Missouri school funding: rebuild or patch?

This analysis first appeared in Aligned’s most recent weekly newsletter. We’re expanding it here to add context on the tradeoffs the Missouri School Funding Modernization Task Force is weighing as it works toward recommendations due to Governor Mike Kehoe by December 2026. Sign up for Aligned’s weekly newsletter for clear, timely insights on education and workforce policy in Kansas and Missouri.

On January 26, the Task Force held its first meeting of the year and moved quickly from background discussion to concrete design proposals for Missouri’s school funding formula. Those proposals reflect months of work by four working groups focused on specific parts of the system.

Members are also using a funding formula simulator developed by Bellwether in partnership with Aligned and a coalition of Missouri education organizations to test how different policy choices would shift funding across districts and what they would cost.

School funding in Missouri is at a genuine inflection point. After years of incremental adjustments or deferred decisions, the Taskforce has moved into the hard part: deciding whether to rebuild the system around durable design principles, or continue layering fixes and complexity into a formula made more than 20 years ago.  

The meeting put three structural questions front and center:

1. Adequacy target: How Missouri sets and updates the base funding amount per student.
2. Regional costs: How the formula accounts for differences in local labor markets.
3. Student counts and weights: How students are counted for funding and which groups generate additional funding.

These aren’t technical footnotes. Together, they determine what the formula costs, how predictable it is over time, and whether dollars track student need — or drift toward a system that’s harder to explain and easier to ignore.

Refining “adequate” funding

The State Adequacy Target (SAT) is the backbone of Missouri’s school funding formula. It represents the state’s estimate of what it costs, on average, to educate a student before accounting for student needs, regional cost differences, or local property wealth.

Where it stands today

• The current SAT is roughly $6,700 per student.
• In practice, the SAT has been updated infrequently and often constrained by available appropriations, which makes it harder to defend as a cost-based benchmark.

What the Task Force is considering

The Funding Targets Working Group recommends keeping an adequacy target, but recalculating it on a regular cycle using a broader “Successful Schools” approach:

• Identify a broad group of high-performing districts (often framed as the top 100, using a two-year average of performance).
• Calculate current operating spending per weighted student.
• Remove extreme high/low outliers.
• Use the remaining average to set a new SAT.
• Recalculate every two years, with phase-ins for increases.

Recent illustrative calculations from this approach land around $10,400–$11,500 per student (depending on the year and comparison group). These are cost estimates, not appropriations.

Why this matters

The design principles guiding these changes are apparent. For one, it would make the SAT more transparent. Increasing the comparison group and removing outliers enhances stability and a regular update cycle makes the SAT more predictable.

Tradeoffs to watch

• A cost-based SAT makes the funding gap more visible (and politically harder to sidestep).
• Regular recalculation creates ongoing cost pressure unless phase-ins or other levers are used.
• Technical choices (who counts as “successful,” outlier rules) materially change the outcome.

Updating regional labor cost adjustments

Missouri’s funding formula includes a regional cost adjustment—known as the Dollar Value Modifier (DVM)—to account for differences in local labor markets. The premise is simple: it costs more to recruit and retain educators in some parts of the state than others, and the formula should recognize that reality.

Where it stands today

• The current DVM relies on federal data that is no longer produced.
• As a result, the adjustment cannot be updated going forward and is effectively frozen.
• This weakens the credibility of a mechanism meant to reflect current labor market conditions.

What the Task Force is considering

The Task Force is exploring a replacement that preserves the purpose of the DVM while modernizing its data and mechanics:

• Use current county-level wage data from reliable sources.
• Blend multiple years of data to reduce volatility.
• Maintain regional groupings like the current approach.
• Anchor the index to the average of the lowest-wage counties.
• Apply a weighting factor that scales adjustments across regions

The intent is to restore a broken adjustment—not to reinvent it—while ensuring nearly all districts continue to receive some level of regional cost recognition.

Why this matters

A labor cost adjustment that can’t be updated eventually stops reflecting reality, undermining confidence in the formula’s fairness.

Tradeoffs to watch

• Any wage-based index redistributes funding across regions, creating clearer winners and losers.
• Small technical choices, such as the weighting factor, can have large fiscal effects.
• Applying a modern index to a higher adequacy target may compound overall cost pressures.

Student counts: attendance versus enrollment

How Missouri counts students for funding purposes shapes both district stability and overall formula cost. Missouri remains a national outlier in relying heavily on attendance, even though districts plan budgets around who is enrolled.

Where it stands today

• The formula relies heavily on attendance-based measures, layered with added complexity over time.
• Attendance-based funding can introduce volatility and make budgeting more difficult.
• Funding levels may drift from actual enrollment, especially during demographic shifts.

What the Task Force is considering

The Student Counts Working Group recommends moving to a more stable, enrollment-based approach:

• Base funding on average enrollment (membership) rather than attendance
• Allow districts to use the higher of current or prior-year enrollment
• Include adjustments to correct revised enrollment data
• Move attendance incentives into accountability systems, not the funding formula

This approach aligns funding more closely with how districts actually operate.

Why this matters

Enrollment-based counts are more predictable, easier to explain, and better aligned with district budgeting realities.

Tradeoffs to watch

• Shifting away from attendance changes where incentives live in the system.
• Enrollment counts may be higher and more stable, increasing the funded base.
• Policymakers must decide whether accountability systems sufficiently preserve attendance incentives.

Eliminating thresholds and redefining who counts for additional funding

Missouri’s formula currently uses thresholds that cap how many students in certain populations generate additional funding. In practice, this means districts with higher concentrations of need may not be fully funded for the students they serve.

Where it stands today

• Thresholds limit funding for low-income students, students with disabilities, English learners, and others.
• High-need districts are more likely to hit these caps, leading to systematic undercounting.
• Over time, this weakens the link between student need and funding.

What the Task Force is considering

The working group recommends removing thresholds and refining how needs are weighted:

• Count all eligible low-income students, using Direct Certification.
• Introduce graduated weights for schools with higher concentrations of poverty.
• Tier special education weights based on service setting and intensity.
• Fully count English learners and eligible pre-K students.
• Convert certain programs, like summer school, into equivalent membership counts.

These changes would bring more high-need students fully into the formula.

Why this matters

Funding would better reflect actual student populations and service delivery, rather than capped estimates.

Tradeoffs to watch

• Removing thresholds substantially increases weighted student counts.
• Formula costs rise unless weights or phase-ins are carefully managed.

The risk ahead: letting cost drive design

The Task Force is finally debating real fixes. But a familiar risk is already emerging: shaping the formula to fit a cost target, instead of building an evergreen design and then using transparent policy levers — weights, phase-ins, and implementation timelines — to manage fiscal impact. Cost matters, but it shouldn’t dictate how the formula functions.

Just as important, several other elements remain largely untouched:

• Local effort is outdated. The calculation is tied to 2004–05 property values, which undercounts how much many districts raise locally today and distorts state aid discussions.
• Hold harmless is overwhelming the formula. Nearly half of districts are off-formula due to enrollment declines, raising hard questions about long-term viability (especially for small districts and schools).
• How to incorporate outcomes-based funding. The Governor asked for the Task Force to consider funding methods to incentivize student achievement and outcomes. 

Missouri should design a formula that works by design — not one that works only when the numbers cooperate.