The Public Education Funding Commission (PEFC) is back after a month-long break to discuss equalization amid statewide property reassessment fallout.
In June, the body approved five recommendations around Delaware's education funding formula, including committing to a hybrid funding framework that blends elements of the current unit count system with a weighted block grant approach.
While the commission now has an approved framework to work off of, it's time for the body to hash out the details of the education funding formula itself.
One of those pieces is equalization — the top agenda item for Monday's meeting — which is a way for states to level the playing field for education funding relative to school district wealth.
How equalization is calculated and implemented varies by state, but at its core, equalization is a way to ensure the wealth of a student's district does not impact the quality of education they receive.
Delaware does have an equalization formula in place, but it has been frozen indefinitely at its 2009 levels due to the lack of regular, recurring property reassessments, making the formula obsolete.
Colonial School District’s Chief Financial Officer Emily Falcon explains the state would compare home market value data to assessment data, but because of the stagnant assessment data, the tax base was not increasing with the market price increase.
This became problematic because it gave the false impression that districts where home sales prices were increasing were "wealthier" and could generate more local revenue.
But because reassessments weren't occurring and property values weren't increasing on paper, the tax base was not increasing with the market price increase, creating a "paper wealth" that could not be taxed.
“Over time, equalization became more and more expensive and more funds had to be allocated and appropriated to kind of keep this formula working when everyone recognized that the data was not really moving the money and allocating it where it should be," Falcon explained.
With the formula no longer working as it should, the state froze it in fiscal year 2009, meaning districts still get equalization funding based on their changing unit counts, but the amount continues to be calculated based on outdated property values.
This means for years districts have not been getting appropriate supplemental funding from the state to make up for district wealth inequality.
While the most recent reassessment process is now complete in all three counties, appeals are underway and some elected officials are calling for an audit of the reassessment values settled on by third-party contractor Tyler Technologies.
Despite these concerns, and expected legislative changes related to the reassessments in the coming days, PEFC Co-Chair and State Sen. Laura Sturgeon (D-Woodbrook) says it’s time for the commission to begin working on equalization recommendations, noting property values are more accurate now than they were forty years ago.
"This is an important piece of the overall funding recommendations that we're going to have to make going forward. It's 'How are we going to handle local property wealth and the ability for local districts to contribute to their own schools funding?'” Sen. Sturgeon said.
The commission can take two different approaches when it comes to revamping how it implements equalization.
The first is providing equalization funding via a separate line-item, which is how Delaware currently does it. The second way, and how the majority of states provide equalization funding, is through the primary funding formula.
The latter is more difficult to adopt, but Senior Researcher and Policy Analyst at the Learning Policy Institute Mike Griffith says baking equalization into a state's education formula is often more equitable for school districts.
Not only will the PEFC be making recommendations on how to implement equalization, it will also have to decide if it wants to rework how the funding is calculated, in other words, how the state determines the wealth of a district.
These will all be questions for the commission to tackle in the coming months with the next meeting set for September 8.
