Funding Gaps in the QBE Formula
The QBE Formula is intended to represent the cost of a providing a Quality Basic Education in accordance with minimum State standards, but there are substantial differences between the estimated and actual costs in various parts of the formula.
The rationale behind the formula is sound. It is based on a series of "building blocks" for the various components in the total cost for each of 19 general programs specified in the QBE Act. These components include the salary and benefits for the classroom teacher, the cost of textbooks and instructional materials, the cost of utilities and maintenance, and allocations for specialists, instructional support, and administrative expenses at the school and system levels.
Each of the components is expressed in terms of a dollar amount per student. Salaries are based on the State's minimum salary schedule, with adjustments for the training and experience of the system's certificated employees in each field, and the amount per student is calculated according to the staffing ratios for various positions in each of the programs (i.e., the number of students per teacher or other position). Some of the allocations depend on the size of a hypothetical school or school system.
The cost per student is then multiplied by the number of full-time equivalent (FTE) students in each program, which takes into account the portion of the school day that each student spends in each program. A further allocation is made for the funding of principals on the basis of one per school. The resulting total equals the "QBE Formula Earnings" for the system.
Categorical Grants are added for those activities, such as pupil transportation, which are estimated on a system-wide basis. There are specific criteria for these grants.
Equalization Grants are also provided to the systems with the least property tax-wealth per student so that they can supplement or "enrich" the basic program to the same extent as other systems. These grants are intended to enable every system to derive at least as much revenue per student from each mill of property tax above the first five mills as does the system at the 75th percentile when ranking all systems according to their equalized property-tax digest per weighted student. The tax digest is "equalized" to ensure that property is valued on the same basis in every system, and the number of students is adjusted by "weighting" each of these students by the relative cost of the programs in which they are enrolled.
Every system is required to contribute a local share based on the revenue which would be generated by five mills of property taxes when levied on the equalized tax digest for the system. In effect, the Five Mill Local Share, as it is called, is a statewide tax, since this amount is deducted from the funds "earned" by each system through the formula. By law, the total of the required local share for every system cannot exceed 20% of the total amount of QBE Formula Earnings for the entire state, but the percentage for each system varies widely depending on the relative property-tax wealth of the system.
Despite its logical framework, the QBE Formula cannot be a realistic estimate of the cost of providing a Quality Basic Education as defined in the Act if the inputs on which it is based are not realistic. The relationships within the formula also depend on the validity of the individual components. Nevertheless, some of these components bear little resemblance to the costs which they are supposed to represent, and the differences have widened over time. The formula has become increasingly distorted as a result.
Some components have been increased regularly, while other components have not kept pace with actual costs. Some of the per-student amounts, such as the allocations for textbooks, instructional supplies, media materials, facility maintenance, and supply teachers, are essentially arbitrary. They are far less than what these items or services actually cost. Other amounts, such as the allocations for school and general administration and the grants for pupil transportation, are based on schedules that are extremely unrealistic.
Dr. Jeffrey D. Williams of the Consortium for Educational Research in Georgia has prepared a table to show the "gaps" for the entire state between the amount of funds "earned" by local systems through the QBE Formula (and the grants for pupil transportation) and the actual expenditures for each of seven selected cost components in FY02. The formula is conspicuously "under-funded" in these categories. Some portion of the gaps may reflect costs that are not absolutely necessary, but the differences are so great that they cannot be reasonably explained on this basis alone.