Budget battle brewing over Gov. Mike Kehoe’s school funding proposal

by Rudi Keller, Missouri Independent
February 12, 2025

The debate over how much to spend on public schools could turn into the first big disagreement between Gov. Mike Kehoe and the GOP-dominated Missouri General Assembly.

Kehoe, a Republican who took office in January, refused to recommend a $300 million boost to public school funding in his first budget proposal. But education advocates in the legislature, and the State Board of Education, are defending the request and pushing for it to be funded as lawmakers rewrite Kehoe’s $54 billion spending plan.

During a House Budget Committee hearing Monday, GOP state Rep. Ed Lewis spent a lot of time defending the law that generated the request. He did so, Lewis said in an interview, because the committee has many new members who need to learn that the question of how much money schools require is not just a question of how much lawmakers are willing to spend.

Of the 31 lawmakers on the committee, nine are new to the panel, including its vice chairman, state Rep. Bishop Davidson, a Republican from Republic.

“I am trying to do that because there are a lot of newbies, and the person who’s sitting next to me has never been there, and now he’s the vice chair and the chair of education appropriations,” said Lewis, a former educator from Moberly who chairs the House Elementary and Secondary Education Committee. “I think it’s my job to make sure that the things I’ve learned over the last four years are understood by some of those people that have never done this before.”

Gov. Mike Kehoe dips deeply into surplus as Missouri budget grows to nearly $54 billion

At one point in the hearing, Lewis told his colleagues that if they don’t provide the money, the state Senate will when it gets the budget later this year.

“The question is, do we want to, as the House of Representatives, think we want to go beyond the governor’s recommendation or leave that for the Senate to do?” Lewis said.

The budget committee is in the middle of hearings on department budgets. Any decisions on what will be in, and what will be out, of Kehoe’s recommended budget will be made next month in markup sessions.

The foundation formula, as the public school funding mechanism is known, is costing taxpayers $3.8 billion in the current year. 

The amount required to fund it is determined by a variety of factors, including the amount spent in districts that do well on state achievement tests and expected attendance.

To meet that obligation, lawmakers use money from the state lottery, casino taxes and the general revenue fund.

Kehoe agreed to fund changes to the formula included last year in a major education bill that will add $200 million to the total cost. What Kehoe doesn’t want to fund is the new, higher basic spending requirement determined by annual evaluation under the Missouri School Improvement Program, or MSIP.

If lawmakers accept Kehoe’s recommendation, it would be the first time since fiscal 2018 that the budget doesn’t fully fund the formula.

“While we are committed to making good on the funding commitments passed by the legislature last year,” Kehoe said in his State of the State Address last month, “this budget does not include the additional $300 million liability that was imposed by an administrative body.”

That “administrative body” is the  State Board of Education, which met Tuesday for the first time since Kehoe presented his budget proposal. Board President Charlie Shields, who helped write the foundation formula in 2005 when he was a state legislator, said he understands Kehoe’s position even if he doesn’t like it.

The state general revenue fund must provide the $300 million, if appropriated, and it is also being tapped for money to replace shortfalls in revenue from gambling on the lottery and in casinos. Kehoe’s budget proposal increases general revenue spending for the Department of Elementary and Secondary Education by $464 million, Shields noted.

“In my time, in both the legislature and on the State Board of Education, I have not seen those levels of increases in education funding,” Shields said in an interview.

He has not spoken to Kehoe about the budget proposal, Shields said, or Kehoe’s call to rewrite the formula. 

“We’re cognizant that (the education department) sits within, you know, 14 other state departments, and there’s limited resources,” Shields said. “The legislature will make decisions about that, but I don’t think we have any question of either defending or explaining why we put in the request that we did.”

Missouri has a substantial balance in the general revenue fund — $4.3 billion at the end of January — and Kehoe’s budget projects a $2.6 billion surplus at the end of the fiscal year in June.

But state revenues are falling so far this fiscal year, and Kehoe wants a big income tax cut. That is putting pressure both on the governor and the legislature to limit new spending.

The key figure driving the increase for the foundation formula is called the State Adequacy Target, determined by the cost of education in districts that do well on the MSIP evaluation. Far fewer districts met the standards of the newly revised MSIP, and they tended to be districts with more property wealth and fewer students in poverty or having special needs.

Over the past two years, the adequacy target has increased from $6,375 per student to $7,145. But the figure was nearly static for nearly two decades prior to that, increasing from $6,117 in 2005 to $6,375 in 2020, where it remained for four years.

The reluctance to fund the higher target, which has increased 17% since it was created while inflation has increased prices by 65%, has drawn fire from Democrats.

“It’s very concerning that when the foundation formula remained flat for year after year after year, as inflation was just climbing through the roof, we didn’t have a problem with the formula,” state Rep. Kathy Steinhoff said when Kehoe unveiled his budget.

Steinhoff is a Columbia Democrat and former teacher. 

“But now that the formula is starting to work and the student adequacy target is starting to gain and getting more money into our schools,” she said, “now all of a sudden we’re looking at it.”

If lawmakers don’t include the $300 million for the increased adequacy target, the board of education can adjust it so spending matches the appropriated amount.

The education department didn’t design the new MSIP evaluation to increase the cost of the formula, Kari Monsees, deputy commissioner of education, told the House Budget Committee on Monday.

“The office of quality schools had no inside baseball on what the impact would be of the MSIP criteria that were established,” Monsees said.

During the state board meeting, members said they want legislators to consider what the state needs, not how much it will cost.

“I would just, again, put in a plea to our legislators that if we want to have a high quality workforce for tomorrow, we have to invest today,” said Carol Halquist of Kansas City, vice president of the state board.

While he expects the money to get into the spending plan, Lewis said, politics may have a bigger role in the decision than anything else.

“Is there a reason that we aren’t going to fund it other than just raw money?” Lewis said. “By doing it right now, in his first year, kind of obligates you to continue to do that in future years.”

The question, Lewis acknowledged, could come down to whether lawmakers are ready to buck Kehoe so soon after his election. 

“It’s his first budget, right?” Lewis noted. “Do you want to stomp on the first budget?”

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