BISMARCK - North Dakota lawmakers this year made changes to how school districts are funded that could have positive and negative impacts on schools.

School districts receive state funding each year through a formula, which takes into account student enrollment and other factors. The formula includes a per-pupil payment, or a designated amount of money per student.

Districts receive their per-pupil payments based on their previous year's enrollment. This means growing districts such as Mandan, which gained nearly 200 students this year, don't see funding for additional students until the following school year.

The way school districts are paid has been criticized by some lawmakers and Gov. Doug Burgum. Hence why lawmakers passed an expansive education funding bill this year that makes a number of changes.

The first change was a proposal Burgum introduced in his executive budget: to move districts to on-time funding, or have them receive per-pupil payments based on their current enrollment.

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Burgum also proposed increasing the per-pupil payment by 2% in each year of the 2019-21 biennium. Lawmakers agreed to this proposal, increasing the per-pupil payment, which has remained flat over the past three years, to $9,839 this upcoming school year, and $10,036 for the 2020-21 year.

As for on-time funding, lawmakers declined to make the switch completely, citing the high price to do this.

"It was mostly the cost," said Sen. Donald Schaible, R-Mott, who was chairman of the Senate Education Committee.

Schaible said the Senate, which wanted to switch to full on-time funding in the second year of the biennium, agreed to compromise with the House and instead go to 50% on-time funding starting in 2020-21.

This means districts that gain students that year will get a 50% per-pupil payment. Lawmakers also approved to increase it by 10% annually until it reaches 100%.

Earlier this month, Burgum and Lt. Gov. Brent Sanford were critical of the partial move to on-time funding.

"We feel like that's a miss or a partial victory," Sanford said. "We feel it was a slow walk that could've been done right away and would've really helped those areas that are growing."

Burgum also said the switch to half on-time funding won't completely help burgeoning districts in the west and could harm workforce recruiting.

"Someone may not even make their way to Williston to talk to a Realtor, because if they Google online and see elementary kids in temporary trailers and 35 kids in a class, that may be all they need to know," Burgum said.

Creating equity

In 2013, North Dakota lawmakers implemented a new K-12 funding formula tied to the cost of providing an adequate education, which is funded by a combination of state and local taxes.

Added to the formula in 2013 was a "hold harmless" clause, which protects smaller districts that are losing students. Basically, districts with declining enrollments are given the option to continue to get the per pupil payment they received in 2012-13, or switch to the formula — whichever amount is higher.

This year, the Legislature changed that aid baseline from the 2012-13 level to the 2017-18 level, which is $9,646 per student. Districts will still be able to choose whether to stay at the baseline amount or switch to the formula.

Lawmakers decided this year that districts not on the formula will continue to be able to select from the higher amount, but will see a gradual reduction to the baseline funding over the next three years.

This change has raised questions as to how these smaller school districts with stagnant or declining enrollment will be affected.

"(On-time funding is) a huge infusion of money for (growing) districts," said Sen. Erin Oban, D-Bismarck. "On the flip side, there are going to be districts that this is going to be a challenge for."

Of the 176 operating school districts in North Dakota, about 80 are not on the formula, according to Dale Wetzel, a spokesman for the Department of Public Instruction.

The education funding formula is complicated, and this year state lawmakers also passed legislation for a mandatory interim study of the formula as a whole.

Rep. Mark Owens, R-Grand Forks, who was chairman of the House Education Committee, conceded there are some issues with formula that have gone unaddressed since 2013, and have caused inequity among the schools.

"We have to adjust that," he said.

Oban said she agrees with the gradual decrease in baseline funding for small districts not on the formula, as it will "help take some of that sting out." Though she would rather switch to on-time funding right away for school districts gaining students, including hers in Bismarck, she doesn't want to harm other small school districts.

"How do you help some and hurt others, when the whole goal (of the formula) was to create equity?" she said.

Lawmakers' decision to move closer toward on-time funding, and effectively get all districts on the formula, will have to be discussed at the local level, she said.

"It won't force any closures, but it will make people discuss, 'Can our property taxpayers sustain what we're going to have to contribute to keep a school in our town?'" she said.

State Superintendent Kirsten Baesler said she's pleased that lawmakers decided to boost funding to public schools, but hopes they continue to probe the merits of on-time funding.

"We really need to seize the opportunities in good times to make sure that our rapidly enrolling school districts really are being funded with on-time funding," Baesler said.

State lawmakers passed legislation mandating a study of the education funding formula.