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Committee advances bill lowering education excess‑spending threshold, staff warn of uncertain district impacts
Summary
The Appropriations Committee voted to report S220 favorably after staff explained the bill would lower the excess‑spending threshold from 118% to 112% (FY2025 baseline, inflation‑adjusted), expand a bond debt exclusion and add a secretary‑discretion hold‑harmless; analysts said about 33 districts could be affected using current estimates but districts may change budgets in response.
Julia Reyktor of the Joint Fiscal Office told the Senate Appropriations Committee that S220 would change how the state calculates the education 'excess spending' threshold and therefore which school district dollars are subject to a second homestead property tax.
"There are no appropriations or expenses made out of this bill," Reyktor said, then explained that the bill lowers the threshold from 118% to 112% of the FY2025 statewide average per‑pupil spending, adjusted for inflation, and applies the change going forward.
Reyktor said her office's best current estimate — using incomplete FY27 district budget data — is that about 10–12 districts would exceed the threshold under current law, while lowering the threshold to 112% would produce an estimate near 33 districts. She cautioned those numbers would change if districts altered budget plans to avoid the penalty.
John Brennan of the Office of Legislative Counsel walked committee members through technical changes in the bill, including a separate provision that removes the 07/01/2024 cutoff for excluding voter‑approved bond debt service from the net education spending calculation. "[The amendment] just says any bond voted ... is excluded for the purpose of calculating excess spending," Brennan said.
The bill also creates two 'flat spending' hold‑harmless exceptions (aggregate spending flat compared with the prior year, or per‑pupil spending flat) and a discretionary exclusion that allows the secretary of education, advised by three business managers and three superintendents, to exclude an increase when it is for "good cause or beyond the district's control," with examples such as emergency capital expenditures and substantial loss of pupils.
Committee members pressed staff on which inflation index the bill uses to update the FY2025 baseline; staff noted the draft uses a commonly used National Income and Product Accounts (NIPA) deflator but said members could amend the index choice later. Members also raised concerns that 'flat spending' is nominal and does not account for inflation, which can amount to a real cut in services.
After discussion, the committee agreed to report S220 favorably and leave the inflator question to the receiving chamber. Staff reiterated the effective date language would apply changes beginning FY2028 and that if the foundation formula contingencies in Act 73 are met, the excess‑spending mechanism would effectively be supplanted by the foundation formula.
Next steps: The committee reported the bill favorably with the inflator question deferred to the House; staff and counsel said they will provide clarifying language and answer follow‑up technical questions requested by members.
