JEFFERSON CITY — Two bills working through the legislature would significantly increase the state’s funding for public schools, but leadership’s other priorities are crowding out their chances of getting through this session.

Missouri ranks last in the nation for teacher pay and 37th for median expenditures per student.

Sen. Lauren Arthur, D-Kansas City, is the sponsor of Senate Bill 17, which would increase the amount the state is obligated to put toward public schools by about $284 million a year. In the House, Rep. John Black, R-Marshfield, would boost school funding in increments every two years that would level out at an additional $302 million 10 years from now.

Many members of the legislature see the need for more school funding. But in a signal that it won’t happen this year, Senate President Pro Tem Caleb Rowden, R-Columbia, told the Missourian that amending the funding formula would be a three- or four-year conversation that would “far outlive my tenure” in the Senate.

Arthur’s approach is to amend the funding formula, which calculates how much money the state must give schools, by taking the product of several variables and subtracting a district’s local funding.

The funding formula changes in Black’s House Bill 529 would boost school funding by $53 million in fiscal year 2025, then rise every two years.

Arthur acknowledges that her proposal is expensive from the start, but she says the Senate is considering what she argues are less important yet expensive proposals, such as exempting ammunition from sales tax, which would cut state revenue by up to $83 million a year. That bill, SB 131, has cleared the Senate and awaits consideration by the House Ways and Means Committee; neither SB 17 nor HB 529 have reached the floor in their respective chambers.

Arthur said her bill would help school districts keep pace with rising inflation and fund costly projects.

“It should give them greater latitude to do things like increase teacher pay and recruit qualified teachers to hard-to-fill positions,” Arthur said. “Hopefully, it will allow them to provide additional services beyond the classroom.”

Rep. Brad Pollitt, R-Sedalia, the House Elementary and Secondary Education Committee chairman , said the current formula provides “zero additional dollars” to schools year-over-year. He said most funding formulas last about 10 years and given that the legislature adopted the current formula in fiscal year 2004, it is time to bring it up to date.

Kari Monsees, the Department of Elementary and Secondary Education’s deputy commissioner of financial and administrative services, said Missouri students “need more support than ever.” He said Arthur’s bill would spark essential growth in the formula’s funding stream, which he said has stagnated for the past few years.

Raising the cap

Both bills seek to change the calculation of districts’ current operating expenditures. The state uses operating expenditures to calculate the state adequacy target, which is the minimum amount the state expects districts to spend on each student.

Arthur said her bill is a response to the legislature putting a 5% cap on cost of expenditure increases in 2016, which cut the state’s funding obligations by about $500 million a year.

“I would argue that we’ve been underfunding education for the last several years, and this is an attempt to help make our districts whole,” Arthur said. “I imagine every senator has heard from a local school about the difficulty filling some staff position or finding qualified teachers in classrooms.”

Her bill seeks to raise the cap to 10% annually because she said this is more “politically possible” than her preference to eliminate it entirely. A 10% cap would increase the state adequacy target from $6,375 to $6,679 per student.

HB 529 would gradually raise the cap every two years until it reaches 9% by 2031. Once the cap hits 9%, the bill requires the state to calculate current operating expenditures with 2024 numbers compared to the current use of FY2004 numbers. The calculations currently are based on numbers from FY 2004.

Doug Hayter, executive director of the Missouri Association of School Administrators, said increasing the cap would raise the maximum amount of money the state could give to schools.

“We do think it would make changes that would help schools,” Hayter said. “The state adequacy target has been stagnant for several years, so school districts are not seeing substantial increases in the formula. ... Anything we can do to get some consistent growth over time would be helpful to school districts.”

The state adequacy target is calculated every other year. It is based on the cost of expenditures per student of all the districts that earn at least 90% of the points on the education department’s Annual Performance Report, excluding the top and bottom 5% ranked by expenditures. These high-scoring districts are called “performance districts.”

Monsees said the state focuses on this variable because the formula is based on a “successful schools” model.

Funding schools with high poverty

Another of the funding formula’s main variables is weighted average daily attendance, which both bills amend differently.

While the state adequacy target represents expected minimum expenditures per student, weighted average daily attendance measures a district’s average attendance and then modifies it based on student characteristics relative to the performance districts.

If a school has more students who qualify for free and reduced-price lunch, follow individualized educational plans or have limited English proficiency compared to the average performance district, that school will receive extra weight from the variable and thus more state money. Pollitt amended HB 529 to give students with individualized education plans more weight in the calculation.

Arthur’s bill would change the weighted average daily attendance variable by allowing districts to receive funding based on whichever gap is larger relative to the performance districts: free and reduced-price lunch count or Census Bureau poverty count.

More students qualify for free and reduced-price lunch than fall below the poverty line. The change would benefit districts with very high poverty because the calculation considers the gap between the average performance district and a sample district, not the total number of students in poverty or on free and reduced-price lunch.

“Let’s say, for example, that performance districts, their average is 30% on free and reduced lunch, but it might only be 10% on Census poverty,” Monsees said. “But if I look at my individual district, their Census poverty number might be 20%, whereas free and reduced lunch might be 35%. So that gap is 5% for free and reduced lunch, but it’s 10% for Census poverty.”

Monsees said the free and reduced-price lunch variable might not always accurately reflect a district’s economic situation because some families might not fill out the necessary forms to qualify and therefore they go uncounted. Arthur said the Community Eligibility Provision, a federal program that provides free school lunch in high-poverty districts, and two years of free lunch during the COVID-19 pandemic, also distort how many students in a district are low-income.

Stacey Preis, the Missouri policy consultant for workforce development interest group ALIGNED, said adding poverty count to the formula is an improvement because it more accurately reflects the purpose of the weighted average daily attendance variable.

“It’s the persistence of poverty, the depth of poverty, that really is the risk factor, and that’s what the poverty metric in the formula is trying to do,” Preis said. “It’s not about measuring the wealth, it’s about measuring the risk that’s correlated with that, and so the best correlation comes from the Census poverty estimate.”

Considering local effort

Arthur supports a more extensive overhaul of the funding formula.

“There are other formulas across the country that are much more equitable, that depend a lot less on local funding sources, and I support something like that,” Arthur said. “But it just doesn’t seem like there’s an ability to get a new formula done this year.”

Missouri school districts vary widely on where their funding comes from. A significant factor behind this is differences in local property values, Monsees said.

The wealthy Clayton School District’s funding is 95.5% local, with only 3.2% from the state. Shell Knob 78 School District, a rural district in the Branson area, has the highest property values in proportion to its average daily attendance in the state. Its funding is 72.7% local and 19.4% state.

Naylor R-II School District, northwest of the Bootheel, has among the state’s lowest property values per average daily attendance. It gets about 61.9% of its funding from the state and 25.6% from local sources. Funding for the Hayti R-II School District, another Bootheel-area district, is 53.2% state and 30.9% local.

How schools get their funding helps explain some inequalities that could arise from open enrollment, another education policy issue the legislature is debating this year.

Both open enrollment bills stipulate that when a student transfers , their state and federal funding follows them to the new district while local funding stays in the community. Schools in areas with lower property values have more to lose if students leave because they rely heavily on state and federal funding.

The funding formula calculation subtracts local effort from the total to account for districts that can mostly support themselves. But Monsees said inequalities still persist with local effort.

The funding formula assumes a $3.43 tax levy statewide, which was the average tax levy among performance districts in fiscal year 2004. This tax levy is the rate at which the assessed value of a property is taxed. Monsees said this levy is as low as $2.75 in some areas and higher than $5 in others.

Because the formula assumes a $3.43 levy, areas that set higher levies receive more state funding than they would if the formula accounted for their actual levy.

The formula also calculates local effort based on a district’s property values in 2004, not its current property values. Districts that have grown in size and wealth since 2004, such as in Columbia or the suburbs of St. Louis and Kansas City, receive a smaller local effort deduction than they would if the formula reflected current values. The formula protect districts from receiving less money than they did in 2004.

Altogether, these factors mean that the local effort deduction cuts less into state funding allocated to wealthier, fast-growing areas than it cuts into the funding given to smaller, lower-income districts.

Preis said that if lawmakers want to change how the formula accounts for local effort, they should do so with caution to avoid giving the system too big a shock.

“It seems like such an obvious place to think about updating the formula, but some of those districts have increased so much, it could just cause a huge swing,” Preis said. “You would want to think carefully about how to implement updating that so that it doesn’t just completely drive the cost of the formula through the roof.”