Missouri

Missouri Governor Mike Parson signed his second state budget in June 2019, one which fully funds its P-12 funding formula and increases higher education allocations. Comprising 25.7% of its $29.7 billion operating budget, Missouri's P-12 and higher education funding has drawn scrutiny, however, for leaving critical elements underfunded. In P-12 education, the adequacy target in its funding formula remains stagnant and transportation funding remains low. In higher education, Missouri continues to hover near the bottom decile nationally in expenditures as student tuition funds larger portions of its budgets and facilities improvements are deferred.

P-12 education: priorities and pressing issues

A central priority in Missouri P-12 education is the full funding of its foundation funding formula, which went into effect during the 2006-2007 school year. The formula weights average daily attendance figures based on student poverty status, special education status, English language learner status, and regional wage adjustments. This figure is applied to an adequacy target (SAT) which is determined through average per-pupil expenditures in districts deemed successful by State standards.¹ Finally, the formula subtracts a measure of local tax revenue effort. On the one hand, Missouri fully funded its foundation formula in fiscal year FY2020, allocating 56.6% of its P-12 budget through the formula.² On the other hand, its SAT is now 15.4% lower than its original FY2007 calculation and 11.9% lower than its peak in FY2014.^{3 4}

Student transportation remains a top priority for Missouri education policymakers. Over two-thirds of Missouri districts are categorized as rural and P-12 transportation funding remains a critical concern particularly in those areas.⁵ In FY2020, Missouri allocated 1.7% of its state P-12 budget for student transportation, a 1.8% increase from its FY2019 appropriation. While these amounts represent substantial increases from prior years, including a 20.6% increase from FY2017 appropriations, they still fall far short of allocations prior to the Great Recession. Further, the Missouri funding statute recommends that the state fund up to 75% of district transportation costs.⁶ In many districts, state contributions amount to less than 20% of total transportation costs, forcing districts to shift budgets away from other important educational inputs to fund their costs of student transportation.⁷

Higher education: priorities and pressing issues

In FY2019, Missouri ranked 46^th nationally in per-capita expenditures and 44^th in expenditures per $1,000 of personal income in its support of public state higher education.⁸ Net student tuition as a share of higher education revenues has grown sharply relative to state contributions over the past decade.⁹ Amid this challenging landscape, the state allocated a 11.2% increase to its higher education budget in FY2020. Despite these increases, many critical challenges remain. Enrollment in Missouri's higher education institutions remains significantly higher than in prior decades, though its funding per enrolled student has not recovered to pre-Recession levels. One particular funding challenge concerns the state's higher education facilities. Missouri's Department of Higher Education estimates that its facilities require an estimated $1.5 billion in deferred maintenance investments, a figure greater than its cumulative investment in higher education facilities over the past two decades.¹⁰ For example, in FY2019 the University of Missouri established a special initiative to reduce its facilities expenditures primarily through building consolidation and demolition.¹¹ Finally, the FY2020 budget allocated $18.9 million primarily to its community colleges to create a new workforce development and career readiness initiative in partnership with local employers.¹²

Forces threatening p-12 and higher education funding

Two primary issues in Missouri threaten its funding to P-12 and higher education. First, total state revenue collection stagnated in FY2019 increasing by less than 1% in nominal terms. This small increase triggered a delay in approved legislation to reduce the state's top income tax rate.¹³ Future planned cuts to state income tax rates, however, may apply additional pressure to P-12 and higher education budgets. Second, Missouri's allocations to its state Medicaid program continued to outpace increases in total budget allocations, comprising...