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Lobbyist Money Help  

Hold harmless schools districts could lose if schools win lawsuit

October 30, 2003
By: Drew Bratcher
State Capital Bureau

JEFFERSON CITY -Not all Missouri school districts have rallied around the idea of suing the state for not fully funding public education. School officials from the wealthiest districts in Missouri fear that a successful suit could leave their districts hurting for funds.

Some superintendents of hold harmless school districts caution their boards of education not to become party to the suit.

"I just can't recommend that they jump on a bandwagon that might actually inflict more harm than good," said Mark Bowles, a leader of the Hold Harmless Coalition and the superintendent for Cape Girardeau schools.

Hold harmless districts are protected from losing money under the current funding system, and guaranteed the same amount of money they received per-pupil in the 1992-93 school year -- the year the funding system changed.

Two charges are at issue in the planned suit. One is that the state is not funding education properly--a charge school officials call adequacy of funding. The other charge is that the formula by which the state funds are distributed leads to unequal levels of educational quality across the state--a charge school officials call equity.

Hold harmless districts suffer smaller budget cuts when state funding to education drops. For instance, the Columbia school district received more than $3 million less in state funding for the 2003-04 school year due to budget withholdings. Whereas Cape Girardeau, a hold harmless district, received cuts of around $50,000.

By a provision in the Outstanding Schools Act, the bill that created the current school funding system, districts essentially are protected from getting less state funding than they did in the 1992-93 budget year.

That protection, called the "hold harmless clause," was adopted in order to win support from legislators representing districts with high economic growth.

The Cape Girardeau district received $910.25 per student from the state this year, or around the same amount they received in the '92-'93 school year. However, without the hold harmless provision, Cape Girardeau schools would receive less than half of that amount, $383.94 per student.

Gerri Ogle, department of education's associate commissioner for financial services, said that the reason why hold harmless districts are at odds with the pending suit is because they know that the courts will be looking at the issue of equity.

"The hold harmless provision is not fair from an equity perspective," Ogle said. "To be hold harmless is good for these districts, but bad for other districts because the state is giving them money that would otherwise go to districts that need it more."

Since the Outstanding Schools Act prevents significant cuts in state funding for those "hold harmless" districts, the only way to give more money to districts with declining economic conditions such as Mexico, Missouri, a district dealing with the closing of two of its major sources of local wealth, is to boost the total amount of state funds appropriated by the legislature -- an increase that has become financially impossible given the state's overall stagnant economic growth.

The number of hold harmless districts has increased from 10 in 1993 to more than 70 this year. There are no hold harmless districts in Boone County.

"The more the formula is underfunded ... the more schools are going to fall into the hold harmless category," said Denise Pierce, director of school finance for the Missouri Department of Education.

While districts planning a court challenge point to the need of legal action to spur the legislature into action fixing school funding, hold harmless schools maintain that the best avenue for action is through the legislative process.

"I think legislatively we have a better chance to come up with compromises that will benefit everybody than we will through anything that's happened court ordered," Bowles said. "I challenge anyone to find me a successful court ordered resolution to school finances anywhere."

Richard McIntosh, a lobbyist for hold harmless districts said that these districts are not a part of the lawsuit because by and large he has not heard that they are going to talk about both equity and adequacy.

"The state has increased standards over the past 10 to 11 years and can unaccredit our schools, but cannot send us dollars to achieve those standards," McIntosh said. "The only way we can achieve those standards is by asking the local property owners to continue to increase their taxes."

An audit conducted by the state auditor found that for the 2002 school year, hold harmless districts received additional revenue of $244 million while schools on the formula faced withholdings.

"In this economic time, being hold harmless is a very good thing," said Pierce.

But McIntosh said hold harmless schools are still facing budget shortfalls. He said that they've suffered from near static levels of state funding since 1993.

"I do not see how that situation is good for any of the 200,000 plus students in hold harmless schools," McIntosh said.

Bruce Johnson, superintendent Stanberry R-II district, said he doesn't feel sorry for hold harmless districts.

"I have no sympathy for hold harmless schools in the last two years because they have been exempt from the majority of the cuts when schools that were not hold harmless were given hundreds of thousands of dollars of cuts," Johnson said.

Attorney Alex Bartlett said that he hopes hold harmless districts will not fight the suit because school districts all face the same issue --lack of funding.

"Many hold harmless districts are just hold harmless on paper," Bartlett said.

McIntosh said that hold harmless districts might intervene in the lawsuit, while continuing to push for an increase in the amount of funding given to hold harmless schools.