A panel of municipal, education and business leaders Monday failed to reach agreement on a proposal to require that state funds for education follow students who leave their local public schools for alternative institutions.

The business and education reform leaders on the panel want to include the proposal in their final recommendations, but representatives of towns, local schools and unions defeated their efforts.

Alex Johnston, head of the New Haven-based school reform group ConnCAN, called the proposal a “policy answer” to help improve public education in the state.

“We are not funding school choice in a way that makes sense right now,” he said.

About 27,000 students in the state attend magnet schools and another 1,300 students attend public schools outside their home districts through a choice program. Although the state provides some funding for the alternative schools, it also continues to fund the local school after the student is gone.

“The way we fund magnets and school choice programs is not fair. When a student leaves a school, so should the money. The school responsible for that student deserves that money,” said Dudley Williams, an executive at GE Asset Management who was named co-chair of Gov.-elect Dan Malloy’s education policy advisory group Monday.

CCM’s Jim Finley (r): ‘This would cause a lot of pain for schools’

But local officials and union leaders said Monday it would be unfair to take money from an already cash-strapped school and send it to another.

“We are concerned about the impact on the individual districts,” said John Yrchik, head of the Connecticut Education Association, the state’s largest teachers’ union. “You would be making it more difficult for districts to function.”

Jim Finley, executive director of the Connecticut Conference of Municipalities, agreed.

“This would cause a lot of pain for schools,” he said after the meeting. “Maybe we can consider this when schools begin to be adequately funded by the state. Right now they are not.”

The panel, which was created by the State Board of Education to make recommendations on school finance issues, will forward other proposals to the board in the next few weeks, including:

  • Allowing parents to enroll their children in any charter, magnet or school choice program
  • Having the state fully fund its 50 percent share of education
  • Reorganizing the funding formula for schools because it is not functioning effectively

Education Commissioner Mark McQuillan said he hopes whatever changes are made to how schools are funded, it is fixed once and for all.

“There needs to be dependability and stability of school funding,” he said. “We cannot continue with this uncertainty.”

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