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Who Pays For Kentucky Public Schools? More and More, It's Local Taxpayers

Creative Commons

As state funding for public schools in Kentucky has failed to keep up with inflation, state data show local taxpayers are increasingly paying more of the costs — and that's leading to greater inequity between school districts across the state. 

In 2008, state funding covered 60 percent of the bill for public education shared by state and local tax revenues. In 2018, state data show the portion covered by state funding fell to 51 percent.

What happened? Although in raw numbers, the legislature has maintained the overall level of state funding for public schools, its value hasn’t kept up with inflation.

In order to keep schools running at roughly the same level as before, local taxpayers have made up the difference. School boards have the power to raise certain local taxes in addition to what the state guarantees all students, and more and more boards are exercising this power. 

But poorer counties aren’t able to raise enough additional funding with their tax increases to keep up with the declining value of state funding. In wealthier districts, the burden has shifted more steadily and fully to taxpayers.

"The local folks have been doing heroic work to fill in those holes, to keep schools something like kicking along," said education consultant Susan Perkins Weston.

Weston often works for education policy organizations like thePrichard Committee for Academic Excellence and theCouncil for Better Education. She's an expert in tracking and explaining Kentucky's education finance. Over the past decade, Weston's been eyeing one trend in particular — a shift in responsibility as the state gradually pays a smaller portion of the cost of education, and local tax revenues gradually cover more. 

"If you don't count inflation, we're not looking at Kentucky having dropped its funding," Weston said. "The core SEEK funding is close to continuity, except that it's lost, like, 16 percent of its buying power since 2008."

Weston said last school year is the first time she's seen every county in Kentucky chip in additional tax revenue beyond what the state requires — or will match — under the SEEK formula.

Current State Funding Raises Equity Questions

The Support Education Excellence in Kentucky (SEEK) funding formula was created in response to a state supreme court ruling that the public school system must be adequately funded, and that “the children who live in the poor districts and the children who live in the rich districts must be given the same opportunity and access to an adequate education.”

The formula exists to ensure that school funding across Kentucky is adequate and equitable funding: Equity refers to whether a funding model is fair across districts, and provides the same amount to spend per student, regardless of where they live.

Adequacy addresses whether a state spends enough on its students.

The SEEK formula does not guarantee adequacy: that the amount the state invests keeps up with inflation or with the growing needs and expectations put on schools. 

Analyst Ashley Spalding of the Kentucky Center for Economic Policy has calculated the amount of state versus local funding contributed to the base per-student guarantee in the SEEK formula. When adjusting for inflation based on the Bureau of Labor Statistics’ Consumer Price Index, the guaranteed base amount Kentucky spends per student has declined since 2008. 

But the formula does aim for equity across districts by guaranteeing the same per-student base funding, currently a guarantee of about $4,000 per student. That base is composed of both state and local funds.

The formula then allocates “add-on funding” to districts based on special needs. Local school boards can also choose to set higher property taxes to help fund schools, and the state will match these tax hikes up to a certain extent -- proportional to the local taxing capacity -- to level the playing field across poor and wealthy districts. That last piece is known as Tier 1 funding.

School boards are also free to raise additional taxes beyond these three steps that the state will not match. This is known as Tier 2 funding — and experts say this is where inequity has crept in.

Wolfe County Schools, a small rural school district in Eastern Kentucky, had long held out on raising property taxes for that Tier 2 funding. But last year, its school board levied enough taxes to provide additional funding for its students beyond what the state will match. 

Wolfe County Superintendent Kenny Bell says this was a tough decision for the board.

“It’s always difficult to raise taxes and any school board can expect to be criticized for a tax increase,” Bell said. “But the real issue is that we can’t raise as much as other counties with the same rate increase.”

This September, the school board voted to raise the local real estate tax again by about 3.5 cents on every $100 of property, meaning that a homeowner with a $100,000 house would pay about $35 more in property taxes compared to the previous year. 

Wolfe County’s latest rate increase generates about $78 per student in their school district. Jefferson County, the same tax rate change could generate more than $300 per student, simply because the value of real estate in Louisville is much greater. Jefferson County has nearly four times as much taxable property value per student compared to Wolfe County. 

“When everybody pushes into Tier 2, Wolfe County is in big trouble, because no matter how hard they work at it, they can’t generate the money that even the average district can generate,” Weston said. 

In Jefferson County, Local Taxes Cover Majority of Public School Funding 

While some of the poorest counties in the state are just beginning to dig deeper into their pockets to provide extra funding for their students, Jefferson County's larger tax burden is growing.

Because Jefferson County has more taxable property and higher property values than the rest of the state, the formula requires its share of local education funding be larger than counties with less wealth.

Since the recession, while state funding has stagnated (adjusting for inflation), that share has grown. In 2008, local taxes accounted for 62 percent of state and local funding for JCPS schools. That grew to 71 percent in 2018.

JCPS Board member Chris Brady says this trend is problematic -- especially for Jefferson County taxpayers.

“We should definitely provide our fair share and support our fellow districts throughout the state,” Brady said. “But just by doing that doesn't necessarily mean that we should accept an inadequate amount of funding from the state.”

He even suggests the current proportions of state funding is possibly in violation of the state constitution, which states the General Assembly "shall, by appropriate legislation, provide for an efficient system of common schools throughout the state."

"Anytime you get a school district that has over 50 percent of local contributions to their budget coming from local resources and not coming from the state, I feel that that is going to be unconstitutional," Brady said.

Even beyond the county's contribution to base education funding, Jefferson County taxpayers are paying more to support local students through voluntary Tier 2 funding, above and beyond what the SEEK formula requires or what the state provides. 

In 2018, Jefferson County taxpayers paid an additional $3,801 per JCPS student beyond what the state requires or will match: That's $3,801 beyond the guaranteed amount other school districts receive, or can raise through matching state funds. 

Compare that with Owsley County, the poorest county in Kentucky based on per capita income in the 2010 census. Jefferson County contributes more than seven times what Owsley County is putting in for Tier 2 funding that the state does not match. That disparity is driving a wedge between funding levels across school districts and creating greater inequity.  

The funding formula requires local taxpayers to cover 19 percent of the education bill shared with the state in 2018, up from 12 percent in 2008. Local taxes in Owsley County pay for an additional $531 per student beyond what the state will match.

Jeff Hawkins is executive director of the Kentucky Valley Educational Cooperative, representing school districts across Southeastern Kentucky that have experienced economic depression from the decline of the coal industry. He says school boards in his region “work really hard” to avoid raising taxes.

“Not because of any other reason than they realize that communities and community members here are hurting,” Hawkins said.

As state funding for education continues to lag behind rising costs and inflation, the shifting burden on local taxpayers and growing inequities between districts are likely to continue. JCPS Board member Chris Brady said he’d like to see the state invest more in education to relieve the pressure on local taxpayers.

"You have to provide adequate funding and be equitable in order to move forward," JCPS board member Chris Brady said. "You can't just do one or the other."

Correction: Due to an editing error, this story initially had the wrong byline. This story was written by Liz Schlemmer.

Liz Schlemmer is WFPL's Education and Learning Reporter.

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