School Finance Partnership

Programs Outside of Per Pupil: What Other States Are Doing

Mary Wickersham, Colorado Children’s Campaign

What is a categorical?

• Funding delivered outside of per pupil funding;

• Particular students or programs;

• Required to be spent in specified ways;

Colorado’s current categoricals

(source: legislative council staff) FY12 FY11 Change % Change

Children with Disabilities (Special Education)

$129,797,797 $127,362,125 $2,435,672 1.9%

English Language Proficiency $13,085,778 $12,396,353 $689,425 5.3%

Transportation $50,378,042 $49,541,821 $836,221 1.7%

Gifted and Talented $9,201,106 $9,059,625 $141,481 1.5%

Small Attendance Centers $959,379 $959,379 $0 0.0%

Expelled and At-Risk Student Services

$7,493,560 $7,493,560 $0 0.0%

Vocational Education $23,584,498 $23,296,124 $288,374 1.2%

Comprehensive Health Education

$1,005,396 $1,005,396 $0 0.0%

Total $235,505,556 $231,114,383 $4,391,173 1.9%

Other State Programs

Capital Con-struction/ Facili-

ties; $35.0

Facility Schools; $14.5

School for the Deaf/ Blind; $11.0

Hold-harmless Full-day K; $6.9

Counselor Corps; $5.0

Read-to-Achieve; $4.4

Nutrition; $4.2 Other; $3.0

Total for FY 11-12 = $84.1 million

Source: Joint Budget Committee Staff

Categorical funding

•All of state categorical funding is state $$, there is no local share.

•Except that none of the categorical programs provides 100% of the costs associated with the services or students identified.

•On average unreimbursed categorical programs accounted for about 17% of total district SFA revenue (nearly 30% in Denver)

Substantial underfunding of some categoricals

•Special Education: The state and federal government collectively provide about 35% of special education funding.▫ Unreimbursed Special Ed. costs can amount to 16% of a district’s school finance revenue.

•Transportation: Just under 25% of school district expenditures on transportation are covered by the state.▫Unreimbursed transportation costs can amount to 8% of a district’s school finance revenue.

•ELPA: On a per student basis, students that do not speak or comprehend English receive an additional $182, while those with better skills receive as little as $17.▫For a district like Denver, total ELPA funding ($1.7M) covers about 2% of the expenditures for those students/programs.

The use of categorical funding in other states

•49 states use categorical funding as a mechanism to direct additional funds to targeted students and schools.

•Ohio reported 105 separate categorical programs. In contrast, Alaska, North Dakota, Texas, and Wyoming each reported only 2.

•Colorado ranks 34th in dollar allocation for categorical programs per capita.

Advantages of using categorical funding

• Some programs do not easily lend themselves to per pupil distribution▫ Transportation: the cost per pupil for transportation varies from over

$3800 per pupil (Agate) to a low of less than $150 per pupil (Estes Park).▫ Capital: on a per pupil basis local capital capacity varies 21,000%.

• As an equity measure, programs for at risk students are sometimes created as categoricals to ensure the $$ do get spent on those students.

• Often state educational priorities get created as categoricals to ensure $$ be used in a specific way.▫ Reduced class size in Florida.▫ After school programs in California.▫ Counselor Corps here in Colorado▫ Federal funding examples (outside of formula distribution): TIF, I3,

Turnaround grants

Disadvantages of using categorical funding

•Because funding is not tied to students, programs are less likely to see regular increases and programs are more likely to be underfunded.

•Because of funding uncertainty, problems with fiscal sustainability of programs.

• In general, because categorical programs are created separately, they are more easily eliminated.

•Specific spending constraints impede flexibility and innovation.

Capital funding in Colorado: BEST•About half of the state’s school districts to not have the

total local capacity to build a single school.•Dedicated funding stream from the School Land Trust;•Grant-based distribution based on need;• Local matching amount requirement is means-tested;•Statewide needs assessment identified $17.9 billion in

unmet needs and the current program is on target to deliver $1 billion before leverage capacity runs out.

•Has created/saved nearly 9000 jobs to date.

New development of incentive/reward categorical programs

•Because of the nature of performance-based incentives and/or rewards, these programs would most easily designed as categorical programs (instead of built into the formula).▫They are not automatically delivered;▫They do not go to each student/district equally.