Is School Funding Fair? A National Report Card

Is School Funding Fair? A National Report Card

Is SchSoECoONlD EFDIuTIOnN:dJUiNnE 2g012Fair? A National Report Card

Bruce D. Baker, Rutgers University David G. Sciarra, Education Law Center Danielle Farrie, Education Law Center

September 2010

About the Authors

Bruce Baker is Associate Professor in the Department of Educational Theory, Policy and Administration in the Graduate School of Education at Rutgers University. He is co-author of Financing Education Systems with Preston Green and Craig Richards, author of numerous peerreviewed articles on education finance, and sits on the editorial boards of the Journal of Education Finance and Education Finance and Policy as well as serving as a research fellow for the Education and the Public Interest Center.

David Sciarra is Executive Director of the Education Law Center (ELC) in Newark, New Jersey. A practicing civil rights lawyer since 1978, he has litigated a wide range of cases involving socioeconomic rights, including affordable housing, shelter for the homeless, and welfare rights. Since 1996, he has litigated to enforce access for low-income and minority children to an equal and adequate education under state and federal law, and served as counsel to the plaintiff students in New Jersey's landmark Abbott v. Burke case. He also does research, writing and lecturing on education law and policy in such areas as school finance, early education and school reform.

Danielle Farrie is Research Director at the Education Law Center (ELC). She maintains a large database of educational data and conducts analysis to support litigation and public policy for ELC and partner organizations. Before joining ELC, she conducted research in the field of urban education on such topics as school choice, White flight and school segregation, and has co-authored several peer-reviewed articles on parental involvement among low-income families. She holds a Ph.D. in sociology from Temple University.

Acknowledgments

We would like to thank Richard Coley and the Educational Testing Service for their generous support of our research and for the production of this report.

For more information and to download copies of this report, go to .

Copyright ? Education Law Center, Newark, N.J.

Table of Contents

I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Fair School Funding: The Key to Improving the Nation's Public School Systems. . . . . . . . . . . 1 The State K?12 Systems: Decentralized, With Concentrated Poverty. . . . . . . . . . . . . . . . . . . . 2 Existing Measures of State School Finance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A Better Measure: Analyzing School Funding Fairness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Fairness Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Why Measure Fairness? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Fairness Measures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Research Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Research Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

II. The Four Fairness Measures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Evaluating the States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Fairness Measure #1: Funding Level. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Fairness Measure #2: Funding Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 The State Fairness Profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Fairness Measure #3: Effort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Fairness Measure #4: Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

III. The National Report Card: Second Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 IV. Improving Public Education. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Fair School Funding and Student Achievement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Fair School Funding and Teacher Quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Fair School Funding and Federal Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

List of Tables

Table 1. Concentrated Student Poverty in U.S. School Districts . . . . . . . . . . . . . . . . . . . . . . . 3 Table 2. Fairness Measure #1: Funding Level. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Table 3. Fairness Measure #2: Funding Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Table 4. Fairness Measure #3: State Effort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Table 5. Fairness Measure #4: Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Table 6. The National Report Card State Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Appendix A: National Child and Student Poverty Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

List of Figures

Figure 1. Pooled Data Samples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Figure 2. Factors Influencing State and Local Education Costs. . . . . . . . . . . . . . . . . . . . . . . 11 Figure 3. State Funding Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 4. State Fairness Profiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 5. Mid-Atlantic: Delaware, Maryland, New Jersey, New York . . . . . . . . . . . . . . . . . . . 16 Figure 6. Big Sky: Idaho, Montana, Utah, Wyoming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 7. Gulf Coast: Alabama, Louisiana, Mississippi, Texas. . . . . . . . . . . . . . . . . . . . . . . . 17 Figure 8. Southeast: Arkansas, Kentucky, Missouri, Oklahoma, Tennessee, West Virginia. . . 18 Figure 9. New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Figure 10. North Central: Illinois, Iowa, Minnesota, Wisconsin. . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 11. Pacific: California, Oregon, Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Figure 12. Prairie: Kansas, Nebraska, North Dakota, South Dakota . . . . . . . . . . . . . . . . . . . 20 Figure 13. Midwest: Indiana, Michigan, Ohio, Pennsylvania. . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 14. South Coast: Florida, Georgia, North Carolina, South Carolina, Virginia. . . . . . . . 21 Figure 15. Southwest: Arizona, Colorado, Nevada, New Mexico. . . . . . . . . . . . . . . . . . . . . . 21

Is School Funding Fair? A National Report Card

Second Edition

I. Introduction

Fair School Funding: The Key to Improving the Nation's Public School Systems

The evolving debate in the United States about how to improve the public education systems in the 50 states and the District of Columbia is ongoing in local communities, state capitals and Washington, D.C. From year to year, educators, school board members, civil rights organizations, parent groups, state and federal elected officials, business leaders and concerned citizens consider, adopt and implement various policies, strategies and "reforms" in an effort to boost outcomes for all students, particularly students attending high-poverty or "high-need" public schools. Of late, efforts have focused on raising learning standards and assessing student and school progress with the stated goal of closing "achievement gaps" and preparing students for engaged citizenship and participation in the economy.

In recent years, the debate on public school improvement has taken on a new, national economic imperative. The United States is increasingly characterized as losing its competitive edge against nations in Europe and Asia. Our public education systems are considered to be lagging behind those of other nations. Better education is viewed as the key to creating jobs and restoring economic prosperity.

Often left out of this debate is the fact that having a predictable, stable and equitable system of education finance is of critical importance to the success of any improvement effort. Sufficient school funding, fairly distributed to districts to address concentrated poverty, is an essential precondition for the delivery of a high-quality education through the states. Without this foundation, education reforms, no matter how promising or effective, cannot be achieved and sustained.

In addition, the adoption of standards-based education offers a new opportunity for states to develop and implement school finance systems driven by the actual cost of providing all students, including low-income students and students with special needs, the opportunity to meet the state's established standards. Unfortunately, only a few states have even made the effort to "cost out" the delivery of standards-based education, and then to provide funding to local school districts based on those costs. As a Colorado judge stated in a recent school funding decision, the Colorado funding system "has never been adjusted to address the cost of meeting [state] standards. Although the primary purpose of standards-based education was to provide objective measures of achievement that could be costed-out and funded, the two systems have remained out of touch and actually diverging, with no meaningful effort to analyze and align funding levels with educational costs."

As the United States emerges from difficult economic times, the challenges of increasing child poverty, revenue declines and state budget cuts appear more daunting. Yet, so too is the national challenge of ensuring all students, especially low-income students and students with special needs, the opportunity to receive a rigorous, standards-based education to prepare them for today's economy. In order to address the challenges of concentrated student poverty and meet the needs of English-language learners and students with disabilities, states must develop and implement the next generation of standards-driven school finance systems, expressly designed to provide a sufficient level of funding, fairly distributed in relation to student and school need.

The inaugural edition of the National Report Card, issued in late 2010, served to focus attention on these important issues. This second edition, which analyzes data through 2009, seeks to continue and sharpen that focus. Amidst the ongoing effort to improve our nation's public schools, fair school funding is critical to being successful and sustaining progress. Creating and maintaining state systems of fair school funding is essential to improving our nation's public schools.

Second Edition

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Is School Funding Fair? A National Report Card

The State K?12 Systems: Decentralized, With Concentrated Poverty

Two features dominate the landscape of the nation's systems of public education and heavily influence school funding: decentralization and concentrated student poverty.

First, kindergarten through 12th grade (K?12) public education provided through the state systems is highly decentralized.1 To deliver public education at the local level, the states have legally established approximately 16,000 school districts and 100,000 schools. These districts and schools -- and the education of students enrolled in these schools -- are funded through financing systems authorized and administered under state law through mechanisms commonly known as the school funding or finance "formula." These formulas deliver some combination of state and local revenues to schools, supplemented by a small amount of federal education aid. The most recent national data show the state share at 48.3%, the local share at 43.5%, and the federal share at 8.2% of public school spending.2

Second, the state education systems face the challenge of educating growing numbers of students living in poverty. Using the U.S. Census standard, the national child poverty rate in the nation's public schools is 16%. This is a 0.2% increase over the rate in 2007 and translates to one million more children falling below the poverty line. Eleven states have child poverty rates of over 20%, two more states than in 2007, with Washington, D.C., at 29%, Mississippi at 28% and Arkansas at 24%. While the Census poverty rate differentiates above and below poverty at 100% of the federal poverty level (approximately $22,000 for a family of four), it is more common in education to assess poverty levels using eligibility for the federal free and reduced-price lunch (FRL) program. The threshold for this program is 185% of the federal poverty level, or approximately $41,000 for a family of four. When poverty rates are expressed in this commonly used metric for student poverty, the national rate is 44%. Eleven states have average FRL rates over 50%, with Mississippi (68%), Washington, D.C. (67%) and Louisiana (65%) topping the list. In California, the nation's largest public school system, the student poverty rate is 52%, with more than three million children qualifying for federal free and reduced-price lunch.3 (See Appendix A for both child and student poverty rates for all states.)

Even more striking than the child and student poverty rates is the extent to which poverty is concentrated in school districts within states (see Table 1). Nationally, 10% of school districts have Census poverty concentrations over 30%. Seventeen states serve more than a tenth of their students in these high-poverty schools, and in five states over a fifth of the state's students are in such districts. Even as the U.S. economy just began to enter the recent downturn, significant shifts had taken place in the poverty concentrations of the nation's schools. The number of districts with less than 10% poverty declined by nearly a quarter from more than 4,300 districts in 2007 to only about 3,500 in 2009. In contrast, the number of high-poverty districts (over 30% poor), increased by 30%, from less than 1,000 in 2007 to nearly 1,400 in 2009. In fact, school districts across the country were more than twice as likely to experience increasing poverty rather than declining poverty between 2007 and 2009. The rise in poverty -- and concentrated poverty -- in states and local school districts is reflective of the economic conditions facing the country during this period.

1 Unlike other countries, the United States has no national right to education. The legal right and responsibility to provide education rests with each of the 50 states. David G. Sciarra, Enhancing Court Capacity to Enforce Education Rights, Foundation for Law, Justice and Society, Oxford University (2009).

2 "Percentage distribution of revenues for public elementary and secondary education in the United States, by source: 2007-08." U.S. Department of Education, Education Finance Statistics Center. ()

3 U.S. Census Bureau, Small Area Income and Poverty Estimates, "School District Data Files," 2009; U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "Public Elementary/Secondary School Universe Survey," 2008?09.

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Is School Funding Fair? A National Report Card

Second Edition

Table 1. Concentrated Student Poverty in U.S. School Districts

Under 10%

10% to 20%

20% to 30%

30% and Over

Districts Enrollment % Enrollment Districts Enrollment % Enrollment Districts Enrollment % Enrollment Districts Enrollment % Enrollment

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

7 63,827

21 112,786

19 101,605

1

295

229 1,176,598

31 327,755

141 380,897

1

6,419

1 31,549 7 166,083

6 38,917

292 705,791

61 250,539

130 169,257

66 171,125

7 61,124

1

5,554

36 56,962

12 772,577

227 581,074

98 492,039

114 432,838

54 266,398

53 11,568

68 99,635

1 10,137

105 128,326

388 907,258

1

3,272

278 932,985

65 56,565 162 527,656

34 99,461 15 91,484 179 841,114 25 78,978

2 24,399 37 25,282

4 98,988 110 683,794

13 341,717 106 40,880

30 711,068 54 305,335

171 346,984 21 33,028

8% 87%

8% 0% 18% 38% 64% 4%

30 273,976

17

6,676

72 554,641

61 171,922

372 2,779,701

78 301,025

18 102,645

12 124,130

1% 9%

13% 31% 22% 33% 34%

8% 1% 28% 80% 55% 28% 48%

26% 7%

31% 2%

60% 61%

1% 29%

56% 27% 15% 15% 41% 47%

3% 18%

9% 14% 57% 44% 54% 27%

37% 36%

25 1,554,223 37 768,694

1 201,374 70 208,928 380 648,388 172 519,718 203 300,625 189 194,944 39 327,129 17 235,290 117 101,971

9 92,934 64 233,610 267 576,741 182 328,962 15 120,127 187 354,713 200 107,288 148 205,447 14 459,645 61 80,666 134 250,155 23 201,095 297 631,783 35 923,023 95 37,549 279 654,891 228 241,827 90 353,210 225 589,029

7 34,675 20 265,622 79 92,107 28 337,438 393 1,430,410 19 184,496 133 46,275 58 369,761 132 559,804 15 90,613 201 415,470 24 57,157

34% 62 348,165

5% 9

5,609

46% 71 379,635

34% 119 224,935

42% 247 2,306,729

35% 47 224,448

17% 7 113,973

84% 3

16,718

1

76,892

54% 32 1,264,115

42% 75 581,548

100%

71% 32

43,456

28% 163 868,335

45% 48 275,002

59% 29

38,941

39% 37 111,140

45% 68 209,654

29% 35 450,689

51% 70

37,619

10% 3 105,818

22% 9 176,950

33% 141 308,199

37% 34

83,760

22% 50 187,110

35% 183 281,979

68% 112

27,396

65% 33

10,670

96% 2

7,681

38% 11

5,254

17% 29 191,924

56% 34

93,862

20% 96 1,492,929

57% 60 573,261

37% 14

1,933

33% 134 401,429

37% 186 216,374

57% 69 160,982

29% 77 246,896

21% 2

19,405

35% 43 413,374

66% 24

9,005

32% 82 457,282

30% 348 1,633,658

31% 8

65,185

49% 28

6,513

28% 44 191,035

50% 84 215,320

32% 35 177,155

44% 45

65,567

62% 1

603

43% 35 4% 6

31% 55 45% 70 35% 117 26% 22 19% 11% 100% 44% 9 32% 64

127,686 4,012

174,884 108,031 418,717

10,054

41,881 316,252

15% 7

2,953

38% 33

60,911

24% 11

98,261

8% 1

335

22% 1

22,357

29% 62 128,393

56% 16 112,415

19% 19

3,862

11%

17% 4

55,517

18% 46 356,831

9% 7

51,262

34% 84 238,002

27% 97 124,719

17% 60

11,138

3% 4

1,172

2%

2% 1

135

13% 10 141,229

26% 31

60,021

47% 13 141,777

36% 23 116,846

2% 10

4,523

20% 39 390,823

33% 84

89,326

26% 23

19,226

12% 19 351,280

12% 2

33,628

54% 22

66,322

6% 16

13,582

43% 22 173,979

34% 181 1,074,594

11% 1

3,703

7% 3

133

15% 6

42,175

19% 25

38,516

63% 5

12,705

7% 8 118,158

1% 2

841

16% 3%

14% 21%

6% 1%

1% 17%

1% 3% 9% 0% 4% 18% 14% 2%

5% 21%

6% 44% 12%

7% 0%

0% 9% 17% 4% 7% 4% 20% 14% 3% 17% 20% 9% 10% 16% 22% 1% 0% 3% 3% 5% 12% 1%

Second Edition

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Is School Funding Fair? A National Report Card

Existing Measures of State School Finance

Several reports analyze state school funding systems:

? The National Center for Education Statistics (NCES) publishes the most commonly used metric for state school funding: "state and local revenue per pupil," a decades-old measure frequently used to compare states with each other. This measure focuses on state and local revenue provided to local districts and schools, exclusive of federal revenue and without regard to current expenses and regional cost-of-living differences.

? Education Week publishes state school finance data and calculates the distribution of funding within states. In an advance over the NCES per-pupil revenue measure, Ed Week adjusts the student denominator in the calculation by using a "weighting," or an estimate of the extra cost of educating low-income students and students with disabilities.4 The estimates also are adjusted to reflect regional wage variations. Ed Week also assigns a "grade" to each state using several measures.

? Education Trust, a Washington, D.C.-based advocacy group, periodically publishes a measure comparing state and local spending in school districts with the highest and lowest concentrations of low-income, minority and English language learning students.5 The measure accounts for regional wage variations, and adjusts for children in poverty, limited English proficiency and children with disabilities.6 Education Trust calculates "funding gaps" between higher- and lower-need school districts, and higher- and lower-minority school districts, within a given state.

? In 2011, the U.S. Department of Education (DOE) published a measure of funding equity called the "Education Dashboard." The DOE measure shows the difference in per-pupil expenditures in high, high-middle, low-middle and low poverty districts across the country. Users can select their own "preferred" weighted adjustment for student poverty in 10% increments from 0 to 100%.

Limitations

These existing measures have serious shortcomings:

? The NCES per-pupil revenue measure masks differences in school funding within states, differences that can be as large as -- or larger than -- differences across states. This measure also does not account for differences in education costs within and across states and regions, and across labor markets, nor does it capture variations in student need and the variations in the resources needed to ensure that students with differing needs are able to meet common achievement and outcome standards, both within states and across states and regions. The NCES measure ignores the increased needs and costs of educating low-income students, especially those in concentrated poverty.

? While the Ed Week, Education Trust, and the DOE Dashboard measures attempt to recognize differences in student need, particularly with regard to low-income students, they assign different, assumed or "preferred" values -- or "weights" -- to account for those differences. In fact, one assigns a value nearly twice as large as the other, and none are based on actual data from the states or research on what it would actually take to close achievement gaps between poor and non-poor children.

4 A "weighting" is an adjustment to per-pupil revenue or expenditure data designed to address differences in needs and costs. Some state school finance formulas use weightings to drive different amounts of funding to districts based on a variety of different needs. In the Education Week analysis, students in poverty are assigned a weight of 1.2 and students in special education a weight of 1.9.

5 Carmen G. Arroyo, The Funding Gap, The Education Trust, January 2008.

6 Education Trust assigns a weight of 1.4 to students in poverty, and 1.6 and 1.9 to limited English proficient students and students with disabilities,

respectively. Funding Gap 2006. ()

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Is School Funding Fair? A National Report Card

Second Edition

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