HB 771 -- School Funding

Sponsor:  Baker (123)

This bill comprehensively revises the state education funding
formula to be phased in over four years beginning July 1, 2006.
The current formula is levy-driven with an equalizing factor, the
guaranteed tax base, to achieve the goal of providing the same
amount of money per student, per penny of the tax rate.  The
formula in the bill is based on student needs with the chief
feature of the new formula being a minimum amount of money that
is needed to educate each child, known as the state adequacy
target (SAT).

To establish the SAT, every two years the Department of
Elementary and Secondary Education will identify schools that
have made perfect scores on their annual performance reports.
These districts are known as performance districts, and their
characteristics form the basis for several calculations in the
formula.  The expenditures in those districts, through a process
specified in the bill, become the basis for the SAT, which does
not decrease when it is recalculated.

The new formula uses weighted average daily attendance (WADA) to
direct additional money to students who qualify for free and
reduced-price lunches, those in special education, and those with
limited English proficiency.  The threshold for WADA is set at
the aggregate percentage of the performance districts' students
in those three categories.  The additional average daily
attendance resulting from the weights in excess of the threshold
is added to the average daily attendance.  The SAT multiplied by
the WADA becomes the basis for the first calculation in the state
aid formula when it is multiplied by the dollar value modifier
(DVM), an index of the relative buying power of a dollar, keyed
to the county wage-per-job data.

The district's local effort is subtracted from the SAT multiplied
by the WADA multiplied by the DVM figure.  If the result is a
positive number, it is the state aid payment.  If the number is
below zero, the district is held harmless and will receive no
less revenue on a per-WADA basis than it did in the previous
year.  The initial hold-harmless year is 2005-2006.  The DVM is
applied to the hold-harmless payment.

The local effort that is deducted from the first line includes
the actual amount of local revenue in Fiscal Year 2005 (the
amount used in calculating Fiscal Year 2007), except if the
district's levy is lower than the performance levy, defined as
the median levy of the performance districts.  A district levying
less than the performance levy will have its local effort
calculated with the performance levy.  Every subsequent year,
local effort will be calculated as before, except that a district
that has less local revenue because its assessed valuation has
fallen from the Fiscal Year 2005 level will have its local effort
calculated based on its current assessed valuation and the
operating levy used in the Fiscal Year 2007 calculation.  No
growth in local revenue will offset state aid.  This provision
anticipates, but does not create, local option sales or income
taxes.

The current formula has several categorical aid streams:
transportation continues unchanged, as do career ladder,
vocational education, and the educational and screening program.
The line 14 "at-risk," gifted, special education, and remedial
reading categoricals are folded back into the district's base,
along with the fair share (cigarette tax) and free textbook
(foreign insurance) moneys.  Revenues from gaming, which will be
deposited into the Classroom Trust Fund, also established by the
bill, will be distributed on an average-daily-attendance basis.

The bill creates option districts, which may elect to forgo state
aid in return for regulatory relief and requires a certificate of
value, a closed record which contains the actual amount of
consideration or reasonable estimate of the true current market
value of property and must be filed with the assessor before the
recorder of deeds can accept the filing of instruments conveying
property.  Many of the sections of the bill revise existing law
to the new terminology and delete obsolete provisions.

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:20 pm