School Finance Excerpted from Kansas Liberty

The Kansas Senate voted 33-7 to amend an aspect of the school finance fund, an initiative that received heavy debate on the Senate floor. Senate Bill 359 would amend the special education catastrophic aid law by doubling the amount of cost that makes a district eligible for receiving catastrophic aid. Currently, districts can receive catastrophic aid for any special education student whose needs cost more than $25,000.

Senate Bill 359 would nearly double that amount so that districts could receive catastrophic aid if the cost of providing services to a special needs student exceeds $46,000. In these cases, the state would reimburse districts for 75 percent of the excess costs over $46,000.

Catastrophic aid is one component of special education funding. Altering the catastrophic aid formula would not change the total amount of funds allocated to school districts for special education purposes, but it would change the manner in which the funds were distributed among districts.

The bill was designed to tighten up requirements so that school districts could not inappropriately use the state’s catastrophic aid formula.

Concerns regarding misuse of the aid were brought up after the state’s catastrophic aid doubled between 2008 and 2009 from $6 million to $12 million. School districts went from claiming 276 catastrophic aid students in 2008 to making 758 claims in 2009.

An audit was conducted to examine why there was a sharp increase in the catastrophic aid payment, and the Legislative Division of the Post Audit identified Shawnee Mission School District, or USD 512, as the reason for the increase. USD 512 filed zero claims for catastrophic aid in 2006, 2007 and 2008 and then made 333 claims in 2009.

After Shawnee Mission started calculating expenses so that it could benefit more in catastrophic aid, the Blue Valley and Olathe school districts followed suit. These three districts alone accounted for $8.9 million of the total catastrophic aid paid out in 2009.

Today's vote split Johnson County senators from other legislators, with each JoCo senator voting against the bill.

The audit found that districts were double dipping by including costs already covered by special education transportation and teacher’s aid. This allowed districts to be paid twice for the same activity.

Auditors recommended that legislators adjust the formula for determining catastrophic aid, and the Kansas Department of Education agreed with the recommendation.

Much of today’s debate centered on whether the Blue Valley, Shawnee Mission and Olathe school districts inappropriately used the funding formula for personal gain.

Sen. Tim Owens, R-Overland Park, introduced an amendment that would have allowed the three districts to maintain half of the catastrophic funding they had already calculated and expected to receive for the upcoming school year.

Owens indicated that he did not believe the districts had intentionally done anything wrong and thought it was fair to allow the districts to maintain 50 percent of what they had expected to receive.

This amendment was challenged by several Republicans who argued that the school districts had intentionally manipulated the formula so that they could benefit financially while other schools were stuck receiving less catastrophic aid. It was unknown whether the three districts would qualify for catastrophic claims under the finance formula adjustment.

“What they did is not a sham, but I think it is shameful behavior,” Sen. Terry Bruce, R-Hutchinson, said. “There is one pot of money and when we cut catastrophic aid off the top, there is less to go around.”

Sen. Tim Huelskamp, R-Fowler, also said he believed the districts were taking advantage of the funding formula.

“They have capitalized on this particular windfall to the tune of $8 million,” Huelskamp said.

Sen. John Vrtail, R-Leawood, supported the Owens amendment, pointing out that the Legislature would often grandfather in agencies when making funding formula adjustments that would result in those agencies receiving less money.

“Time and time and time again we have grandfathered and held harmless those districts who lose money as a result of a change in our school funding formula,” Vratil said. “This is but another example of this situation.”

Vratil has worked as an attorney on behalf of school districts.

Ultimately Owens’ amendment failed in a voice vote.