School Finance Initiatives in Georgia

Questions about the adequacy and equity of Georgia’s funding system have increased as the state budget has tightened.  Defining adequacy requires that we first determine what an adequate education means in terms of standards, teachers, and curriculum.  Then we must determine what the appropriate funding level must be to provide that.  Equity is a consideration of how resources are distributed.  Does the funding mechanism provide the opportunity for all students to receive a quality education?

There are currently two initiatives in the state addressing this issue. 

Governor's Education Finance Task Force
In February 2004, Governor Perdue appointed a task force to review the QBE funding formula.  When the formula was created in 1985, the law included a provision that required the Governor “to appoint a task force every three years for the purposes of reviewing the effectiveness of existing program weights and recommending to the General Assembly any changes needed” (O.C.G.A. § 20-2-161).  State Board member Dean Alford is chairing the task force. 

The first meeting was held in August.  Remarks by Governor Sonny Perdue were familiar to those who have attended GSCI’s “Making Accountability Count” workshop.  Gov. Perdue stated we need to stop talk about funding and talk about investing in education excellence.  He went on to say we should tie every dollar spent to student achievement.  The Governor charged the task force with determining how to bolster the QBE formula in the immediate future and with making recommendations for the best possible formula for education excellence. 

The formula should have three characteristics:  it should be a transparent, open, inclusive process and formula; it should be simple; it should create parity for all children in Georgia to have access to an excellent education.  The proposed formula will be referred to as Investing in Educational Excellence or IE2.  Mr. Alford proposed a four step process:

1. Community conversations on education excellence.  Small groups will be set up around the state for this step.
   
2. Define the benchmarks and requirements to achieve excellence.  What are the best practices?
   
3. What is the cost for providing these requirements?  An outside expert will build a model to determine the cost.  It will not be based on studying expenditures.
   
4. Determine what the multiples are for strategic resources needed for special categories of students.  After identifying strategic areas for a targeted focus, they will define the investment multiple needed to achieve the desired effect.

The task force was divided into five committees:

• Community Conversation on Education Excellence
• Requirements/Best Practices
• Cost Model
• Strategic Multiples
• QBE Review

Mr. Alford estimated the task force’s work will take 18 – 24 months.  The next meeting was tentatively set for the end of October.

Consortium for Adequate School Funding in Georgia
The second initiative is the Consortium for Adequate School Funding in Georgia.  As the title of the group states, the purpose is to seek adequate funding for Georgia’s schools.  Fifty-four school systems have joined the group since its inception in 2001.  Although this group was started by rural systems, the Consortium has tried to avoid having the debate center on rural vs. metro systems.  The question is not who should give the money to whom, but how much money should be provided for the state to meet its Constitutional obligation. The Consortium filed suit September 14, 2004, in Fulton County Superior Court.  Following is a summary of the issues involved.

1. Georgia's K-12 schools are funded through a combination of State and local funds, with the State paying for about 60% of the total cost for general operations. Nearly all of the funds from the Federal government are restricted to specific programs.
   
   
2. The QBE Formula is supposed to represent the cost of providing a basic program for all students. The funds which each system “earns” through the QBE Formula include a required local share equal to 5 mills of property taxes. Each system contributes additional funds not only to supplement the basic program through higher local salaries and expanded programs but also to cover deficits in the funding of the basic program.
   
   
3. Nearly all of the new funds from the State for K-12 education in the last decade have been used to raise the State minimum salary schedule for teachers, to cover the increased costs related to enrolment, and to construct additional classrooms. Local systems have to cover the remaining deficits. Meanwhile, the limits on class sizes have been tightened significantly, and new requirements have been added.
   
   
4. The under-funding of the QBE Act affects some systems more than others, since the systems without a large amount of commercial property per student do not have the same ability to raise the needed funds locally, but all systems are harmed.
   
   
5. Even with the last-minute reduction in the proposed cuts for FY 2005, the cumulative cuts in QBE Earnings for all local systems in the last three years come to more than
   
   
   1. $400 million in total,
   2. $270 per student, and
   3. $6,000 per classroom.
      
      
6. In addition, local systems have to compensate for
   
   
   1. the deficits in the QBE Formula that existed in FY 2002 (at least $500 million),
   2. inflation since FY 2002 (at least $500 million in the State share of all costs), and
   3. the cost of new State and Federal requirements.
      
      
7. Taken together, these factors imply that the total funding by the State of $5.6 billion in FY 2005 is at least $1.4 billion or 20% less than what is needed to meet the most basic State standards. The under-funding of the basic program by the State has forced local systems to reduce supplemental programs and increase local property taxes.
   
   
8. An improving economy will not be enough to correct this problem, especially since the budget for FY 2005 budget already anticipates a revenue growth of over 6% for the entire year. There are also competing demands on the use of any additional revenues.
   
   
9. Although the source of revenues is up to the General Assembly, it is clear that the current tax structure does not generate enough funds to meet the State’s obligations. However, any new State taxes would be offset to some extent by reductions in local property taxes.

Additional Resources

Governor's Education Finance Task Force Members

School Funding Made Simple

Consortium for Adequate School Funding in Georgia