Is an obscure school funding tool pushing a trend of one-time bonuses for Utah teachers?

As the 2018 Utah Legislature wrapped up in March, Utah Gov. Gary Herbert thanked lawmakers for their commitment to public education, pointing to a boost in per-student spending by the equivalent of 6.9 percent.

Herbert’s use of fudge word “equivalent” was notable, as members of his staff and state school officials struggled behind the scenes to parse the newly passed education budget after the closing gavel had fallen on Capitol Hill.

Much of the confusion stemmed from late-hour negotiations with the Our Schools Now campaign, whose backers agreed to drop their ballot initiative to boost sales and income taxes on behalf of public education. In exchange, lawmakers passed a package of property and income tax reforms and promised to put a non-binding question about raising Utah’s gas tax on the November ballot.

As lawmakers and Our Schools Now organizers group-hugged over the compromise, upwards of $60 million was quietly shifted into a new and undefined Teacher and Student Success account and an obscure budget item called “flexible allocation.”

“We just didn’t have time at the end of the session to finish our negotiation,” said Rep. Brad Last, R-Hurricane and House budget chairman. “We will be making some adjustments in some of these accounts next year, and I think we can smooth out any problems that may occur.”

Nearly two months later, that budget ambiguity is surfacing again as Utah’s school districts set pay rates for the 2018-2019 academic year. Some districts have sought guidance and others are forging ahead with creative ways to deliver “flexible allocation money” directly to teachers’ pocketbooks.

What they decide could well affect how the state pays its teachers in future years under the Our School Now compromise, with schools already struggling to hire and retain educators as the new funding formulas come online.

Two of Utah’s largest school districts recently announced that in addition to raises, they will also offer a system of bonuses and “grants” to teachers — but only as one-year pay.

Granite School District spokesman Ben Horsley said this year’s infusion into its flexible allocation account played a direct role in a decision to offer a 1 percent bonus to educators as well as in this year’s collective bargaining with the district’s teachers’ union.

“Because it is one-time money,” Horsley explained, “you don’t want to allocate funding that you may not have access to in the future.”

How the budget works

At the start of their yearly budget process, lawmakers divide the state’s new revenue into two categories: ongoing, as in, expected to remain constant or even grow year to year; and one-time, or short-term revenue that could come and go.

For public education In Utah, the bulk of ongoing funding is traditionally put into the weighted pupil unit, or WPU, a per-student spending formula that is the backbone of school and district budgets.

In March, lawmakers boosted the WPU by 2.5 percent, sending millions of ongoing dollars to districts to spend at the discretion of local administrators.

But as part the session’s deal-making, roughly $70 million in flexible allocation money — drawn from a series of other accounts — was kept separate and distributed to schools on a one-time, per-student basis.

“The Legislature could have put it into the WPU if they wanted to,” said Natalie Grange, an assistant state school superintendent. “However, if you put it into the WPU, you can’t really take it out.”

Grange said the state Board of Education has gotten several calls from districts looking for guidance on how best to use this new money. The answer, she said, has been to treat it as any other one-time budget item — albeit an inordinately large one.

“Because we don’t know what the Legislature is going to do,” she said, “we suggested that they not put those funds into contracts or ongoing things.”

Sen. Jerry Stevenson, R-Layton and budget chairman for the state Senate, agreed with Grange’s take. While the $70 million is expected to remain a part of Utah’s education budget in some form, he said, it may not be in the form of a flexible allocation.

“We think it’s ongoing [money],” Stevenson said. “We’re going to do everything we can to make sure that it is. But maybe salaries isn’t the best place.”

Cause and effect

Prior to this year, cash flowing through the flexible allocation account remained stagnant at roughly $8 million annually, Grange said. When carved up among Utah’s more than 650,000 public school students, the account meant a few hundred thousand dollars at most, even for a major school district.

Horsley said Granite’s share of the account went from $770,000 last year to $6.3 million this year, exceeding the district’s $5.9 million in new WPU funding.

Granite is offering a 2.5 percent cost-of-living raise to teachers next year, in addition to the 1 percent bonuses. The district is also launching a medical clinic for its teachers, with flexible funding covering nearly $2 million in clinic startup costs.

In Jordan School District, board members are creating a $3 million grant system, letting exemplary teachers apply to receive a one-time stipend of up to $3,000 — though district spokeswoman Sandra Riesgraf said that decision was made independent of the new flexible funding.

Last year, Jordan triggered what became known as the “salary wars” by significantly boosting its pay for entry-level teachers. The changes, which midcareer educators criticized, were part of a major overhaul of Jordan’s salary package that administrators acknowledged would take multiple “phases” to fully put in place.

The $3 million grant program announced last week was always part of the district’s plans, Riesgraf said, and is not being paid for out of Jordan’s $5.1 million in flexible-allocation money this year.

“Phase 2 was going to look the way it looked,” Riesgraf said. “We’ll see how it goes to determine whether we continue it in the future.”

Despite being cautioned against it by lawmakers and the state school board, Riesgraf said Jordan has used some of its one-time funding for ongoing raises. If the state money gets cut later, she said, the district will find away to replace the funds from internal sources.

Canyons School District, which split from Jordan in 2009, has not finalized its salary negotiations, but district spokesman Jeff Haney said it will likely use flexible-allocation cash “in a similar way” to the one-time bonuses and grants deployed in the Granite and Jordan districts.

Grange said there’s relatively little risk that districts would experience a funding cut in future years. Asked for examples of how the new flexible approach could be used, she, too, pointed to short-term teacher pay.

Our Schools Now

The compromise over Our Schools Now may add to the funding equation.

Assuming that voters approve a 10-cent gas tax hike proposal in November and that lawmakers enact the hike next year, Utah’s public education will see an influx of roughly $375 million in new yearly funding — in addition to naturally-rising tax revenues from Utah’s growing economy.

But under a provision left over from the original Our Schools Now proposal, large portions of that money will go directly to schools instead of district offices, through a new creation by lawmakers: the Teacher Student Success Account.

That approach, teachers and others warn, could mean more new education money to spend — but not for teacher salaries or permanent raises.

“If it goes directly to the school,” said Horsley, “it actually handicaps our ability to fairly disseminate that funding.”

While school principals are able to vet and select their teaching faculty, Horsley noted, those employees are hired and paid by districts. Advocates for putting money directly into Utah’s classrooms, Horsley said, may forget that the largest classroom expense is the teacher’s pay.

Our Schools Now spokesman Austin Cox confirmed that the compromise with lawmakers preserved the initiative’s notion of awarding funding directly to schools. But that compromise, he said, also requires schools to submit spending plans for district approval, and that districts would retain the ability to keep a portion of funds for broader goals such as teacher pay.

For its part, the Utah Education Association is encouraging districts to use up to 25 percent of their flexible allocation funding for employee salaries and benefits, in keeping with the idea that the cash will keep coming.

Heidi Matthews, president of the teachers’ union, says she’s understands the reluctance of districts to use one-time funding for ongoing salaries. But, she added, grants and bonuses do not attract and retain talent as effectively as a permanent pay raise.

She predicted that school administrators, long used to tight budgets, will adjust.

“They’ve been careful for so long and playing it safe for so long,” Matthews said. “It’s hard to make this transition.”