House Bill 1453: INSPIRE Funding Formula

March 1, 2024April 5, 2024 Bill Tracker

Latest Action

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The Senate failed to take action on HB 1453 by the April 2 deadline, causing the bill to die in committee. However, Senate Bill 2332, as amended by the House, includes similar language to HB 1453.

Explanation of the Bill

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House Bill 1453 would replace the MAEP school funding formula with the Investing in the Needs of Students to Prioritize, Impact and Reform Education (INSPIRE) formula. The proposed INSPIRE formula would provide school districts with per-student funding based on average daily membership (ADM, a measure of enrollment) and a base student amount (BSA) augmented by weights to direct additional funding for students in the following categories:

• Low-income students 
• English-language learners (ELLs)
• Special education students
• Gifted students
• Students enrolled in career and technical education (CTE)
• Students in districts with concentrated levels of poverty
• Students in districts that are sparsely-populated

These weights would allow for a more equitable distribution of state funding as schools with greater student need, including poverty, would consistently receive higher state funds. Actual funding data from FY24 shows that MAEP no longer provides equity in state funding. (See Inequity in MAEP, below, for more information.)

HB 1453 calls for a minimum BSA of $6,650. Based on an internal analysis of enrollment, student demographics, and revenue collection, we estimate that a BSA of $6,650 combined with the proportional weights in HB 1453 would require roughly $2.97 billion in state funding—an increase of $241 million, or 8.8%, over state spending on MAEP in FY24. This would result in an increase in state per-pupil funding for all but a handful of districts. (Most of the districts losing money under HB 1453 are currently benefiting from a “hold-harmless” provision that prevents funding from falling below 2002 levels, even if student enrollment is now much, much lower.)

Beginning in FY28, HB 1453 would require that the BSA increase annually by a rate of 20% of the consumer price index (CPI), which measures the rate of inflation. For example, with a BSA of $6,650 and a CPI of 3% in a given fiscal year, the BSA would be $6,689.90 for the following fiscal year. HB 1453 also requires the State Superintendent to develop and submit a report, with input from a working group of district superintendents, a representative from the charter schools, and other appointees of the State Superintendent, to the legislature every four years that reviews the BSA and makes recommendations for potential revisions “based upon considerations which may include the effects of inflation, studies of the actual costs of education in the State of Mississippi, research in education and education finance, and public comment.” These provisions would result in modest increases to the BSA each year, as well as the consideration of what would likely be larger increases every four years, which is similar to the process for MAEP now. The updated bill language removes the sentence stating that the legislature will set the BSA in the budget due to this new language.

Because the initial BSA of $6,650 for FY25 was not calculated with a formula (but rather anchored in FY24 actual spending with a sizable increase), critics of the bill have stated that the legislature has “just picked a number” for the BSA. However, given the legislature’s approach to funding MAEP (i.e., not fully funding the BSC calculated under MAEP), the legislature already effectively “just picks a number” for the BSC under MAEP. The purpose of INSPIRE is to improve how state spending is allocated, regardless of how much money the legislature decides to spend on education in a given year. However, as noted, the BSA in HB 1453 would result in an increase in state spending over FY24 levels—and would be guaranteed to increase in future years, providing a new “full funding” number annually.

Other changes under HB 1453 include counting students based on average daily membership (ADM) instead of average daily attendance (ADA) and repealing a “hold-harmless” provision that prevents districts from receiving a lower state share of their operational cost from MAEP than they received in 2002.

HB 1453 would not alter the current state/local share policy under MAEP, wherein each district receives state funding but is expected to contribute locally generated revenue to fund a portion of the formula (either 28 mills in assessed property value or 27% of the formula, whichever is less). However, because this “27% rule” would be applied across the totality of state funding, wealthier districts would be required to support a larger share of their allocation, which accounts for why a handful of non-“hold-harmless” districts would receive lower funding from INSPIRE (see State/Local Share, below, for more information). Finally, HB 1453 would not repeal codes related to funding for student transportation, enabling the legislature to continue to allocate programmatic funding to districts for this purpose.

We expand on the INSPIRE funding formula and other changes under HB 1453 in the sections below. Please note that HB 1453 is a long and complex bill, and while we have detailed the most consequential changes, there are aspects of the bill that we are still analyzing. We will expand this bill summary as we complete these additional analyses.

Weighted Student Funding, Explained

INSPIRE’s weighted student funding formula is relatively straightforward. Funding for each district would be determined simply by multiplying the district’s average daily membership (ADM) by the applicable weights for individual students, and then multiplying this figure (“final weighted student enrollment”) by the base student amount (BSA). For instance, if a district had an ADM of 10 students, and each student was classified as low-income, you would multiply 10 by 1.3 (reflecting a weight of 30%) to get a final weighted enrollment of 13. You would then multiply the final weighted enrollment (13) by the BSA ($6,650), which would equal the district’s annual INSPIRE allocation of $86,450.

In practice, the math would be somewhat more complicated, as there would be much higher ADMs as well as many additional weights that would only pertain to applicable students (the sparsity weight for students in rural areas also involves a few extra steps to calculate). Importantly, these weights would apply cumulatively to individual students. For example, a student who receives special education services and is classified as low income would have both weights applied to their enrollment. These weights are as follows:

Low-income: 30% (i.e., each applicable student is counted as 1.3 students)

A weight of 30% would be applied to all students classified as low income. Under INSPIRE, low-income students would be identified through “direct certification,” meaning that the Mississippi Department of Education (MDE) would automatically identify as low income any student who qualifies for (or whose family qualifies for) a means-tested program like the National School Lunch Program, Head Start, Medicaid, the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), or the Food Distribution Program on Indian Reservations (FDPIR). This weight would also apply to students who are homeless, in foster care, runaways, or migrants.

This definition of low income is a significant change from MAEP’s current “at-risk” weight of 5%, which applies to any student receiving free lunch under the National School Lunch Program. Because of the Community Eligibility Provision (CEP), in districts where at least 25% of students are eligible, all students automatically become eligible (regardless of income status)—meaning this weight gets applied to the vast majority of students in Mississippi. Because the INSPIRE definition of low income is more targeted, and because the weight is six times larger, the low income weight under INSPIRE would enable resources to be better targeted to student need across Mississippi.

English-language learner: 20%

A weight of 20% would apply to all students identified as entitled to English as a second language (ESL) or bilingual services on the basis of the student’s English language proficiency. English-language learners (ELLs) now make up 3.1% of Mississippi’s student population (an increase from 0.4% in 2000-2001) and require unique support from their schools. However, Mississippi is one of two states (the other being Montana) that does not provide additional state funding for ELLs. INSPIRE would change this.

Special education: 60%, 125%, or 170%

A weight ranging from 60-170% would apply to students receiving special education services, based on three disability tiers:

• Tier 1 (language/speech impaired, developmental delay, specific learning disability): 60%
• Tier 2 (autism, emotional disability, hearing impaired, intellectual disability, other health impairment, orthopedic impairment): 125%
• Tier 3 (deaf-blind, multiple disabilities, traumatic brain injury, visually impaired): 170%

A student with multiple disabilities would qualify for the highest tier. A special education weight would be a departure from MAEP’s current approach of funding special education based on the approved number of special education teachers in a given district (MDE has a complicated formula to calculate this “teacher unity allocation”) as well as their average salary. As a result of the tiers, the state would be spending more money on special education and districts would have more flexibility in how they use funds, as long as they maintain spending levels over time.

Gifted: 5%

A weight of 5% would apply to 5% of all students in each district, regardless of how many students are identified as gifted in a given district. Presumably, gifted students are more or less evenly distributed across school districts, but there is substantial variation in the proportion of students who are, in practice, screened and identified as gifted. Nationally, research demonstrates that students in high-poverty areas and students of color are less likely to be recognized as gifted. A universal 5% weight applied to 5% of students in each district assumes that gifted students are not concentrated in certain districts. This is a departure from the current MAEP approach of funding gifted education based on the number of MDE-approved gifted teachers in a given district and their average salary.

Career and technical education (CTE): 10%

A weight of 10% would apply to each student enrolled in a CTE course. A student enrolled in multiple CTE courses would only be counted once for this purpose. This is a departure from the current MAEP approach of funding CTE based on the number of MDE-approved CTE teachers in a given district and their average salary.

Concentrated poverty: 10%

An additional weight of 10% would apply to each student identified as low income above a threshold of 35% in each district. This weight would only apply to students in districts where at least 35% of students have been identified as low income. This weight would apply in addition to the low income weight of 30% and would only apply to the number of students above the threshold of 35%. For instance, in a district of 100 students where 36 students are identified as low income, a concentrated poverty weight of 10% would be applied only to one student (in addition to the low-income weight of 30% applying to all 36 low-income students). The idea behind the concentrated poverty weight is that high concentrations of poverty have a compounding effect on the individual needs of low-income students. There is not currently a concentrated poverty weight under MAEP.

Sparsity: 0-8%

In “sparsely populated districts or charter schools” (i.e., districts or charter schools with fewer than eight students per square mile within their geographic boundaries), a district-specific sparsity weight would be applied to the weighted enrollment after other weights have been applied. The sparsity weight would be calculated by subtracting the number of students per square mile from eight and then applying this figure as a percentage. For instance, in a district five students per square mile, MDE would subtract five from eight to get a sparsity weight of 3%.

This weight would be applied after accounting for other weights. Under INSPIRE, every other weight would first be applied to calculate a “preliminary weighted enrollment.” In districts that are not sparsely populated, the preliminary weighted enrollment would be the same as the final weighted enrollment (which would then be multiplied by the BSA). In sparsely populated districts, the sparsity weight would be applied to the preliminary weighted enrollment to calculate the final weighted enrollment (which would then be multiplied by the BSA).

Counting Students: Average Daily Membership

Under HB 1453, school funding would be determined by average daily membership (ADM) rather than average daily attendance (ADA), as student counts are currently determined under MAEP. As their names suggest, ADM counts the number of students enrolled at a given school, whereas ADA counts the number of students attending a given school each day. Due to student absences, ADM yields a higher number than ADA, meaning that counting students using ADM would yield a higher count—though the exact amount would vary by district. (In 2022-2023, statewide ADM was 439,787, about 12% higher than the statewide ADA of 392,408.) 

As is the case under MAEP, funding would be based on projected student counts (albeit using ADM rather than ADA), with traditional public schools using months two and three from the previous year to make these projections. Enrollment projections at charter schools would be based on projections included in the charter contract. However, unlike MAEP, if actual ADM in a given year is less than projected ADM for that year, the state would subtract the difference from the following year’s funding, a process called reconciliation. Charter schools are already subject to a reconciliation process, so this provision would only affect charter schools by changing their reconciliation to be based on ADM for both projected and actual counts.

Hold-Harmless Provision

The MAEP statute includes a provision, § 37-151-7(3)(b), that effectively prevents districts from receiving a lower state share of their operational cost from MAEP than they received in 2002. Because most districts currently have larger student enrollments than in 2002 and because the overall BSC has risen in absolute dollars, this “hold-harmless” provision only impacts a handful of districts that have significantly smaller student enrollments than in 2002. HB 1453 would repeal this “hold-harmless” provision, effectively guaranteeing a decrease in state funds to affected districts. (As of last year, 10 districts still benefit from this provision.)

However, HB 1453 would provide a temporary “hold-harmless” provision for FY25 that would prevent these districts from receiving less state funding than they did in FY24, including any additional money received from the $240 million line-item for the 2022 teacher pay raise and the $100 million that the legislature appropriated for schools as another separate line-item in FY24. HB 1453 would also provide a temporary phase-out of this “hold-harmless” provision in FY26 and FY27 that would prevent a district from receiving less than 97% of the state funds received in the previous year. This means that the current “hold-harmless” districts would continue to benefit from these provisions to some extent until FY28. 

HB 1453 also requires that the legislature create a taskforce to examine whether any school districts qualifying for the temporary “hold-harmless” provisions, as well as districts rated “F” at the time of review, would benefit from district consolidation or “other legislative action to increase the financial sustainability, operational efficiency, or educational quality” in these districts. There are six districts that will qualify for INSPIRE’s new hold-harmless provision based on estimates of district funding. It is unclear how many additional districts would be rated “F” at the time of review. The taskforce would be required to meet before December 1, 2028.

State/Local Share

As is the case under MAEP, local districts would be required to pay for a share of the operational cost: either the equivalent of 28 mills of property value ($28 for every $1,000 in assessed value), or 27% of INSPIRE formula funds for the district—whichever is less. The “27% rule”, as this provision is known, is generally beneficial for property-rich districts, as it does not require any district to fund more than 27% of the operational cost formula.

Though HB 1453 would not repeal or amend the 27% rule, under INSPIRE, districts benefiting from the 27% rule would still pay a greater share than they pay under MAEP. This is because add-on programs like special education, gifted education, and career & technical education (CTE) are currently funded outside the operational cost and exclusively with state funding—meaning that the 27% rule doesn’t apply to funding for these programs. Under INSPIRE, these three programs would be funded within the formula—meaning that local districts would pay up to 27% of the cost of these programs, rather than 0%. In other words, while local districts would still pay no more than 27% of formula funds, the “pie” of formula funds would be somewhat larger under INSPIRE. (Transportation is a current add-on program under MAEP that would remain an add-on program outside of the INSPIRE formula should the legislature choose to fund it.)

Inequity in MAEP

MAEP no longer serves to provide equity in Mississippi school funding for four primary reasons. First, the current formula only includes a single 5% weight for “at-risk” students as defined by participation in the federal free lunch program. Since 2010, school districts with at least 40% of students identified as eligible for federal poverty programs could serve 100% of children free lunch through a program called the “Community Eligibility Provision” (CEP). CEP is a great advancement for families, but it means that using “free lunch” eligibility as a measure of poverty in schools is now inaccurate. With uptake of CEP high in Mississippi, the “at-risk” weight now applies to most students in most Mississippi districts, making it a very weak differentiator between districts with high poverty and districts with lower poverty. In other words, instead of providing more money for districts with greater student poverty, this provision is essentially an enrollment supplement for everyone. Beginning in October 2023, the threshold for CEP was lowered to 25% ensuring that “free lunch” eligibility will be virtually meaningless as a differentiator for poverty status going forward. The 5% at-risk component is also far too little to make any difference for children in poverty. At only 5%, the additional money is worth barely $300 based on FY24’s actual base student cost. Research suggests a minimum of $600 extra per child is necessary for schools to afford research-based interventions–twice as much as the formula currently provides.

Furthermore, MAEP only accounts for local wealth on a portion of state funds, known as the operational cost, and not on the full balance of state funds, which includes money from the “add-on” programs (i.e., special education, gifted education, career and technical education, transportation, and alternative education). This means that wealthier districts only pay a portion of a portion of what MAEP says an adequate education costs, which means that they disproportionately benefit from state money.

Another place that the formula introduces inequity is that the system is based on ADA. Districts with greater student need, particularly poverty, are more likely to struggle with chronic absenteeism than wealthier districts with lower student need. This means that these districts will get fewer dollars for their total population than a wealthier district with fewer struggles with absences.

Finally, the add-on programs themselves introduce a significant level of inequity. MAEP allocates additional funding for special education, gifted education, and CTE based on the MDE-approved number of these teachers a district may employ as well as their average salary. Districts with more experienced, more credentialed teachers–who are more likely to be wealthy districts–receive more money as a result, regardless of the district’s ability to pay and regardless of whether another district has the same exact number of teachers. 

The result of all of these problems is that, under MAEP, there is no clear correlation between student need and the allocation of state resources to districts. Districts with higher poverty can receive fewer state dollars than districts with lower poverty on a per-pupil basis, and districts with the same level of poverty can receive very different state allocations. In short, the current system is grossly inequitable–one of the key problems MAEP was intended to address in 1997.

This spreadsheet compares projected state funding for FY25 under the INSPIRE formula with total state funding in FY24 under MAEP for every school district.

FY25 projections under the INSPIRE formula were calculated using publicly available data from MDE as well as data obtained from MDE via a public records request. Most data utilized for these projections are from FY24, though certain data are from FY22. Actual FY25 funding may vary based on major changes to local revenue, student enrollment and demographics, as well as any potential changes to HB 1453.

Please note that total state funding in FY24 under MAEP includes additional money received from the $240 million line-item for the 2022 teacher pay raise and the $100 million that the legislature appropriated for schools as another separate line-item in FY24.