School finance expert defends state during funding trial

JEFFERSON CITY, Mo. -- A school finance expert testified Wednesday that Missouri's new method of paying for public schools is a sound approach that other states should consider.

About half of the state's school districts sued Missouri in 2004, arguing it doesn't spend enough on education and distributes the money unfairly. The trial has been under way for six weeks.

University of Florida education professor Craig Wood on Wednesday spoke about his work for a special legislative committee that helped rewrite the school funding formula. Wood recommended the state move from a formula driven largely by growth in property taxes and wealth to one based on student needs.

The formula, passed in 2005, generally follows that approach, and Wood said it's a fairer way to distribute money that over time will provide for an adequate education.

"In many ways it is a model. Legislatures would be well-advised to entertain and examine some of the features of this model," he said.

The money required under the state's old formula grew as property values escalated, without considering whether students' educational needs rose at that same level. The state eventually fell hundreds of millions of dollars short in funding it.

"With a tax rate-driven formula, at the extremes, the formula tends to break down very quickly," Wood said.

The new method sets a target amount per student based on spending by districts that achieved perfect scores on a state performance report. The report considers both districts with high academic achievement and those making improvement. The state then provides extra funding for districts with higher shares of poor, special education and English as a Second Language students than the "performance" districts have.

Wood reviewed various aspects of the formula and said state lawmakers did a good job of accounting for differences in student demographics and cost of living and made logical choices in determining how much of a factor more costly student populations should be.

Wood also said that basically freezing the calculation of a district's locally raised money is an improvement because property wealth becomes less of a factor in the formula over time.

But the school districts' attorney, Alex Bartlett, argued that provision actually hampers efforts to make school funding fairer. Wealthy areas can continue to increase local taxes and improve their schools without a reduction in state aid, while poor districts cannot, potentially widening the gap between high- and low-spending districts, he argued.

The state has said the new formula should add about $846 million to the $2.5 billion Missouri was already spending on basic aid once it's fully phased in, a process expected to take until the 2012-2013 school year.

Wood acknowledged parts of the formula don't follow his recommendations, such as a five-year phase-in period at most, but said he's satisfied with the result.

The suing districts argue the extra funds aren't sufficient and schools need up to $1.3 billion more immediately, with much more needed to account for inflation by 2013.

Wood also criticized another method used to determine appropriate school spending that suing school districts embraced. Wood said relying on panels of teachers and others in education to determine what schools need tends to result in a much higher cost estimate than other methods yield.