Georgia School Funding Association

REPORTS

Recommendations for a New Funding Formula

April 22, 2005

As you design a new funding formula for K-12 education in Georgia, we urge you to base the method of financing our schools on clearly defined educational goals. The achievement of those goals must be based on the actual needs of our students, and some students clearly need more time and attention than others to overcome the disadvantages they bring to school.

Despite some of its complications, the underlying structure of the QBE Act is still sound. The intent is to estimate the cost of the basic program, to provide a mix of state and local funds to cover this cost, and to allow local communities to supplement the basic program.

The problems have resulted not so much from the framework itself but from inadequate funding, which has been exacerbated over time through selective adjustments in some but not all of the components in the formula. These adjustments have usually been made for political rather than educational reasons. We are glad that you are undertaking a periodic review as required by the QBE Act and trust that it will lead to a comprehensive updating of the essential elements in the funding of an adequate education.

We understand your desire to simplify the current formula, but it is essential to preserve the important distinctions that must be made in recognizing the differences among students and the additional services they need. The wide diversity of the educational needs of our students must be clearly recognized in the new formula which you are designing.

In addition to these general principles, we recommend several specific changes in the current formula, as indicated below.

1. Reduce the number of general programs, but designate add-on programs for specific needs and additional services.
2. Express school and central administration as simple overhead rates, perhaps with a reduction in the rate for central administration in very large systems.
3. Provide additional funding to compensate for the effects of poverty, not only for low-income students but for all of the students at every school impacted by poverty. (The National Center for Education Statistics estimates that educating students in poverty requires 1.2 times more funding than for other students, and nearly half of the states have an adjustment of this nature.)
4. Use parameters in which the salary and non-salary cost components of the formula are continuously updated.
5. Consider setting the total required local effort at 20% of the total cost of the basic program (instead of five effective mills of property tax), with this total being apportioned among all local systems according to their taxable wealth.

We commend you for taking the two-step process of first defining the desired educational outcomes for all students and then estimating the cost of the educational programs that are needed to produce these outcomes. This approach mirrors the Governor’s desire to view the spending on education as an investment in Georgia’s future, with an expected return in terms of student achievement. We simply want to be sure that the funding formula addresses the full range of student needs and that enough support is provided to fulfill the stated intent of each program.

This estimate should not prescribe the form of instruction or the delivery model, but it should provide enough funding to support the basic elements of instruction in meeting the needs of each student. Although local systems and schools should have the latitude to choose other ways to operate their schools, there should be enough funding to provide an adequate education through regular classes and the current allocations for staffing.

We also recommend two necessary changes related to Equalization Grants. First, the benchmark for these grants should be the equalized property-tax digest per weighted student for the state as a whole. The current reference point is actually less than the statewide average. Second, the formula should be corrected so that the adjustment in the amount of a grant is not interrupted in the second year after a school system changes its tax rate.

As you study the financing of Georgia’s schools, we hope you will consider broadening the definition of local wealth to take into account differences in disposable personal income as well as a system’s property tax base. Although the use of personal income is a complicated adjustment that must be considered with great care, one possible approach is to apply an index based on the median household income in the system or to make direct offsets for this purpose.

We urge you - for the sake of our students and the future of Georgia - to ensure the needed investment by the State in the basic educational program for all students in Georgia so that every student has the opportunity to succeed, without curtailing the ability of local systems to supplement the basic program in meeting local needs.

As much as we believe in equity and as much as we endorse the goal of excellence in education, the most immediate challenge at this time is to achieve nothing less than an adequate education for every student in Georgia. Raising the foundation to an adequate level is essential in meeting the needs of all students. It would also work to the benefit of all systems. This would be an essential step on the road to excellence.

Also enclosed are copies of a memo to Governor Perdue, a preliminary analysis of the under-funding of QBE, and general recommendations for improving education in Georgia.

Thank you for considering these recommendations.

Enclosures