Bureau of Legislative Research: categorical and supplemental K–12 spending often exceeds per-student allocations

The Bureau of Legislative Research presented Part 2 of its resource-allocation review to the joint Senate and House Education Committee on May 22, reporting how districts used categorical, supplemental and federal funds in the 2025 school year.

Elizabeth Bynum and Leah Headley summarized statewide totals and fund behavior. "Public school districts and charters spent over $7,000,000,000 in the 2025 school year," Bynum said, and the group showed that roughly 49% of that spending was paid from foundation aid and 51% from other funds. Categorical funds — the four statutory funds for alternative learning environments (ALE), English learners (EL), Enhanced Student Achievement (ESA) and professional development (PD) — accounted for about 4% (under $300 million) of total spending.

Key findings presented:

- Program spending often exceeds the categorical allocations: presenters repeatedly showed that per-student spending on ALE and EL services exceeded the categorical per-student funding and that districts were using transfers, prior-year fund balances and federal funds to cover the shortfall.

- ALE and EL: The bureau said ALE per-student funded counts fell while district spending per ALE student rose, and EL categorical allocations ($366 per EL student in 2025) covered primarily salary and benefits but total EL spending from all fund sources ran roughly 43% higher than EL categorical funds in 2025.

- ESA planning and rules conflict: The committee heard that Act 807 of 2025 removed the statutory requirement for a separate three-year ESA plan (moving prioritization to district strategic plans), but DESE rules still require a three-year ESA submission, creating a regulatory conflict that the department and the committee will have to resolve.

- PD spending: PD categorical funding is allocated as a per-student amount (about $37.50) but districts spent substantially more on PD-related activities from other sources in 2025. The bureau cited an evidence-based benchmark (Ogden & Pikus) recommending roughly $125 per student for effective, sustained PD.

- Supplemental and reimbursement funds: The report covered isolated/small-district funding, declining enrollment and student-growth formulas, ESA reimbursement grants, enhanced transportation and the special-education high-cost reimbursement program. For high-cost special-education claims the bureau showed about $66 million in eligible claims for 2025, a maximum reimbursable amount of roughly $30 million and net available funding of $17.5 million — leaving about $48 million in eligible claims unfunded.

- Teacher-salary programs: The bureau reviewed teacher salary equalization funding (originally $185 per prior ADM; scheduled reductions under subsequent law) and the LEARNS minimum teacher-salary distribution (the state provided $181.5 million to districts in 2025); presenters noted the equalization funding formula will be reduced under Act 905 in future years.

Committee members asked for follow-up data on how districts make up categorical shortfalls (which fund sources they tap, and whether federal funds are restricted), where declines in free-and-reduced-lunch counts occurred, and more detail about how districts are using ESA and supplemental funds. Presenters offered to provide disaggregated breakouts and deeper audits of expenditure sources.

Why it matters: The briefing identifies persistent gaps between statutory per-student allocations and actual district spending, shows where districts rely on transfers or federal funds to meet needs, and highlights pending statutory and rule conflicts that could affect local budgeting and accountability.

Next steps: Bureau staff agreed to provide additional breakouts on expenditure sources, district-level transfers and the composition of ESA and ALE spending on request by the committee. The committee will also follow up on the ESA-plan/rule conflict with DESE.