formula funding for fiscal year 2012 and beyond. budget issues – good news fy11 budget includes...

Formula FundingFor Fiscal Year 2012 and beyond

Budget Issues – Good NewsFY11 Budget includes 2.3%

growth in state revenues.As of October 1, year-to-date

collections are up 2.6 percent compared to 2010.

$189 Million in Federal Jobs money to be run through FY11 supplemental budget process.

Budget Issues – Bad NewsFoundation formula includes $247

million in Federal Stabilization Funds.Gaming revenues that support the

formula are about $50 million under budget.

Formula requires an additional $233 million to fully fund in FY12 at 86/14.

The state’s total general revenue is about $600 million short for FY12.

Foundation Formula History

FY07 - $2,748,753,809FY08 - $2,871,673,147 +$122,919,338

FY09 - $2,969,011,969 +$97,338,822

FY10 - $3,004,388,410 +$35,376,441

FY11 - $3,004,388,410 +0

New Formula Phase-in

SB287 2005-062006-07 (FY07) 15%85%2007-08 (FY08) 30%70%2008-09 (FY09) 44%56%2009-10 (FY10) 58%42%2010-11 (FY11) 72%28%2011-12 (FY12) 86%14%2012-13 (FY13) 100% 0%

Formula Cost

FY11 (72/28)$3,129,672,170

FY12 (86/14)$3,237,040,673

FY13 (100/0)$3,345,928,000

Formula UnderfundingWith $3 billion funding appropriation

FY11 $125,283,760 4% reductionFY12 $232,652,263 7-9% reduction**FY12 reduction will increase if appropriation is less than $3 billion.

FY13 $341,539,590 ?????

FY 11 Foundation FormulaFunding Scenarios

Phase-in Approp. Proration72%/28% 3.004 B 96.0%72%/28% -50 m 94.4%72%/28% -50 m + Fed. Jobs100.4%

FY 12 Foundation FormulaFunding Scenarios

Phase-in Approp. Proration 86%/14% 3.004 B 92.8%86%/14% -50 m 91.3%86%/14% -100 m 89.7%86%/14% -200 m 86.6%86%/14% -297 m 83.7%

In FY13 The Rules Change

SB287 includes a provision that comes into play in 2012-13 (FY13) which says, “The state adequacy target may be adjusted to accommodate available appropriations.”

FY 13 Foundation FormulaFunding Scenarios

Phase-in Approp. Proration SAT100% 3.004 B 89.1% $5,612100% -50 m 87.5% $5,515100% -100 m 85.9% $5,410100% -200 m 82.7% $5,125100% -297 m 79.6% *

*At this point all districts are hold harmless

IF $3B is appropriated to fund the foundation formula in FY13.

The state adequacy target may be adjusted to accommodate for available appropriations.

The adequacy target is estimated to fall from the current $6,131 to about $5,600.

About 100 more school districts will become hold harmless.

Hold harmless school districts would receive 100% of their hold harmless amount.

FY13 School Funding ChaosIf get to FY13 and the state

adequacy target is adjusted to $5,600 or below, there will be a MASSIVE shift of funds from formula districts to hold harmless districts creating financial chaos among Missouri’s public schools.

Is There A Solution?Executive Committee requested

a study of possible solutions.

Formula Funding Proposal

1. Proposal only works if there is $3 billion appropriated and distributed to schools in FY12 and the amount is increased in FY13 and FY14.

Formula Funding Proposal

2. Freeze the funding percentages at 72%/28% for FY12 and FY13. In the following years, increase the percentages by 7% each year on the SB287 formula until the percentage reaches 100% in FY17.

Formula Funding Proposal

3. Reduce the reduction for all school districts before the funding percentages on the SB287 formula move higher.

Formula Funding Proposal

4. Funding percentages can never go below 72/28. If available appropriations fall below what is needed to fund a 72/28 formula, then all school districts, formula and hold harmless take a percentage reduction.

Formula Funding Proposal

5. The future funding percentages are only targets. If the appropriation is insufficient to meet the targeted percentages, the phase-in percentages would be adjusted. If more money is available than needed, the percentages would be increased.

Potential Issues

Can the state appropriate $3 billion for the formula in FY 12 and additional money in FY13 and FY14?

Will all school districts agree to a solution?

Who is going to carry the legislation?What amendments will be added

during legislative process?

Coming together is a beginning.Keeping together is progress.Working together is success.

-Henry Ford

Questions and Comments?