LESC briefs House Education committee on school funding formula; HB63 would change poverty and secondary funding

LESC staff director John Sena told the House Education Committee on the first day of orientation that the state's public school funding formula pays for day'to'day operations and allocates money to districts and charter schools based on units generated by students and program factors. "The school funding formula pays for the operational pieces of schools. This is not capital. This does not pay usually for building schools and other things," Sena said.

The briefing explained why the State Equalization Guarantee (SEG) matters and how it differs from categorical and one'time appropriations. Sena described the formula''its student "units," staffing cost multiplier, at'risk component, special education and bilingual program units, and add'ons such as K'12+ days'and rural size adjustments'as the mechanism that converts student counts and program needs into district funding.

Why it matters: Changes to how poverty and targeted student needs are counted would shift resources across districts and charters. Sena and LESC staff framed House Bill 63 as a multi'year product of study meant to increase transparency and better target dollars to students and schools with higher needs.

Key points from the presentation

- Unit values by grade: full'day kindergarten currently generates 1.44 units; grades 4'6 generate about 1.045 units; grades 7'12 currently generate 1.25 units. LESC staff previewed a proposal to increase certain secondary factors to 1.3.

- At'risk funding: The current at'risk factor combines three indicators (poverty via the federal Title I percentage, English learner status, and student mobility), averaged over three years and multiplied by the state's at'risk factor (currently 0.33). LESC staff said that clustering those indicators obscures how much funding is attributable to English learners and that mobility is inconsistently coded across districts.

- HB63 (previewed): Among the changes described, the bill would (a) use the state's Family Income Index (a 2021 state law that matches tax and benefits data with census data) as the poverty indicator for at'risk funding, (b) create a standalone English'learner factor so districts can see how much EL services generate, (c) eliminate the mobility component because of data inconsistency, and (d) raise the secondary factor (7'12 and sixth grade in some proposals) toward 1.3.

- K'12+ and instructional time: House Bill 130 (previous session) raised annual instructional hour requirements to 1,140 hours; the K'12+ program provides extra funding when districts add days beyond baseline thresholds (180 days for 5'day weeks; 155 for many 4'day weeks). LESC staff noted the legislature must provide the additional funding when districts opt into more days.

- Budget nomenclature explained: Sena walked members through "above the line" (SEG funds that flow directly to districts/charters), "middle of the line" (categorical appropriations limited to specific purposes such as transportation or the Indian Education Fund), and "below the line" (recurring and nonrecurring special appropriations to PED or other programs).

Questions and context

Representative Torres VelE1squez asked whether growth and "save harmless" units address the bilingual/ENL timing problems raised in litigation such as Martinez; Sena explained the formula is based on prior'year membership (average of the 80th and 120th day counts), so sudden year'to'year swings can leave districts serving students before the formula and appropriation fully reflect that enrollment. He said growth units primarily target districtwide rapid growth rather than single'student swings in small districts.

Sena and staff emphasized the multi'year working group that produced the recommendations: the family income index and the separate EL factor were the product of interim study and stakeholder meetings with PED, superintendents, school boards, labor representatives and others.

What remains undecided

LESC staff presented these items as committee recommendations and proposed legislation; the presentation did not record a formal House vote on the measures during the session. HB63 and other bills were listed on LESC'endorsed legislation in the packet and will be scheduled for committee hearings according to House rules.

Ending

Sena said committee members will get more detail on Wednesday; LESC will present the high'level budget side'by'side and the committee will compare LESC, LFC and executive recommendations. Sena advised members the annual report and supporting briefs will be available electronically to review the working'group background and data underlying the proposal.