K-12 Spending - Where Does the Money Go?

An Illustration from the Highline School District

In this year's election, one of the main issues in both state and federal races is education: class size; competitive salaries for teachers; getting more money to the classroom; etc. But how are current education allocations spent?

In the 1998-99 school year, our state spent an average $7,933 per child on education. Yet, only an average of $2,812 was spent on what state education officials call "basic education." It is a grave disservice to teachers and students to under-allocate education dollars for the "meat and potatoes" part of a child's education. So how is the rest of the K-12 money spent?

In 1991, Governor Gardner's budget director, Len McComb stated that there is no way to know for sure how the money is being spent. "It is not clear where the money goes once it gets to the districts." Upon election, Gardner said that finding out where the K-12 money was going would be one of the tasks of a special blue-ribbon commission. "We have to get answers as to where the money is going," Gardner said. "Apparently, it's not getting back to the classroom in every case because we're hearing that from the teachers." Governor Gary Locke, at that time the Chair of the House Appropriations Committee, said the legislature would demand more accountability from school districts in the future. "We've wised up in the last few years," Locke said.

Apparently, neither the governor's office nor the legislature has "wised up" because in the 2000 supplemental budget, the legislature again provided millions of dollars in additional funding to K-12 before finding out if previous allocations were well spent. In allocating this new money, the legislature did not make a way to track the money to see that it is spent by school districts for its intended purpose. History tells us that legislative intent for the allocation will not be viewed as an expenditure directive and it will be close to impossible to find out later how the money was spent.

So who is responsible to fix the very real problem of too few dollars going to our classrooms?

Perhaps the legislature should mandate the programs for which the money is to be spent. On the other hand, maybe local school districts should take the responsibility as they move money from one pot to another. Is it a reasonable expectation that a school district should spend its money first on the needs of the students in the individual classrooms? Or should the legislature and school districts just keep asking taxpayers for more money?

To illustrate what happens to K-12 money when it goes to the school district, EFF analyzed financial data from several school districts. We used three school district financial reporting forms, easily accessible from the Office of the Superintendent of Public Instruction's website. In our analysis, EFF made the assumptions that:

• Money allocated by the state legislature or the federal government for a specific purpose (i.e. Basic Education) is to be spent on that program; and
• If a program spends more than the money allocated to it, the only place money can come from to make up for this shortage is a levy or excess revenues from another program.

Example: Highline School District

This is a district struggling with high dropout rates and low student test scores. Notwithstanding these challenges, in 1998-99 the district underspent its Basic Education revenue by $1.7 million while overspending for administration by $17.4 million!

When the Highline School Board met to decide on the district's 1998-99 budget, it planned to receive $115.3 million in revenues and to spend $116.1 million during the school year. The school district actually received $113.7 million dollars and spent $114.9 million.

Highline spent $23.8 million on what the district calls Support Services (these are mostly administration expenditures). In addition to Support Services, another $3,511,697 in administrative costs are scattered among other programs.

During the 1998-99 school year, Highline received part of its $113.7 million revenue from a $20 million levy. If the school district spent the money the legislature allocated for basic education on basic education, then none of the $20 million levy was spent on the basic education program. The district actually took $1.7 million of basic education revenue to spend among other programs. Administrative programs' revenue fell short of their expenditures before the levy and ended up using $17.4 million out of the $20 million local levy!

Following is a financial summary of Highline's $20 million special levy:

		Budgeted Actually Spent
Basic Education	-$85,330	-$1.7 million
Special Education	$2.8 million	$3.3 million
Skills Center	$2.1 million	$1.8 million
Other programs	-$1.1 million	-$.6 million
District-Wide and Instruction Support (administration)	$14.9 million	$17.4 million
Pupil Transportation	$2.0 million	$.5 million

The negative numbers in the above table represent programs that received more money than was budgeted or spent. These are programs that the school district might have borrowed funds from to make up for shortages elsewhere. The positive numbers in the above table represent funds either from the levy or transferred from other programs to make up for cost overruns. This table illustrates administration costs taking up a large portion of the school district's levy.

Part of this problem is caused by the legislature's artificial and unrealistic cap on administrative employees' salaries. This leaves school districts scraping together the money to pay roughly half of its administrators' salaries. We will explore potential solutions for this in later policy briefs.

Should the legislature mandate its intent for every K-12 allocation? Is this micro-management? Or, should school districts have flexibility in exchange for no-nonsense, objective student performance standards?

We prefer the latter. But until such time as this ambiguity and lack of responsibility is solved, nobody wins. Educators, parents and students will continue to be frustrated and taxpayers will continue to foot the increasing bill.

Watch for future information about other school districts.

Prepared by Amanda Jarrett, Research Analyst (360) 956-3482 or ajarrett@effwa.org

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org