Susan Pendergrass speaks with Marty Lueken, director of EdChoice’s Fiscal Research and Education Center, about the 2025 Fiscal Fact Book. They discuss how much is really spent per student, where the money comes from, why staffing has grown even as enrollment has declined, the fiscal impact of school choice programs, and more.

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Timestamps

00:00 Understanding School Funding in the U.S.
10:03 The Impact of School Choice Programs
20:30 Challenges and Misconceptions in School Funding

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Missouri anticipated around $80 million from these frozen programs. The Department of Education’s budget summary suggests the funding for many of these frozen programs will be consolidated and given as a lump sum under the K-12 Simplified Funding Program.

This fund seems to be designed like a block grant, as it would allow states to spend money on previously allowable activities (such as after-school programs) but with fewer administrative regulations. This model is not unprecedented, as Temporary Assistance for Needy Families (TANF) is currently funded using a block grant, and there have been discussions about switching Medicaid to a block grant structure as well.

The department’s actions could signal that federal funding to states may continue to decrease, and there may be fewer strings attached to federal funding. That would mean that states, including Missouri, will have to decide which programs that rely on federal funding will be sustained, and to what extent.

Evaluating Deeper Budget Decisions

Missouri likely will need to make some hard budget decisions in the coming years. Prior to COVID, federal dollars comprised about 14 percent of Missouri’s total revenue for K-12 education. In 2021–22, an additional $1 billion in federal dollars ballooned that percentage to 28. In 2022–23, the federal share fell slightly to 25 percent. In my colleague Elias Tsapelas’ paper “Saving Federalism,” he notes that the Department of Elementary and Secondary Education’s (DESE) inflation-adjusted federal spending was roughly 45% higher in fiscal year 2022 than fiscal year 2011.

This extra money is fizzling out as the pandemic spending evaporates and the Trump Administration continues to evaluate longstanding programs and rules. The changes at the federal level should incentivize Missouri to rightsize the budget by eliminating unnecessary or unhelpful spending. Establishing a Missouri Office of Government Efficiency would be a good initial step.

Beyond that, Missouri will need to take a more proactive approach to funding specific education programs. Should we increase funding for after-school programs at the expense of a program to improve teacher effectiveness? Before the recent federal policy shift, Missouri was largely guided in these decisions by what we could get federal money for. Now, DESE and school districts will need to set their priorities.

Here’s to hoping Missouri can rise to the challenge and prioritize programs with the greatest potential to benefit students.

The post A Freeze in July? appeared first on Show-Me Institute.

His response to a laundry list of budget items that were earmarked for a particular school district was:

Given the State’s historic investments in education this year, it is incumbent upon local school districts to prioritize the use of their resources for this type of programming as they deem appropriate and necessary.

In other words, the Foundation Formula is intended to make sure that all districts have and are able to spend an amount that is “adequate” for the successful education of their students. The Foundation Formula funds should cover repairing an outdoor track in the Houston R-1 school district, not earmarks.

Some programs, such as the St. Louis reading literacy program or Kansas City for K-12 career literacy resources, were vetoed entirely because the budget contains “multiple other areas of funding for similar programs.”

Increases for programs such as the Teacher Recruitment and Retention Scholarships or the Workforce Diploma Program were removed. Perhaps the governor wants to see evaluations of the impact of these programs first.

All in all, the governor, along with his staff, appears to have finally taken a close look at the education items in the budget before signing it. Perhaps the next fiscal year, when the governor is involved from the beginning, will usher in a new era of responsibility and accountability for the spending of our hard-earned dollars.

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One such item is DESE requesting a much higher than usual increase in the Foundation Formula. The Foundation Formula is the principal vehicle for distributing state general revenue to school districts in a way that (theoretically) reflects student needs and (theoretically) balances resources between poor and wealthy districts. The total Foundation Formula funding has been creeping up from about $3.4 billion a few years ago to $3.8 billion last year. For the next fiscal year, DESE would like to keep the $3.8 billion and add another $500 million, which is three or four times the typical increase.

Why the big increase? Three years ago, DESE asked for an increase in the base amount per student, in part because enrollment was declining. (For reference, the number of students being funded by this “student-based formula” has decreased by over 20,000 students in the last five years). Apparently, having the formula vary with the number of students is only okay if that number is going up. In fact, the increase in the base amount accounts for over $300 million of the request.

Secondly, a bill was passed last year that made several changes to education programs at the state level. The estimated cost of all of those changes was “up to” $228 million in FY 2026. But that includes changes in a laundry list of budget items—not just the Foundation Formula.

Here are what the fiscal effects directly associated with the Foundation Formula were calculated to be for FY 2026 by the Committee on Legislative Research’s Oversight Division. Just over $1.6 million was estimated for changes to how virtual students are counted. A change in how students are counted—from being based entirely on attendance to being based 90 percent on attendance and 10 percent on enrollment—was expected to cost $41 million in FY 2026. A change to how preschool students are counted is expected to cost an additional $61 million in FY 2026. Finally, incentives that increase the Foundation Formula for districts that keep a five-day school week, instead of switching to a four-day school week, are projected to cost $40 million in FY 2026.

So why is the legislature being asked for an additional $500 million? It seems that DESE will not accept districts receiving less money for fewer students.

The post $10 Billion Is a Lot of Money appeared first on Show-Me Institute.

Classifying Missouri Public School Spending

The Department of Elementary and Secondary Education (DESE) classifies spending as:

• Instructional
• Student support
• Non-instructional/student support

Instructional costs include salaries and benefits for teachers, aides, and specialists. It also covers instructional materials (paper, microscopes, software, paint brushes, sports gear, etc.), professional development, and standardized testing materials.

Student support services cover (but are not limited to) salaries and benefits for counselors, psychologists, social workers, nurses, behavioral specialists, and college-preparatory specialists. It also covers costs for mental health services, plus behavior and outreach programs. Administrative, transportation, and food service costs are also classified under this category.

Non-instructional/student support costs in Missouri cover a wide variety of services, such as early childhood instruction, afterschool programs, adult education, and purchases with bonds.

The figures below show how costs have shifted in Missouri over the last decade, as well as changes in staff numbers.

Figure 1: Share of Total Expenditures in Missouri Public Schools by Type, 2013–2023

Figure 2: Number of Missouri Public School Students and Teachers

Figure 3: Total Number of Staff: Student Support Services

Source: Department of Elementary and Secondary Education (DESE)

The 2018–19 school year marked the first large decrease in the share of instructional costs in total expenditures, and it has decreased further since then. If the trend continues, spending on student support services in Missouri may soon surpass instructional spending.

Figure 1 is even more fascinating when considering that the total number of teachers has continued to rise in Missouri, with student enrollment decreasing in the same time period. Even with 26,000 fewer students than in 2012–13, there are around 4,000 more Missouri teachers and 2,000 more student support staff (as of 2022–2023, the most recent data).

The trends emerging from Missouri’s public school spending raise important questions about financial priorities and the need for increased educational transparency. Are funds being used to improve classroom instruction and foster better learning environments? Once DESE releases financial data for the 2023-2024 school year, it will be interesting to see whether this downward trend continues.

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-The 20th anniversary of the Show-Me Institute
-Show-Me Institute analysts predicting the future
-Missouri’s broken system for funding public education
-An opportunity to join the burgeoning nuclear energy renaissance in the United States
-Some good news and bad news on property taxes
-A Taxpayer Bill of Rights for Missouri

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In this episode, Susan Pendergrass speaks with Stephane Lavertu, Professor at the John Glenn College of Public Affairs at Ohio State University and Senior Research Fellow at the Thomas B. Fordham Institute, about the so-called “fiscal cliff” in public education funding. They discuss the idea that returning to pre-pandemic funding levels constitutes a crisis, the implications of declining student enrollment, whether maintaining or increasing current funding levels is truly necessary, and more.

Stéphane Lavertu’s teaching and research focus on public administration, political economy, public policy analysis and evaluation, and education policy and governance.

He has a doctorate in political science from the University of Wisconsin, a master’s degree in education from Stanford University, and a bachelor’s degree in political science from The Ohio State University.

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We can’t blame the COVID-19 pandemic for this outlook. These projections are based on a combination of factors, but the biggest driver of the downward trend is declining birth rates. Birthrates took a hit during the Great Recession in 2008 and have never recovered.

This graph shows the percent change in enrollment in public schools in Missouri between 2013 and 2023. Each dot is a school district. Some districts have made gains, but they are mostly small ones (with the exception of Grandview, which has increased enrollment in its virtual program). Most districts (366 out of 517) in the state are declining.

What this means is that we need to begin to reframe our thinking on public education spending. When we are serving fewer students, should we always expect to spend more? Is there a way to be smarter about what we spend and better target spending to the students with the most needs? Do we need to start having conversations about rigid teacher contracts and pension commitments? These are questions Missouri policymakers ought to be asking themselves.

The post An Undeniable Trend appeared first on Show-Me Institute.

Let’s look at this with a clear head. The chart below shows Missouri state and federal revenue for public education, adjusted for inflation, from before the pandemic through the recently approved budget for the 2024–25 school year. In 2017–18, there were just under 920,000 students in pre-K through 12th grade in Missouri and the state legislature appropriated a total of $5.8 million (2023 dollars) from the general revenue fund and other state funds. The federal government kicked in another $1.3 million, largely for the Title I program for low-income students, the IDEA program for students with disabilities, and the school lunch program. Last year, even after the recovery from the pandemic enrollment drops, we had about 25,000 fewer students—a trend that is expected to continue. Yet, the legislature’s appropriation was about $500 million more than seven years ago.

The cliff is in that green hump at the top of the graph. Like a hike in the mountains, if you do a lot of climbing, you’re going to have to descend at some point to get back to your car.

So, is it obvious that we need a special session to get a “mother of all supplemental budgets” for education? Only if you believe that spending can only ever go up. Missouri, like many states, has a persistent trend of declining enrollment. Is it reasonable to think that we can only ever consider level or increased spending on public education?

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This bill proposes some needed reforms that will improve the educational landscape for our students, families, and teachers. Students and families would have greater access to the schools that best suit their needs.

However, there are still a number of changes that could make SB 727 stronger. Below are links and summaries to three detailed breakdowns of different policies contained in the bill.

The Missouri Senate Moves on Education Choice

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• Eligibility for the MO Scholars program is dramatically expanded with SB 727.
  • Eligibility for MO Scholars is expanded outside Missouri’s 10 largest communities.
  • The low-income restriction line has been raised from 200% of the free or reduced-price lunch boundary to 300% (a yearly income of roughly $166,000 for a family of four).
• However, unlike the other states that have passed similar legislation, Missouri still would not provide any public funding for the scholarships under SB 727.
  • Funds still must be raised from scholarships through donations by individuals or corporations.
  • Missouri should provide public funding for the MO Scholars program
• Charter school expansion to Columbia is a good start, and hopefully more cities will be eligible in later years.

Now Is Not the Time to Tinker

Click here for the full article

• Missouri does not need to tinker around the margins of the current state foundation formula—we need to build a new one.
• SB 727 changes how students are counted for the state aid formula, from all attendance to half attendance and half enrollment. The bill acknowledges the chronic absenteeism crisis, but waters down the incentive to fix it.
• Even with the change, districts can still use the highest number of students from the past three .
• Missouri cannot redeem this funding formula with tinkering—we need to go back to the drawing board and mimic a student-oriented system like the system in Tennessee.

How Will the Four-Day School Week Progress in Light of SB 727

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• SB 727 creates a new voting procedure for parents to have a say in switching to a four-day school week (4dsw), but this only applies to the largest Missouri communities.
  • Only around 100 of the 553 school districts and charters will be subject to this new voting process. Smaller communities are excluded—they should not be.
  • Without open enrollment or greater educational choice policies, there will still be numerous families trapped in a 4dsw district despite preferring a different schedule.
• SB 727 re-establishes instructional day minimums in Missouri, but again, this only applies to the largest Missouri communities.
  • Large school districts will be required to have 169 instructional days if they operate on a five-day school week, and 142 days if they use a four-day school week.
  • Most districts and charters in the state—80 percent—are not subject to this requirement.
  • The threshold for this requirement is still rather low; most states require 180 instructional days.
• An aid bonus is provided for districts that have 169 instructional days. This provision appears to be an attempt to diminish the use of a 4dsw. However, this would probably be unsuccessful.
• A 1% aid bonus would equate to an average of $24,000 for districts that used a 4dsw in 2022–2023; a 2% bonus equals an average of $48,000.
  • This would be equivalent to around 0.6% of a 4dsw district’s total expenses, which is not a huge sum to incentivize a major schedule change.
• If the goal of this provision is to diminish the use of the 4dsw, it will probably be ineffective. Could money instead be spent on another program, such as providing public funding for the ESA program?
• For many small school districts in Missouri, it does not appear that SB 727 would create any significant incentive to reverse the trend of moving to a 4dsw.

The suggested changes outlined above could serve to make SB 727 stronger and improve the educational environment for students, parents, and teachers in Missouri.

The post Our Thoughts on SB 727 appeared first on Show-Me Institute.

My post got a bit of attention on X (formerly Twitter),  where many took issue with my claim. For the most part, the objections failed to engage with my argument but instead proved my point. As one person wrote: “My fundamental objection is that you cannot take away funding from public schools. Do what you want with your own non tax related money.” That was my point. School choice opponents do not care about rich people receiving public dollars; they object to allowing people the freedom to control those dollars.

X, for all its good traits, is not the place for a substantive back and forth. Nevertheless, this claim that school choice takes money from public schools deserves some scrutiny. There are two issues to consider. First, it is not necessarily true that a school choice program will take any money from public schools. In a system that funds schools based on a formula, such as Missouri’s foundation formula, public schools will only lose money when a student leaves. This leads me to my second point—schools that lose students should lose money.

Missouri’s schools are funded by a combination of local, state, and federal dollars. If a school choice program funds students already in private schools, as is often claimed by opponents, this would not change funding for the local public schools at all. The school district would continue to receive the funds as determined by the funding formula. The only thing that could possibly be argued is that the additional cost of paying for private school students may lead to constraints on the expansion of funding for public schools in the future, but that is a downstream argument.

The only way school choice takes money away from public schools is when a student switches from a public school to a private school. This could actually lead to an increase in per student revenue for the public school as they lose only the state (and possibly federal) funding for the student but retain local dollars. Setting that aside, it is true that the switch could lead to lower total revenue for the public school. Once again, however, this is not the real objection. Schools always lose money when a student leaves. If the student moves out of state or to another public school, the district will lose money. The district will even lose money if the student leaves to attend a public school that his or her parents pay for. Indeed, the dollar amount lost by the district is no different in any of these scenarios than it would be with a private school choice program (unless the program was designed to take local education dollars).

Opponents of school choice do not argue public schools should not lose dollars when a student leaves. They only object when the student is equipped with public dollars (or tax-deductible contributions to a scholarship fund). The takeaway is clear. Opponents of school choice are fundamentally opposed to freedom of choice in education. They do not believe individuals should be allowed to spend education dollars on the school of their choice.

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What SB 727 does is transition the counting of students from all attendance based to half attendance based and half enrollment based. That matters. If attendance is the method of counting students for state funding, districts are incentivized to get kids to school. If it is enrollment, districts are incentivized to register students. Right now we have a chronic absenteeism crisis in Missouri. We should not simply change the rules because we know that poor students are less likely to attend school.

Either way, it won’t really matter for many years because, even under the current system, districts can use the highest number of students from the past three years—meaning pre-pandemic attendance numbers are still being used this year. That is the most generous counting of students in a funding formula of any state in the nation. Many states use prior year numbers. A couple use the highest of the last two years, or an average of them. Only Missouri uses the highest of the last three years.

Most school districts rely on state funding. If it goes down, either local funding needs to go up or districts will need to reduce costs (likely meaning cutting staff). We have had declining enrollment for at least a decade. We now have declining attendance combined with declining enrollment. So, the effort to change the formula is not surprising.

Missouri needs to take its funding formula back to the drawing board and start over. Tennessee did so several years ago and created the Tennessee Investment in Student Achievement (TISA) formula. TISA is student centered, weighted to reflect student needs, and outcome based. It is considered the gold standard of funding formulas. Until we are ready to make a wholesale improvement, let’s not tinker around the edges of the foundation formula.

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This year’s proposals focus on raising the minimum salary that teachers can be paid. There are several bills in each legislative chamber (see links here, here, and here), but they all take a similar shape. They raise the minimum salary that districts can pay new teachers from $25,000 to $38,000 (some go higher), then raise the minimum higher over several years. To help school districts afford the increase, the bills create a state fund that districts can request reimbursement to pay 70% of the increased salaries. The legislature has already been appropriating this higher minimum salary for teachers via the budget for several years—these bills would enshrine this change into statute, but also increase salaries even more down the road.

As my colleagues have written previously, the discussion surrounding raising Missouri’s “minimum” teacher salary is somewhat misleading. School districts set teacher salaries, not the state— but the state does set a floor for pay that districts must remain above. You often hear people claim that Missouri has one of the lowest teachers’ pay “minimums” in the country, but that is not an accurate representation of how much teachers are actually being paid, as my colleague James Shuls has outlined. For example, the average teacher salary in the district I live in, Affton, is more than $62,000 per year.

My biggest concern is not with the idea of the state raising minimum teacher pay, but the way the proposals go about doing it, and the perverse incentives they would enshrine into state law. By offering to permanently subsidize teacher pay for some school districts, especially at a time when the state’s budgetary outlook is so uncertain, Missouri will begin sending state dollars to cover what have previously been almost entirely local decisions.

The primary way the state funds schools is through what’s called the foundation formula. Though the formula may not be perfect, it offers an equitable method to distribute state funds, adjusted by a variety of agreed-upon criteria. The proposals that our policymakers are now considering seek to create an outside-the-formula funding source for a specific purpose (minimum teacher salaries). The problem is that these funds would not be distributed in an equitable way. If enacted, these proposals will represent a significant redistribution of state funds to school districts whose voters have chosen not to raise their taxes sufficiently to pay their teachers more.

Since state fiscal year 2023 when Missouri began piloting this approach, it’s become clear that many school districts would jump at the chance of additional state funding. Governor Parson’s budget recommendation shows that approximately 65% of the state’s school districts have already taken advantage of the state salary grants. It’s not unrealistic to assume that if this program is made permanent, more districts will begin participating. Of course, it makes sense, because once the state begins offering subsidies for teacher salaries, why wouldn’t districts take advantage? Or, perhaps more importantly, why would districts ever choose to raise salaries with their own money if the state would pay for them instead?

None of this is to say that the way Missouri funds its schools is ideal, or that teachers shouldn’t be paid more. But whatever the general assembly decides to do, it’s important that policymakers think through the unintended consequences. Incentives matter—Missouri’s voters and school districts have demonstrated as much, and it’s time our policymakers started acting like it. There’s no getting around the fact that the proposal to raise minimum teacher pay, as currently drafted, is a bad idea for Missouri.

The post The Terrible, Horrible, No Good, Very Bad, Teacher Pay Plan appeared first on Show-Me Institute.

Using data from the National Center for Education Statistics (Table 211.50 and Table 236.55), I calculated how many students it took to pay for the average teacher’s salary. I calculated this by dividing the average salary by per–pupil operating expenditures. In 1960, it took 13.3 students to generate the equivalent amount of money as a teacher’s salary. That number dropped steadily over time. By 2000, it was 5.7, and in 2020 it was just 4.4 students.

You read that right: fewer than five students in a class is enough to cover a teacher’s salary today.

So where does all that money go? Ben Scafidi, an economist at Kennesaw State University, has some ideas. He noted that from 1950 to 2015, the number of administrators and other staff has increased by 709% nationally. In that same time period, the number of students went up 100% and the number of teachers went up 243%.

In more recent years, the number of students in Missouri has been declining. Yet the number of teachers is going up.

There is a very simple way to increase teacher pay, and it does not require any legislation. School districts can make different staffing decisions—hire fewer administrators and free up dollars to pay teachers more.

The post Education Spending: Where Does the Money Go? appeared first on Show-Me Institute.

Missouri Elementary and Secondary Enrollment and Teachers: 2014–15 through 2021–22

Source: U.S. Department of Education, National Center for Education Statistics (NCES), Common Core of Data, Nonfiscal Survey, multiple years, nces.ed.gov/ccd

Missouri enrollment fell from 920,000 students in 2015 to 910,000 in 2019—before the pandemic. Even with the post-pandemic recovery, enrollment is still down over 30,000 students from six years ago. Interestingly, we now have over 3,000 more teachers to serve the smaller student body.

According to Dr. Marguerite Roza of Georgetown University, there have been three waves contributing to the growing teaching staff. The first was the post-recession hiring back of laid off teachers. Then there were seven boom years of growth in education funding (though not in enrollment). Finally, there has been the enormous influx of pandemic stimulus funds from the federal government.

Stimulus money is drying up, though. So, what happens next? The Department of Elementary and Secondary Education (DESE) has just submitted a budget request that has a $300 million increase. In a logic-defying move, DESE claims that fewer students means we need a higher dollar amount per student in the foundation formula. Why? Because hiring when enrollment goes down because you’ve got the money doesn’t mean you can simply fire excess teachers when the funds dry up. Public education employment contracts don’t work that way. The system needs total funding to stay the same or increase, regardless of enrollment trends. Here’s hoping the state legislature looks at the math before agreeing to this request for no accountability.

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