Gov. Jay Nixon vetoed SB 509 late last Thursday and the General Assembly is expected to consider overriding the governor's veto when they return to Jefferson City this week. The bill phases in a cut to business and personal income taxes. During the phase in, each year that state revenues grow by $150 million, a $120 million tax cut is triggered. This is done until taxes are cut a total of $620 million annually.
This has the effect of prioritizing tax cuts and Medicaid spending ahead of education.The Missouri budget appropriates approximately $8 billion of general revenue each year. The current trend for annual state general revenue growth is between 3-4%. This equates to approximately $240-$320 million in growth each year. If SB 509 were to become law, then the first $120 million (the annual phased in amount of the tax cut) would first be dedicated to the tax cut. The next requirement to be funded is Medicaid because Missouri must match a minimum level in order to draw down a substantial amount of federal dollars. This entitlement program grows annually by approximately $100 million of general revenue. This means that under SB 509, the first $220 million of general revenue growth until 2022 would be spent before any additional funds could be considered to go to things like education. With the foundation formula, underfunded by $556 million, Missouri schools, particularly those dependent on state funding can count on stagnant funding levels with the passage of SB 509.
SB 509 leaves the Missouri budget vulnerable to an economic downturn either at the national or state level.If between now and 2022 (when the $620 million cut is fully phased in) the economy were to experience the same sort of decline in a single year as it did in 2008 and 2009, Missouri would be faced with an additional annual loss of revenue of $124 million (the annual cost of the tax cut) as we attempted to recover. This is because the $150 million annual growth “trigger” would be enacted as the budget began to grow from the one-year decline.
We have seen these sorts of cuts in other states over the last several years. As many of you know, legislators have been citing the benefits of similar proposals in Kansas and Oklahoma as a reason to copy their lead. However, it appears legislators have not been getting all of the facts coming out of those states. In Kansas, the legislature has been forced to raise taxes and drastically cut education funding in order to deal with the loss of state revenue. Consequentially, the state’s bond rating has been downgraded twice in the past year, the most recent of which came just last week.
In Oklahoma, lawmakers used the same approach that Missouri lawmakers are using to cut taxes. By basing the cuts on future revenue growth, they have prevented additional resources from being available to fund things like education. This resulted last month in nearly twenty five thousand supporters of public education rallying at Oklahoma State Capitol to advocate for additional funding for education.
The attempt to override must start in the Senate. If two-thirds (23 votes) of the Senate votes to override, then the bill will move to the House of Representatives for their consideration. There, a two-thirds majority is also needed (109 votes) for the tax cut to become law. There are currently 108 elected Republicans in the House of Representatives, meaning that all Republicans would need to be present and vote in favor of the override and one Democrat would also cross the aisle and vote to override the Governor’s veto. All Republicans voted for SB 509 when it initially passed the House of Representatives two weeks ago.
One Democrat, Rep. Jeff Roorda (D – Barnhart) voted in favor of SB 509 when it was initially passed, but has since raised reservations about the bill’s impact that were not known at the time the General Assembly first approved the measure.
SAC is opposed to SB 509 because of the negative impact it will have on the state’s ability to fund vital services like public education.
House Passes Scaled Down Voucher Bill
Last week, the House of Representatives took up and passed their version of SB 493. The bill, intended to address student transfers, became a voucher bill as it moved through the process this year, a move that SAC opposed.
In a move to help gain enough votes for passage, House members added several amendments that added additional language to the bill, scaled back the voucher program, and put regulations on private schools that accept public dollars through the voucher process laid out in SB 493.
After the changes by the House, the major components of SB 493 are as follows…
- Students that have resided in an unaccredited district and attended at least one semester in an unaccredited school building would be eligible to transfer. First, the students could be transferred to accredited school buildings within the district, if space existed. If space did not exist, then students could transfer to accredited school buildings in accredited schools within accredited districts in the same or an adjoining county, to charter schools within the unaccredited district, or to private schools within the district if voters within the district vote to authorize the revenue generated by the local tax levy to be paid to private schools. The amount of tuition to be paid to a receiving public school district, charter school, or private school cannot exceed seventy percent of the tuition rate of the unaccredited district.
- Transportation would not be required to be paid by the sending or receiving school district, instead ten percent of the unaccredited district’s tuition rate shall be paid to a regional transfer authority (that is created under the SB 493) for every student that seeks a transfer for the purposes of transportation.
- Receiving districts are given the ability to set appropriate class size ratios for the purposes of calculating open spots available for transfer students from unaccredited district. Receiving district would be able to utilize student population growth when considering the number of open spots available.
- Allow students that have already transferred from an unaccredited district to stay in the district to which they have transferred through the highest-grade level in the building that the student currently attends. However, if the student had not been a resident of the unaccredited district for more than one semester prior to transferring, then the student would be prohibited from continuing in the district.
- The seventy percent cap on the tuition rate is retroactive, meaning that districts that received transfer students during the current school year at one hundred percent of their tuition rate would be forced to pay by the difference between the new tuition rates calculated in SB 493 (seventy percent of the sending district’s tuition rate).
- In order for a private school to be eligible to accept transfer students, the private school must be located within the unaccredited district. Voters of the unaccredited district must first vote in order to approve the use of the district’s local tax levy to pay for tuition at a private school. The state is not required to pay for any tuition to private schools. Also, the private school would be limited to only accepting 70% of the unaccredited district’s tuition rate for admission of transfer students to their school and the private school would be prohibited from requiring the student to pay for any portion of the tuition. Private schools would be subject to many, but not all, of the same rules, regulations, and state statutes that apply to public schools. The private school would have an annual performance report generated by DESE only for transfer students but if transfer students make up more than 25% of the school’s enrollment then the entire school would be subject to the Missouri School Improvement Program.
- DESE is required to form review teams to be made up of education professionals to be sent into districts that drop below seventy-five percentage points on their annual performance report. The review teams will assess the district’s comprehensive school improvement plan and assist the district in making changes to the improvement plan.
- The State Board of Education is given the ability in unaccredited districts where they institute an alternative governing structure other than a school board, like in the CEE-Trust model, to levy or adjust tax rates as a public school board.
- Any time the formula is not funded, school districts are given a waiver from the one percent requirement in the foundation formula to be spent on professional development. Districts are given additional flexibility from fund placement requirements in the formula whenever the foundation formula is not fully funded.
- Repeals any reference to the number of days a school district is required to be in session and instead replaces it with a requirement of one thousand and eighty hours.
- Requires the minimum teacher salary to be $30,000, subject to legislative appropriation, and creates a fund for the state to deposit funding.
- An amendment was added that required the tuition rate charged to K-8 districts be limited to 70%, making it equal to the percentage an unaccredited district would pay to a receiving district or private school under SB 493.
- The language mandating that schools would be prohibited from being in session five days a week in June, July and August was removed.
- The bill now moves back to the Senate where they will determine whether or not to accept the changes made by the House. If those changes are rejected, then the bill will head to a conference committee to be made up of members of both the House and the Senate to work out differences between the two chambers.
While many significant gains were made on the bill, SB 493 still goes well beyond just addressing the transfer issue and includes many problematic provisions, including, but not limited to, the creation of a voucher program and the authorization of a CEE-Trust model of school governance and gives the state board of education the same authority as a local school board in unaccredited districts, including taxing authority.
SAC continues to advocate for a clean transfer bill that focuses on improving districts that begin to struggle rather than taking advantage of the transfer crisis to push an anti-public education agenda.
Posted on Wed, May 7, 2014