The model for a new school spending formula has exposed the financial inequality at Hawai'i's public schools, leaving the state Board of Education with the uncomfortable choice of taking money away from some schools, including many that are struggling, to bring more balance and fairness to others.

The school board has been so torn by the decision that it missed its internal deadline last May and, if it fails to act soon, risks giving schools only a few months to make the transition to the new formula by the 2006-07 school year as required by state law.

The state Department of Education is confident the school board will approve the formula, but some administrators were stunned that the board was deadlocked at its Sept. 15 meeting on the Big Island and believe some school board members have either failed to understand or lack confidence in the reasons behind the change. Some members of the board, however, are asking whether the department accepted the formula for political expedience without fully considering its impact on schools.

The formula was central to an education-reform law approved by the state Legislature last year and had the enthusiastic support of Gov. Linda Lingle, Democratic leaders and many educators. But it was largely overshadowed by Lingle's proposal to split the Department of Education into seven school districts with locally elected school boards, which was opposed by most educators and rejected by Democrats.

Educators had warned the formula was a potentially massive shift for schools that would likely involve financial sacrifice. An early model, given to the school board in December 2003, showed that some schools would fare poorly, so board members have known for some time that change would not be painless.

"What we're looking at now is what is the threshold for each school," said Pat Hamamoto, the state schools superintendent.

The formula, which could be brought up again at the board's meeting next month on Lana'i, does not address whether Hawai'i's schools are adequately funded by the state. Instead, it seeks to bring more transparency and equity to school finance and give school principals more control over school budgets so they have the flexibility to make changes that might improve academic performance.

The formula bases school spending on the individual needs and characteristics of certain students, instead of school enrollment. It provides a basic allocation for all students and then gives added weight to students who are poor, still learning English, or who have changed schools because their families are in the military or have moved during the school year. Weights are added for students in kindergarten-through-second grades, where the department wants to promote smaller class sizes, and in elementary and middle schools.

Smaller schools also were given an added weight, at the expense of very large schools, since per-student costs for staff are higher at smaller schools.

The department chose not to tamper with spending on students with mental or physical disabilities, who often cost the most to educate, since it just emerged from federal court oversight of its handling of special education.

The formula generally covers state education money that is available to all schools, but also gives schools control over some other program spending, so school principals ideally would have power over about 70 percent of school budgets. The formula could be adjusted annually to respond to trends or correct unforeseen problems.

As predicted, the formula would break existing spending patterns and help some schools more than others while making the overall system more equitable. While many educators anticipated, and were ready to defend, a shift in spending from schools in wealthier to poor neighborhoods, some did not expect that some smaller and rural schools would be the ones that could lose the most money.

For instance, Farrington High School in predominantly lower-income Kalihi would gain $1.3 million under the formula as it is phased in over the next four school years, while Kaimuki, Kalani and Kaiser high schools in middle- and upper-income East Honolulu all would lose money.

But at small and rural Kohala High School, which serves about 280 students on the Big Island, administrators stand to lose $711,000. The model found that Kohala now receives $8,211 per student, more than any other high school in the state. Under the formula, Kohala would get $5,689 per student, which would still be the highest in the state but would be much more comparable with other high schools.

Kalihi Elementary School, which serves about 220 mostly low-income students, would lose about $388,450. The model shows that Kalihi now receives $7,364 per student, among the highest at elementary schools in urban Honolulu. The school would receive $5,591 per student under the new formula, closer to what other elementary schools receive.

Laupahoehoe High and Elementary School, which serves about 250 students on the Big Island, would lose about $884,950, among the largest cuts in a formula that seems particularly unkind to combination schools. "You can cut all the paper, pencils and erasers you like, but it's still not going to equal that amount of money. You're talking about personnel," said Cheryl Merk, the school's principal. "I'm hoping that they go back to the drawing board."

The school board has mostly heard from schools that would lose substantial amounts of money, but it can likely expect opposition from parents once the formula reaches schools. Some parents are already demanding to know why successful schools should have to sacrifice when there is no evidence that the money taken away and given to other schools would be put to the best use.

But the model has shown what many educators have long suspected. The statewide school system, praised in national surveys for its equity, is far from equal and has some of the same financial disparities as urban, suburban and rural school districts on the Mainland.

Randy Moore, who is working on the formula at the Department of Education, said the differences stem from historic —and often inexplicable — spending patterns, principals who are better at getting money from the state, or preferences from within the department. He said most of the schools that would lose money under the formula have a larger non-teaching staff, such as counselors or librarians, compared to the number of students.

Moore said it is unfortunate that the first big decision for some school principals and their new school community councils under the reform law could be how to manage the loss of thousands of dollars. But he believes all schools can handle the changes by being creative, much like charter schools already do with less money. Schools could combine job descriptions, merge grades or share staff with other schools.

Moore said it would be easier if the school board or department said definitively that nobody would lose their jobs, since educators would likely have the option of moving to other schools if their jobs were cut at schools losing money. But he also said that people still seem to be thinking about what is fair for the schools or staff instead of what is best for individual students.

"That's the mindshift that people seem to have a hard time making," Moore said.

Some school board members feel those answers are not good enough.

Karen Knudsen, a board member who voted against the formula this month, asked why it seems to narrow the spending differences between all schools rather than move money to schools with students with the most need. She also believes the weights for smaller schools are too low and leave many losing too much money.

Knudsen said the department has often responded to questions about the formula by promising to help schools that would lose money, like Kohala, rather than examine the larger rationale behind what it wants to achieve. She asked whether it was fair to take money from schools serving students in poverty or already failing to meet academic goals to satisfy an arbitrary formula.

But she said the model has been revealing. "It's shown us there are tremendous inequities in this system, which was kind of a shock to some of us who thought we were on top of this," Knudsen said.

Garrett Toguchi, another board member, said he would like the formula amended so schools would not lose, or gain, as much money. Another option would be to ask the Legislature for an additional $33 million over four years to cover schools that would gain money while sparing the schools that would lose money from making the cuts. Although that would not strictly honor the intent of the formula, it would provide more equity.

"It's not really about the formula, it's about the flexibility for schools to use the money to get results," Toguchi said.

State lawmakers, who are also hearing from schools, will discuss using some of the state's budget surplus to increase school spending next session. The lawmakers who were behind the reform law, state Rep. Roy Takumi, D-36th (Pearl City, Palisades), and state Sen. Norman Sakamoto, D-15th (Waimalu, Airport, Salt Lake), do not want to have to tell the school board how to create the formula or rescue schools that might lose money, but they do want the board to move quickly. Other lawmakers, though, are more inclined to help schools in their districts, especially if they have to explain to voters in an election year why their schools should suffer under a law that was supposed to make schools better.

Breene Harimoto, the school board's chairman, said it would be unfair to schools to delay much longer but is unsure about the next step. "If we tweak the formula on one side, we're going to raise concerns on the other side," he said. "The bottom line is we need to approve something. That's a given."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.