Hawaii’s Funding Mess: My thoughts on why

It is indeed sad to see the state of public schooling in Hawaii. Teachers are furloughed and students are losing valuable classroom time. The state has chosen to use ARRA stimulus funds to fill budget gaps – which has been done by many states – but Hawaii has chosen to cut more than fill.

Arguably, Hawaii’s current education funding problems can be traced back to 2003 and a hard-nosed attempt at revenue-neutral education reforms – Fad-based reforms! Not fact-based ones. Off-the-Shelf School Finance solutions, as Doug Elmer and I describe in a recent article. (http://epx.sagepub.com/cgi/content/abstract/23/1/66)

Some historical context is provided here:

http://archives.starbulletin.com/2003/11/25/news/story2.html

Among other things, Hawaii’s leaders were misled in 2003 to believe that Hawaii already spent far more than necessary on its schools and that decentralized governance alone would solve their problems, driving more money to classrooms without ever having to add a dollar of new revenue.

The report by Bruce Cooper and William Ouchi concluded:

If Hawai’i were to reach classroom spending of 65 cents out of each education dollar, it would mean an additional $46,250 to spend on each classroom per year. This diversion of money to non-core uses is typical only of very large school districts.[1]

The results of our study bear on the consideration by the state of moving to a new system of management, Weighted Student Formula (WSF).

But this was an argument based on shoddy analysis and poorly documented summaries of state spending (actually, state and local total revenue) – comparisons which the authors of the original report even failed to understand. Yet, their message stuck with Hawaii policymakers.  No more money for schools. Just structural (read superficial) reform.

Oddly enough the original Cooper/Ouchi report which chastised Hawaii’s Board of Education for spending way to much to begin with and driving less than 65% to the classroom, never actually provided legitimate analyses supporting the secondary conclusions of that report – promote decentralized governance and implement a weighted student formula with the money you already have! Doug Elmer and I discuss these issues in this article: http://epx.sagepub.com/cgi/content/abstract/23/1/66

This whole series of events provided the governor and legislature in Hawaii the platform to continue starving the state’s education system while placing blame on the State Board of Education for not acting on their reforms, which in their view, would have solved everything. http://www.kpua.net/news.php?id=9232

Hawaii’s education system problems run much deeper than any superficial, off-the-shelf management guru strategy can solve.

Hawaii is among the few states where fewer than 80% of 6 to 16 year old children attend the public school system (78.8% according to American Community Survey 2005 to 2007). Yes, less than 80% of children in the age groups where most kids attend public schools are in Hawaii’s public schools. And yes, they are the lower income kids compared to their peers in Hawaii private schools.

That said, Hawaii’s educational effort (share of Gross state product spent on public schools) is relatively average to above average among states. Further, cross state comparisons of Hawaii’s educational spending provide mixed messages:  Hawaii’s current spending  – depending on how it’s measured and/or how it’s adjusted for regional cost variation is relatively average to above average (looking at total state and local revenue) or below average (looking at current expenditures per pupil) , adjusted for regional costs.

During the recent economic downturn, Hawaii’s total state revenue decline has been near the middle (upper middle) of the pack nationally – total state revenue losses from peak to June 2009 (p. 20 and 21), according to this Rockefeller Institute Report (best site for this stuff):

http://www.rockinst.org/pdf/government_finance/state_revenue_report/2009-10-15-SRR_77.pdf

This very recent WSJ article (http://online.wsj.com/article/SB125635093976805443.html) shows how Hawaii’s education funding cuts compare to those in states like California, Florida, Georgia and New Mexico – all of which have experienced much greater declines in total state revenue than Hawaii as of earlier this year – according to the Rockefeller Institute analyses linked above.

Even though Hawaii’s total state revenue is not declining as fast as these other states, Hawaii’s cuts to public schools have been comparable or even greater.

A few years back, Scott Thomas (now at Claremont Graduate School) and I were asked to provide analyses for and guidance to the Hawaii Department of Education regarding implementation of the decentralized weighted student funding plan which had been adopted as part of the comprehensive reforms of 2004.  To a large extent, our attempts at modeling financial redistribution options across Hawaii’s schools under revenue neutral assumptions proved to be an exercise in re-arranging deck chairs on the titanic.  Our two reports can be found here:

Part I – includes executive summary and conceptual framing of analyses, along with comparisons to other state formulas

http://sites.google.com/site/schoolfinancepolicy/consulting-reports/Hawaii.Part1%262.2006.pdf?attredirects=0&d=1

Part II & III – includes specific analyses of teacher labor markets, distribution of teachers by qualifications across richer and poorer neighborhoods, locations & islands, and concludes with simulations of redistribution options

http://sites.google.com/site/schoolfinancepolicy/consulting-reports/Hawaii.Part3.2006.pdf?attredirects=0&d=1

On page 34 of the second report, Scott Thomas and I explain:

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A recent New York Daily News (7/2/06) editorial opined:

“Rather than simply pumping more gas into this broken down car, it’s time to design a much smarter and more effective way to get from Point A to Point B. A reform idea called ‘weighted student funding’ does just that, making intelligent use of the resources we already devote to education. How? Unlike the current system—which funds school districts through an incredibly complicated calculus—weighted student funding ties the money to the student.” (Cooper)

Increasingly, pundits supporting this view of WSF use the analogy of students carrying with them a need-based backpack of funding. Hawai‘i’s BOE and Committee on Weights now recognizes that in a system already constrained by limited resources, targeting sufficient need-based weighting simply costs more, not less or the same amount of money. As noted in our original report, we do not envy the members of committee charged with redistributing limited resources. If, as our estimates suggest, some schools need 40% more than others on the basis of poverty alone (we believe this to be a low estimate), and if this is to be done with no new money added to the system, then others must necessarily give up 40% of their funding.

In other words, assume Johnny and Malaya both need backpacks and currently they both have $10, sufficient to buy an ordinary backpack at Target or Wal-Mart. But, Malaya, by virtue of combined economic disadvantage and limited English proficiency, needs a $20 backpack. Johnny may need only an $8 backpack—the cheapest available (but with less padded shoulder straps than Johnny is used to). Unfortunately, if we redistribute the necessary resources to Malaya, then Johnny is out of luck altogether. If we leave Johnny with enough for the $8 backpack, then Malaya is out of luck. It’s a lose/lose proposition. For both Johnny and Malaya to get the backpack (read education) they need through a WSF, we will likely have to find more money. We ourselves might view this issue differently if it was plainly obvious that Hawai‘i’s schools are flush with funds and simply squandering those funds on unnecessary, frivolous endeavors. We lack any evidence to support this conclusion.

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While I’ve not followed Hawaii closely for the past few years, it would appear that this ship has now begun to sink – widening the gap between the fewer than 80% of children left in public schools (on the ship) in Hawaii and the 20% from first class who had access to life rafts.

I find it most disturbing that much of this mess may have been avoidable had it not been for purely political interests and self-absorbed snake-oil salesmen ready and willing to serve those interests with the simple message that money can’t fix schools.  Off-the-shelf reforms like WSF can!

The reality is that substantive education reform often costs money – sometimes a lot of money and sometimes a lot more than the amount already being spent. Automatically assuming that there’s enough money in a system just because it looks like a big number is not enough. More detailed analysis is required. You can’t starve a system into reform, especially if the reforms cost money. Unfounded assumptions and arguments that there’s plenty of money and that money doesn’t matter and may never matter are not only absurd but are potentially very harmful. It would appear that Hawaii is now becoming a stark example of that harm.

You can rebuild the engine and transmission as many times and in as many ways as you want, but if you don’t eventually put gas in the car, it won’t run!

(my apologies for combining sinking ship metaphors, backpacks and cars that don’t run in a single blog post)