Sensitive to the financial impact of a new student spending formula on small and rural schools, leading state lawmakers say they likely will give the state Department of Education more money and flexibility to help schools make the transition to the formula over the next few years.

The formula, which goes into effect in the school year that starts this summer, bases school spending on the individual characteristics of students rather than overall school enrollment. Protests from several small and rural schools that would lose thousands of dollars under the formula led the state Board of Education to phase it in over four years, with any gains or losses limited to 10 percent in the first year.

"The comfort level is not there yet," said state Rep. Roy Takumi, D-36th (Pearl City, Palisades), the chairman of the House Education Committee.

Takumi and state Sen. Norman Sakamoto, D-15th (Waimalu, Moanalua, Salt Lake), the chairman of the Senate Education and Military Affairs Committee, remain committed to the formula but recognize there are some growing pains.

The formula was at the heart of an education reform law that the Legislature approved in 2004. It is designed to bring more equity to school spending by getting money to students with the most need. Although it was inevitable that some schools would gain money and some would lose based on student demographics, it has created new questions about fairness.

Some on the state school board believe the formula developed by the department is flawed because so many small and rural schools — which typically have higher fixed costs per student than larger schools — are losing money. The department estimates that 118 of the state's 250-plus traditional public schools will gain money under the formula while the rest will lose, including some that would lose hundreds of thousands of dollars a year after the transition is complete.

State schools superintendent Pat Hamamoto is working with lawmakers on a transition fund the department would use to help schools losing money or, possibly, send money to certain schools gaining under the formula more quickly. The fund would be aimed at schools the department believes would benefit the most and would not be used as a bailout to all schools losing money. The exact amount of state money that would go toward the fund is still being negotiated.

Several lawmakers, who are hearing complaints from schools in their communities, have proposed taking care of all schools this year but Takumi, Sakamoto and department officials believe that would undermine the intent of the formula.

"We know we have to go back and look at the formula," Hamamoto said.

DISTRIBUTING DOLLARS

The first reaction at many schools losing money has been to look at staff cuts, so lawmakers likely will try to give schools some guidance on how to protect critical staff from being lost.

House Minority Leader Lynn Finnegan, R-32nd ('Aliamanu, Airport, Mapunapuna), wants to provide $300 per student — or about $54 million — directly to schools. Finnegan and other Republicans believe too much school money is being held by the department for administrative reasons and want the new money — which would be taken from the state's projected budget surplus — to reach the school level with no strings attached.

"This is one way that will help get that flexible dollar down to the school," Finnegan said.

Takumi and Sakamoto have said they would hold hearings on Finnegan's proposal.

Linda Smith, the senior policy adviser to Gov. Linda Lingle, said the administration believes the department has more than enough money in its $2 billion budget to help schools adjust to the formula. The administration also suggests that the department place more of its budget into the formula rather than separate out certain spending for statewide services.

"Our sense is there's plenty of money in the department. It's how they use it," Smith said. "It's about priorities."

ANOTHER LOOK

Two years ago, when the formula was being debated at the Legislature, several educators cautioned that it was extremely complex and that it would take years to find the right balance that works for schools. The formula now provides added weight, or money, for students who are poor, still learning English or have recently moved or changed schools. Weights also are given in the early grades, in elementary and middle schools and at smaller schools.

Garrett Toguchi, a school board member and critic of the formula, said lawmakers should help the schools losing money this year while the board studies possible adjustments.

"It would at least buy us time to take another look," Toguchi said.

Several lawmakers have said privately over the past few months that they had no idea some schools would lose so much money under the formula. State Rep. Dennis Arakaki, D-30th (Moanalua, Kalihi Valley), said he did not know small and rural schools would suffer.

"I hope we can make some adjustments because I don't think that was the intent," he said.

But Takumi and Sakamoto said the formula would be more beneficial for students in the long term than existing spending patterns that are in some cases inexplicable. The formula has already made school spending more transparent and they hope it can be perfected so schools would have the resources necessary to match student need.

"It can't go back to business as usual," Sakamoto said.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.