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Minutes for SB31 - Committee on Education
Short Title
Excluding U.S.D. No. 207, Fort Leavenworth and virtual school students from the capital improvements state aid determination.
Minutes Content for Wed, Feb 24, 2021
Chairperson Baumgardner opened the hearing on SB31.
Tamera Lawrence, Assistant Revisor, Office of the Revisor of Statute, gave a brief overview of the bill. (Attachment 1)
Dustin Avey, Managing Director, Piper Sandler & Co., explained the intent of the current law which in 2015 established a method to manage the State's budgetary expense related to capital improvement state aid for bonds issued to fund facility improvements. There is an unintended inequity in the current law that should be addressed. The purpose of Capital improvement State Aid is to provide an equitable solution for funding capital improvement projects.
School Districts receive State Aid for Bonds based on their Assessed Valuation Per Pupil (AVPP). The State uses AVPP to evaluate district wealth.
There are currently two Capital Improvement State Aid formulas:
- Bond Elections Approved by voters Prior to July 1, 2015 - State annually calculates AVPP, median AVPP results in 25% State Aid, the percentage factor represents the portion of principal and interest payments the State will pay for each school district eligible to receive State Aid in the current fiscal year. For 2015/16, 200 school districts were eligible, for 2020/21, 185 were eligible.
- Bond Elections Approved by voters After July 1, 2016 and July 1, 2017 - State annually calculates AVPP, intent of law is to establish a method to manage the budgetary expense related to State Aid for bond issues, lowest AVPP District is capped at a state aid percentage factor of 75%, Fort Leavenworth (USD 207) is the lowest AVPP, under law for bonds approved by voters prior to July 1, 2015, the District would be receiving 107% State Aid but does not have the legal authority to issue bonds. USD 207 continues to get "poorer" on a per pupil basis compared to other districts due to limited assessed valuation. State Aid for all other districts is decreased by the same percentage point drop. For 2015/16 159 school districts were eligible to receive State Aid under this law. For 2020/21, 115 school districts are eligible. Districts who have issued bonds under this law will continue to see a decline in State Aid.
The result of the current law for bonds authorized by voters after July 1, 2015, if managed correctly, provides a method to manage the State's budgetary expense related to this program. The lowest AVPP district in the State is Fort Leavenworth. Statue KSA 72-1210 relates to the organization of USD 207 and it state that 'The Board of Education of the school district shall not have the power to issue bonds.'
A solution would be to modify the current law to require that school districts must have the authority to issue bonds in order to be eligible to receive Capital Improvement State Aid from the calculation and to modify the formula to exclude virtual students from the per pupil count. These modifications appropriately realign the law with its original intent which is to manage long term budgetary expense and provide an equitable method for funding improvements while focusing on local property tax relief. (Attachment 2)
Quentin Breese, Superintendent, Concordia USD 333, explained to the Committee how the Concordia Community and USD 333 staff and administration have been working tirelessly over the past 4 years to facilitate a capital improvement strategy to meet the needs of their students for the next 50-100 years. The District needs a number of solutions for their aging facility needs with efficiency and modern classrooms but they continue to hit road blocks when costs for these solutions are revealed. They are facing the challenge of renovating a 1929 High School that has 19 different elevation changes, asbestos and a number of electrical and roofing needs.
Capital Improvement State Aid has decreased by more than 36% since 2015. The constraints placed on districts with the Capital Improvement State Aid have been revealed over the past 4 years and continue to exaggerate the inequities as Ft. Leavenworth continues to become "poorer" in the calculation. This change has a significant impact on facility planning.
USD 333 is cognizant of the local tax base and realizes the current 208 local mills assessed from the school, extension agency, the college, the county, and city on taxpayers is a significant property tax levy. The proposed modification of removing USD 207 from the calculation appropriately realigns the law with its original intent of managing ongoing budget expense to the state without creating inequity among school districts. (Attachment 3)
Mark Tallman, Associate Executive Director for Advocacy and Communications, Kansas Association of School Boards (KASB), reported that the KASB Delegate Assembly adopted a resolution stating "Ensure equitable and adequate funding for school district capital costs". Changes in state law are creating inequities in capital improvement aid and a statewide cap on school board issues limits the ability of school districts to provide appropriate facilities.
KASB appears as a proponent because changes in the capital improvement aid formula passed in 2015 are gradually reducing the equalization formula for capital improvement or bond and interest aid. The 2015 formula change ties the equalization schedule to the district with the lowest assessed valuation per pupil in the state. That district is now, and is likely to always be, USD 207 Fort Leavenworth, on a military base with almost no taxable valuation. USD 207's valuation never increases while other districts do, causing the gap to widen. Therefore over time, more districts will receive no state assistance.
Because bond and interest costs not covered by state aid are paid by local property taxes, there will be two consequences. First, it means shifting more reliance on school facility costs to the property tax and second, it means low wealth districts will require much higher property tax levies than higher wealth districts to raise revenue for school facilities.
SB31 may not be the only way to address this issue, but it appears to be an acceptable method. (Attachment 4)
Written proponent testimony was submitted by:
Kellen J. Adams, Superintendent, Chanute USD 413 (Attachment 5)
Ryan Bradbury, Superintendent, Wellsville USD 289 (Attachment 6)
John Hutchison, Deputy Superintendent for Business and Operations, Olathe Public Schools USD 233 (Attachment 7)
Beth Watson, Wellsville USD 289 Board Member (Attachment 8)
Melissa Kennedy, Superintendent, Valley Heights USD 498 (Attachment 9)
Justin Coup, Superintendent, Solomon USD 393 (Attachment 10)
Cory Gibson, Superintendent, Valley Center School District, USD 262 (Attachment 11)
Craig Neuenswander, Deputy Commission of Education, submitted information as to the Capital Improvement State Aid including districts considering bond elections and information about successful bond elections for the past 7 years. (Attachment 12)
Neutral written testimony was submitted by Deena Horst and Ben Jones, Legislative Liaisons, Kansas State Board of Education (Attachment 13)
Seeing no further Conferees, the Chair closed the hearing on SB31.
