Rudi ’splains it: The State Adequacy Target

Only someone schooled in sarcasm pushes themselves away from a banquet table, pats their stomach and exclaims, “That sure was adequate!” when they have consumed a fine meal.

Something adequate is acceptable, but it’s not something you go out of your way for. But adequate is what state law directs the legislature to attain in funding public schools.

Since the 1970s, the equation that determines how much each school district is due from the state has been called the foundation formula. Each step in the formula is designed to send state money where it is most needed. 

Every equation starts somewhere, and these days the foundation formula starts with the State Adequacy Target. That number, once determined, becomes the base for other calculations leading to a district’s actual state allocation.

But what in the world is the State Adequacy Target? And why is that the name? 

Well, I’m here to tell you in the first of a series of occasional columns I call “Rudi ’splains it.”

As I near the 40th anniversary of the day I first walked into the Capitol Building as a student reporter, I want to share some of the knowledge absorbed by osmosis over the years. I will use this space to clarify the sometimes difficult issues we write about.

I chose the State Adequacy Target for this first effort because it is at the center of one of the biggest budget questions facing lawmakers this year. To fund it as designed next year will cost $4.3 billion, including $300 million tied to an increase in the adequacy target that Gov. Mike Kehoe doesn’t want to spend.

Budget battle brewing over Missouri Gov. Mike Kehoe’s school funding proposal

Instead, after saying the money was a “liability that was imposed by an administrative body” in his State of the State address, Kehoe said he wants to rewrite the formula.

I’ll admit Kehoe’s words bothered me when I heard them. The “administrative body” he referred to is the State Board of Education, made up of political appointees, executing a state law written in the political crucible of the General Assembly and requesting an amount as directed by that law.

Whether to fulfill the request in appropriations is also a political decision.

Now, back to my subject.

To answer my second question first, the snarky answer is that it is named State Adequacy Target because they had to call it something. In previous iterations of the formula, the figure the equation started with was alternately called the State Expenditure Factor and the Guaranteed Tax Base.

The State Expenditure Factor was in a bill passed in 1977 that created the first formula with a multi-line calculation. The Guaranteed Tax Base was the term used in 1993 in the Outstanding Schools Act, which combined a revised formula with an income tax increase dedicated to public education.

The State Expenditure Factor was a simple calculation of all the money spent by school districts two years previously divided by the number of students. That formula was intended to put a base under every district’s funding.

The Guaranteed Tax Base was designed to allow every district in the state to have as much money per student as the local tax rate would raise in districts in the 90th percentile of property wealth. Voting for a higher local tax rate, up to a ceiling, would draw more money from the state.

Reassessment had the same result, sometimes increasing the amount required by the formula by as much as $300 million in a single year by the early 2000s.

The current formula, written in 2005, is when the State Adequacy Target appeared.

To understand how the name was chosen, you have to understand the context for both the 1993 and 2005 revisions. In January 1993, just at the start of Democratic Gov. Mel Carnahan’s first term, Cole County Circuit Judge Byron Kinder ruled that the formula written in 1977 didn’t meet the state’s constitutional obligation to educate young people.

“The court determines and declares that the General Assembly must provide adequate funds to establish and maintain a system of public education at the elementary and secondary level providing a general diffusion of knowledge and intelligence at the level necessary in this era to preserve the rights and liberties of the people,” Kinder wrote, echoing the Constitution.

In his ruling, Kinder wrote that an over reliance on local revenues produced a statewide system of schools that ranged “from the golden to the God-awful.”

That spurred the 1993 formula revisions.

In 2005, as it is now, the question was how much the formula should cost. Maybe the drafters of the 2005 formula didn’t have Kinder’s ruling in front of them when they changed Guaranteed Tax Base to State Adequacy Target, but the same education organization that won the 1993 ruling was again in court, challenging the new formula on the basis of adequacy. 

Missouri wasn’t alone. Lawsuits starting in the 1980s had resulted in rulings against funding systems in a number of states.

So that’s where the name came from. Now, how does it work?

Every year, the state’s 516 school districts are evaluated under the Missouri School Improvement Program. Their score is a snapshot of student performance in end-of-course exams and statewide standardized tests along with an assessment of district continuous improvement plans.

The amount spent per pupil in districts that do well, known as performance districts, become the basis for setting the adequacy target. The calculation is done every two years. If the adequacy target increases, it is phased in during the two years until the next recalculation. 

The most recent version of the program, called MSIP 6 by the Department of Elementary and Secondary Education, was introduced in 2022. It has been lauded as “more rigorous” than in the past, when more than 200 districts were rated as performance districts.

The smaller number making that mark now tend to be those with higher per-pupil spending. The two-year phased-in increase was $770, to $7,145 from $6,375. It had been unchanged for four years.

That 12% jump is the biggest two-year increase since the formula was written in 2005, resulting in an initial adequacy target for fiscal 2007 of $6,117. 

The adequacy target today is 17% more than where it started. General inflation since 2005 is 65%.

I’ve seen governors run for re-election touting their record for always fully funding the formula. And I’ve seen governors struggle during recessions to avoid cutting foundation formula funding to slow state spending.

There are some features of the current formula that distort it and make it more expensive than it might otherwise be. But changing those features will be a political decision.

Right now, Missouri holds a historically high fund balance in general revenue, so the question for budget writers isn’t whether the money is available.

This year, unlike many I have seen, whether the state spends enough money to be adequate is a purely political question.