Financing schools: Analysis and recommendations

Future of Children

Volumn 7, Issue 3, 1997, Pages 4-23

  Terman, Donna L ^a   Behrman, Richard E ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

BUDGET; DISABILITY; EDUCATION; FINANCE; GOVERNMENT; HANDICAPPED CHILD; MODEL; POLICY; REVIEW; SCHOOL;

EID: 0031401074     PISSN: 10548289     EISSN: None     Source Type: Journal    
DOI: 10.2307/1602442     Document Type: Review

References (68)

1. Hanushek, E.A. Outcomes, costs and incentives in schools. In Improving America's schools: The role of incentives. E.A. Hanushek and D.W. Jorgenson, eds. Washington, DC: National Academy Press, 1996, pp. 29-52.
2. Americans were taxed $933 annually to support public schools in 1993. See U.S. Department of Commerce, Bureau of the Census. Statistical abstract of the United States: 1996. Washington, DC: U.S. Government Printing Office, 1996, p. 298.
3. Throughout this analysis, the term &public schools& refers only to elementary and secondary schools, not institutions of higher education.
4. U.S. Department of Education, National Center for Education Statistics. Digest of education statistics, 1996. Washington, DC: U.S. Government Printing Office, 1996, pp. 50-51.
5. This amount was determined by author calculation. Direct expenditures at all levels of government (excluding intergovernmental transfers and noncash tax expenditures) totaled $10,770 per capita in 1993. See note no. 2, U.S. Department of Commerce, Bureau of the Census.
6. Orland, M.E. State investments in education and other children's services: The fiscal challenges ahead. Washington, DC: The Finance Project, 1995, p. 9.
7. U.S. Department of Education, National Center of Education Statistics. Digest of education statistics, 1994. Washington, DC: U.S. Government Printing Office, 1994, p. 163.
8. These figures are somewhat misleading because inflation should be calculated differently in service industries, such as education, which rely heavily on professional labor. Such calculations would reveal a slower rate of increase in educational expenditures. For further discussion, see Rothstein, R., and Miles, K.H. Where's the money gone? Changes in the level and composition of education spending. Washington, DC: Economic Policy Institute, 1995.
9. Grissmer, D.W. Education productivity. Washington, DC: Council for Education Development and Research, 1997.
10. See note no. 4, U.S. Department of Education, National Center for Education Statistics, p. 132.
11. See note no. 4, U.S. Department of Education, National Center for Education Statistics, p. 137.
12. Rossi, R. Holding students back: Pass or fail? Chicago Sun-Times, August 25, 1997, at Section NWS, p. 12.
13. Unready students at college. The Washington Post. April 22, 1996, at A16.
14. Purnick, J. Old schools are unfixed, new unbuilt. New York Times. April 29, 1996, at B1.
15. Kozol, J. Savage inequalities: Children in America s schools. New York: Harper Perennial, 1992.
16. Odden, A. Raising performance levels without increasing funding. School Business Affairs (June 1997) 63,6:4-12.
17. Stringfield, S., Ross, S., and Smith, L., eds. Bold plans for school restructuring: The new American schools designs. Mahwah, NJ: Earlbaum, 1996.
18. Goodlad, J.I. A place called school: Prospects for the future. New York: McGraw-Hill, 1984.
19. Consortium on Productivity in the Schools. Using what we have to get the schools we need: A productivity focus on American education. New York: Columbia University Institute on Education and the Economy, 1995, p. 37.
20. San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973).
21. Hawaii, which has only one school district, has been excluded from this calculation of the range of state expenditures on public schools.
22. For the most part, the extensive regulations in the Individuals with Disabilities Education Act (IDEA) merely codify federal court rulings interpreting the constitutional equal rights of students with disabilities. If a state should choose not to accept IDEA funding, the state's educational programs would still have to meet constitutional standards, which are largely the same as IDEA regulations. For further discussion, see Martin, E.W., Martin, R., and Terman, D.L. The legislative and litigation history of special education. The Future of Children (Spring 1996) 6,1:25-39.
23. Historically, school boards had the ability to levy taxes, and most retain that authority today. However, some states, such as California, have virtually eliminated the ability of local school boards to increase property tax rates to benefit schools. And in several large urban school districts - for example, New York City; Chicago, Illinois; Baltimore, Maryland; Philadelphia, Pennsylvania; Nashville, Tennessee; and Atlanta, Georgia - the city council or county board of supervisors controls property tax rates and, thus, a large share of the school district's budget.
24. See note no. 4, U.S. Department of Education, National Center for Education Statistics, pp. 144-48.
25. Enrich, P. Leaving equality behind: New directions in school finance reform. Vanderbilt Law Review (1995) 48,1:101-94.
26. See note no. 4, U.S. Department of Education, National Center for Education Statistics, p. 144.
27. Rose v. Council for Better Education, 790 S.W.2d 186 (Ky. 1989).
28. See note no. 4, U.S. Department of Education, National Center for Education Statistics, p. 144.
29. Mishel, L., and Rothstein, R. Measurement issues in adjusting school spending across time and place. Paper presented at the Annual Data Conference of the National Center for Education Statistics, Washington, DC, July 1997.
30. Hill, P.T., Pierce, L.C., and Guthrie, J.W. Reinventing public education: How contracting can transform America's schools. Chicago: University of Chicago Press, 1997.
31. Rodriguez v. Los Angeles Unified School District, Los Angeles County Superior Court, No. C 611358, Consent Decree (1992).
32. Odden, A. School finance: A policy perspective. New York: McGraw-Hill, 1992.
33. See note no. 4, U.S. Department of Education, National Center for Education Statistics, pp. 96-97.
34. Augenblick, J.G., and Myers, J.L. Determining base cost for state school funding systems. Denver, CO: Education Commission of the States, February 1994.
35. Education Commission of the States. Clearinghouse notes: Determining the cost of a basic or core education. Denver, CO: ECS, 1997.
36. Kennedy, M.M., Jung, R.K, and Orland, M.E. Poverty, achievement, and the distribution of compensatory educational services: An interim report from the National Assessment of Chapter 1. Washington, DC: U.S. Department of Education, 1986.
37. Parrish, T.B., Matsumoto, C.S., and Fowler, Jr., W. Disparities in public school district spending, 1989-90. NCES Research and Development Report 95-300. Washington, DC: U.S. Department of Education, National Center for Education Statistics, 1995.
38. See note no. 22, Martin, Martin, and Terman.
39. Wagner, M.W., and Blackorby, J. Transition from high school to work or college: How special education students fare. The Future of Children (Spring 1996) 6,1:103-20.
40. U.S. General Accounting Office. Limited English proficiency: A growing and costly educational challenge facing many school districts. GAO/HEHS-94-38. Washington, DC: GAO, 1994.
41. Visiedo, O. Something has to give. Education Week (January 18, 1995) 14,17:34. Available online at http://www.edweek.org.
42. In fact, for this reason, many property-poor districts have high tax rates. U.S. General Accounting Office. School finance: State efforts to reduce funding gaps between poor and wealthy districts. GAO/HEHS-97-31. Washington, DC: GAO, 1997.
43. In Kentucky, Tier 2 taxes can be raised up to a maximum of 30% of the sum of the foundation level and Tier 1. Using the same example, Tier 2 in Districts A and B could be a maximum of $1,150. Thus, the widest spread possible between districts would be $1,650. District A could have per-pupil funding of $4,983 ($3,333 foundation level funding plus $500 at Tier 1 and $1,150 at Tier 2). District B, if it chose not to raise taxes to Tier 1, would have the $3,333 of foundation level funding.
44. U.S. General Accounting Office. School facilities: Condition of America's schools. GAO/HEHS-95-61. Washington, DC: GAO, February 1995.
45. In many poor urban schools, building maintenance is routinely deferred to keep class sizes lower. See Appendix B in this journal issue.
46. See Appendix A in this journal issue.
47. Roosevelt Elementary School District No. 66 v. Bishop, 179 Ariz. 233, 877 P.2d 806 (1994). Figures cited by the Arizona court convey the urgency of the problem. The presence or absence of taxable commercial property led to assessed valuations per pupil ranging from $5,800,000 to $749. Even in two districts with comparable commercial property, differences in the value of residential property led to per-pupil assessed valuations of $130,778 and $18,293, respectively. A first glance shows Arizona had a normal level of commitment to funding equity: the state provided 45% of the total education budget, 90% of the state's districts received some equalization funding, and the foundation funding level included a line item for capital improvements in every district. However, on closer examination, the court found that the foundation level of funding, and specifically the line item for capital improvements, was insufficient even to pay for long-term maintenance, let alone for new construction. In effect, all facilities needs had to be met entirely from local property taxes. The result was a gross disparity in local tax rates (with property-poor communities paying more) and the quality of facilities (with property-rich districts benefitting greatly). Although Arizona's court has taken a strong stand, the legislature has not yet created a funding plan acceptable to the court. See Johnson, R.C. Judge dismisses latest school finance plan in Arizona. Education Week (September 3, 1997) 17,1:22,28. Available online at http://www.edweek.org. The Ohio court has recently followed Arizona's example. DeRolph V. State, 780 Ohio St.3d 419 (1997). Unfortunately, the situation found in Arizona is common to most states. See Dahlkemper, L. Rundown schools: Whose responsibility? State Legislatures (September 1997) 23,8:15-19.
48. Roosevelt Elementary School District No. 66 v. Bishop, 179 Ariz. 233, 877 P.2d 806 (1994). Figures cited by the Arizona court convey the urgency of the problem. The presence or absence of taxable commercial property led to assessed valuations per pupil ranging from $5,800,000 to $749. Even in two districts with comparable commercial property, differences in the value of residential property led to per-pupil assessed valuations of $130,778 and $18,293, respectively. A first glance shows Arizona had a normal level of commitment to funding equity: the state provided 45% of the total education budget, 90% of the state's districts received some equalization funding, and the foundation funding level included a line item for capital improvements in every district. However, on closer examination, the court found that the foundation level of funding, and specifically the line item for capital improvements, was insufficient even to pay for long-term maintenance, let alone for new construction. In effect, all facilities needs had to be met entirely from local property taxes. The result was a gross disparity in local tax rates (with property-poor communities paying more) and the quality of facilities (with property-rich districts benefitting greatly). Although Arizona's court has taken a strong stand, the legislature has not yet created a funding plan acceptable to the court. See Johnson, R.C. Judge dismisses latest school finance plan in Arizona. Education Week (September 3, 1997) 17,1:22,28. Available online at http://www.edweek.org. The Ohio court has recently followed Arizona's example. DeRolph V. State, 780 Ohio St.3d 419 (1997). Unfortunately, the situation found in Arizona is common to most states. See Dahlkemper, L. Rundown schools: Whose responsibility? State Legislatures (September 1997) 23,8:15-19.
49. Between 1985 and 1995, schools in Kansas City, Missouri, received more than $1.3 billion of court-ordered state support for desegregation, a substantial part of which was used to improve facilities, though critics charged it did not lead to better student outcomes. Walsh, M., and Schmidt, P. In K.C. case, court curtails Judge's powers. Education Week (June 21, 1995) 14,39:1,23. Available online at http://www.edweek.org.
50. Florida's recently passed H.B. 2121 provides cash rewards to districts that practice "frugal construction practices." See note no. 47, Dahlkemper.
51. Hill, P.T., Foster, G.E., and Gendler, T. High schools with character. Santa Monica, CA: RAND Corporation, 1990.
52. Stecklow, S. If their schools score well, state gives teachers cash. Wall Street Journal. September 2, 1997, at A1.
53. Clotfelter, C.T., and Ladd, H.F. Recognizing and rewarding success in public schools. In Holding schools accountable: Performance-based reform in education. H.F. Ladd, ed. Washington, DC: Brookings Institute, 1996, pp. 23-63.
54. Miller, E. Early report from Kentucky on cash rewards for "successful" schools reveal many problems. The Harvard Education Letter (1996) 12,1:1-3.
55. Elmore, R.F., Abelmann, C.H., and Fuhrman, S.H. The new accountability in state education reform: From process to performance. In Holding schools accountable: Performance-based reform in education. H.F. Ladd, ed. Washington, DC: Brookings Institute, 1996, pp. 65-98.
56. See note no. 51, Stecklow.
57. See note no. 52, Clotfelter and Ladd, p. 27.
58. See note no. 54, Elmore, Abelmann, and Fuhrman, p. 83.
59. DeSpain, B.C., and Livingston, M. Roads to reform. The American School Board Journal (July 1996) 183,7:17-20.
60. Hawley, W.D. The predictable consequences of school choice. Education Week (April 10, 1996) 15,29:56. Available online at http://www.edweek.org.
61. National Center for Education Statistics. Private schools in the United States: A statistical profile, 1990-91. NCES 95-330. Washington, DC: U.S. Department of Education, Office of Educational Research and Improvement, 1995.
62. Eighty-six percent of private schools are affiliated with a religious organization. (Author calculation, based on note no. 60, National Center for Education Statistics, p. 11.) Subsidies may be in the form of free classroom space, free business or administrative services, or lower pay to nuns in Catholic schools or to other teachers.
63. Walsh, M. Voucher plan in Cleveland is overturned. Education Week (May 7, 1997) 16,32:1,31. Available online at http://www.edweek.org.
64. Walsh, M. Judge overturns expanded Wisconsin voucher plan. Education Week (January 22, 1997) 16,17:1,17. Available online at http://www.edweek.org.
65. Hill, RT. Contracting in public education. In New schools for a new century. D. Ravitch and J. Viteritti, eds. New Haven, CT: Yale University Press, 1997.
66. Stecklow, S. Businesses scramble to run charter schools. Wall Street Journal. August 21, 1997, at B1.
67. These figures are for current expenditures only, not capital (that is, construction) expenditures.
68. Speakman, S.T., Cooper, B.S., Holsomback, H.D., et al. Tracking expenditures to the classroom. School Business Affairs (February 1996) 62,2:34-44.