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Representative Peterson, USBE propose rewrite of Necessarily Existent Small Schools formula to reduce complexity
Summary
Representative Karen Peterson and USBE staff presented a working-group proposal to rewrite the Necessarily Existent Small Schools formula, using NCES locale codes, two-grade-band curves and a district-level component to simplify and better target rural funding.
Representative Karen Peterson and Utah State Board of Education staff presented a multi-year working-group proposal to revise the Necessarily Existent Small Schools (NES or "NEST") funding formula used to support rural schools.
Peterson said the existing statute and discretionary processes left too much subjectivity in school identification and created perverse incentives (for example, moving a grade to a different building to gain funding or disincentivizing consolidation). "We have tried band-aid after band-aid," Peterson said. "We should tackle the problem."
Nut graf: The working group's proposal would (1) adopt a clearer, objective definition using National Center for Education Statistics (NCES) locale codes (rural codes 33+), distance thresholds, and exclusions for online or specialty schools; (2) replace five idiosyncratic school-based curves with two grade-band pyramids (elementary and secondary) to address consolidation disincentives; and (3) include a district-based component to recognize economies of scale and reduce abrupt funding cliffs.
USBE MSP administrator Dale Frost and co-presenters showed modeling that the proposed structure would simplify calculations, retain the program's regressive feature (per-student support declines as enrollment increases), and roughly preserve or increase funding for most current NEST districts while limiting negative hits to a few. The working group recommended a phased approach to implement the changes and asked the committee for initial one-time funding (about one-quarter of estimated full ongoing cost) with the remainder phased in.
Members discussed trade-offs, including how to treat growth, consolidation, and how to set statutory obligations; Peterson said the committee should shift certain obligations from USBE rule to statutory clarity and consider the Legislature's role in annual obligations. Several rural superintendents participated in the working group and supported the proposal as a comprehensive reform to remove complexity and better target funding.
Ending: Peterson asked the committee to consider a phased appropriation and continued legislative oversight of the statutory definition and funding curves so rural districts can plan with greater predictability.
