Policy proposals will be presented to a school-funding task force in December, giving the group a year to fine tune them and present them to the governor
By:Annelise Hanshaw
Missouri Independent
The funding formula for Missouri’s public schools is poised for wide-ranging changes as work groups studying elements of the model reached the halfway point of their work at meetings on Monday.
The groups, led by the state education department’s former finance chief Kari Monsees, have convened three times each. They are scheduled to meet three additional times prior to presenting recommendations to the larger task force in December.
Proposed changes are due to Gov. Mike Kehoe by December 2026. Here is where the policy discussions are heading.
Funding targets
The funding efforts working group is primarily focused on a measure called the state adequacy target, which is intended to represent the per-pupil cost for districts to provide an adequate education.
Currently, this number is calculated by looking at the per-pupil expenditures of “performance districts,” or districts who score at least 90% of the points possible on the state’s performance review, called the Missouri School Improvement Program.
The group is not considering a dramatic shift away from this system but is instead moving toward a new way of classifying performance districts. The proposal discussed Monday would look at districts’ expenditures that score in the top 100 of the Missouri School Improvement Program.
Additionally, the calculation would be based on the districts’ enrollment numbers rather than attendance and would include extra weighting for students with disabilities, low-income students and English-language learners.
This method would be less volatile with changes to MSIP, which is on its sixth iteration since its inception in 1991, since the number of districts setting the average would remain steady.
During the switch from MSIP5 to MSIP6, a system deemed “more rigorous” by education officials, the number of performance districts dropped from over 200 to 23. The state adequacy target then rose from $6,375 to $7,145.
The shift added an extra $300 million to fully fund the foundation formula in fiscal year 2026. In his budget request in January, Kehoe excluded the $300 million, though lawmakers decided after tense negotiations to fully fund the formula with the new boost.
Kehoe, in his executive order creating the Missouri School Funding Modernization Task Force, asked for the group to create a formula that would provide fiscal year 2025 funding levels — prior to the $300 million boost.
But the change discussed Monday is not a cost-saving measure. Monsees estimated the proposal would drive the target to $10,367.
“If we are going to increase this side of the equation significantly, I just want to (ask) what that means for the rest of the equation,” said Don Thalhuber, policy director for the Senate Democratic caucus who helped draft the state’s current formula in 2005. “Because we don’t have infinite money.”
A deduction in the formula is likely to balance out the adequacy target’s surge, Monsees said, pointing to a factor that subtracts local funding to lower the amount due to wealthier districts.
“The local effort is tied back to 2004’s assessed values that is very much deflated as well,” he said. “So the state adequacy target is likely to go up, but then at the same time, your local effort is going to go up.”
Local effort
Missouri’s formula considers local funding as a counterbalance to state aid, meaning that wealthier districts with adequate tax revenue receive less on a per-pupil basis. Finding a way to subtract local effort as part of the formula is a “conundrum,” Monsees told the group last week.
The local effort working group pointed to problems with two main models, one based on property taxes and the other on local wealth.
“We come up with these proxies that somehow represent what the capacity of a local community is to generate funds for their school, and the state’s obviously going to try to balance that across communities. But if that representation doesn’t match the actual cash that comes in in revenue, we may not be balancing the scales as much as we would want to,” Monsees said.
The group has been critical of the current formula’s reliance on property tax revenue. And with lawmakers considering changes to the property tax system, the factor feels unsteady.
“We have got something that may not be equitable and may not be stable,” said Monsees.
He suggested the group look for two to four factors so they are not reliant on just one variable, and they adjourned their discussion Wednesday without direction otherwise.
Student counts
A working group looking at the way students are counted in the formula is debating a shift to enrollment-based funding rather than basing state aid on a district’s average attendance.
Enrollment-based funding is not a new concept in Missouri. A 2023 study commissioned by the State Board of Education recommended a switch away from attendance funding, saying attendance-based models disadvantage higher poverty districts.
And in 2024, state lawmakers passed a large education package that included a gradual shift to funding 50% based on attendance and 50% based on enrollment by 2029.
Two other studies that the foundation formula task force has delved into also recommend enrollment-based student counts.
But with state lawmakers having recently negotiated the shift to a 50/50 approach, Monsees told the group that basing the formula purely on enrollment could be “not as easy of a switch politically.”
“There is still a little bit of hesitation there to remove the financial incentive that comes with including attendance,” he said.
The group is also evaluating how different student groups pull more state money and seems likely to eliminate funding cliffs that are written into the current formula.
Low-income students, those with special education services and English-language learners have an extra multiplier in the formula, giving their districts more money to provide services. But there is a threshold built in, assuming a base level of students with various needs. Only those with a higher percentage of students in these groups pull the extra funds currently.
The student counts working group has been pursuing a plan to eliminate the threshold.
“This idea of removing the thresholds and weighting all the students, it is certainly going to be a cost driver to the overall equation,” Monsees told the group.
The discussion Monday dug into the weights with more specificity, with the group considering a multi-tiered system for special education funding.
Monsees gave options of grouping types of disabilities into funding subcategories or creating a tiered system based on the amount of time a student spends out of the general education classroom. The group members preferred the latter.
Jordan Dickey, assistant superintendent of finance for Joplin Schools, said that kids with the same disabilities may not have the same support needs.
“Depending on what their label is, it doesn’t necessarily reflect the level of service that they need,” she said.
She recommended a much greater weight for students who receive educational time out of the general education classroom.
Performance incentives
Kehoe’s executive order includes a charge to give districts with strong performance bonus funding. Performance incentives would be new in Missouri and are largely unprecedented, other than a model in Tennessee that awards schools when students reach certain targets.
The group studying performance incentives does not have a definitive plan, as of the conclusion of its third meeting last week, but is leaning toward promoting literacy and numeracy.
Mike Podgursky, a semi-retired economics professor from the University of Missouri-Columbia and affiliated scholar at the Sinquefield Center for Applied Economic Research, suggested the group pick one or two priorities rather than giving money for “a whole bunch of things.”
“There’s a case for really focusing on early literacy,” he said. “If these kids can’t read by grades three and four, then you forget about math at grade eight and everything else.”
The group discussed incentives for literacy at the third grade level and math performance in eighth grade at length.
Members are considering building the rewards into the formula or siloing them as a separate source of funding.