House Bill 4130: Mississippi School Funding Formula

May 20, 2024May 22, 2024 Bill Tracker

Latest Action

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On May 8, the Governor signed HB 4130 into law.

Explanation of the Bill

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Once approved by the Governor, House Bill 4130 will replace the Mississippi Adequate Education Program (MAEP) school funding formula with the Mississippi School Funding Formula (MSFF). MSFF is a weighted student funding formula that will provide school districts with per-student funding based on net 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

HB 4130 implements a BSA of $6,695.34 in FY25. Using the proposed education budget (HB 1823) as a guide, the combination of this BSA and the requisite student weights will result in $2,958,652,725 in state funding for public schools via MSFF in FY25—an increase of over $200 million from the current fiscal year under the MAEP formula.

MSFF is very similar to the proposed INSPIRE formula that passed the House earlier in the session. One notable difference is that MSFF includes an “objective formula” to recalculate the BSA every four years, starting in FY29. In the intervening years between recalculations (including the three fiscal years between FY25 and the first recalculation in FY29), the BSA will be subject to an inflationary component. (Under the proposed INSPIRE formula, the State Superintendent would have convened a working group of educators to propose changes to the BSA every four years instead of utilizing a formula; however, the inflationary component in MSFF is nearly identical to INSPIRE). 

Other differences between MSFF and INSPIRE include a slight reduction in special education and English-language learner weights under MSFF, which will result in somewhat less state funding for these students. MSFF also uses a somewhat lengthier formula than INSPIRE to apply student weights for the purpose of determining district funding, though the result is functionally the same. However, MSFF is still a major departure from the MAEP formula. In each section below we expand on how MSFF differs from MAEP and what this means for public schools.

Weighted Student Funding, Explained

The weighted student funding formula under MSFF is relatively straightforward. Funding for each district will be determined by multiplying the BSA by the “final weighted enrollment,” which is determined by adding the following:

1. Net enrollment of the district
2. The product of multiplying each weight by the applicable percentage of students in the district, and then multiplying this figure by the net enrollment

For instance, if a district had a net enrollment of 10 students, and each student was classified as low-income, you would take the following steps to determine final weighted enrollment:

1. Multiply 0.3 (reflecting the low-income weight of 30%) by 1 (reflecting that 100% of students in the district are classified as low-income)
2. Multiply the resulting figure (0.3) by the net enrollment (10).
3. Add the resulting figure (3) to the net enrollment (10)

To then determine funding for this district, you would simply multiply the final weighted student enrollment (13) by the BSA ($6,695.34).

In practice, the math will be somewhat more complicated, as there will be much higher net enrollment as well as many additional weights that will only pertain to applicable students (the sparsity weight for students in rural areas also involves a few extra steps to calculate). Importantly, these weights will 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% will be applied to all students classified as low income. Under MSFF, low-income students will be identified through “direct certification,” meaning that the Mississippi Department of Education (MDE) will 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 will 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 eligible¹, all students automatically become eligible (regardless of income status)—meaning this weight gets applied to the vast majority of students in Mississippi. Because the MSFF definition of low income is more targeted, and because the weight is six times larger, the low income weight under INSPIRE will enable resources to be better targeted to student need across Mississippi.

English-language learner: 15%

A weight of 15% will 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 will change this. (Note: under INSPIRE, this weight was initially 20%).

Special education: 60%, 110%, or 130%

A weight ranging from 60-130% will 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): 110%
• Tier 3 (deaf-blind, multiple disabilities, traumatic brain injury, visually impaired): 130%

A student with multiple disabilities will qualify for the highest tier. A special education weight will 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 will be spending more money on special education and districts will have more flexibility in how they use funds, as long as they maintain spending levels over time. (Note: under INSPIRE, the Tier 2 and 3 weights were initially 125% and 170%, respectively).

Gifted: 5%

A weight of 5% will 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% will apply to each high school student enrolled in a CTE course. A student enrolled in multiple CTE courses will 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% will apply to each student identified as low income above a threshold of 35% in each district. This weight will only apply to students in districts where at least 35% of students have been identified as low income. This weight will apply in addition to the low income weight of 30% and will 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 will be applied to the weighted enrollment after other weights have been applied. The sparsity weight will 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 with five students per square mile, MDE would subtract five from eight to get a sparsity weight of 3%.

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

Determining the Base Student Amount

Alongside the funding weights, the base student amount (BSA) is a key component of MSFF. Similar to HB 1453 (the INSPIRE bill that ultimately died), HB 4130 calls for a statutory (i.e., not calculated via a formula) base student amount (BSA) of $6,695.34 in FY25. In FYs 26, 27, and 28, this BSA will be subject to an inflationary component that will increase the BSA by an annual rate of 25% of the BSA multiplied by the 20-year average consumer price index (CPI), which measures the rate of inflation. For example, using the current 20-year average CPI of 2.45%, we would take the following steps to determine the FY26 BSA:

1. Multiply 25% by the FY25 BSA of $6,695.34
2. Multiply the resulting figure ($1,673.84) by the 20-year average CPI (2.45%)
3. Add the resulting figure ($41.01) to the FY25 BSA
4. FY26 BSA: $6,736.35

Starting in FY29, the State Board of Education will recalculate and propose a new BSA every four years (applying the inflationary component described above in the intervening years) using an “objective formula” which will be the sum of the following components:

• Instructional cost: the statewide average teacher salary (including local salary supplements, aside from the highest 5% and lowest 5% of local salary supplements) divided by the statewide student-teacher ratio.
• Administrative cost: 20% of the instructional cost.
• Ancillary personnel and expenses: 30% of the instructional cost.
• Operation and maintenance of plant: the average daily attendance (ADA) of selected districts (districts with ratios of plant and maintenance expenditures per 100,000 square feet and maintenance workers per 100,000 square feet that are between one standard deviation above the mean and two standard deviations below the mean) divided by the plant and maintenance expenditures of these districts.

Under HB 4130, in years when state revenue has remained stagnant or declined the Legislature has authority to either retain or lower, respectively, the previous year’s BSA—even if the State Board of Education has recommended an increase to the BSA based on the recalculation formula.

(Note: HB 4130 uses the terms “base student amount” and “base student cost” interchangeably. Though the relevant statutes will likely be amended in coming years to make this language uniform, their interchangeable use has no impact on the functionality of MSFF. We have opted to exclusively use the term “base student amount” for the sake of clarity).

Counting Students: Net Enrollment

Under HB 4130, school funding will be determined by net enrollment rather than average daily attendance (ADA), as student counts are currently determined under MAEP. As their names suggest, net enrollment 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, net enrollment yields a higher number than ADA, meaning that counting students using net enrollment will yield a higher count—though the exact amount will vary by district.

As is the case under MAEP, funding will be based on projected student counts (albeit using net enrollment 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 will continue to be based on projections included in the charter contract. However, unlike MAEP, if actual net enrollment in a given year is less than projected net enrollment for that year, the state will 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 will only affect charter schools by changing their reconciliation to be based on net enrollment for both projected and actual counts.

Because funding for each district is in large part based on the applicable weights, HB 4130 requires superintendents to submit data on net enrollment and specific student populations to the Mississippi Department of Education (MDE) along with an affidavit attesting that this data is accurate. The State Board of Education is authorized to withhold funding allocations to districts that report inaccurate data.

Hold-Harmless Provision

The MAEP statute includes a provision, § 37-151-7(3)(b), that has effectively prevented 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 base student cost 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 4130 will repeal this “hold-harmless” provision, effectively guaranteeing an eventual decrease in state funds to affected districts. (As of last year, 10 districts still benefit from this provision.)

However, HB 4130 includes a temporary “hold-harmless” provision for FYs 25, 26, and 27 that prevents 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. This means that the current “hold-harmless” districts (as well as any districts that may lose funding under MSFF) will continue to benefit from these provisions until FY28. 

State/Local Share

As is the case under MAEP, local districts will 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 MSFF 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 4130 will not repeal or amend the 27% rule, under MSFF, districts benefiting from the 27% rule will 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 MSFF, these three programs will be funded within the formula—meaning that local districts will pay up to 27% of the cost of these programs, rather than 0%. In other words, while local districts will still pay no more than 27% of formula funds, the “pie” of formula funds will be somewhat larger under MSFF.

Changes to Districts of Transformation and Mississippi Achievement School District

HB 4130 also includes language, similar to House Bill 1696 (which previously passed the Legislature this session and has been signed into law) that will revise provisions related to the state takeover of struggling school districts. This language abolishes the Mississippi Recovery School District and Mississippi Achievement School District, and clarifies the pathway for the State Board of Education to take corrective action in school districts. We have provided a separate, comprehensive analysis of these changes in our summary for HB 1696.

There are a handful of differences between HB 4130 and HB 1696. Some of these are technical amendments, including updating language that previously referred to MAEP to refer to MSFF. However, one change is more substantive: HB 4130 deletes language that requires the Mississippi Statewide Accountability System to require that at least 5% of schools and at least 10% of schools to be graded as “F” and “D,” respectively. This change was not included in HB 1696.

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.

We are awaiting official projections for FY25 district allocations under MSFF, but based on previous allocation estimates for the INSPIRE formula (which was functionally very similar to MSFF) we are confident that MSFF will result in a far more equitable distribution of state funding than under MAEP, in addition to providing more state funding overall. We previously published an analysis comparing funding projections under INSPIRE and MAEP that demonstrated how INSPIRE was clearly far more equitable than MAEP. We are anticipating similar results under MSFF and will publish them once we have the requisite data.

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¹ Between 2010 and September 2023, the threshold for CEP was 40%. In October 2023, the new threshold of 25% went into effect. Under this new threshold, nearly all school districts in Mississippi will qualify for CEP.