Adequacy in School Funding: A National Perspective

Jay G. Chambers, Ph.D.

Senior Research Fellow American Institutes for Research (AIR)

National Forum on Education Policy Education Commission of the States

July 13, 2006

Overview of my presentation

• School funding & evolution of equity & adequacy • Cost-based funding • Adequacy & Costing-out

90.0

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K-12 Revenues Sources & Trends in School Funding Percent K-12 Revenue from Federal, State, and Local Sources, 1919-2000 Rapid Increase in state Focus on Equity Rapid increase in federal role Standards based reform Stabilized federal role Focus on Adequacy

1919-20 1929-30 1939-40 1949-50 1959-60 1969-70 1979-80 1989-90 1999-00 2002-03 School Year State Local Federal

Why Adequacy Cases are Winning.

• • •

Built on state education law

– State has the duty to serve all students.

Standards-based reform

movement pushed states to establish standards. – States have raised standards & – Holding students accountable.

Systemic lack of resources



barrier to learning

– Most states have not provided the sufficient resources to help students reach higher standards.

Transition from Equity to Adequacy & Cost-based Funding

• • • •

Horizontal equity:

–

treat similar children & taxpayers similarly.

Vertical equity:

–

treat different children & taxpayers differently.

Access to resources

–

An input orientation

Cost-based funding

–

An output orientation

Differences in Expenditure

•

Demand factors = local choice

– How much do you want to spend? OR – What level of outcomes do you want to produce?

•

Supply factors = cost differences

– Input costs - labor costs – Pupil-needs – poverty, Engl learners, disabilities, Voc – Scale of operation – school & district size (rural factors)

Designing an

“Adequate”

School Finance System

•

What are the goals?

– Establish learning standards – Specify desired results (proficiency levels) – Measure the results •

What does it cost?

– Design instructional programs – Specify resources to delivery the programs – Estimate the Costs (Costing out studies) •

Who pays for it?

– Design a funding formula

Public School Funding Process

Design Funding Formula State Allocation for K-12 Education Balance against non education needs Determine Cost To Achieve Goals Set Standards & Goals

Approaches to Costing-out:

• Cost Function • Professional Judgment • Successful Schools • Evidence-Based • Hybrid Approaches

ELEMENTS OF THE HYBRID PROFESSIONAL JUDGMENT MODEL Public Engagement

Beating the Odds Analysis Literature Review (What works)

Professional Judgment Process

Supporting Studies (GCEI, Transp, & Facilities) Analysis of Overhead (Central Adm, M&O)

Stakeholder Panel

Sample Results From New York Adequacy Project

Results

• The Bottom line – Cost estimates for each school or district – Total cost estimate for the state • Formula Development – How does this fit into a formula?

– Who pays – local v state v federal?

Total and Marginal Costs by Type of District Total Expenditure Required to Bring All Districts to "Adequate" Spending Levels (Total Expenditure in Bold)

$45.0

$38.91

$40.0

$35.0

$7.20

$30.0

Total Expenditure $25.0

(in billions) $20.0

$15.0

$10.0

$5.0

$0.0

$31.71

Overall $15.87

$4.46

$11.41

New York City $1.92

$0.42

$1.50

$3.07

$0.54

$2.52

$2.29

$0.46

$1.83

Big Four Urban High NRC Other High NRC Rural Cities Urban and Suburban Need to Resource Categories $10.53

$1.23

$9.30

Average NRC $5.23

$0.09

$5.15

Low NRC Total Additional Expenditure Required to Bring All Districts to "Adequate" Spending Levels Actual Total Expenditure from the NYSED Fiscal File

Scale, Need and GCEI

by District Size Index value

Relative Scale and Need Indices by Enrollment Category Based on Model Using Actual School Enrollment (separate equations by enr_cat, school size within sample limits)

140 117 120 100 100 100 100 87 93 110 88 95 103 89 99 100 92 100 94 112 103 80 60 SCALE INDEX NEED INDEX Implicit GCEI 40 20 Overall <=1,000 1,001 2,500 2,501 5,000 Enrollment Category 5,001 10,000 >10,000

Policy Perspectives on Adequacy

• Adequacy is a political & technical process – No one right answer • Accountability is critical to success – Educators need to be held accountable • Block grant approach offers simplicity – Flexibility at the local level

Adequacy & NCLB

• Adequacy as a national issue • NO CHILD LEFT BEHIND what?

Under NCLB, we have

• 50 different accountability systems • 50 different funding systems • 50 different levels of commitment to children

Real Per Pupil Spending, K-12 Education by State, 01/02

NY CT M E NE M D NM KY NC WA ID NV UT IN GA ND VA A K

$ $2,000 $4,000 $6,000 $8,000 Dollars per pupil $10,000 $12,000

State Average Per Pupil Expenditure K-12 Education, FY2002 MAXIMUM MINIMUM RATIO Actual

$ 12,102 $ 4,900 2.47

Real

(Cost adjusted)

$ 11,269 $ 5,132 2.20

U.S. Federal commitment

% of Revenues from various sources •

Among lowest federal commitment of developed nations. (7%)

•

Highest in local contribution (43%).

Poverty Differences used to Distribute Federal Funds • A single poverty threshold used.

– % Poverty reflects COL differences across states.

• Federal $ not adjusted for cost differences

Policy Questions to Consider

• Is adequacy a national issue? • Should we permit 50 different systems for children?

• Should a child’s education depend so heavily on the state in which they are born?