Bureau reports gaps in categorical and non‑matrix K–12 spending; ALE, special‑ed claims outpace formula funding

The Joint Education committees were presented with the Bureau of Legislative Research’s resource allocation report, which documented how Arkansas school districts relied on multiple funding streams in 2023 to meet student needs beyond what the adequacy matrix explicitly funds.

Bureau staff said total K–12 funding for fiscal 2023 was about $6.9 billion, with foundation funding representing roughly half of that amount. Staff walked members through categorical funds (such as Alternative Learning Environments, English‑learner funding and Enhanced Student Achievement), supplemental funds (isolated/small‑district, declining enrollment and student growth) and a broad set of non‑matrix spending categories districts cover with foundation, federal and local funds.

The report flagged several persistent gaps. Alternative Learning Environment (ALE) categorical funding totaled a little over $31 million in 2023 and served 2,063 public school districts and two open‑enrollment charters, bureau staff said, but analysis of expenditure data showed only small shares of ALE categorical dollars were spent on counselors (0.72%) and student support (0.08%). Staff noted districts commonly transfer other funds into ALE programs to cover services.

Special‑education high‑cost occurrences were another pressure point. The reimbursement schedule requires districts to cover the first portion of an individual student’s extraordinary costs, with partial reimbursement beyond specified thresholds and a statutory cap; in 2023 districts submitted about $46.9 million of eligible claims while $14 million was the state appropriation for reimbursements. Using the formula described in the presentation, $21.3 million of claims were reimbursable, and districts ultimately received about 66% of that reimbursable amount, leaving roughly $33 million in eligible claims unfunded.

Non‑matrix spending—items not explicitly listed in the adequacy matrix but commonly purchased by districts—totaled more than $2.0 billion in 2023. Foundation dollars specifically paid for about $186 million of non‑matrix items (roughly 5% of foundation funding), with instructional aids the largest single category. Superintendent survey responses identified additional unfunded needs that districts cover from existing resources, notably school safety (including school resource officers), student mental‑health services, additional classified staff and dyslexia interventions.

Bureau presenters emphasized that some supplemental and categorical funds are by design targeted to certain purposes (for example, ESA funds for students qualifying under free and reduced‑price lunch thresholds), while other programs such as declining‑enrollment and student‑growth funding use different eligibility formulas and timing that can create year‑to‑year mismatches between when students incur costs and when the state funds are distributed.

Members asked for further disaggregation. Representative Long requested a clearer breakdown of ‘other state and local’ dollars in future charts; Senator Chesterfield pressed for data showing how many districts actually transferred ESA dollars back versus how many allocated funds for transfer in plans; Representative Painter asked staff to attempt to disaggregate why foundation‑funded food‑service spending appeared to increase in the reported tables. Staff committed to follow up with the underlying extract and to send supplemental tables where possible.

Next steps: bureau staff said they would dig into members’ follow‑up questions and provide detailed tables and the survey cross‑tabs requested by committee members. No formal action was taken; the committee moved to recess and later continued the agenda.