March 10, 2014 - In This Issue:
Ruling by the Supreme Court of the State of Kansas, Luke Gannon v. State of Kansas

In January last year, a three-judge panel of the Shawnee County District Court (District Court) ruled in Gannon vs. State of Kansas that funding for public schools was unconstitutionally inadequate. However, the District Court's ruling was stayed by the Kansas Supreme Court in February of last year. The Kansas Supreme Court heard the case themselves. On Friday, March 8th, the Supreme Court released the long anticipated ruling in Gannon vs. State of Kansas.


The Supreme Court's decision gave some clarity to both Equity of Funding and Adequacy of Funding.

Equity of Funding

The Supreme Court unanimously ruled that the state had failed to provide equity of educational opportunity as required by the Kansas Constitution. The equity issue surrounds equalization of two funding sources for schools. Those two sources are Capital Outlay and Local Option Budgets (LOB). The Supreme Court ruled that the State was not adequately equalizing funding for all school districts.


Equalization is a process that sets out to equalize the difference in money collected between all school districts. Some districts have more property to collect tax on. In general, urban school districts collect more taxes from 1 mill levy than rural school districts. The equalization difference is made up by the state giving the districts that collect less tax revenue money out of the State's general fund to make up the difference, or equalize. It is important to have a basic understanding of equalization to understand the Supreme Court's ruling. The example below attempts to demonstrate how equalization works.



Capital Outlay

Schools are allowed to levy up to 8 mills of property tax to fund their capital outlay needs. Capital outlay purchases would include things like buses, building repair, furniture, certain equipment, etc. The state was to equalize the amounts collected by districts. The state stopped equalizing in 2009. The Supreme Court found that to be unconstitutional on equity basis. The estimated amount to solve this deficiency is approximately $25 million dollars. The Supreme Court has ordered the Legislature to fix this by July 1, 2014. 


Local Option Budget

Local school districts can raise money locally for their schools through property taxes. Equalization works a little different with LOBs. Schools that collect at 81.2% or more, based on the average value per pupil (AVPP) collected, receive no equalization. Schools who collect less than 81.2% of AVPP receive equalization money from the state's checking account to bring them up to the 81.2 percentile. Since 2009 the State has funded the schools below the 81.2 percentile at less than 100%. For example, in the 2013-14 school year the state only equalized at 78% rather than the full 100%. The estimated amount to solve this deficiency is approximately $104 million dollars. The Supreme Court has ordered the Legislature to fix this by July 1, 2014.


The Supreme Court has instructed the legislature to correct these two equity of funding issues by July 1, 2014. The corrections must come in the form of fully funding, funding over a specific time frame, or making changes to the current statutes.

Adequacy of Funding

The Supreme Court sent the matter of determining adequacy of funding back to the District Court. The decision fundamentally shifts focus from money inputs to outcomes. This has been a critical point of distinction for Republicans and the court's affirmation is significant. The Supreme Court's decision rejected the District Court's ruling that "suitability" of education under the state constitution is determined only by a dollar amount. Instead, the Supreme Court instructed the District Court to look toward outcomes to determine adequacy. The District Court is instructed to examine Kansas public education by measuring adequacy based on the Rose Standard, which is already contained in current Kansas statute.


The Rose Standard is based on a Kentucky court case from 1977, and it states: "An efficient system of education must have as its goal to provide each and every child with at least the seven following capacities:

  1. Sufficient oral and written communication skills to enable students to function in a complex and rapidly changing civilization.
  2. Sufficient knowledge of economic, social, and political systems to enable the student to make informed choices.
  3. Sufficient understanding of governmental processes to enable the student to understand the issues that affect his or her community, state, and nation.
  4. Sufficient self-knowledge and knowledge of his or her mental and physical wellness.
  5. Sufficient grounding in the arts to enable each student to appreciate his or her cultural and historical heritage.
  6. Sufficient training or preparation for advanced training in either academic or vocational fields so as to enable each child to choose and pursue life work intelligently.
  7. Sufficient levels of academic or vocational skills to enable public school students to compete favorably with their counterparts in surrounding states, in academics or in the job market."

The Supreme Court recognizes that the amount spent is not the sole determinant of adequacy of funding. To me this indicates the study known as Augenblick & Meyers is considered flawed. This is the study the original school finance lawsuit was based on.

The Supreme Court clarified that school finance includes not only State General Fund spending (BSAPP), but also ALL other funding sources. The decision specifically said ALL funding sources include the cost of teacher's retirement plan known as KPERS, capital outlay spending, local LOB funding, and even federal funding. It will be very productive to the legislature to have this finally settled when we address the Adequacy of Funding issue in the future. To demonstrate the significance of this clarification, please review the graph below.




The Plaintiffs in the case only wanted the BSAPP amount of $3,838 to be considered the only cost being spent on K-12 education. The State Supreme Court settled this long running conflict and ruled that all costs must be considered. When you add up all the costs directed by the State Supreme Court the per student spending is around $12,781 annually.


In the end, the Court spent significant time acknowledging that the cuts enacted under Democratic Governor Mark Parkinson in 2009 have resulted in inequalities within the funding formula. The two areas the ruling focused on are the equalization of funds raised through local property taxes (LOB) and the equalization of capital outlay state aid (the latter being used for building construction, school buses and other equipment). The Court ruled that these funds must be distributed equally from richer districts to poor districts in order to abide by the Kansas Constitution.


Now that the ruling is here we need to get to work to solve the Equity of Funding issues. The courts have given us until July 1, 2014 to accomplish this. With all of our committee work still going this is a short fuse so we have to work diligently. We all spent the weekend talking with our school Superintendents, Legislative Leadership, the Governor's office, and of course Legislative Research.


Capitol Office
300 S. W. 10th Street, Room 541-E
Topeka, KS 66612

Overland Park
8416 W. 115th Street
Overland Park, KS 66210

Paid for by Jim Denning for Kansas Senate - Kathy Vance, Treasurer

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