Modernizing the school funding formula (Capitol Update)

The Legislative Office of Fiscal Transparency (LOFT) issued a report last week calling for changes in the state aid school funding formula. It recommends providing more funding for school districts with high concentrations of students in poverty; changing the statutory definition of bilingual to English learners to define the need more properly; raising the weight per student for economically disadvantaged and bilingual students; and directing funding to instructional categories. 

The state funding formula delivers state aid to local school districts on a per pupil basis. But to, as near as possible, provide an equal educational opportunity to every Oklahoma student, the formula recognizes the local wealth of each district and deducts a portion of the state money from districts with more than average local wealth to help equalize funding among the districts. 

The formula also assigns a weight to each category of student in the school district. It costs more to educate, for example, a financially disadvantaged, bilingual, or disabled child than a child without those issues. The students are also assigned a weight by grade. So, in total, a school gets its state aid funding based on the “weighted” average daily membership of pupils in the district based on the wealth of the district and the kinds of students it has.

The funding formula was first passed in 1981, but it had some inherent problems from the beginning. To get the bill passed, the legislature included a “hold harmless” provision stating that no district could get less than it had received the previous year based on the formula. This immediately created inequities between growing and declining school districts. Districts in western Oklahoma and a few other places that were losing population, and core city districts like Tulsa and Oklahoma City that were losing students to their suburbs, had declining enrollments. The growing districts justifiably complained that the declining districts were being paid for students that were no longer there with funding that should be going to the district where they were now located. 

By 1990, when House Bill 1017 was passed, school funding was wildly unequal. In fact, inequitable school funding was one reason Gov. Henry Bellmon called the special session that resulted in HB 1017. The inequality was caused primarily by the gap that had continued to increase caused by the hold harmless provision; the legislature having added teacher salary increases and other funding directly to the districts outside the formula; and a few districts having so much wealth that even the deduction from their state aid could not create equitable funding.

HB 1017 came very close to equalizing funding, and the hold harmless provision was repealed. Ninety-nine percent of the districts were within 10 percent of the statewide per pupil average, and 91.8 percent were within 2.5 percent. This was done by adjusting the weights in the formula to send money where it was needed, by adding more transportation funding as needed for geographically large, sparsely populated districts, and by adding to a small school factor. 

After 32 years the formula is likely out of whack. A 2018 legislative study recommended formula changes like those recommended by LOFT, and others, but they did not happen. The 2018 study was probably not the first one. Every change in the formula creates winners and losers, and every legislator requests a printout showing how each school district they represent will be affected. If the impacts are negative, they are reluctant to vote for the change.

To bring the formula up to date and reflect 21st century needs and equities, it will take three things: Legislators with the support of leadership in each chamber who will make it their cause to get it done; the tenacity to figure out what needs to be done; and increasing funding enough so that with the changes few, if any, school districts will be losers. 

When HB 1017 passed, the formula directed enough new funding to each district so that every county was a winner. The schools in Alfalfa County gained the least, 0.6 percent, while the schools in Cimarron County gained the most, 38 percent. Tulsa County schools gained 14.9 percent and Oklahoma County gained 15.7 percent. Fortunately, the money is available now to rework the formula without a tax increase as in HB 1017. I have no idea what the cost would be, but undoubtedly it will cost something. It’s a question of whether the legislature wants to take the opportunity.


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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