When it comes to money for schools, what’s fair? Should all children receive basically the same public education opportunities regardless of whether they live in a rich or poor Georgia county?
Leaders speak of equal opportunity for rich and poor systems when it comes to public education. But putting such ideals into practical budgetary solutions isn’t a simple matter.
Wide gaps remain.
For instance, while some metro-area public schools spotlight kids on a jumbotron when they make a tackle on Friday nights, some of the state’s poorest school systems struggle to keep the lights on in the hallways or to have functioning water fountains. While some high schools offer a wide variety of advanced placement (AP) courses, others struggle to offer any AP opportunities. While some systems flirt with $1 billion in sales taxes over five years, others rely on pennies to trickle in from the one Dollar General in the area and can’t replace dilapidated buildings.
Madison County is on the low end of the state’s totem pole, ranking 160th out of Georgia’s 180 school systems in property wealth. And as state funding has dwindled in recent years, so has the system’s school calendar. Kids are in school 10 fewer days this year than normal as leaders try to balance the books.
With those strains in mind, Madison County educators stood at the podium in the county school board meeting room recently to voice their concerns about their system’s financial state. They said kids are getting shortchanged. They said teachers and other staff members feel the pinch of two weeks without pay.
Local superintendent Allen McCannon said he feels legislators heard what they said and relayed the concerns to Gov. Nathan Deal, who recently proposed an increase for education funding in his 2014 budget. McCannon wrote to county staff members recently regarding Deal’s proposal.
“I am excited to say that this is the first year in the last six or seven years that there is a real focus on restoring lost educational funding,” wrote McCannon in a letter to Madison County staff members. “He (Deal) proposed restoring funding in various areas, but we do not know the impact on our system at this time. Governor Deal is proposing a restoration of a portion of the austerity cuts for each school system.”
McCannon said the system has been told that the county can expect to receive “30 percent of its austerity cut for fiscal year 2014,” which would equal $1.1 million in additional revenue. “Austerity cuts” refer to the shortfall of the state’s actual funding for systems compared to what its own formula determines is adequate.
McCannon noted that the bump in money is “still not funding” $2.6 million of what the county should receive. He also said the school system saved about $1.8 million by cutting the school calendar 10 days this year. But another $1.1 million won’t necessarily cover the revenue shortfall, meaning there could be more furlough days in the next school year.
While McCannon thanked the governor for proposing more money for education this year, he said funding for rural systems in Georgia, such as Madison County, is a big issue that needs long-term legislative attention.
He said he meets with other rural superintendents and hears horror stories of lights off in hallways between classes and other necessities going unfunded.
“You go listen to this stuff and it makes you feel blessed (to be in Madison County),” said McCannon “But you realize, if these trends continue, that could be us one day.”
One primary head-scratcher for low-wealth school systems is the distribution of state money that many see as Georgia’s method of equalizing wealthy and poor districts. In the mid 1980s, the state government established the “equalization fund” to help school systems with a low property tax base.
But the term “equalization” seems anything but equal to many Georgia systems.
For instance, James Salzer in a 2012 article for The Atlanta Journal Constitution (AJC) about the equalization fund interviewed leaders from Hancock County, which doesn’t receive any equalization money, despite having a median household income of $22,000, compared to the state average of $49,000, according to Census data.
“It makes no sense to me,” said Rep. Sistie Hudson, D-Sparta, to the AJC. “My little poor counties are not low-wealth? Forty-seven percent of our children live in poverty and we’re not low-wealth? You’ve got to be kidding me.”
Last year, Madison County saw its equalization allotment drop by $2 million to $3.7 million. That cut led to a reduction in the school year by 10 days.
Meanwhile, Gwinnett County saw its equalization funding rise from $43.2 million to $65.6 million.
McCannon echoes the sentiment of several local educators who recently addressed legislators on equalization funding.
“Gwinnett County is a known county in the nation and I’m not picking on Gwinnett, but they’re known and you have something where we’re sending money and they’re getting more money in a thing called ‘equalization,’” said McCannon. “When you have a low-wealth district that’s losing and you have a major metro county with a billion dollars every five years in sales tax revenue and they’re getting more, it doesn’t seem right.”
Gwinnett County has a full-time lobbyist in the Gold Dome. And McCannon said he’d like to see a rural caucus in Georgia, a collection of rural educators and administrators, that stands up for funding for low-wealth systems outside the metro area.
Madison County assistant superintendent Bonnie Knight said one legislative change that would significantly help rural systems would be a minimum allotment for the poorest 25 percent of systems.
“If they would set the low-wealth counties at some base line so we know we can count on at least that much,” said Knight.
As it stands, Madison County administrators can’t get a good read on how much state money they’ll have until property values from around the state are factored into the equalization formula. That means that a big dip in property values in the Atlanta area mean millions less in revenue for Madison County and other low-wealth systems, which is exactly what happened in recent years after the housing crash. While Madison County property values dipped some, they didn’t fall as fast as metro counties, which had highly inflated values due to the housing boom. Consequently, the low-income, rural systems had to give up a lot in “equalization” money to the more well-to-do areas.
Lou Byars, director of financial review for the Georgia Department of Education, is very familiar with the complaints surrounding the “equalization fund.” He said it’s important for people to realize that the function of the fund isn’t to level the playing field between low-income and high-income counties — or between areas of poverty and affluence. Instead, he said it’s to provide balance between systems that have low local tax revenue potential with those that have significant local revenue abilities.
“So, if you have two school systems that both have 10,000 students, let’s say,” said Byars. “And one has a million dollars in property value they can tax, and another has $10 million, the one with $10 million can get more local revenue than the one with a million, especially per student. Equalization is trying to equalize districts that just don’t have the capability of getting local money and equalizing that local fund.”
He gave an example of Gwinnett and Fulton counties. He pointed out that they are roughly equal in terms of property wealth, but Gwinnett has about 170,000 students compared to roughly 100,000 in Fulton County. This means Gwinnett gets equalization funding to help narrow the gap of property value it can spread per student.
“Fulton only has to spread it (its property tax revenues) among 100,000 students,” said Byars. “So equalization is trying to equalize that ability. And that’s true whether it’s a small district with 100 students or a large one like Gwinnett.”
When asked for a brief summary of how equalization is calculated, Byars chuckles and admits that “equalization” is a “very involved formula.”
“The formula basically is, you look at how much property value they have,” said Byars. “You look at how many students. We look at FTE, how many weighted FTE we have. Basically in laymen’s terms, how many students they have, but it’s not really students. And then we divide one in the other and we rank the districts throughout the state.”
Byars said the state used to rank all the systems in terms of property wealth per student from one to 180, then they would “equalize” down to the 75th percentile, meaning the top 45 school systems wouldn’t receive equalization money. But the bottom 135 systems would receive funding to try to equalize them with the 46th most wealthy system in the state.
Now, he said all the systems are averaged together and systems are brought in line with that average. He said this helps the state maintain a level total “equalization” allotment, which is roughly $500 million annually, but it actually can introduce volatility for individual school systems. He recognized that a number of systems took a hard blow after the housing crash.
“In Gwinnett and the metro districts, they (property values) were dropping rapidly,” said Byars. “So if you’re not dropping as fast as the average is dropping, you could lose funds.”
Byars said he sees there are gaps between affluent and poor areas in terms of education funding.
“It (the gap) comes up in the discussion when you’re talking about equalization, because you’re talking about wealth of districts,” he said. “People associate that with income level. So that conversation comes up. But equalization wasn’t designed for that. Now, I guess they could try to adapt it. I think the better thing would be to look at it as a separate item. But that’s just me personally.”
Byars said the state could eventually include income levels in its education funding formulas. He said the federal government already provides “Title I” funding for poor systems, though he acknowledged that there are a number of restrictions on how that money can be used.
He also said the state might eventually consider addressing the wide gap in sales tax wealth between various systems. Sales taxes aren’t considered in the “equalization fund.”
On a related note, legislation is currently being considered by the state General Assembly to allow school systems to use up to half of their sales tax money for maintenance and operation expenses. Right now, those funds are used for facilities.
While such a law would be great for Gwinnett County, which could add roughly $100 million to its annual budget, Madison County and many other systems would see no gain from the move. Madison County is funding its high school expansion with bonds that will be paid back by the next two special purpose local option sales taxes — provided voters again say “Yes.” McCannon said the school board approved that measure instead of levying a bond millage rate on property owners to pay for the construction. He said numerous counties have gone that route to fund construction projects and thus wouldn’t have anything to gain from the bill.
Meanwhile, McCannon fears that giving larger, wealthier counties even more money in their budgets will lead to higher teachers’ pay in those districts and pull even more quality teachers away from poorer systems, like Madison County.
Consequently, the superintendent said the current legislation under consideration could exacerbate inequity problems.
While Byars said he feels addressing inequities between Georgia systems is something that might be addressed eventually, he feels the first thing all systems need is the restoration of funds lost through austerity measures in recent years.
“Yes, those are two things to address: there’s not really specific state funding that makes up that difference between a low-income versus a high-income area,” said Byars. “And there’s not a lot to make up the difference with sales tax, except there is some facilities fund money you can get from the state. But the first thing I think — and the governor’s talked about and put in his budget — that we have to address is the austerity. Let’s fund the formula first and then talk about these other things. I think that’s going to help out every district, from Gwinnett to Hancock to Taliaferro.”
Bridging the gap between rich and poor school systems: a look at state finances and the ‘equalization fund’
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