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Education Funding in Delaware Is Working

By John Marinucci, Advisory Board Member, A Better Delaware

It has become quite fashionable for education advocates and stakeholders to argue that the system of education funding in Delaware is broken. Critics claim that Delaware’s education funding system is convoluted, complex and should be discarded in favor of some other funding mechanism.  But, before we pass judgement and seek to scrap the system, it’s important to establish a foundational understanding of the Delaware Education Unit Funding structure.

Delaware’s Unit Funding structure is entirely formula driven.  Funds are appropriated to school districts and schools based on the number of students enrolled, with three types of funds being received: State funds, Local funds; and Federal funds.  Prior to Federal Covid Relief funds, the level of Federal support was relatively stable and constant, and made up approximately 8% of the funds received by districts.  This remaining, primary funding sources that make up approximately 92% of education funding are State and Local funds.  State funds provided to school districts are appropriated based on the Units Funding system through three funding divisions – aptly named Division I, Division II, and Division III.

Division I funding represents State funds allocated to school districts to fund teacher, administrator, student support personnel, and administrative support salaries.  A formula in Delaware law establishes the number of students that constitute a single funding unit.  That same law establishes the number of units that trigger the “earning” of various school and district level administrators as well as student support personnel.  The larger the number of students enrolled, the more units “earned”, and the more administrators and support personnel “earned” by the formula.  The Delaware statutes also contain pay scales for the various classes of employees that establish the State contribution to that individuals’ ultimate salary. The scale accounts for the incremental increases a teacher can earn based on years of experience and level of education. An individual’s final salary may also include a local salary supplement determined by the board of the local school district.

The Division I funding structure is intended to reward higher levels of education and greater years of experience, giving districts the incentive to hire employees with the highest level of education and the most experience.

Teachers with more experience and seniority may seek a transfer for personal, or other reasons, and often seek transfers into positions and to schools that they perceive as easier or less stressful.  This leaves a vacant position in what can be considered a more difficult position or school, to be filled by a less senior educator, who, of course, is paid less, based on the scale.  This leads to the conclusion that employees in what are perceived to be less desirable schools or positions are paid less than employees in the more desirable positions or schools, which in fact, is true.  To attract and retain the senior, most experienced employees to the most challenging positions and schools, significant incentives must be made available.

Division II funding is allocated to fund the State’s share of all the “stuff” it takes to run an education system, books, curricula, supplies, electricity, heating fuels, etc.  Division II funding is allocated based on the total units “earned” by a school district, based on the assumption, the more students, the more “stuff” is needed.  Division II funds are not intended to cover all of the other education costs, however. Districts are expected to use Local Funds to supplement State Division II funds.

Division III funding is what is known as “equalization” funding.  Division III recognizes that some neighborhoods have greater property wealth and therefore a greater ability to generate local property taxes, the primary source of local funding, and seeks to balance the inequities inherent with the great variations in local property taxes.  Districts with lower property values receive a greater amount per unit than districts with higher property values.

Local Funds make up the third source of funding.  Local funds are the funds collected by school districts generated through local property taxes and are intended to supplement the State and Federal funds.  Each district establishes a school property tax to be assessed on properties within its district boundaries, which must be approved by a referendum vote of the citizens within the district.  The education system in Delaware is established on the fundamental principle of “Local Control” and referenda driven local property tax authority represents the hallmark of that Local Control.

This funding structure provides budget certainty to school districts.  Districts can estimate the funds to be allocated based on their student enrollment, which enables them to better budget and manage their finances.

There is one shortcoming of the education funding structure. Currently, the State has no regular unit-driven funding for technology.  Imagine a school with no computers, no smartboards, no websites, no on-line testing or on-line curricula.  Libraries with no on-line access to perform research.  It’s impossible to conceive of a life without technology in this day and age, yet the State provides ZERO unit-driven funding to support the technology needs of districts, schools and students.  State technology funding that has been provided has been in fits and starts and woefully insufficient.

A word of caution – State funds have historically constituted the majority of funds available to school districts. However, recently the trend has been to shift the responsibility for education funding in Delaware from the State to the districts’ local property taxing authority.  Specifically, in State Fiscal Year 2007, the ratio of funding of Delaware schools was 64% State Funds, 28% Local Funds and 8% Federal Funds.  Ten years later in Fiscal Year 2017 that ratio was 59% State Funds, 33% Local Funds and 8% Federal Funds.  A full 5% of the total funding for the respective year has shifted from the State to the districts’ local property taxing authority.  This is alarming since State funding is a much more equitable form of education funding than local funds because it doesn’t matter “what side of the tracks” the kids come from, the funds for their education will be the same.  Local property taxes are very much driven by the relative property wealth of the community from which those taxes are assessed and collected.  And despite equalization funding, intended to lessen those inequities, in fact, some remain.

In conclusion, while the State of Delaware’s Unit Funding structure may be old and may not include vital aspects that were not a consideration when it was first conceived, such as technology funding, the State’s Unit funding structure is clearly an inherently more equitable funding source than local property taxes.  Mind you, local property taxes and local financial participation in education funding play an important role in the complete funding structure, after all, communities must have “skin in the game”, but it is short-sighted to dispose of a funding structure simply because it’s “old”.  The Unit Funding structure in Delaware works.  The Unit Funding structure in Delaware is inherently equitable.  While it does lack the requirement of a regular, periodic review to assure it meets the funding needs of the current education necessities and obligations, the Delaware Unit Funding structure is not fundamentally broken.

John is the former Director of Operations for the Milford School District, Director of Finance for the DOE, and Executive Director of the Delaware School Boards Association.