55% school funding by state may never happen

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AUGUSTA — Maine’s inability to meet its voter-mandated funding obligations for public education was among the most-discussed topics during the five gubernatorial debates, which concluded this week.

Two candidates — independent Eliot Cutler and Democrat Mike Michaud — have pledged to find a way to meet the state’s statutory requirement to fund 55 percent of the cost of K-12 education, but history shows it’s unlikely to happen.

School funding comes from three pots of money: State funds, federal funds and local property tax revenue. Ten years ago, in an effort to lower property tax rates, Mainers passed a referendum to make state government pay 55 percent of local education costs. The measure passed with 55 percent of the vote and represented the latest attempt in several decades to formalize the state’s share of education costs.

After voters approved the measure, a plan was implemented to slowly ramp up state funding, with the goal of hitting 55 percent of the cost of “essential programs and services,” known as EPS, by 2010. Things progressed well through 2009, with state funding for education rising by millions of dollars every year.

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However, declining enrollment and the recession stymied the state’s efforts, and the threshold wasn’t met by the deadline. And it hasn’t been met since.

This year, state funding for education is at 50 percent, about $109 million short of the amount approved by voters. The reason it’s that high is that Republican Gov. Paul LePage’s administration, in 2012, began including state payments for teacher retirement and other benefits in calculating the state’s share of education costs.

Critics have said including benefit payments had the net effect of reducing state funding because those expenses were previously accounted for outside the state funding formula. Without that adjustment, state funding levels would represent only about 46 percent of the cost of EPS.

Cutler and Michaud have said meeting the state’s funding requirement would be a key policy goal if they were elected governor. Michaud hasn’t said how he’d pay for it, but Cutler’s plan calls for increases to the sales tax to pay for the increased education funding, among other initiatives. The problem, however, is getting the Legislature to come aboard.

Lawmakers and voters have bristled at the kind of sweeping tax reform proposed by Cutler. And without broadening the tax base or choosing to substantially cut costs elsewhere in the state budget — something else lawmakers have been hard-pressed to do — meeting the 55 percent benchmark has been impossible.

“The Legislature will forever have the debate about whether (meeting the requirement) is as important to pay for as something else in the budget,” Maine Education Commissioner Jim Rier said Wednesday.

Rier, whose tenure with the Department of Education spans back to Gov. Angus King’s administration, said that’s because voters approved a 55 percent state funding level at the ballot box but with no guidance on how to pay for it.

“The people who voted yes for 55 percent didn’t say yes to raising any taxes,” he said.

While moving toward 55 percent funding would be helpful, it wouldn’t be a silver bullet for the problems looming over Maine’s school districts. Declining enrollment, increases in the number of low-income students, reductions of federal funding and concerns over administrative efficiency also apply pressure to state and local education budgets, Rier said.

LePage expressed an even more pessimistic attitude during the last gubernatorial debate, held Tuesday at WMTW-TV’s studio in Auburn.

“Fifty-five percent is never going to be achieved,” he said.

The governor offered other ways to improve schools: “First, you’ve got to weaken the union, which my opponent (Michaud) is married to,” LePage said. “Secondly, you’ve got to get more money into the classroom” and out of administration.

Jim Boothby is the superintendent of Regional School Unit 25, the school district that serves Bucksport and several surrounding towns. He said the state’s failure to meet its financial obligation to local districts is a top concern in Bucksport.

“What’s not paid for by the state has to be made up at the local level” via property taxes, Boothby said. “But the ability to afford quality education will vary from community to community.”

In other words, more affluent communities are better positioned to make up for the gap created by the state not meeting its requirement.

Some fear impending revenue constraints may only make meeting the 55 percent threshold more difficult to achieve. A temporary increase to the sales, meals and lodging tax increase established last year will sunset in summer 2015, and municipal officials across the state are pushing for a restoration of millions of dollars in revenue-sharing that were cut in the current budget. Given the decisions on those issues that will have to be made in the next budget cycle, it’s difficult to see where lawmakers will find more than $100 million for education.

Connie Brown, executive director of the Maine School Management Association, said a lot will depend on the gubernatorial election.

“A lot will depend on who gets elected, and what their constituents have given them for marching orders when they get to Augusta,” she said Wednesday.

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