A new controversy is shaping up over how money is divided among the state's public schools under a formula based on student need.

Small and rural schools were expected to suffer staggering monetary losses under a new Weighted Student Formula that will take effect with the new school year July 27. And even though the losses were averted with an extra $20 million from the Legislature, the outcry over the expected impact on small and rural schools generated widespread concern.

Now, a special Department of Education committee charged with re-examining the formula has proposed a key change intended primarily to address wide discrepancies in funding between the largest and smallest schools.

Under the plan, each school would receive a base amount — or "foundation grant" — to assure that each could afford essential positions. The foundation grants would amount to about 25 percent of total school funding, leaving much less to be divided according to student need.

While the proposal would help small schools, it could cost large schools substantial amounts of money. Under preliminary projections, some small schools, like tiny Maunaloa Elementary on Moloka'i with 57 students, would gain as much as $140,000 a year, while some large schools, like Pearl City High with 1,980 students, would lose as much as $411,500.

The plan is still subject to change and has a long way to go for approval, but already it's generating controversy.

One member of the Committee on Weights, attorney Owen Matsunaga, has resigned because of his feeling that the new committee is biased toward small schools. And more fireworks are expected at a community meeting tomorrow, where principals will discuss the proposal.

SERIOUS CONCERNS

In testimony prepared for the meeting tomorrow, Catherine Payne, principal of Farrington High, the state's largest public high school, expresses serious concerns with the new proposal. She says it pits schools against one other, negates the intent of the formula and does not give schools a fair chance to see how the formula works.

As well, she said, it overlooks needy students, especially those at larger schools in disadvantaged communities, returning budgeting to status quo levels of the past.

"Many of the large schools losing funds have high special-needs populations — the very ones that the Weighted Student Formula purported to support," she writes. "It will be difficult for me to stand before my faculty in July and tell them that what we were told last year about support for our students with special needs has been retracted."

Farrington stands to gain money with the proposal, an estimated $344,000 next year, but that's far less than the school would realize if the current Weighted Student Formula went unchanged.

Principals at smaller schools are feeling some relief with this plan, but worry about fairness, too.

"It'd be a heck of a good idea for me but again I still feel for the other bigger schools like Farrington, for example. We both need the support, but they have more bodies than I do," said James Toyooka, principal of Lili'uokalani Elementary School in Kaimuki, with just 123 students.

His school stands to gain an estimated $127,000 next year under the proposed change to the formula rather than losing $30,000 as was scheduled this coming year under the first year's implementation of the original formula.

'HAPPY MEDIUM'

In an interview, Toyooka said that would allow him to keep essential positions that otherwise would have to be cut — custodians, a student service coordinator and a teacher. The school already has cut a librarian, he said.

"There has to be a happy medium. I would love to be able to keep these positions, but I also know that to be fair with other schools we can't be selfish," he said.

Committee chair Bruce Coppa said input tomorrow from principals of the state's larger schools could affect what the committee eventually presents to the Board of Education.

Coppa said "there were lessons learned" from the first committee, and he said this second committee is attempting a more modest change over a longer time frame.

The Weighted Student Formula marks a fundamental change in the way money is allocated to schools. The change, mandated by the Legislature in the Reinventing Education Act of 2004, is intended to make school funding fairer and more equitable. Because the formula takes money from some schools and gives to others, changes in the formula affect everyone.

MORE UNCERTAINTY

The formula already has caused considerable uncertainty among principals, who have had to plan not knowing for sure how much money they were going to receive even though the Legislature appropriated an extra $20 million this session so virtually no schools would lose money this first year. But the magnitude of the latest proposal means more uncertainty could lie ahead.

"If we have to go through this every year I'm not sure how we're going to be able to do any long-range planning because we won't ever be sure what kind of resources we'll have every year," said Roger Kim, principal of Mililani Middle School. "We should get a formula that the majority of people can live with, and work with it for three or four years."

Under the first formula approved by the Board of Education last fall, schools lost and gained hundreds of thousands of dollars, but it was the smallest schools that suffered the biggest losses. Rural Neighbor Island schools especially, and O'ahu schools with fewer than 400 students, were some of those expecting to suffer the most, and many have had to cut back on such services as librarians and counselors.

Under the legislation, the committee is asked to re-examine the formula annually, but it was the backlash, especially over the impact on small and rural schools, that spurred the board to ask for a smaller committee this year to re-evaluate how the formula was put together and whether it should include a foundation grant for certain essential services.

"It was just that we ran into unforeseen problems and some of us felt it hadn't been tested to see the impact and it took us by surprise," said board member Karen Knudsen. "It sounded good in theory until it was applied. Some of us have thought there needs to be a basic foundation that schools should get and then build from there."

Rep. Roy Takumi, chairman of the House Education Committee and one of the architects of Act 51, said he thinks the latest proposal makes sense.

"It recognizes that all schools — large or small, urban or rural — have basic needs," he said.

But Matsunaga, the committee member who resigned, believes large schools will be shortchanged if the new proposal is approved.

He sent a strongly worded letter to the other committee members expressing his concerns.

"The 25 percent foundation grant currently being proposed by the committee would result in many of the larger, mainly central and leeward O'ahu schools either seeing much-needed increases significantly reduced or actually losing overall funding," said Matsunaga in his letter.

And that, he added, "would only perpetuate, if not enhance, the inequities that exist in public school financing, which tends to disfavor larger schools."

SMALL-SCHOOL BIAS?

Kim, of Mililani Middle School where Matsunaga is on the School Community Council, said his school would suffer under a formula like the one now proposed.

Mililani Middle, a multitrack school with a large student enrollment of 1,872, will gain about $90,000 in the coming school year, but would lose about $174,000 the following year under this new proposal.

"I think there is a small-school bias," said Kim.

Randy Moore, who has been one of the chief overseers of the formula for the Department of Education, said the impact of the plan by the new committee would be "disadvantageous" for larger schools.

"It leaves a significantly smaller amount to be distributed on a per- student basis," said Moore. "It goes back and puts the big schools in an even less advantageous position than before the formula and gives small schools even more than they had. But I think they're still working on this. I don't think it will go to the board without further modification."

Coppa, the committee chair, said he knows "we're not going to make everybody happy, I can tell you that now."

He also expects the foundation grant to be a transitional measure.

"I think in the future the foundation will become smaller and smaller as people get comfortable with the formula," he said. "But eventually, over time, that foundation is going to have to go away."

Reach Beverly Creamer at bcreamer@honoluluadvertiser.com.