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KERA closes rural-urban school spending gap

Kentucky's spending on elementary and secondary education has grown and evened under KERA, but it still lags nationally, a new University of Kentucky study concludes.

The report suggests that while the 1990 Kentucky Educational Reform Act essentially has eliminated disparities in per-pupil spending between urban and rural school districts, it actually might have increased disparities in the sources of urban-rural educational funding.

The new fiscal analysis is the first of two studies of KERA prepared by the University of Kentucky's Center for Business and Research. It was sponsored by the Friedman Foundation for Educational Choice and the Bluegrass Institute for Public Policy Solutions.

The second report will look at how the educational reform act has affected educational outcomes in Kentucky schools.

KERA, which the Kentucky General Assembly passed in 1990, changed the way schools were funded and gave Frankfort a greater hand in determining what schools should teach, evaluating how well they teach it, and influencing local decisions on employment and pay.

Kenneth Troske, one of three UK researchers who wrote the new report, says the study shows that KERA has realized some key goals.

Kentucky in 1987 ranked fifth in per-student expenditures among eight south-central region states (Alabama, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, Texas and Kentucky). By 2006, Kentucky had the highest per-student expenditures in the region, the study says.

While expenditures on education were growing under KERA, they also were evening out statewide, according to the new report.

In 1987, Kentucky's metropolitan school districts were spending almost $600 more per student than the state's rural districts were spending. But, since KERA's passage, that disparity had virtually disappeared. By 2006, spending by rural districts trailed city districts' spending by only about $10 per pupil, researchers concluded.

Equalizing funding was a key KERA goal, Troske noted.

"There was some focus on increasing overall educational spending, but the main impetus was to even out funding," Troske said. "KERA certainly has achieved that goal."

But while Kentucky has increased its educational spending under KERA, it still has a way to go, according to the UK researchers. In 1987, there was a $2,199 per pupil gap between educational spending in Kentucky and other states. That gap had narrowed to about $1,092 per student in 2006.

And although disparities in spending across the state have disappeared under KERA, disparities in sources of funding actually have grown, the UK study says.

In 2006, Kentucky's metropolitan school districts got 40 percent of their revenue from local taxes and the rest in grants from the state and federal governments, the study says. Rural districts, however, got only 20 percent of their revenue from local sources and the rest from Frankfort and Washington.

"Perhaps as an unintended consequence, KERA seems to have produced a greater disparity in sources of revenue, which now vary dramatically," Troske said.

As a result, he says, rural residents may have surrendered some control over their schools because the schools now rely so heavily on the state and federal government funding.

"You can imagine that in a school district with a lot of local revenue, local residents might care more about how the schools spend the money because it's their money being spent," Troske said. "But if a district gets most of its money from Frankfort or Washington, folks might say, 'It's not my money," and leave it more up to the school superintendent to decide how to spend it.

"You could imagine that a loss of local revenue and control could affect how schools spend their money."

That's a question the UK researchers will explore in their forthcoming report on education outcomes.

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