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Not all taxation is included in Kansas school spending

apple-worm[1]From Kansas Policy Institute.

$1.35 billion excluded from school finance provision

By Dave Trabert

If you think school finance in Kansas couldn’t possibly be more obtuse (or absurd, depending upon one’s perspective), consider this new wrinkle: the 20 mill property tax levied for the support of public education isn’t considered part of state aid.

Every school district is required by statute to levy a 20 mill property tax, which according to K.S.A. 72-6431(b)(2), is “… for the purpose of paying a portion of the costs of operating and maintaining public schools in partial fulfillment of the constitutional obligation of the legislature to finance the educational interests of the state …” It’s right there in black and white, but the $563 million generated in the 2013 school year by that 20 mill property levy isn’t counted as part of the legislature’s constitutional obligation to make suitable provision for the finance of the state’s educational interests.

According to Deputy Commissioner of Education Dale Dennis, all property taxes (including the state-mandated 20 mills) levied by school districts are “… collected by the county treasure[r] and distributed directly to local districts.” Since property taxes aren’t sent to the State for distribution, all of that revenue is considered part of Local aid.  The amounts identified as state aid come from revenues collected by state government, and since those property tax dollars never hit state coffers, they aren’t part of Base State Aid or any other form of state aid.

We also spoke with Kansas Legislative Research and Kansas Division of the Budget. Both offices confirmed that local property taxes, including the 20 mills, are sent directly to school districts, are not collected or distributed by the state and are not counted as local aid rather than state aid.

The constitution does not say that “suitable provision for finance” of schools shall be provided solely through the State General Fund or any other state fund. The constitution also does not reference Base State Aid Per Pupil (BSAPP) as the determinant of whether the Legislature has made suitable provision for school funding … yet BSAPP is often portrayed as though it is the entirety of all aid for what school districts refer to as “regular education.”

The Legislature makes provision for the financing of public schools in several ways. A complicated formula, which includes BSAPP as one element, determines how funding is dispersed from the state budget. But in addition to the statewide 20 mill property tax, the Legislature also makes provision for districts to receive other funding that is recorded as Local aid.

Total property taxes levied for the operation and maintenance of public schools last year was $1.65 billion, of which $300 million was voter-approved special levies. The remaining $1.35 billion (which does not require affirmative citizen approval) should be considered part of the Legislature’s provision for financing public education.

The exact amounts levied by district are available at KansasOpenGov.org

It will be very interesting to see how this new discovery impacts the State Supreme Court’s review of the school finance decision next week. Earlier this year, the Shawnee County District Court ruled the schools were underfunded to the tune of $443 million based on the amount of money in Base State Aid Per Pupil. No one really knows what it costs for schools to achieve required outcomes while also making efficient use of taxpayer money. But that aside, if the Shawnee District Court did not consider the $563 million in property taxes that are statutorily “… a portion of the costs of operating and maintaining public schools in partial fulfillment of the constitutional obligation of the legislature to finance the educational interests of the state …,” the State Supreme Court may well have justification to set the lower court’s ruling aside.