House Ways and Means Committee debates allowing supplemental district spending, directs staff to model caps and offsets

Members of the House Ways and Means Committee spent the meeting discussing whether school districts should be permitted to raise money above the proposed Education Opportunity Payment (EOP) and, if so, how to limit and account for that supplemental district spending.

The committee’s chair opened the discussion asking the fundamental question: should districts be allowed to spend more than the EOP. Committee members expressed a range of views but generally agreed to allow some supplemental district spending while setting a cap; the exact cap and mechanics were left for staff to model and for legislative counsel to draft.

Why it matters: the EOP and the foundation formula are central to the committee’s broader re-write of K–12 funding. Allowing districts to raise additional local revenue affects tax predictability, equity between wealthy and less-wealthy districts, and whether the state or local voters will shoulder ongoing cost drivers such as health care and special education.

Key points from the discussion

- Terminology and framing: members debated what to call the authority (examples discussed included “supplemental school spending,” “supplemental district spending,” and “district spending”). Several members favored a phrase that makes the geographic scope clear (district rather than school). The committee agreed to proceed using a district-focused term and to refine wording later.

- Straw poll and general direction: the committee conducted an informal show-of-hands poll. A majority indicated they favored allowing supplemental district spending, with many saying that any authorization should be contingent on an explicit cap (percent or dollar-based) to preserve statewide predictability.

- Cap mechanics: staff presented options the Joint Fiscal Office (JFO) shared earlier (5%, 10%, 20% over current FY25 education spending as framing examples). Julia Richter of the Joint Fiscal Office told the committee that, under the slide examples discussed yesterday, “5% of FY25 spending overall … would be about $94,000,000,” and cautioned that translating percentages into impacts on local tax rates depends on the mechanism districts use to raise the dollars.

- Basis for the cap: members debated whether a cap should be a percentage over the EOP (which incorporates pupil weights) or a dollar amount per pupil (weighted or unweighted). Several members argued that basing a cap on a percentage of the weighted EOP would better preserve equity across districts because the EOP already accounts for student weights such as special education and poverty.

- Offsetting revenues and fundraising: committee members raised equity concerns about allowing districts to use private fundraising or philanthropy to reduce their contribution into any state equalization or reserve mechanism. Members noted that fundraising capacity varies widely among districts and could undermine equalization if wealthy districts meet supplemental needs via private donations while poorer districts must raise property taxes. The chair and several members asked legislative counsel and JFO to draft models and language showing how to treat offsetting revenues (for example, whether booster-club or one-time bequests should be counted as offsets when calculating supplemental district spending).

- Penalty and equalization mechanics: the committee discussed models in which districts that levy supplemental spending would face either (a) an equalized levy so all districts pay a common rate (based on the district with the lowest tax capacity) and higher-capacity districts therefore raise more dollars, or (b) a ‘penalty’ whereby a fraction of locally raised funds is redirected (members referenced an 80¢ on the dollar construct discussed in prior sessions). Opinions diverged: some members argued a penalty is necessary to discourage excessive local levies; others warned penalties could unfairly punish districts that truly need supplemental funding and that the voters — not a statutory penalty — are the primary check on exorbitant local levies.

- Data and inflators: Representative Wilkerson pressed agency staff and the JFO for better, timely data on the major cost drivers in the education fund, saying that without clear information on drivers such as health-care and special-education cost inflation the committee cannot responsibly set a fixed cap. Members also asked JFO to show different inflator options (for example, separate health-care inflators versus a general consumer/inflation measure) because the choice of inflator will influence whether a fixed cap remains adequate over time.

What the committee directed staff to do

- JFO was asked to produce additional models showing: (a) the fiscal impact of several cap options (percentage over EOP and dollar-per-(weighted) pupil options), (b) how different inflators would change the cap’s purchasing power over time, and (c) the tax-rate implications under equalization assumptions.

- Legislative counsel and staff were asked to draft possible statutory language addressing offsetting revenues (fundraising/philanthropy and categorical grants) and examples that show how such offsets would affect contributions to any state-level reserve or equalization mechanism.

No final votes were taken. The committee did an informal straw poll that showed majority support for allowing supplemental district spending contingent on a cap; members agreed to return with modeled numbers and draft language before locking on a cap amount or penalty approach.

Community and implementation context

- JFO’s preliminary example (the 5% framing) was offered as an illustration, not a settled policy. Julia Richter noted the FY25-based $94 million benchmark depends on how the final foundation formula and EOP are calculated.

- Members repeatedly emphasized transition risks: until the committee finalizes the EOP base, weights, and how districts will be reorganized (size/merger scenarios discussed in prior sessions), numeric caps are provisional. Several members warned that a too-strict cap could incentivize districts to rely on under-the-table fundraising or otherwise game the system; others warned that too-lax an approach could compound inequities between high- and low-capacity districts.

Ending note

The committee left the meeting with a clear staff assignment: JFO and legislative counsel will return with modeling and drafted statutory options (including ways to treat fundraising/offsetting revenues and alternative cap formulas). The committee’s next substantive decision points are whether a cap will be percentage-based or dollar-based, whether weighting will be used in the cap calculation, and whether any portion of locally raised supplemental dollars will be routed to an equalized state-level reserve.