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Department of Education

State Activities, in the Department of Education, received an additional $5.2 million in state general funds and 4 positions in the Appropriation Bill. However, $4.3 million of that is simply a transfer of remediation funds from the Subgrantee Assistance program for testing and distinguished educators. An additional $650,000 are new funds for imaging costs associated with moving to a new building. The end result is nominal growth in funding for the program, below that needed to meet expected growth in expenses.

Subgrantee Assistance had several programmatic changes resulting in an additional $7.2 million in overall appropriations. Federal funds were reduced by over $4.8 million primarily to reflect expected expenditures. There was also a $2.1 million reduction in interagency transfers resulting from the elimination of the JTPA transfer from the Department of Labor. A notable increase to this program was a $10.8 million increase in statutory dedications from the Education Excellence Fund; these funds will pass through to local school districts. The additional state general funds are for Type 2 Charter Schools and the K-3 Reading programs.

There were two programs in the Department of Education that received few adjustments. The Special School Districts received an additional $3.3 million in general funds for the Justice Department Settlement Agreement. The only change for the Non-Public Assistance program was the addition of $45,000 from the Education Excellence Fund.

The largest program in the Department of Education is the Minimum Foundation Program (MFP) with a total appropriation of $2,243,837,611; all from general funds except $95.5 million in lottery proceeds (lottery proceeds were reduced $3.7 million from last year). The process for funding the MFP is quite simple. The Board of Elementary and Secondary Education (BESE), working with the Department of Education and the Legislature, develops a new formula each year. The formula is submitted to the Legislature, in the form of a resolution, where it is either accepted or rejected. If the resolution is rejected or not introduced, BESE can submit another resolution. If no new resolution is adopted, the prior year’s resolution remains in effect.

BESE originally submitted a resolution reflecting the recommendations of the School Finance Commission as noted above. Since there were insufficient revenues to fund the additional $300 million needed for this formula, the resolution was never introduced by the legislature. Instead, BESE was asked to revise the current year MFP, making adjustments to help the state in its current budget crisis. It is important to note that BESE was not required to make these adjustments. In fact, if BESE had done nothing, the built in growth to last year’s MFP would have cost the state an additional $25 million.

However, what BESE did do was to make a series of adjustments, some of which were not made by any other state agency, resulting in a reduction in general fund appropriations of more than $10 million. First, adjustments were made for normal growth in the formula (this is similar to the idea of a continuation budget for other agencies), increased funds for the lab schools, funds going to Subgrantee Assistance for Charter Schools, and a drop in statewide student enrollment. Then adjustments were made for an increase in insurance costs and a reduction in retirement costs. The first set of adjustments alone would have increased MFP costs by approximately $11 million. The board, however, agreed to make adjustments for changing insurance and retirement costs; an adjustment not made anywhere else in the state’s budget. This adjustment, by itself, reduced the MFP costs by approximately $23 million. The net result is a reduction to total MFP appropriations.

There are several issues concerning the second set of adjustments. First of all, the MFP does not calculate costs for local school districts. It determines how much money goes to a district based on student count. Making an adjustment to a revenue generating formula based on an expected change in expenditures is questionable. Secondly, while the state was happy to reduce MFP appropriations based on reduced cost expectations, it is unclear as to whether additional funds would be provided should these costs increase. It is believed that most of these issues could be addressed with the development of a new formula tied to the recommendations of the School Finance Commission.

The following chart is provided to show an historical perspective on the numbers of administrators and teachers, teacher salaries relative to the nation and the SREB, and student membership in local school districts.