Investing in Our Future pt 3: Can an Arkansas Public School Survive on Only 25 Mills?

"If you think education is expensive, try ignorance."

                    - Derek Bok

In Arkansas, school funding is a shared responsibility between state and local communities.  While the state provides foundation funding to help equalize opportunities, the financial health and long-term viability of a school district still depend heavily on local support.

One question that occasionally arises in policy discussions AND discussions among communities is:

Could a public school district remain viable if it relied ONLY on the minimum 25 mills from its local community?

The short answer is it would be extremely difficult - and in many communities, impossible.

Understanding the 25 Mil Requirement

Arkansas law requires every school district to levy a uniform rate of 25 mills for maintenance and operation (M&O).  This tax is applied to the assessed property value in the district and is used solely to fund public schools. (a mill is $1 in tax for every $1,000 of assessed property value).

This 25 mill rate is called the Uniform Rate of Tax (URT) and is the baseline local contribution to the school funding system.  

However, those 25 mills was never intended to fully fund a public school.

The Role of Foundation Funding

Arkansas uses a foundation funding formula designed to guarantee that every district receives a minimum amount of funding per student.  The foundation amount can fluctuate slightly (for example, the amount will be $125 less per student next year.  That is an approximate loss of $75,000 for our district),  but the amount is roughly $8037 per student.  The State makes up the difference if local property taxes do not generate enough revenue to meet this threshold.

At Two Rivers, local taxes generate $4,550 per student, so the state provides the remaining $3,487 to get us to the required $8,037 because our local taxes do not generate enough revenue.

Even with this equalization system, the 25 mill requirement only represents the minimum contribution, NOT a complete funding model.

The Funding Matrix

Arkansas’s school-funding matrix is not the budget of an actual school. It is a model. Lawmakers create an imaginary 500-student school, determine the teachers, support staff, materials, transportation, maintenance and other resources that school should need, and then divide the estimated cost by 500. That calculation helps establish the foundation-funding rate.

For example.  The matrix funds one kindergarten teacher for every 20 kindergarten students a school has enrolled.  If a school has 45 kindergarteners enrolled, they are funded for two full positions and only 20% of a third.  However, the rules state that a kindergarten class can not have more than 22 students (IF there is a instructional aide in the room for at least half the day).  That means a third teacher would be required by law, but not fully funded.  Approximately 80% of the third teachers salary will have to come from somewhere else in the budget.

The matrix is best viewed as a recipe, not a shopping list. It shows how the state calculated the cost of an adequate education, but it does not perfectly describe the actual costs faced by every district. And as anyone who has operated a school district knows, imaginary buses never break down, imaginary roofs never leak, and imaginary insurance premiums are always much easier to afford.

Why EVERY District in Arkansas Levies More Than 25 Mills

All school districts in the state of Arkansas levy more than the required 25 mills.  The average millage rate for Arkansas schools is 39.21 mills.  14.21 mills OVER the required minimum.  

Why?

Because additional mills support things that the basic funding formula does NOT cover:

• Facility construction and debt service
• Maintenance and infrastructure
• Transportation and equipment
• Expanded academic programs like Agri, athletics, Pre-school, tutoring services, field trips, college opportunities, and more.
• Competitive compensation to recruit and retain highly qualified staff.

Without these additional mills, districts would not be able to maintain modern facilities or offer the educational opportunities that the community has come to expect.

The Practical Reality of a 25 Mill District

Imagine a district funded by only the minimum local contribution.

In theory, the state's foundation funding formula would still provide the BASE level of funding per student.  However, the district would likely face several serious challenges:

1.  Limited Facilities and Infrastructure

Bond issues and building improvements are typically supported through additional millage.  A district funded at the minimum would struggle to maintain current facilities and make additional improvements (like a new pre-school, lights on baseball/softball fields, etc.) impossible.

2.  Difficulty Recruiting and Retaining Staff

Teacher salary and benefits often rely on local supplements.  We are only funded to pay the minimum required.  Any raises, district provided merit pay, stipends for additional duties, or bonuses has to be paid through additional millage revenue.

3.  Reduced Local Flexibility

Local millages gives the community the ability to invest BEYOND the basic educational model and what the school can offer their students.  Without it, schools will be forced to offer only the bare minimum.

4.  Vulnerability to Enrollment Changes

Rural districts with declining enrollment (over 80% of all districts in Arkansas) already face financial pressure.  Without additional local revenue streams, those pressures become greater and likely insurmountable .

The Broader Question

What SHOULD the role of the local community be in supporting its schools?

Historically, all Arkansas communities have chosen to invest beyond the minimum.  Why is that?  It is because they recognize that strong schools are essential for:

• Community stability.
• Opportunities for ALL children
• Community control (allows the community to tailor the schools to meet local needs)
• Safety
• Economic Development

A district funded only at the minimum level might technically function for a short period of time, but it would not be able to provide the robust educational programs and facilities that communities expect.

Final Thoughts

The 25 mill URT was never designed to represent the full investment required for a thriving school district.  When communities support additional millage, they are not simply increasing taxes, they are making a declaration about what they believe their schools, their students, and their future are worth.