For nearly four decades, funding for Georgia public education has been provided by a program known as Quality Basic Education, and commonly referred to as QBE. The Quality Basic Education Act was enacted in 1985 by a unanimous vote of the Georgia General Assembly during the administration of Governor Joe Frank Harris. It was introduced by then-Senator and future-Governor Roy Barnes.
Historical Background
QBE was introduced as a means to address inadequate and unequal funding across Georgia public education, especially in rural areas. Education policy over the decades prior to QBE’s inception was focused on facilitating integration, and despite increasing state funds going to public schools, budgeting had until then been primarily a local responsibility.
States began to face significant legal challenges to their education funding systems following the California Supreme Court’s Serrano v. Priest ruling in 1971. The court ruled that the property tax aspect of education financing ties a child’s education to the wealth of parents and neighbors, which violated the equal protection clause of the 14th Amendment.
This issue was brought to a head in Georgia with McDaniel v. Thomas (1981), which questioned whether Georgia’s education funding system fulfilled the state constitution’s requirement of “an adequate education for the citizens.” While the Supreme Court of Georgia ruled that the program – then known as the Adequate Program for Education in Georgia (APEG) – was constitutional, the alarm was raised on its numerous flaws. The plaintiffs specifically alleged that APEG’s reliance on local property taxes created disparities across districts, and that these disparities also violated the equal protection clause. These disparities were acknowledged in the ruling.
From APEG to QBE Implementation
McDaniel was the result of low APEG funding and little in the way of horizontal or vertical wealth equalization. State funding under APEG was based on enrollment with no additional, contextual funding provided to schools given their conditions or ability to generate revenue. Even though this litigation failed, the issues it raised inspired Gov. Harris’ creation of an Education Review Committee. That committee’s recommendations to address the funding issues led to the implementation of QBE, which began functioning during the 1986-87 school year.
QBE provides a formula for funding allocation that includes “earnings” based on full-time students and the programs they attend as well as other grants. Despite a changing economy, enormous population growth and shifts in budgetary needs, QBE has not been significantly altered since its origin.
Criticisms and Incremental Adjustments
Over the years, criticisms of QBE have piled up, with many asserting that the system is antiquated and does not adequately apply to modern education. One common criticism is that Georgia lacks an allocation for students living under the poverty line. Critics also frequently point out that QBE is complicated and rarely understood at a granular level outside of state and school system finance departments. When legislators and advocates mention reforms, they often emphasize simplifying the system so that more people understand the way the formula distributes state funding to local school systems.
While there have not been substantial changes to QBE since 1985, there have been multiple attempts to revamp the funding formula. When QBE was introduced, legislators maintained that funding the formula would not require a tax increase. But only three years later, the state portion of the sales tax was raised by one percent to fund QBE.
QBE has also seen increases in equalization funding, which is made up of grants above QBE funds and intended to boost low-wealth school districts in terms of property tax wealth per pupil. Equalization has been part of the funding formula since its inception and has been reformed twice since. The first of these reforms, implemented in 2001, was an increase in grant amounts coinciding with a decrease in the number of qualifying districts (from 90 percent to 75 percent of Georgia’s districts). This led to an increase in grant funding per district. The second, in 2012, was a limit on the number of districts that receive these grants, which was partly a response to a drop in state revenues during the Great Recession, and lowered the aggregate amount of grants distributed.
Additional cuts – known as austerity cuts – were assessed between 2002 and 2018 in response to revenue shortfalls and economic downturns. These were intended to be temporary measures to reduce the burden of local districts during an economic downturn when they were introduced in 2003, but were included in varying amounts until their elimination with the passage of Georgia’s FY19 budget. Despite these reductions in state earnings, state funding per student is 72 percent higher, adjusted for inflation, relative to the 1986-87 academic year, the first year the QBE formula was implemented.
The following chart details how student revenues changed from QBE’s first year of implementation, the 1986-87 school year, to the 2019-2020 school year.
Student Revenue Changes, 1987 and 2020
| Year | Total Revenue | State Revenue | Enrollment | PCE Price Index | Nominal Total Revenue per Student | Nominal State Revenue per Student |
| 1987 | $3,511,288,000 | $2,016,071,000 | 1,096,425 | 51.894 | $3,202 | $1,839 |
| 2020 | $23,826,892,000 | $11,234,259,000 | 1,769,657 | 104.458 | $13,464 | $6,348 |
- From 1987 to 2020, real (inflation-adjusted) total revenue per student increased by 109% ($6,446 in 1987 to $13,464 in 2020).
- Over the same period, real state (inflation-adjusted) revenue per student increased by 72% ($3,701 in 1987 to $6,348 in 2020).
- The figures above were gathered from the National Center for Education Statistics. 2020 was highlighted to demonstrate trends under QBE before they were impacted by the COVID-19 pandemic. Since the pandemic, public school revenues have skyrocketed while enrollments have fallen off a bit.
Despite drastic changes in revenue and enrollment, QBE’s structure has remained the same.
Reform Efforts and Political Challenges
It was thought that this might change during the administration of Governor Nathan Deal, who focused on education after winning reelection to his second term. In 2015, an Education Reform Commission made recommendations to the governor’s office that included changes to the QBE formula. The Commission’s report, now nearly a decade old, noted that the funding formula in place was outdated.
The commission’s recommendations included input from five subcommittees:
- The Funding Formula Subcommittee recommended a formula based on student base funding, weighted student characteristics, categorical grants and the aforementioned weight for students below the poverty line.
- The Teacher Recruitment, Retention and Compensation Subcommittee was tasked with providing workforce guidance and funding to local districts.
- The Early Childhood Education Subcommittee prioritized increasing pay for Pre-K educators, increasing funding for Pre-K programs and creating tax incentives.
- The Move On When Ready Subcommittee focused on more structural changes to Georgia education. Their recommendations included formative math and reading assessments in K-3, a “competency-based” education system allowing students to progress at their own pace, and help in facilitating workforce and postsecondary pathways.
- The Expanding Educational Opportunities and School Choice Subcommittee mainly focused on improving the state’s tax credit scholarship program and charter schools.
The Funding Formula Subcommittee recommended a formula based on student enrollment counts. This was in contrast to the current model, which uses full-time equivalent (FTE) students as a translation of student credit hours into an equivalent number of full-time, full-year students.
Ultimately, this effort did not bear fruit. More recently, a Senate Study Committee to Revise Education Funding Mechanisms convened in 2022 to address similar concerns, but it did not yield action either.
Despite multiple unsuccessful attempts to change or replace QBE, the willingness to try doesn’t seem to be going anywhere, and criticisms of the formula and public school funding in general continue to permeate policy conversations.
The QBE Formula
The process of calculating the funding needed to operate public schools is divided into earnings and grants. The earnings are calculated by counting the FTE of students at each school for each educational program. These programs–which include grade clusters as well as gifted and remedial programs, special education and so on–are weighted differently based on how much they cost to operate. Earnings also include a training and experience (T&E) factor that accounts for the experience and degree levels of teachers and other certified staff.
So, the FTE students in each program are multiplied by weighted allocations of those programs, and the result is multiplied by a district’s T&E factor. Districts also earn funding for teacher health insurance.
In addition, the state adds funds for categorical expenses like transportation, and indirect expenses such as maintenance. QBE also provides for equalization grants that target school districts with less taxable property per student. According to the State Education Finance Study Commission, these grants intend to “narrow the gap between systems in terms of property tax wealth per pupil.” Much like the rest of the QBE formula, the equalization grant has remained roughly the same since its implementation aside from its two aforementioned reforms. It consists of three metrics:
- Assessed value, which represents 40 percent of a district’s (adjusted) property tax digest.
- Weighted, full-time equivalent students.
- The amount of recognized mills, or effective mills minus five, capped by a maximum number denoted in grant legislation.
Deductions to these grants include the five mill share that districts are required to collect to fund local schools. Each district is expected to contribute the equivalent of revenue collected by five mills of property taxes.
Austerity reductions in total earnings were made in the past to account for reductions in state revenue during economic downturns. When implemented, they reduce school districts’ shares of the funding formula.
Reforming the QBE formula has long been at the periphery of education policy under the Gold Dome, but making significant changes continues to be a tall task for legislators. Despite widespread acknowledgment that the 40-year-old formula is no longer suited to support modern education, efforts to update it have stalled amid political and logistical challenges. For now, Georgia’s schools continue to operate under this framework.