Time to Tax the Churches!

On June 30th 2020, the U.S. Supreme Court determined that if a state has a program of providing public financing for private entities to provide educational services, that program cannot exclude from participation any institution simply because that institution is religious (see Espinoza v. Montana Department of Revenue). The decision involved a taxpayer financed tuition tax credit program providing vouchers for children to attend private schools, which under the state’s constitution (Blaine amendment), prohibited use of those vouchers at religious schools. This decision followed an earlier SCOTUS decision that prohibited Missouri from excluding religious institutions from access to a publicly financed program for playground refurbishing. These cases combined reverse a long history of state enforced Blaine Amendments which excluded the use of taxpayer dollars for religious institutions, even where taxpayer dollars were available to other private providers.

Of course, one difficulty with such provisions is having the government play any role in defining what is, or isn’t religion, when determining whether a tax benefit or public financing should be bestowed on an institution. Jedi? Religion! Church of the Flying Spaghetti Monster? Religion!

There are other examples where state governments bestow tax benefits on institutions simply because, exclusively and explicitly because of their status as “religious,” and regardless of other religion neutral criteria. These too have, to date, been upheld by established case law. But we argue that Espinoza which upended the established case law on Blaine Amendments also upends established case law on any state program which provides a tax benefit on the basis of religious status alone.

You ask – what could they possibly be talking about, and how could this be a big deal? Among other things, most if not all states provide for religious institution exemptions  from local property taxes. Churches, their often elaborate physical facilities, the land on which they sit is often exempt from property taxation by municipalities, school districts, etc., under state laws. Indeed, other types of institutions are also exempted in many cases, but churches and religious institutions are given their own separate status under these exemptions.

In New Jersey, schools and colleges, historical societies, libraries and other publicly held lands/buildings along with some service oriented non-profit organizations may quality for similar tax exemption, in accordance with religion neutral qualifications. Portions of land/buildings leased for to for-profit entities and/or for purposes not otherwise tax exempt may be subject to taxation. New Jersey law (NJ Rev Stat § 54:4-3.6 (2013) ) explicitly states: “all buildings actually used in the work of associations and corporations organized exclusively for religious purposes, including religious worship, or charitable purposes.”[1] Kansas law similarly provides explicit exemption for religious properties:

79-201. Property exempt from taxation; religious, educational, literary, scientific, benevolent, alumni association, veterans’ organization or charitable purposes; parsonages; community service organizations providing humanitarian services; electric generating property using renewable technology; landfill gas and production property.[2]

That is, religious institutions, regardless of whether they qualify on other religion-neutral grounds are granted exemption. Religious worship, per say, is presumed to be a non-profit community/public service, simply because it is “Religious,” even if that activity would not otherwise qualify.  

We are certainly not the first to raise this issue. But to reiterate, as much as these exemptions have been argued by some as absolutely untouchable as a form of religious freedom, or grudgingly untouchable by others as upheld in existing case law,[3] Espinoza changes all of this, and provides clear path toward taxing the churches.

If a state cannot exclude from access to taxpayer resources institutions simply because they are religious, a state also cannot exclude from taxation, institutions simply because they are religious. Indeed, to the extent that properties on which private schools operate are exempt, then this exemption would also apply to properties on which private religious schools operate. But the exemption would not extend to the church itself, or for example, rectories, religious retreats or other lands and buildings used solely for “religious” activities, including worship. The state cannot define religious activity in-and-of-itself to qualify as public service because the state should not be in the business of defining “religion,” and bestowing differential benefits on that basis alone.

Religion neutral exemptions for service oriented non-profits may include religion neutral regulations, such as non-discrimination requirements that may lead to the exclusion of some (if not many) religious institutions, including schools, from tax exemption. Such was the case in the revocation of non-profit status by the IRS of Bob Jones University. The Bob Jones case speaks to the broader point that religion in-and-of-itself cannot be classified by government as necessarily benevolent, thereby qualifying under a “benevolent neutrality” doctrine[4] (per non-profit qualifications). However, a recent SCOTUS decision raises questions about whether these regulations can be enforced. All the more reason to tax the churches.

Who pays the price for these unlawfully bestowed tax benefits? Other local property owners, who must pay higher taxes to offset the reduced overall tax base, and all other taxpayers in the state where state general funds are used to offset differences in local fiscal capacity. These taxpayers should, simultaneously, across multiple jurisdictions begin to file suit to recover these damages, and mitigate any future damages.


[1] https://law.justia.com/codes/new-jersey/2013/title-54/section-54-4-3.6/

[2] http://www.kslegislature.org/li_2014/b2013_14/statute/079_000_0000_chapter/079_002_0000_article/079_002_0001_section/079_002_0001_k/

[3] https://www.oyez.org/cases/1969/135

[4] https://www.oyez.org/cases/1969/135

Filling our Nation’s Funding Gaps

Mark Weber, Matt Di Carlo and I have a new report, with data and visualizations available over at schoolfinancedata.org. For that project, we take advantage of two major data sources to estimate a “cost model” for public school districts in the United States – specifically with the goal of estimating the per pupil costs (spending, controlling for differences in efficiency) to achieve a common outcome goal. We set that common outcome goal at the very modest level of existing national average outcomes on state assessments of reading and math achievement, grades 3 to 8. Yes, these are limited outcomes. Yes, this is a low bar. But, our main point here is to evaluate the disparities that exist across states and districts in the funding available, relative to the predicted costs, of achieving this modest target. Education cost analyses of this type have helped us better understand two things:

  1. It costs more to achieve higher outcomes than lower ones; and
  2. It costs more to achieve any given level of outcomes in some settings, with some children, than others!

State school finance systems state accountability systems for schools have historically been disjoint. On the one hand, we use state assessment data and other outcome measures to declare schools or districts good or bad – exceptional or failing. But rarely do we design and implement school funding systems that are actually built upon estimates of a) the costs of achieving the desired outcome levels, on average, or b) how those costs vary from one setting and child to the next. That is, we don’t design state school finance systems to deliver the funding that would provide each school or district with equal opportunity to hit the targets we set in state accountability policies. Thus, we necessarily create an unfair playing field. This is true in every state, though some more than others. We’ve rarely even considered how these disparities play out across states. That is, whether children in Mississippi should have equal opportunity to achieve outcomes similar to children in Massachusetts, and what that might cost.

Here’s what those funding gaps look like with respect to costs to achieve national average outcomes, for 2019, based on a model fit to data on spending, outcomes and various other school and district characteristics from 2009 to 2018.

Here’s what the outcome gaps look like in 2018:

In other words, the outcome gaps line up largely with the funding gaps. Where states, schools and districts spend enough to achieve average outcomes, they generally do achieve those outcomes. It’s not a perfect relationship, but it is a clear one. Further, deviations from this relationship occur for a few different reasons – some of which we suspect are a result of data which simply aren’t fully comparable – fully equated from one state to the next.

Still, these data give us a pretty good picture where in the country and within specific states we need substantially more investment in schooling to achieve even modest outcomes. To put these gaps into context, in 2021, the total sum of money needed to fill the red in the first map is about $130 Billion! While that seems huge, and is, it’s also about the same amount of money included in the new federal stimulus package for schools. But, a) that stimulus package is spread over a few years, to be obligated by fall 2024 (perhaps spend and spread out over even longer) and b) not permanent. It will go away, when what we really need is a sustained increased investment.

It is important to understand though, that states – especially those which currently put up very little effort of their own, should have to share some of the cost of closing these gaps. The needed increase in federal aid to close these gaps would be significantly reduced by requiring all states to put up their fair share and allocate aid to local districts appropriately according to need. This figure, from our visualizations on the site shows that states which put up more effort to fund their schools tend to have more adequate spending. Shocking, I know!

It’s also important to understand that if we want to shoot higher, it’s going to cost more. A lot more. Here’s what the funding gaps look like if we shoot for current Massachusetts average outcomes:

Let’s take a relatively average state, for example, like Missouri. An average state, but one with extremes. I had the pleasure of speaking to school administrators in Missouri about a week ago. On average, school spending per pupil across Missouri school districts really doesn’t vary much by poverty. The funding is not progressive. And on average, it’s relatively average.

St. Louis and Kansas city have somewhat elevated funding, but high poverty districts overall, not so much. If we compare these current expenditures to costs of achieving national average outcomes, we have …

That is, to provide equal opportunity to achieve national average outcomes, which aren’t too different from Missouri average outcomes would take doubling or more the per pupil spending of low spending high poverty districts, but low poverty districts could actually spend less, quite a bit less to achieve national average outcomes (which are much lower than their current achievement). For example, from our new visualizations… Clayton, an affluent suburb of St. Louis spends well above what it needs to achieve merely national average outcomes, and far exceeds those outcomes.

By contrast, right down the road… Normandy schools have significant gaps in spending and outcomes.

A few additional points which aren’t included in our new reports and site are a) how much more it would cost to achieve higher outcomes and b) the influence of racial isolation and segregation on costs. First, here’s how much the cost targets go up in Missouri if we shoot for Massachusetts average outcomes:

Shooting for Mass average outcomes, only Missouri’s lowest poverty districts currently spend enough to achieve the target and the per pupil costs for the state’s major cities climb to over $35,000 per pupil.

Prior research has shown that if we include racial composition directly in these models we may get different cost projections and thus funding gaps. Specifically, black population concentration resulting from structural, systemic racism, housing and school segregation can lead to even higher costs of mitigating outcome disparities.

If we re-estimate our models to each standard, with and without racial composition (in this case, % black enrollment) we get these results. For Normandy, for example, the non-race model (which we use in our new report) estimates a cost of national average outcomes in 2018 of $18,774. But, when racial composition is considered, Normandy which is a nearly 100% black school districts, has costs per pupil of nearly $26,000 to achieve national average outcomes.

These issues require further exploration and integration into what Preston Green and I have recently laid out as a reparations framework for school finance. Racial composition, as in our past work, continues to significantly affect the cost of achieving common outcome goals. Because of this, it remains a significantly unfair playing field to rate and rank districts on outcome metrics, when we have failed to fully address these different costs. It’s also simply unfair to the children subjected to these conditions and a constitutional violation under many state constitutions to deprive these children of equal opportunity to achieve common, adequate outcome levels.

Our new project is intended to help users, policymakers and advocates better understand these need and cost differences. Our focus is on the relative position of districts and states in the mix. And again, we are estimating against a low bar. It should not be construed that this bar – the outcome basis for our estimates – constitutes constitutional educational adequacy in any state’s particular context. States have their own standards. State courts have in many cases determined whether those outcome standards determine the constitutional standard and by extension the legislature’s obligation to finance districts to meet those standards. But many states, courts and legislatures have ducked these questions altogether over time. And we’ve never really had a robust national discussion on what it might take to raise the bar nationally, and where we have the furthest to go.

Here, we offer a starting point and one that hopefully helps change the conversation, and guide future federal aid programs as we move to the post-covid era!

A few thoughts on School Funding and Pandemic Relief

I keep getting asked the same questions regarding my thoughts on the current stimulus proposals for schools. So here’s a quick attempt at summarizing my thoughts.

The pandemic has had at least three different types of effects on school funding, which in turn, require specific, separate policy responses.

First, the pandemic has highlighted the need for a short term infusion of resources to make existing schools safer and healthier for existing staff and students, increasing expenses for things such as cleaning supplies, PPE and technology expansion for increased remote access. While these things can add up, they are still probably the smallest among these financial issues facing schools and states in this moment. Still, they must be addressed, both for short term purposes and so that we learn better how to handle similar situations in the future.

The second issue is the fact that the pandemic has created significant shortfalls in state budgets which have yet to be resolved by an appropriately structured federal stimulus package. When state budgets take a hit like this, and income and sales tax revenues dip, there’s usually a large sharp dip for 1 to 3 years, followed by a long slow recovery. We learned a lot from the last great recession. This one is, and will be different in some ways. State budgets and by extension general aid to local school districts will need significant general support for ongoing expenses for the next few years, just to stop the bleeding. But that can’t just go away immediately like it did last time, leaving huge budget holes in year 3 before states had fully recovered. Ongoing district costs, like making sure schools can provide enough nurses, counselors and small enough class sizes require ongoing support. Continued federal aid increases will be needed beyond year 2 or 3 and the federal government must put additional pressure on states to do their part.

We address this issue in these sources:

Baker, B.D., Weber, M., Atchison, D. (2020) Weathering the storm: School funding in the COVID-19 era. Phi Delta Kappan https://kappanonline.org/school-funding-covid-19-baker-weber-atchison/

AND:

https://www.shankerinstitute.org/resource/coronavirus-pandemic-and-k-12-education-funding

Here’s a picture of what a sustained relief package for operating funding shortfalls might look like:

The third issue is that the pandemic has highlighted the extent of inequity in school buildings in terms of safety, health and overall capacity. These have long been issues. Buying more PPE, or having more nurses won’t solve the long accumulated deferred problems of overcrowded, poorly ventilated school buildings that in many cases are over 50 years old. The same facilities also often suffer the greatest deficits in tech infrastructure, while serving communities that have been disproportionately affected by the pandemic.

It’s also important to understand that one factor which limits district ability to reduced class sizes simply by hiring more teachers is lack of useful, quality space. Not enough classrooms! You can’t focus on class size reduction by focusing on personnel alone. Buildings matter.

Schools and districts need renovation, replacement, HVAC upgrades. This may be an especially good use of a large infusion of federal funding, because even after that funding is gone – what was bought with that funding will last for some time. Not only that, but if the federal gov’t invested a large sum in school facilities renewal and environmental improvement (HVAC, lighting, tech.) the ongoing costs of operating those facilities, which falls on districts and states, would actually be reduced. It’s a win-win.

Older post on school facilities and why they matter: https://schoolfinance101.wordpress.com/2019/08/26/school-facilities-matter-in-so-many-ways-how-could-they-not/
And a picture:

The current Biden framework includes some of these elements, but lacks sufficient detail. The plan needs to better sort out the short term (COVID preparedness), medium term (filling state budget holes) and longer term (maintaining adequate ongoing funding and investing in infrastructure) issues. Focusing on hiring teachers to reduce class size sounds good, politically, but there have to be classrooms in which to house these smaller classes.

Further, current conditions faced by districts across the country vary. Some may require more staff. Some may require better paid staff. This problem is broadly solved by an infusion of general aid, not funds targeted specifically toward expenditures that may or may not be top priorities, may be infeasible and may lead to problematic cuts a few years down the line.

Any final regulations on the plan need to make sure that states do their part. That states don’t generally decimate school budgets over the next several years and that states specifically protect the interests of the most vulnerable children and families, both in terms of the formulas by which new federal aid is allocated and the states’ own obligations.

This report provides some ideas of where that money is needed most, now and in the future: https://tcf.org/content/report/closing-americas-education-funding/

Getting School Finance Indicators Right

Our data and reports can be found at: http://schoolfinancedata.org/

A few years back, Mark Weber and I decided (for a variety of reasons) that we needed to regain control over our school finance indicators work. We needed to find competent collaborators who would support our desire to continuously improve the quality and integrity of the indicators and our communication of them. We also needed to find an appropriate outlet. The William T. Grant Foundation had provided us with significant support to develop an open source data system and a set of indicators to improve the conversation around school funding equity and adequacy.

We found exactly what we were looking for through Matt Di Carlo at Shanker Institute, with whom I have collaborated on a few prior projects, most notably: https://www.shankerinstitute.org/resource/does-money-matter-second-edition

I started this work back in the mid to late 2000s around the time I transitioned from Kansas to New Jersey. I’ve written previously about my concern over other “indicators” reports that are out there and the need to improve and add clarity and consistency to the conversation.

Here in April of 2019, I explain the mindset behind the development of our new (in the past few years) school finance indicators data system (SFID):

Matt Di Carlo helped bring this all together into a clear, concise set of indicators to be presented as the body of our new reports.

Below is the summary of our newest update:

The publication of this annual report and accompanying database is motivated by two considerations. The first is that there is now an emerging empirical consensus about the centrality of equitable and adequate funding for high-quality K-12 education. Yes, how money is spent is also important, but there are few options for improving U.S. public schools that do not require investment of resources, and districts cannot spend wisely money they do not have. The research is clear: Money matters. Period.

The second consideration is that school finance is extremely complicated. The inner workings of states’ funding systems, shaped over decades in state legislatures and courts, are so intricate and complex that few truly understand how they work. And finance research is among the most arcane and impenetrable fields for policymakers, parents and the general public. Every year, countless reports of varying quality are published by a variety of different individuals and organizations, sometimes reaching inconsistent conclusions.

The primary purpose of the School Finance Indicators Database (SFID) is to cut through this clutter. It is a public collection of finance and resource allocation measures that are based on sophisticated and widely accepted methods but are also designed to be easy for non-researchers to interpret and use themselves.

The State Indicators Database (SID), which is the SFID’s primary product, includes approximately 125 variables, but we focus in this report on three key school finance measures: fiscal effortadequacy, and progressivity. We feel that these three indicators as a whole provide a succinct and informative overview of the adequacy and fairness of each state’s school finance system.

This third edition of our database and annual report, however, is being published in the middle of a terrible global crisis: the coronavirus pandemic. Due to the lag in the release of national school finance data, our measures (2017-18 school year) predate the economic crisis caused by this pandemic. Yet this is precisely the right time to examine and evaluate states’ school finance systems, as they will play a big role in determining the severity, duration and distribution of the school budget shortfalls. Accordingly, we pay special attention in this report to discussing how states’ systems tend to mediate the impact of economic downturns, and we offer general guidance as to what we can expect as the impact of the current crisis continues to unfold over the next few years. 

Fiscal effort

Fiscal effort (or simply effort) measures how much of states’ total economic capacity is spent directly on K-12 education. It is fundamentally less a measure of how much states spend than the degree to which they leverage their potential to spend. Our effort indicators allow us to determine whether states lag behind in spending because they don’t have the capacity to raise revenue (e.g., they have smaller economies from which to draw tax revenue), or because they refuse to devote sufficient resources to their public schools. 

  • States vary in their effort levels, which, along with state capacity, drive large interstate differences in school resources. 
    • Individual states’ effort levels range from about 2.4 percent of gross state product (GSP) in Hawaii and Arizona to 4.4-4.5 percent in Wyoming and New Jersey. That is, New Jersey and Wyoming devote almost twice as much of their “economic pies” to public schools as do Hawaii and Arizona. (Figure 3)
    • Higher-effort states generally produce more revenue, though states with larger economies can produce the same amount of revenue as states with smaller economies that put forth the same effort levels. Effort and capacity together explain roughly 70-80 percent of interstate differences in adjusted state and local revenue. (Figure 4)
  • The Great Recession, in combination with policymakers’ choices in its aftermath, caused what appears to be a permanent decline in fiscal effort.
    • Average U.S. effort increased from roughly 3.8 percent in 2004 to a high of 4.1 percent in 2009. This was followed by a rapid four-year decline between 2009 and 2013, during which time the average decreased from 4.1 to 3.5 percent. It has remained relatively flat since 2013. States’ economies recovered, but most failed to revisit their funding systems to make up lost ground. (Figure 5)
    • Between 2007 and 2018, there was at least a nominal net decrease in effort in all but nine states (and even small changes in effort represent large changes in resources). In several states—such as Florida, Hawaii, Indiana and Michigan—this decrease was close to or greater than one percentage point. 
    • As a result, in 40 states, effort was lower in 2018 than it was in 2004, 14 years earlier. 
  • Most states are in a worse position to handle the current economic crisis than they were prior to the Great Recession.
    • High-effort, low-capacity states are particularly vulnerable. These states, such as Arkansas, Mississippi and South Carolina, are already spending a relatively large share of their “economic pies” on education and are more limited in their ability to increase resources.
    • Most states’ effort levels will likely increase in the short term, and decline afterward. The initial increase is an illusion of sorts, as it tends to take some time for education budget cuts to “catch up” with the immediate economic contraction caused by recessions. Without significant federal and state level policy responses, decreases in effort may once again recur for several years and not subsequently recover, representing another long-term de facto cut in school funding.

Adequacy

Effort measures how hard states and districts work to raise funds for their public schools, while adequacy addresses whether the amount raised is enough. Our primary measure of adequacy compares each state’s current education spending, by district poverty level, to estimates of spending levels that would be required to achieve national average test scores. In other words, we define adequacy in terms of a common benchmark (national average scores) that is educationally meaningful, using estimates from models that take into account factors such as student characteristics, labor market costs and district characteristics.

  • In the vast majority of states, spending in high-poverty districts falls far short of estimated adequate levels.
    • On average, spending in the highest-poverty districts (80-100th percentile poverty) is approximately 20 percent below our estimated adequate levels. (Figure 7)
    • There are only nine states in which spending on the highest-poverty districts exceeds estimated adequate levels: Wyoming; New York; New Hampshire; Nebraska; Alaska; Connecticut; D.C.; North Dakota; and Delaware. (Figure 8)
    • Conversely, spending in the highest-poverty districts is at least 20 percent below the adequate level in 28 states, and at least 40 percent lower in eight of these states: Arizona; New Mexico; Texas; Mississippi; California; Nevada; Oklahoma; and Alabama.
    • The situation is not much better in the second highest poverty district quintile (60-80th percentile district poverty), where spending is above adequate levels in only 19 states.
  • In contrast, spending in lower-poverty districts is above estimated adequacy targets in most states. When it comes to their lowest-poverty (0-20th percentile) districts, 41 states spend above estimated adequacy targets, by an average of 45 percent. In the second-lowest district poverty quintile (20-40th percentile), spending is above adequate levels in 30 states, by an average of 11 percent.
  • There is a positive relationship between adequacy and fiscal effort. That is, states that spend a larger slice of their “economic pies” on education tend to exhibit more adequate spending levels. Adequate spending in no small part represents a policy choice. (Figure 10)
  • Higher-poverty districts (and states) are particularly vulnerable during the current economic downturn, and most are already spending below adequate levels.
    • The negative impact of budget cuts on spending adequacy will be more severe and persistent in higher-poverty districts, as lower-income districts are generally hit harder by state revenue cuts, and are less well-equipped to recover from them.
    • Federal aid should be targeted at high-effort states with inadequate funding. States such as Mississippi and New Mexico try to raise their own revenue but are constrained in their ability to do so. Low-effort states with inadequate funding, in contrast, have more flexibility to generate resources in house.

Progressivity

Put simply, progressive funding systems are those in which higher-poverty districts, all else being equal, receive more revenue than lower-poverty districts. Regressive funding systems, in contrast, allocate more funding to wealthier districts than they do to poorer districts. Progressivity (sometimes called “fairness”) is important because it is generally well established that students from marginalized backgrounds tend to require more resources than their more affluent peers to achieve the same level of education outcomes. Our primary progressivity measure compares revenue between high- (30 percent Census child poverty) and zero-poverty districts while controlling for factors—such as labor market costs, population density and district size—that affect the value of the education dollar. 

  • State and local education revenue in most states is either non-progressive or regressive. That is, high-poverty districts, all else being equal, tend to receive revenue that is similar to or less than that allocated to the lowest-poverty districts in the same state.
    • There are only 10 states in which high-poverty districts receive at least 10 percent more revenue than zero-poverty districts. In only four of these states (Alaska, Utah, Nebraska, and Minnesota) do high-poverty districts receive at least 25 percent more. (Figure 12)
    • In 25 states, high-poverty districts actually receive less revenue than zero-poverty districts. Funding is particularly regressive in Nevada, New Hampshire, Illinois, Delaware and Maine.
  • At the national level, education funding has been non-progressive for the past two decades. On average, labor market-centered state and local revenue in the highest-poverty districts has been within 2-3 percentage points of that in the lowest-poverty districts since 1998. (Figure 13)
  • The Great Recession reversed a decade of slow progress in improving the fairness of education funding.
    • Between 1998 and 2008, 35 states saw at least a nominal net increase in progressivity.
    • During and after the recession, however, most states saw a net decrease in revenue fairness—in 32 states, funding was less progressive in 2018 than in 2008. Even as states’ economies recovered, the damage to funding equity persisted.
  • Due to the pandemic-fueled economic downturn, increasing inequity of education funding is likely in the short term, but policymakers can limit and reverse the damage.
    • School funding in many states will likely become more regressive during the next two to four years. This shift could be even more pronounced and persistent than it was during and after the Great Recession, as revenue from property taxes, which are regressive, declined due to the collapse of the housing market in 2007-08, but hopefully will remain more stable during this current downturn.
    • The magnitude of these shifts, and how long they last, is largely in the hands of policymakers. The current distribution of state revenue, how it is cut, and its interplay with local revenue will shape these trends. For example, states can cut aid in a manner that minimizes harm to higher-poverty districts, and reform their systems going forward to ensure a more progressive distribution of K-12 revenue.

Overall, then, resources in most states tend to be allocated regressively or non-progressively, and funding for higher-poverty districts in the vast majority of states falls far short of estimated adequacy levels (in many cases reflecting a lack of effort). These results are particularly troubling in our current economic situation, which threatens to make a bad situation worse. 

Yet our findings also highlight the heterogeneity of states’ school finance systems. There are, in fact, several states in which education funds are both adequate and distributed equitably, and there are relatively few that perform poorly on all three of our core measures. Such diversity is a result of the fact that school finance is primarily in the hands of states, and the structure and performance of systems thus varies widely among those states. 

The impact of the current economic crisis on K-12 funding will likewise differ among states that were at a variety of different “starting positions” when the pandemic began. And it bears emphasizing that state policymakers have the ability to mediate the severity of the damage, how long it lasts, and whether the burden is borne disproportionately by districts serving higher-needs students. 

Finally, while the purpose of this report (and the SFID in general) is to describe and evaluate states’ school finance systems, we do not provide overall state ratings or grades. Due to the complex interdependency of our three core measures, as well as the importance of state contextual factors, the potential for single summative measures to mislead and oversimplify outweighs their benefits. We do, however, include recommendations as to how policymakers, journalists, parents, and the public can use our data and results to summarize and assess the performance of state school finance systems.

We have once again made our State Indicators Database, which includes many measures not presented in this report, freely available to the public. Also accompanying this report are one-page profiles of the school finance systems of all 50 states and the District of Columbia, which may be particularly useful to those interested in one state or a small group of states. It is our hope that these data and analyses will improve school finance debates and policymaking in the U.S., both during this current economic crisis and beyond.

Fixing Connecticut School Finance: The Time is Now

 with Rob Cotto Jr. & Preston Green III

Also available at: https://ctmirror.org/category/ct-viewpoints/fixing-connecticut-school-finance-the-time-is-now/

The COVID pandemic has laid bare the extent of inequalities across Connecticut’s cities, towns and school districts and the children and families they serve. Connecticut has long been one of our nation’s most racially and economically segregated states, while also one of the wealthiest. In the past decade those inequities have worsened along both economic and racial lines. In 2021, Connecticut continues to face the interrelated challenges of segregation and school funding equity and adequacy.  Connecticut must do better.

In two recent articles we showed that Connecticut school funding continues to systematically disadvantage students in schools and districts serving predominantly Latinx communities. This finding is not new, with districts like Bridgeport, Waterbury and New Britain recognized in numerous national reports as being among the most financially disadvantaged school districts in the nation. For a period, Connecticut appeared to do somewhat better on behalf of predominantly Black school districts, but this was largely a function of additional aid directed specifically at magnet school programs in Hartford and New Haven, and not by the design of the general aid formula. In a forthcoming article, we find that Black-white disparities in state and local revenues and in property taxation are among the largest in the nation and have worsened in recent years.[1]

Inequities in property taxation, fueled by a long history of exclusionary zoning and racial discrimination are major contributors to the state’s school finance problem, and cannot be ignored. Municipal fiscal dependence is also a problem. Having a system in which local public schools rely on city and town budgets, where those budgets are based on prior taxing and spending behavior rather than current needs exacerbates the unevenness of school funding, hitting especially hard, schools in cities like Bridgeport.  Above all, however, the state’s general aid program for schools – The Education Cost Sharing Formula (ECS) – falls short of addressing these inequities, and has never been calibrated appropriately to meet the needs of all of the state’s children.

Yes, longer term structural changes to the property tax system, housing and school segregation must be on the table. But more immediate steps are in order, to reform the state’s Education Cost Sharing Formula. The primary objective of a state school finance system is to ensure that regardless of where a child in the state lives or attends school, that child should have equal opportunity to succeed in school and life. Whether that system relies exclusively on local public-school districts, or includes alternatives such as charter schools among the delivery mechanism to achieve these goals, choice is not a substitute for equitable and adequate funding. Equitable and adequate funding is a prerequisite condition, and necessary for closing the state’s racial and economic achievement gaps.

State school finance systems must accomplish two goals simultaneously:

  1. Accounting for the differences in needs and costs across districts, cities and towns associated with providing equal educational opportunity;
  2. Accounting for the differences in local capacity to generate revenues toward the provision of equal educational opportunity.

Just like the name of the current formula – Education Cost Sharing Formula – suggests, the goal is to identify the “costs” of educating children from one school and district to the next, and then determine how to “share” those costs between local communities and the state. ECS is the primary mechanism by which the state shares the cost of educating children in Connecticut’s public schools. But ECS has never been based on any actual analysis of those costs or how those costs vary from one location to the next and one child to the next.

To clarify, “cost” per se, is what is outlined under the first point above – the “costs” of achieving specific outcome goals.  Any legitimate conception of “costs” necessarily involves consideration of outcomes. The state must decide what those goals are and how they should be measured. And the state should engage in an analysis of the costs of providing all of the state’s children with equal opportunity to achieve those outcomes. This is what we mean by “calibration.” Connecticut needs this information sooner rather than later to take steps toward reforming or replacing ECS.

A recent national analysis estimated the costs of achieving the modest goal of national average outcomes on reading and math assessments, a benchmark that Connecticut children generally exceed. Even against that low bar (per pupil cost of achieving national average outcomes) a handful of Connecticut districts fall behind. Specifically, Bridgeport, Waterbury and New Britain have spending gaps exceeding $5,000 per pupil. Similar analyses have been conducted in recent years to advise state legislatures in Vermont, New Hampshire and Kansas. Two things we know well from these analyses:

  1. It costs more to achieve higher and broader outcome goals
  2. It costs more to achieve these goals in some locations and for some children than others

There are significant additional costs of achieving common outcome goals in locations with concentrated child poverty, large shares of emerging bilingual students with added needs, etc. Connecticut’s Education “Cost” Sharing formula falls well short of addressing these “costs.”

It will undoubtedly require a substantial boost in total state aid to bring all districts to spending levels sufficient to achieve a robust set of outcomes. Achieving more will cost more, plain and simple. Again, Connecticut is a wealthy state that can afford, through higher taxes on its most affluent residents, to address these issues without fearing a mass exodus.

To summarize, we propose a three-step process toward reforming the state school finance system to mitigate the state’s persistent racial and economic disparities in school funding and student outcomes:

Step 1: Conduct rigorous analyses to answer the question – what is needed to achieve equal opportunity for all of the state’s children to achieve a sufficiently robust set of outcomes?

Step 2: Recalibrate ECS with a formula specifically designed to hit these cost targets through a combination of a) equitable local effort and b) sufficient state aid;

Step 3: Fund it! (Raise sufficient tax revenues to support the system)

Keep it up! Revisit. Evaluate. Recalibrate.

No state school finance system remains adequate in perpetuity without checks and balances. Goals change as do other demands on local public schools. State school finance systems require constant evaluation and recalibration. The time is now to start these steps. Connecticut schoolchildren have waited far too long, especially those in the state’s low income black and Latinx communities.


[1] Green, P.C., Baker, B.D., Oluwole, J. School Finance, Race and Reparations. Washington and Lee Journal of Civil Rights and Social Justice

The Post-Espinoza End Game

Bruce D. Baker

Preston C. Green III

In Espinoza v. Montana Department of Revenue, the U.S. Supreme Court ruled that if a state chooses to operate a program for private subsidies for private schools, the state cannot exclude from that program, religious schools. Because only a few states have voucher programs that prohibit the participation of religious schools, some might wonder whether Espinoza is really all that important.[1]

Instead of minimizing the impact of the Espinoza case, we should think of this decision as the latest domino to fall on the issue of taxpayer financing of religious schools. For example, in Zelman v. Simmons-Harris, the Supreme Court removed the Constitution as a barrier to voucher funding by ruling that the Establishment Clause permits voucher programs. In Mitchell v. Helms, several Justices questioned the legal impact of state constitutional provisions that imposed greater restrictions on state funding than the U.S. Constitution. But finally in Espinoza, the Court ruled that states could not use these so-called Blaine Amendments to exclude religious schools from voucher programs.  

Prior to this latest decision, we explained that states might still take reasonable steps to regulate schools in receipt of public financial support. States can adopt policies that are facially neutral to religion, but still regulate:

  1. discrimination on the basis of sex (including LGBTQ status) or race;
  2. curricular standards and assessments;
  3. employee professional credentials;

Some states, including Florida, which provides both direct and indirect subsidies for private schools have long included religious schools in those programs and have chosen not to regulate curriculum and standards or discrimination. Investigative reports on those schools show relatively large numbers of schools that discriminate on the basis of sexual orientation (nationally 14%), including some that force students into conversion therapy, and large numbers of schools using curricular materials  from conservative Christian organizations (ABEKA, Bob Jones University Press, Accelerated Christian Education) which among other things teach the coexistence of dinosaurs and humans, climate change denial and even confederate perspectives on the Civil War. While states can no longer exclude from public financing, schools that adopt these policies and curricula, states can and we would argue, should regulate these schools more than they presently do.

But, what if the next domino falls? And what is that domino? Bethel Christian Academy in Maryland participates in the state’s voucher program and openly opposes homosexuality, same-sex marriage, and transgenderism. The school has also chosen not to adopt a state law-aligned non-discrimination policy. As a result, the state removed the school from the voucher program in 2018. The school has argued that complying with the policy violates their “free exercise” rights. That is, the school, which after Espinoza cannot generally be excluded from participating because it is religious, is arguing further that the state cannot regulate policies and practices of the school derived from religious belief –  even if that school receives state financial assistance. At this point in the litigation, the court has refused to enjoin the enforcement of the regulation.[2]

At some point, the Supreme Court may rule on whether a state voucher program’s antidiscrimination requirement is unconstitutional. If the Court finds in favor of one of these “Bethel Academies,” then all bets are off, in any state (or government subdivision) which provides public financing for private schools!  Government will not be able to exclude religious providers. And Government will have limited ability to regulate policies and practices of those providers which may be perceived as clashing with their religious beliefs. States not wishing to subsidize private schools that engage in the practices identified above will have one choice – to simply cancel public subsidy programs for any/all private schools.

But the implications go even further. In his dissent in Espinoza, Justice Breyer rightly notes the murky ground of charter schools under state laws. Although state statutes define charter schools as “public schools,” a significant body of case law finds that charter schools are more the equivalent of publicly subsidized private entities than directly operated government schools. Preston Green in 2001 pointed out that states may not be able to exclude religious organizations from operating charter schools, but at the time Green argued that curriculum and other standards and policies could be regulated. Perhaps not, or to a far more limited extent? Justice Breyer seems concerned that the mere presence of a charter school law, providing public financing for privately operated providers might also trigger the requirement that religious providers not be excluded. The policy implication of either interpretation is the same. For states wishing to foreclose the possibility of taxpayer dollars supporting religious ideology and religion-based discrimination, the remaining solution is to not only cancel public subsidy programs for any/all private schools, but also charter schools. That is, states should fund (with taxpayer dollars) and directly operate (with government employees) only their own state-run schools.

Only then would the line be clearly enough drawn between government and private providers, consistent with Roberts framing in Espinoza. It would be illogical to further extrapolate that if government funds and operates its own schools, government must also fund and operate religious schools. By extension, this would suggest that government must also fund and operate religious tribunals (as alternative to government court systems), religious libraries, police, parks and so on, for each and every religion that wishes to have their own taxpayer funded services, from Catholicism and Islam to Jedi and the Church of the Flying Spaghetti Monster. This is an extreme and unfortunate end game. But the time may soon come where states wishing to reign in public financing of discriminatory behavior and extremist curricula have little other choice than to cancel non-public school choice.


[1] Other states that may be immediately affected by this decision include Vermont and Maine, where some small town and rural districts have historically used tuition agreements with nearby public districts and non-religious private schools to serve their children.

[2] The Trump administration has filed on behalf of the school: https://www.politico.com/newsletters/morning-education/2019/11/27/trump-administration-backs-maryland-christian-school-in-voucher-fight-783165.

On Private Schools and Discrimination: Response to Hechinger Report Editorial Note

Original Op Ed (in response to this post, a new note has been added to our op ed and the original offending note removed)

Preston C. Green III

I am writing this post to alert my fellow professors about a situation I recently encountered after publishing a piece with the Hechinger Institute. This organization approached Bruce Baker and me to write an op-ed explaining the possible consequences of the Espinoza v. Montana State Department of Revenue case. In this case, the Supreme Court is considering whether states can prohibit parochial schools from participating in a tax-credit scholarship program. It is generally expected that the Court will hold that states cannot act in this manner.

In this op-ed, we explained that states might respond to this potential decision by placing curricular restrictions on participating schools or even refusing to fund private education altogether. We even posited that states might respond to the Court’s expected decision by dramatically reducing their investment in charter schools.

We did not get much pushback for these points in the op-ed. However, Corey DeAngelis, adjunct scholar of the Cato Institute’s Center for Educational Freedom and the Director of School Choice at the Reason Foundation, claimed on Twitter that we were wrong to suggest that parochial school participants in school voucher programs might even consider discrimination on the basis of race. He supported this assertion by citing a Supreme Court case, Runyon v. McCrary. DeAngelis posted a screenshot of the purported holding, which he got from Wikipedia. According to this summation, Runyon held that “[f]ederal law prohibits private schools from discriminating on the basis of race.” On the basis of this “evidence,” DeAngelis demanded that Hechinger correct this alleged error.

I responded on Twitter by posting a screenshot of the pertinent part of the actual case, which included the following statement (italics added):

It is worth noting at the outset some of the questions that these cases do not present. They do not present any question of the right of a private social organization to limit its membership on racial or any other grounds. They do not present any question of the right of a private school to limit its student body to boys, to girls, or to adherents of a particular religious faith, since 42 U.S.C. § 1981 is in no way addressed to such categories of selectivity. They do not even present the application of § 1981 to private sectarian schools that practice Racial Exclusion on religious grounds. Rather, these cases present only two basic questions: whether § 1981 prohibits private, commercially operated, nonsectarian schools from denying admission to prospective students because they are Negroes, and, if so, whether that federal law is constitutional as so applied.

The italicized section clearly established that the Court in Runyon did not address the question of whether § 1981 prohibited sectarian schools from racially discriminating on the basis of religious belief.

DeAngelis insisted that a retraction was in order reposting the Wikipedia screenshot and claiming that parochial schools would never discriminate because they might lose their tax-exempt status. Other people joined in on Twitter claiming that we were fearmongering because no school would ever consider discriminating on the basis of race for religious reasons – the stakes were too high.

Although I would like to believe we are past the time that schools would not overtly try to discriminate on the basis of race, I do not share this rosy view. My parents received part of their education in racially segregated public schools in Virginia. And although I did not attend a racially segregated school, I also experienced several incidents of overt discrimination.

The Hechinger editor asked Bruce Baker and me over email about the Twitter avalanche from DeAngelis and his supporters. I explained that DeAngelis’s understanding of Runyon was incorrect. The Court’s decision expressly did not address the legality of parochial schools claiming racial discrimination on the basis of religious belief. I even cited cases in which parochial schools attempted to exploit this loophole in Runyon (the courts rejected this assertion on the ground that the discrimination was not based on sincere religious belief).

Two days later, our editor emailed Bruce Baker and me again, explaining that her superiors wanted to place a note after the offending sentence to the effect that racial discrimination violated federal law. We responded by explaining that this statement was overly broad. It was true that parochial schools that discriminated on the basis of race ran the risk of losing their tax-exempt status. It was also true that a parochial school that discriminated on the basis of race ran the risk of losing its federal funding (if it received such aid). However, it was false to assert that federal law explicitly prohibited parochial schools from racially discriminating in their admissions. To summarize our position: While it was unlikely that a parochial school would discriminate on the basis of race in its admissions policy, federal law did not explicitly prohibit it.

Our editor then responded by suggesting an editors’ note that federal law made it unlikely for a parochial school to discriminate on the basis of race. I agreed to that parenthetical statement.

To our surprise, the following day, we received an email from the editor telling us that her superiors had overruled her. The overly broad editors’ note was back in. We were also told that there was nothing we could do about it. We have yet to hear any convincing explanation why Hechinger rejected our reasoning regarding this legal issue.

I am disappointed and, frankly, outraged, that Hechinger acted in this manner. When DeAngelis challenged our assertions, we cogently explained why we believed he was wrong. Yet Hechinger did not support the well-reasoned legal opinion of two scholars in the field it had specifically asked to research this issue. Instead, it bowed to online pressure even after we had spent more time providing additional background and case law. Other professors should consider our experience if Hechinger approaches them for an op-ed.

On Teachers & Teacher Bashing

Over a year after the teacher uprisings, with the start of this school year, we are finally seeing some new national news coverage of the teacher workforce:

https://www.cbsnews.com/news/how-we-have-failed-our-teachers/

Certainly, lagging compensation is a major issue. Teacher wages have plummeted over time with respect to similarly educated (weekly) non-teacher wages.


The share of economic capacity spent on K12 schooling over time has dropped:

And NO! spending hasn’t increased dramatically, nor have staffing ratios:

At least not for nearly 20 years! This, despite increased demands on schools!

Further, states that put up the least effort, tend to have the crappiest wages:

Then there’s this other issue of the rhetoric about “bad teachers,” and their evil “unions.” That’s actually softened in recent years. But this rhetoric has likely also had some influence on young people’s desire to enter the teaching profession. I mean seriously, you’ve got popular international outlets like The Economist calling teachers and their unions the greatest impediment to closing income gaps ever and anywhere (more than any Wall Street financier) and Wall Street financiers taking that ball and running with it, comparing teachers and their unions to the KKK and Governor George Wallace.

Then, you have more subtly manipulative efforts to pit young, incoming teachers against their elders, to distract teachers and the general public from the problems so evident in the graphs above. Below is a short section I removed from my book due largely to space constraints:

Who is to Blame?

If our schools really are so bad and if we really spend so much to achieve such deplorable outcomes, then where can we point our finger of blame? And how can we fix these systemic failures? An emergent theme during the “new normal” era was that U.S. schools have a “bad teacher” problem, and the best way to solve that problem was to establish methods and metrics to systematically identify and dismiss all of the bad teachers, while taking the money saved to pay good teachers more.  The barrier, however, to achieving these reforms was the teachers unions, who were characterized as thwarting the removal of bad teachers at every turn.

            In March of 2010, Newsweek put it right out there in an article titled “We Must Fire Bad Teachers.” (H/T to Dana Goldstein who addresses this article in her book Teacher Wars).  The set-up in the Newsweek piece is familiar:

“The relative decline of American education at the elementary- and high-school levels has long been a national embarrassment as well as a threat to the nation’s future. Once upon a time, American students tested better than any other students in the world. Now, ranked against European schoolchildren, America does about as well as Lithuania, behind at least 10 other nations.”[i]

The Newsweek piece comes to the conclusion that “Nothing, then, is more important than hiring good teachers and firing bad ones.” However, one thing stands in the way. As explained in Newsweek: “At the same time, the teachers’ unions have become more and more powerful. In most states, after two or three years, teachers are given lifetime tenure. It is almost impossible to fire them.”

            These arguments have continued to morph in recent years, and presently involve two main assertions: 

  • Bad teachers and protectionist unions are the reason for America’s general decline in education quality, coupled with burgeoning expenses associated with experienced-based pay and outdated pension systems.
  • Bad teachers and their unions are also the reason for inequality of teacher quality between rich and poor schools because of seniority protections and tenure.

That is, teachers and their unions are the primary drag on overall quality and a primary cause of inequality of educational opportunity.  These two assertions form the basis of a recent spate of lawsuits which claim that teacher seniority protections and tenure laws – not funding levels or disparities or any other factor for that matter – are the primary cause of inequitable and inadequate schools for low income and minority children, in violation of education articles of state constitutions (in California, New Jersey and New York).[ii]  And these claims are built on the assertion that competitive wages and equitable wages across schools and districts have absolutely nothing to do with the quality of the teacher workforce or the distribution of quality teachers.

            Again, it may seem that I’m exaggerating claims of teacher and union responsibility. But extreme examples are not difficult to find in relatively mainstream sources (like Newsweek). An article in the Economist proclaimed in October of 2012:

School reform and introducing choice is crucial: no Wall Street financier has done as much damage to American social mobility as the teachers’ unions have.[iii]

(note: Really? are you F……. kidding me?)

Similar claims were reiterated in the Economist more recently:

Many schools are in the grip of one of the most anti-meritocratic forces in America: the teachers’ unions, which resist any hint that good teaching should be rewarded or bad teachers fired.[iv]

If it wasn’t bad enough to be compared disfavorably to Wall Street financiers, a Wall Street financier has more recently compared teachers’ unions disfavorably to the KKK. Dan Loeb, New York hedge fund manager, charter school supporter and Chairman of the Board of Success Academy charter schools[v] has made even more bold claims and suspect comparisons of teacher’s unions’ role in promoting inequality:

If you truly believe that education is the dividing line (and I concur) then you must recognize and take up the fight against the teachers union, the biggest single force standing in the way of quality education and an organization that has done more to perpetuate poverty and discrimination against people of color than the KKK.[vi]

(note: this is almost as good as if the Sackler’s were to blame teachers for getting kids addicted to drugs)

Finally, teacher’s pensions have come under fire in a carefully articulated assault financed in part by Laura and John Arnold of Enron notoriety. [vii] Among other fiscal malfeasance, Enron is known for channeling their own employees benefits (>60%) into Enron stock as the company collapsed and while executives unloaded their own shares. A core assertion of the attack on teacher pensions is that the obligation to fund pensions for existing and retired employees is unnecessarily diverting money from classrooms. As described in one recent report, teacher pensions are gobbling up classroom resources like PacMan.[viii]  That is, pension obligations, not tax cuts or reduced state funding are the major cause of tight classroom dollars and lagging teacher wages.[ix] A recent article in The Atlantic noted:

Without the $6,800 in “pension debt,” Aldeman contends public-school systems could spend that money on teacher salaries or other instructional material to improve student outcomes.[x]

Other organizations, including the Thomas B. Fordham Institute have jumped on the pensions-are-the-problem bandwagon.[xi] It’s a rather easy political sell to convince the public that cash-strapped states should be able to recapture pension funds hoarded by spoiled, self-indulgent retirees lounging pool-side in Del Boca Vista, and put those funds back into classrooms for the benefit of children! Some have even suggested that current school spending shortfalls could be remedied by municipal bankruptcy and pension fund dissolution, allowing cash strapped cities to redirect contractually obligated pension funds to classrooms.[xii] Of course, it’s unlikely that any pension funds would ever make it to classrooms while other creditors wait in the wings for their share of the spoils to be distributed in bankruptcy court.

One might cynically view these arguments as an effort to pit young teachers against old by telling them that the main reason their salaries are low is because old and retired teachers are collecting gold-plated pensions, not because of tax cuts or aid reductions.  A similar tactic was exposed about a decade ago, when Overstock.com CEO Patrick Byrne established an organization named “1st Class Education” and bankrolled Arizona-based lobbyist Tim Mooney to wine-and-dine state legislators to encourage them to pass the seemingly innocuous 65% solution. The proposal was that states require school districts to prove they allocate 65% of funding to “instruction.” The proposal was sold to policymakers and pitched to the public as a way to increase classroom spending without increasing overall spending or taxes. 65% was chosen as a somewhat arbitrary figure slightly greater than the existing national average, based on federal data sources. The Austin American Statesmen (Texas) however, got ahold of an internal memo from Tim Mooney (the Arizona lobbyist) to Texas republican legislators outlining the real purpose of the proposal, which included as its first bullet point: “Splitting of the Education Union. The 1st Class Education proposal pits administrators and teachers at odds with one another.”[xiii]


[i] Thomas, Evan. Why we must fire bad Teachers. Newsweek. March 5, 2010 http://www.newsweek.com/why-we-must-fire-bad-teachers-69467

[ii] Vergara v. State of California, 246 Cal. App. 4th 619, 202 Cal. Rptr. 3d 262 (Ct. App. 2016).

[iii] True Progressivism. The Economist. Oct 13, 2012. http://www.economist.com/node/21564556

[iv]America’s New Aristocracy. The Economist. Jan 22, 2015 http://www.economist.com/news/leaders/21640331-importance-intellectual-capital-grows-privilege-has-become-increasingly

[v] Shapiro, Eliza. Loeb will remain chair of Success Academy board following racial remark. Politico. Aug. 11, 2017. http://www.politico.com/states/new-york/city-hall/story/2017/08/11/loeb-will-remain-chair-of-success-academys-board-113906

[vi] Davis, Owen. Dan Loeb sure loves comparing public servants to the KKK, Part Two. Deal Breaker. Aug. 14, 2017. http://dealbreaker.com/2017/08/dan-loeb-sure-loves-comparing-public-servants-to-the-kkk/

Others have recently compared unions to segregationist Alabama Governor George Wallace:

Mezzacappa, Dale, Wolfman-Arent, Avi. Well-regulated charters improve education for low-income students, author says. The Notebook. Sept. 8, 2017

[vii] For information on funders and founders of the teacher pension project, see: https://www.teacherpensions.org/about-us

see:

Weinberg, Ari. The Post-Enron 401(k) Forbes. Oct. 20, 2003 https://www.forbes.com/2003/10/20/cx_aw_1020retirement.html

[viii]Aldeman, Chad. What Do Pac-Man and Pensions Have in Common? TeacherPensions.org May 2016. https://www.teacherpensions.org/resource/what-do-pac-man-and-pensions-have-common

[ix] Aldeman, Chad. What Do Pac-Man and Pensions Have in Common? TeacherPensions.org May 2016. https://www.teacherpensions.org/resource/what-do-pac-man-and-pensions-have-common

[x]Zinshteyn, Mikhail. What teachers lose to pension debt. The Atlantic. May 13, 2016 https://www.theatlantic.com/education/archive/2016/05/what-teachers-lose-to-pension-debt/482673/

[xi]Zeehandelaar, Dara, Winkler, Amber M. The Big Squeeze: Retirement Costs and School District Budgets. Thomas B. Fordham Institute. June 2013.  http://edexcellencemedia.net/publications/2013/20130606-The-Big-Squeeze-Retirement-Costs-and-School-District-Budgets/20130606-the-big-squeeze-retirement-costs-and-school-district-budgets-FINAL.pdf

[xii]Harris, Bracey. EdBuild CEO: What you need to know. Clarion Ledger. Oct 12, 2016 http://www.clarionledger.com/story/news/2016/10/12/edbuild-ceo-there-no-ulterior-motive/91938470/

See also: https://www.youtube.com/watch?v=3ylURYg0wuI

[xiii] Baker, Bruce D., and Douglas R. Elmer. “The politics of off-the-shelf school finance reform.” Educational Policy 23, no. 1 (2009): 66-105.

School Facilities Matter! In so many ways (how could they not?)

This post contains a brief summary on the importance of equitable and adequate school facilities – a topic unfortunately missing from my 2018 book. So here it is:

I begin with a conceptual model of how investments in school facilities influence working conditions, employee (specifically teacher) attitudes and behaviors, student outcomes, including physical health and academic outcomes, and how investment in school facilities both directly and indirectly drives local housing and property values (Capitalization).  Figure 1 presents the conceptual model derived from the existing research on investment in school facilities. Investment in school facilities has both direct effects and indirect effects on student outcomes, and cyclical effects on local communities’ overall quality of life.

Figure 1

Source: Constructed by author based on review of relevant literature herein

Regarding direct effects reflected in Figure 1:

  • Higher quality and safer outdoor play spaces lead to improved student health, reducing absences and improving a wide array of short- and long-term student outcomes.
  • Improved air and water quality from new and updated systems contribute positively to student and employee health.
  • More consistent, higher quality lighting, heating and cooling systems contribute positively to student health (mental and physical) and academic outcomes.

Regarding indirect effects on student outcomes:

  • Newer, more efficient mechanical systems lead to reduced annual operating costs of facilities, permitting more money to be directed toward classroom instruction.
  • Newer, more adequate and physically appealing facilities improve teacher satisfaction and retention (thus reducing the need to counterbalance bad working conditions with higher wages).

Regarding cyclical effects on overall community quality of life and economic conditions, investment in school facilities can generally increase the quality of amenities accessible to a community including open play spaces, tracks for running, and perhaps even community meeting spaces, which enhance property values, which in turn increases the revenue raised by any given tax rate, to generate more revenue for schools and other public services. Further, investment in school facilities, which leads to improved school quality, can lead to increases in local property values. [1] Both are forms of “capitalization” of investments in schooling, where the former is more direct (influence of the amenity or facility itself) and the latter indirect (leveraged through improved student outcomes). [2]

            Cellini and colleagues explore more directly the influence of passing local bond referenda for schools on home prices. [3] They find:

Our results indicate that California school districts underinvest in school facilities: passing a referendum causes immediate, sizable increases in home prices, implying a willingness to pay on the part of marginal homebuyers of $1.50 or more for each $1 of capital spending. These effects do not appear to be driven by changes in the income or racial composition of homeowners, and the impact on test scores appears to explain only a small portion of the total housing price effect. (p. 215)

That is, they find stronger direct effect on capitalization than indirect effect (leveraged through test scores), but do find evidence of both effects. 

Facilities Investment and Achievement

Similarly, facilities and infrastructure investments have both direct and indirect influence on student outcomes. For example, a very recent study finds that “results consistently suggest that passing a bond measure increases achievement among low- but not high-SES students. However, these benefits for low-SES students are delayed and emerge 6 years after an election.”[4] That is, it takes time for bond measures to result in capital expenses resulting in fully equipped facilities. And extended exposure to those new facilities yields significant, long term positive effects.

Another very recent study finds important effects of heat on student learning, and further that providing air condition can mitigate negative effects of heat:

We demonstrate that heat inhibits learning and that school air-conditioning may mitigate this effect. Student fixed effects models using 10 million PSAT-retakers show hotter school days in years before the test reduce scores, with extreme heat being particularly damaging. Weekend and summer temperature has little impact, suggesting heat directly disrupts learning time. New nationwide, school-level measures of air-conditioning penetration suggest patterns consistent with such infrastructure largely offsetting heat’s effects. Without air-conditioning, a 1°F hotter school year reduces that year’s learning by one percent. Hot school days disproportionately impact minority students, accounting for roughly five percent of the racial achievement gap.[5]

In a study of 80 Virginia middle schools, Uline and Tschannen-Moran shed light on indirect influences of school facilities on student outcomes, finding:

Results confirmed a link between the quality of school facilities and student achievement in English and mathematics. As well, quality facilities were significantly positively related to three school climate variables. Finally, results confirmed the hypothesis that school climate plays a mediating role in the relationship between facility quality and student achievement.

Our results revealed that when learning is taking place in inadequate facilities, there tends not to be as clear a focus on academics, and the learning environment is less likely to be perceived as orderly and serious. Where school buildings are shabby and inadequate, there is less likely to be the kind of community engagement that supports teaching and learning. Teacher attitudes and behaviors are related as well, as teachers are less likely to show enthusiasm for their jobs and to go the extra mile with students to support their learning when they teach in buildings they judge to be of poor quality.[6]

Ladd (2011) in a study of North Carolina public schools addresses similar indirect effects of school facilities, through their influence on teacher perceptions of working environment, noting that “For reading, teachers’ perceptions of facilities are also predictive of positive school effects.” [7] Maxwell (2016) finds that: “academic achievement is linked to building condition mediated by the social climate and student attendance.”[8]

In a recent review of studies of the influence of education investments on student outcomes, Kirabo Jackson provides a review of 7 specific studies pertaining to school facilities/infrastructure investment.  Jackson concludes that “[o]f the 7 studies identified, four are positive and three are null impacts. The fact that none were negative suggests that the average impact of capital spending is positive but that there may be considerable heterogeneity in that impact (and it may be zero in many cases).”[9]

Among the studies reviewed by Jackson, Neilson and Zimmerman using data on New Haven, CT public schools, specifically found:

Taking advantage of the staggered implementation of a comprehensive school construction project in a poor urban district, we find that, by six years after building occupancy, $10,000 of per-student investment in school construction raised reading scores for elementary and middle school students by 0.027 standard deviations. For a student receiving the average treatment intensity this corresponds to a 0.21 standard deviation increase. School construction also raised home prices and public-school enrollment in zoned neighborhoods.[10]

The six-year time frame noted in this study matches that of the recent study by Rauscher (2019).

Facilities and Teachers’ Perceptions of Working Conditions

A handful of high-quality studies have explored in greater depth the role that facilities play in shaping teacher perceptions of and attitudes toward their working environments. Ladd, in her study of North Carolina schools find that “working conditions of the type on the NC survey are highly predictive of teachers’ career plans to leave schools” though the relationship to actual one-year departure rates was less clear.[13] Specifically at the elementary level “working conditions taken as a group are as predictive as the more commonly analyzed school characteristics” with respect to actual departure rates.[14]

One important factor regarding working conditions is the quality, or perceived quality of school facilities. Similarly, Loeb and colleagues in a study of California schools find:  

Although schools’ racial compositions and proportions of low-income students predict teacher turnover, salaries and working conditions-including large class sizes, facilities problems, multitrack schools, and lack of text-books are strong and significant factors in predicting high rates of turnover. Furthermore, when these conditions are taken into account, the influence of student characteristics on turnover is substantially reduced.[15]

Facilities and children’s health

A recent comprehensive review of studies on the connections between school facilities conditions and children’s health, compiled by the Harvard School of Public Health identifies seven areas of particular importance to children’s health and learning:[16]

  1. Ventilation and Indoor Air Quality
  2. Water Quality
  3. Thermal health
  4. Lighting and Views
  5. Acoustics and Noise
  6. Dust, Pests, Mold & Moisture
  7. Safety & Security

These findings are consistent with those addressed above.  The Harvard School of Public Health study also more expansively summarizes public health literature linking environmental factors to children’s and adult health, including workplace conditions. Put simply, healthier kids learn better, just as healthier adults are more productive in their workplace. Healthy work environments and school environments contribute positively to employee and student health, improving daily productivity on site and reducing absences from short term or chronic illnesses.

Additional studies show that, among other factors, children’s exposure to air pollution may adversely affect both their health and educational outcomes.[17], [18]  Exposure may be a function of the location of outdoor play spaces or of the quality of filtering and ventilation systems for interior air quality.  This includes exposure to mold, dust, mildew and other hazards which contribute to chronic asthma and increased rates of absence from school among affected children.

Research from Denmark finds that accessibility of outdoor play spaces may also affect children’s health. Neilsen and colleagues find:

The number of play facilities in the school grounds was positively associated with all measures of children’s activity. In preschool, every 10 additional play facilities the children had access to was associated with an increase in the average accelerometer counts of 14% in school time and 6.9% overall. For the children in third grade, access to 10 additional play facilities was associated with an increase in school time activity level of 26% and an increase in overall activity level of 9.4%. School playground area did not affect activity levels independently of the number of permanent play facilities.[19]  


[1] Figlio, D. N., & Lucas, M. E. (2004). What’s in a grade? School report cards and the housing market. American economic review, 94(3), 591-604.

[2] For example, Figlio and Lucas found that Florida’s school grading scheme significantly influenced housing values, even where grade distinctions from one district/school to another did not reflect real differences in school quality. Id.  The finding that the mere appearance of differences in quality influences housing markets is echoed in a number of studies. Id. at fn. 1, p.2.

[3] Cellini, S. R., Ferreira, F., & Rothstein, J. (2010). The value of school facility investments: Evidence from a dynamic regression discontinuity design. The Quarterly Journal of Economics, 125(1), 215-261.

[4] Rauscher, E. (2019). Delayed Benefits: Effects of California School District Bond Elections on Achievement by Socioeconomic Status, p. 1 (EdWorkingPaper No.19-18). Retrieved from Annenberg Institute at Brown University: http://edworkingpapers.com/ai19-18

[5] Goodman, J., Hurwitz, M., Park, R.J., & Smith, J. (2019). Heat and Learning (EdWorkingPaper No.19-30). Retrieved from Annenberg Institute at Brown University: http://edworkingpapers.com/ai19-30

[6] Uline, C., & Tschannen-Moran, M. (2008). The walls speak: The interplay of quality facilities, school climate, and student achievement. Journal of Educational Administration, 46(1), 55-73, at 66.

[7] Ladd, H. F. (2011). Teachers’ perceptions of their working conditions: How predictive of planned and actual teacher movement?. Educational Evaluation and Policy Analysis, 33(2), 235-261.

[8] Maxwell, L. E. (2016). School building condition, social climate, student attendance and academic achievement: A mediation model. Journal of Environmental Psychology, 46, 206-216, at 206.

See also: Whipple, S. S., Evans, G. W., Barry, R. L., & Maxwell, L. E. (2010). An ecological perspective on cumulative school and neighborhood risk factors related to achievement. Journal of Applied Developmental Psychology, 31(6), 422-427. (& https://www.schools.nyc.gov/ )

[9] Jackson, C. K. (2018). Does School Spending Matter? The New Literature on an Old Question (No. w25368). National Bureau of Economic Research.

[10] Neilson, C. A., & Zimmerman, S. D. (2014). The effect of school construction on test scores, school enrollment, and home prices. Journal of Public Economics, 120, 18-31.

[11] Holden, K. L. (2016). Buy the book? Evidence on the effect of textbook funding on school-level achievement. American Economic Journal: Applied Economics, 100-127.

[12] Sara D. Adar et al., Adopting Clean Fuels and Technologies on School Buses: Pollution and Health Impacts in Children, 191 Am. J. Respiratory and Critical Care Med. 1413 (2015).

[13] Ladd, H. F. (2011). Teachers’ perceptions of their working conditions: How predictive of planned and actual teacher movement?. Educational Evaluation and Policy Analysis, 33(2), 235-261.

[14] Id

[15] Luczak, L. D. H., & Loeb, S. (2013). How Teaching Conditions Predict: Teacher Turnover in California Schools. In Rendering School Resources More Effective (pp. 48-99). Routledge.

[16] Eitland et al., at 10-27.

[17] Heissel, J., Persico, C., & Simon, D. (2019). Does Pollution Drive Achievement? The Effect of Traffic Pollution on Academic Performance (No. w25489). National Bureau of Economic Research.

Laquatra, J., Maxwell, L. E., & Pierce, M. (2005). Indoor air pollutants: Limited-resource households and child care facilities. Journal of Environmental Health, 67(7), 39-44.

[18] Frank, L. D., Sallis, J. F., Conway, T. L., Chapman, J. E., Saelens, B. E., & Bachman, W. (2006). Many pathways from land use to health: associations between neighborhood walkability and active transportation, body mass index, and air quality. Journal of the American planning Association, 72(1), 75-87.

[19] Nielsen, G., Bugge, A., Hermansen, B., Svensson, J., & Andersen, L. B. (2012). School playground facilities as a determinant of children’s daily activity: a cross-sectional study of Danish primary school children. Journal of Physical Activity and Health, 9(1), 104-114.

Toward a Consensus Approach to Evaluating State School Finance Systems! (and dumping the others!)

Over the past decade, there has been an emerging consensus regarding state school finance systems, money and schools. That consensus is supported by a growing body of high-quality empirical research regarding the importance of equitable and adequate financing for providing quality schooling to all children. As guideposts for this new and improved annual report on state school finance systems, we offer the following five core principles:

  1. The level and distribution of school funding matters;
  2. Achieve higher outcomes and a broader array of outcomes often requires additional resources and may require substantial additional resources;
  3. Achieving competitive student outcomes depends on adequate school resources, including a competitively compensated teacher workforce;
  4. Closing achievement gaps between children from rich and poor neighborhoods requires progressive distribution of resources targeted toward children with greater educational needs;
  5. Both the adequacy of students’ outcomes and improving the equity of those outcomes are in our national interest.

But US public schooling remains primarily in the hands of states. On average, about 90 percent of funding for local public school systems and charter schools comes from state and local tax sources. How state and local revenue is raised and distributed is a function of seemingly complicated calculations usually adopted as legislation and often with the goal of achieving more equitable and adequate public schooling for the state’s children.

Core Principles of Funding Fairness

Beginning in 2010, in collaboration with the Education Law Center of New Jersey, we laid out a methodology and series of indicators for comparing state school finance systems using available national data sets. With support from the William T. Grant Foundation, we dramatically expanded our analyses and developed publicly accessible district and state level databases – The School Funding Fairness Data System. More recently, we have combined our data with those of the Stanford Education Data Archive to estimate a National Education Cost Model. Concurrently, we have begun to expand our state funding equity analyses to include public two-year colleges, applying similar methods of analysis.

We based the original method on the relatively straightforward premise that:

…all else equal, local public school districts serving higher concentrations of children from low income backgrounds should have access to higher state and local revenue per pupil than districts serving lower concentrations of children in poverty.

By “all else equal” we mean that comparisons of resources between lower- and higher-poverty school districts are contingent on differences in labor costs and other factors, such as economies of scale and population density. State school finance systems should yield progressive distributions of state and local revenue, which should translate to progressive distributions of current spending per pupil, progressive distributions of staffing ratios, and competitive teacher wages. Other organizations, including the Urban Institute, have adopted similar approaches, acknowledging the basic need for funding distributions that are progressive with respect to child poverty.[1] Of course, progressiveness alone may not be sufficient. Progressive distributions of funding must be coupled with sufficient overall levels of funding to achieve the desired outcomes. No state has a perfect school finance system, but a few states stand out as providing sufficient levels of funding and reasonable degrees of progressiveness. Massachusetts and New Jersey are among the best examples.

There is now broad agreement between scholars and organizations across the political and disciplinary spectra that school districts serving higher need student populations – those with higher poverty rates in particular – require not the same, but rather more resources per pupil than districts serving lower need student populations. In other words: state school finance systems should channel more funds toward districts with higher levels of student poverty, because that’s where those funds are needed the most. The equity measures produced in our report, those produced by the Urban Institute, and those produced by the Education Trust all acknowledge this basic goal of state school finance systems and framing of equal educational opportunity.

Consensus indicators

Drawing on our past reports and convenings with representatives of various interest groups and organizations involved in state school funding deliberations, we propose the following Consensus indicators for comparing and evaluating state school finance systems.

  • Educational Effort: The share of a state’s economic capacity which is spent on elementary and secondary education (and/or postsecondary education) in combined state and local resources.
    • State economic capacity can and should be measured by both a) gross domestic product, state and b) aggregate personal income.

This indicator provides a policy relevant representation of the effort a state is putting forth to fund its public education systems. It makes less sense, for example, to evaluate the share of state total revenue (state budget) allotted to schools, because some states simply choose not to levy sufficient taxes to support any quality public services. Effort is a policy choice, representing both the choice to levy sufficient taxes and the priority placed on public education. Combined with the adequacy of spending levels, the effort indicator allows us to determine which states lag behind in spending because they simply lack capacity, versus those that lag behind because they don’t put up the effort.

Adequacy (Spending Levels):

  • Equated spending levels: Per pupil spending (or revenue) levels for districts a) of efficient scale (>2,000 pupils), comparable population density, national average competitive wages and at specific rates of student need (child poverty).
  • Equated spending to common outcome goals (NECM): Per pupil spending levels adjusted fully for the costs of achieving common outcome goals, wherein cost adjustment involves consideration of a) regional variation of competitive wages, b) economies of scale and population density, c) student needs (child poverty, adjusted for regional income variation), and d) assuming districts produce outcomes at current national average efficiency.

The first of these indicators merely compares equated spending or revenue levels for otherwise similar school districts. That is, what does a school district of efficient scale and average density, national average wages, with 10% children in poverty spend in New Mexico versus New York?  Such adjustment is more complete than merely dividing current spending by a regional wage adjustment factor, as it also accounts for the higher average spending in states with larger shares of children in small, sparsely populated districts. This approach also compares spending for districts at similar rates of child poverty.

The second of these indicators compares spending based on the costs of achieving existing (prior year) national average outcomes, given the same contextual cost factors, and modeling the relationship between spending and district level outcomes over several years. This approach allows us to more completely characterize the “relative” adequacy of existing spending toward achieving common outcome goals, from one state or district to another, across the nation.

  • Progressiveness: The relationship between available resource quantities (per pupil spending, revenue, teachers per 100 pupils, etc.) and child poverty across schools or districts. A progressive system is one in which schools or districts serving higher shares of children from low income family backgrounds (all else equal) have greater quantities of resources available to them. Progressiveness should be both substantial and systematic:
    • Substantial: That the ratio or slope of the relationship between resource quantities in high poverty to low poverty schools or districts is large (e.g. high poverty districts have 50% or more resources per pupil than low poverty districts). This can be measured by either the high/low poverty ratio or slope of the relationship between poverty and resources across schools or districts.
    • Systematic: That the relationship between schools’ or districts’ student population needs is systematic across districts, falling in a predictable pattern whereby districts serving higher need student populations have more resources per pupil. This can be evaluated by the amount of variation in resources explained by variation in student needs (r-squared or partial correlation).
  • Competitive teacher compensation: In order to recruit and retain a high-quality teacher workforce, the wages paid to teachers must be comparable to those of non-teachers holding similar levels of education, at similar ages (or experience levels) and for a certain amount of time worked.

It is not necessarily the case that teacher wages should be at 100% parity with those of non-teachers, or higher or lower than that. Rather, if we expect to maintain a teacher workforce of constant quality, the teacher to non-teacher wage should stay constant, not fall further behind. Similarly, the gap, if any, should be similar across settings to achieve comparable recruitment and retention. So, we compare teacher wage competitiveness in relative terms, across states and over time. We refer in our reports to a Salary Parity Ratio, which compares teacher to non-teacher wags, based on Census data, at constant degree level, age, hours per week and weeks per year. The Economic Policy Institute takes a similar approach with Bureau of Labor Statistics data to compare weekly wages of teachers and non-teachers at constant degree levels.

[1] Matthew M. Chingos and Kristin Blagg, Do Poor Kids Get Their Fair Share of School Funding? (Washington, DC: Urban Institute, 2017).

Comparison to Other Indicators

In this brief, we compare our indicators with those of other organizations which seek to characterize and evaluate state public school finance systems and teacher wages.  It was our original intent in designing and producing our indicators that they would be more comprehensive, more precise and more meaningful than other measures of state school finance systems. At the time of our first report, two other reports dominated the public discourse on state school funding inequity – Education Week’s Quality Counts and the Education Trust Funding Gap report.  Education Week has continued to rely on largely the same indicators we critiqued in our original technical report in 2010.[1] We revisit problems with those indicators here.

The Education Trust has sporadically revisited their funding gap report, measuring differences in per pupil revenue between higher and low poverty, higher and lower racial minority concentration districts. Their initial report prompted our efforts to pursue greater precision and accuracy in characterizing state school finance systems along similar conceptual lines. In the mid-2000s, Education Trust produced Funding Gap reports which seemed to suggest that Kansas was among those states where districts higher in child poverty spent, on average more than lower poverty districts. Two complicating factors led to this mischaracterization, both related to the fact that Kansas has large shares of children in very small, rural districts. First, poverty rates tend to be overstated in rural areas, compared to urban areas.[2] Second, Kansas’ state school finance formula provides substantially greater funding to very small districts to compensate for their lacking economies of scale. In fact, the state over-subsidizes (or did at the time) scale related costs.[3] So, in Kansas, very small rural districts with overstated poverty do spend more than lower poverty districts. But after accounting for differences in poverty measurement and in district size, this difference is muted or negated if not reversed (in most data years).

At issue in any evaluation of per pupil resource variation is the sorting out of resource variation that is intended and based on differences in costs and needs versus resource variation that is random, inequitable or otherwise purposefully inducing inequities.  Major factors influencing the cost of providing equitable and adequate educational programs and services are well understood but overlooked in most existing reports on school funding equity.[4] Major factors include the following:

  • Input prices:
    • Competitive Wage Variation
  • Geographic Factors:
    • Economies of scale
    • Population Sparsity
  • Student Needs:
    • Child Poverty
    • Disability (by Severity)
    • Language proficiency

Most recent reports on school funding do make use of Lori Taylor’s Education Comparable Wage Index as a basis for calculated regionally cost adjusted per pupil revenue or spending. But all others (other than ours) ignore entirely differences in economies of scale and population sparsity, and the intersection between the two. Some reports will also assign “pupil weights” as cost adjustments for student needs, such as assuming it costs an additional 50% for each low income child. However, where states allocate more than 50% additional funding for low income children, those variations are assumed to be inequitable variations even if they come closer to addressing the actual costs of achieving common outcomes for low income children. Unfortunately, no single common weighting scheme suffices for adjusting student need related costs.

Table 1 summarizes the measures, their intended purposes and cost factors which are accounted for in their estimation.  Education Week’s Quality Counts (EWQC) report remains the lone holdout in applying especially dated methods and measures. First, the EWQC report relies on arbitrary pupil need weights to adjust for “costs” associated with specific student populations. EWQC also uses the Education Comparable Wage Index to adjust for regional variation in competitive wages for teachers. Then, EWQC estimates a series of measures of variation in per pupil spending after adjusting that spending for student needs and regional wage variation.

The first is the coefficient of variation, which is simply the standard deviation of per pupil spending expressed as a percent of the mean spending. Assuming a normal distribution, a CV of .10 would indicate that about 2/3 of children (assuming the analysis to be student weighted) attend districts within 10% of average per pupil spending. The “restricted range” is the difference in per pupil spending between the district attended by the 95%ile pupil and the district attended by the 5%ile pupil (ranked from highest to lowest per pupil spending).  A significant shortcoming of both of these measures, when using arbitrary weights to adjust for student need costs, is that some variation in spending reflected in the CV might actually be a function of the state targeting resources according to need more aggressively than the weight chosen by Ed Week. Additional variation in spending might occur due to other legitimate cost factors like scale and sparsity which aren’t accounted for at all in the EWQC report.

The McLoone Index is a measure which relates the average spending on students in the lower half of the school spending distribution, as a percent of spending on the median pupil. That, it’s a measure of the extent to which the bottom half is leveled up toward the median. The meaningfulness of this measure is contingent on the adequacy of that median. In very low spending states, the median child may attend a woefully inadequately funded district. A state can achieve a relatively high McLoone Index, for example, if half or nearly half of the children in a state attend one or a few very large districts whose per pupil spending is near the median. And again, this measure like the others does not fully sort out “good (equitable) variation” from inequitable variation. The McLoone Index, while perhaps useful in its day, provides relatively limited information for understanding modern state school finance policies.

EWQC also includes two measures of spending levels intended to imply “adequacy” of funding. The first is a measure of the share of children in each state attending districts at or above the national average per pupil spending. The second is a “spending index” which is kind of like a national McLoone Index, but measured against the national mean rather than median. The spending index evaluates “the degree to which lower-spending districts fall short of that national benchmark. In states that scored 100 percent, all districts met or cleared that bar.”

Most recently the Urban Institute (UI) developed a school funding “progressiveness” index, which parallels the conceptual framing of our own index. The Urban Institute Index adjusts per pupil revenue for regional variation in competitive wages. Then, the Urban Institute calculates for each state, and average revenue per pupil figure for children in poverty (average weighted by U.S. Census poverty count) and an average revenue per pupil for children NOT in poverty. The gap between the two is the progressiveness measure (which could as easily be expressed as a ratio rather than dollar gap). States where the poverty weighted per pupil revenue figure is higher (gap>0) are progressive and vice versa. This approach has a few key differences from ours.

  • First, Urban Institute simply divides per pupil revenues by the regional wage index, rather than regressing revenues against the index (reducing the influence of the regional cost adjustment).
  • Second, Urban Institute does not adjust Census Poverty Rates for regional variation in income, as we do.[5]
  • Third, Urban Institute makes no attempt to account for economies of scale, population sparsity or the interaction between the two.

But, the UI conceptual approach is consistent with ours and should reflect similar patterns across states, differing most among states with large shares of children attending, small, sparsely populated and remote rural districts.

Table 1

Comparison of Indicators

Source Measure Intended Accounting for Equitable Variation
Education Week/ Quality Counts Coefficient of Variation Equity Arbitrary “weights” to adjust for student needs

ECWI to adjust for regional wage variation

  Restricted Range Equity
  McLoone Index Equity of lower half (“adequacy”)
  % Students in Districts above National Average PPE adequacy
  Per-pupil spending levels weighted by the degree to which districts meet or approach the national average for expenditures (cost and student need adjusted) adequacy
Urban Institute Progressiveness Equity Child poverty

ECWI to adjust for regional wage variation

ECWI adjusted mean for children in poverty (poverty weighted) vs. those not in poverty

Funding Fairness Progressiveness Equity Modeled “predicted values” accounting for:

Child poverty (adjusted for regional wage variation)

Wage variation (ECWI)

Economies of scale

Population density

  Level Adequacy
NECM Level (by poverty quintile) Adequacy (and equity) Modeled “predicted values” accounting for:

Child poverty (adjusted for regional wage variation)

Wage variation (ECWI)

Economies of scale

Population density

Grades served

Efficiency factors

Constant outcomes

Most recently, we have added to our catalog of indicators, measures of relative “adequacy” from our National Education Cost Model. These model-based estimates not only account for all of the “cost factors” included in our Funding Fairness Models, but also attempt to fully equate spending with respect to common outcome goals. That is, how much does it cost, from one location to another, one child to another, to achieve common outcome goals? And how far above or below those cost predictions are current spending levels? In the process, we assign common efficiency expectations for all districts. That is, costs of achieving the outcome goal in question are based on an assumption that each district achieves those outcomes at the efficiency level of the average district.

Table 2 compares our approach to constructing an index of the competitiveness of teacher wages to the approach used by Sylvia Allegretto with the Economic Policy Institute. Both indices compare the average wages of teachers, at constant degree levels, to wages of non-teachers. The EPI index compares weekly wages of teachers to non-teachers holding a bachelors or master’s degree using data from the Bureau of Labor Statistics, Current Population Survey.[6] Our approach uses data from the American Community Survey of the U.S. Census Bureau and estimates a model of wages for teachers and non-teachers, controlling for their age, degree level (including masters and bachelors recipients only), hours worked per week and weeks worked per year.

Table 2

Comparison of Wage Competitiveness Measures

Source Measure Data Source Controls
EPI (Allegretto) Teaching Penalty = teacher weekly wage / non-teacher weekly wage (by degree level) Bureau of Labor Statistics Current Population Survey Time at work (unit=week)

Degree level

Funding Fairness Wage Parity = teacher wage  / comparable non-teacher wage American Community Survey Age

Degree level

Hours per week

Weeks per year

Equity Measures

Here, we take a look at the relationships between our indicators and those of others, first focusing on indicators intended to represent equity. Figure 1 shows the relationship between the EWQC coefficient of variation an our measure of spending progressiveness – that is, to what extent is spending variation positively associated with child poverty? How much higher (or lower) is spending per pupil in higher poverty versus lower poverty districts.

EWQC finds similar degrees of variation (similar CV) for Pennsylvania, Illinois, New Jersey and Massachusetts. If anything, EWQC’s CV suggests that Massachusetts and New Jersey are slightly less equitable than Pennsylvania or Illinois (further to the right, higher CV, more variation). But, vertically, PA and IL sit nearer the bottom around or below 1.0, indicating that both of these states have regressive distributions of spending with respect to poverty whereas MA and NJ have progressive distributions of spending. In fact, it is the progessiveness itself that is handicapping MA and NJ on the EWQC measure, yielding the erroneous conclusion. In part, the “variation” reflected in the CV in an enrollment-weighted average is reduced in PA and IL by the presence of very large urban districts (Chicago and Philadelphia) because the calculation assumes all children within those districts receive precisely the same per pupil resources.

Figure 1

EWQC does separately relate property wealth to district spending to determine the “neutrality” of spending from wealth, wherein the preferred condition is one where there exists little or not relationship between district taxable property wealth and revenue or spending per pupil. But Figure 2 shows that even this measure has little or no relationship to our more meaningful, more accurate and precise progressiveness measure. The neutrality measure does pick up the inequities of the Illinois system, but continues to place Massachusetts between Illinois and Pennsylvania despite Massachusetts having a decisively more progressively funded system. Indeed, these measures are designed to show different things, and thus they do. But in an era of information overload, it would be wise for us to select and emphasize that subset of measures which most accurately convey what we really need to know about state school finance systems.

That is, is the overall level of funding sufficient to achieve desired outcomes? And do children and setting with greater needs and costs have sufficiently more resources to have equal opportunity to achieve those outcomes? (are the systems sufficiently progressive?) Whether there remains some relationship to taxable property may be unimportant, or a mere artifact of the distribution of taxable wealth (including high value undesirable properties like utilities, refineries or oil fields).

Figure 2

Figure 3 provides a clearer view of per pupil spending (centered around labor market means) and child poverty rates (centered around labor market means) for Massachusetts, New Jersey, Illinois and Pennsylvania. Figure 3 shows specifically that New Jersey per pupil spending tilts upward as poverty increases. That is, it’s progressive. Massachusetts is relatively flat, but Boston (the large circle) is higher in the distribution, creating an average upward tilt, but less systematic than New Jersey. Pennsylvania, by contrast is systematically regressive, with the largest district Philadelphia having very high poverty and low spending. In Illinois, Chicago sits marginally below the average for its labor market on spending, and also with high poverty. Among these states, New Jersey is clearly most equitable, with Massachusetts second, Illinois a distant third and Pennsylvania at rock bottom. But the EWQC equity indicators convey and entirely different – incorrect – conclusion.

Figure 3

Figure 4 displays the relationship between the Urban Institute progressiveness measure and our progressiveness measure for state and local revenue per pupil. The relationship is weaker than we might expect, but mainly because so many states are clustered together near the center of the distribution. Figure 4 shows that New Jersey is in fact progressive by both measures and Illinois is regressive by both measures, in contrast with the EWQC equity indicators which suggested little difference in equity between New Jersey and Illinois. Massachusetts is also identified as progressive by both indicators.

Figure 4

Adequacy Measures

Figure 5 compares the McLoone Index to our measure from our National Education Cost Model in which we compare current spending to the spending predicted to be needed to achieve national average outcomes in reading and math. There exists little relationship between the two, and the relationship that does exist tilts in the wrong direction. A higher McLoone index is intended to indicate more adequate funding. That is, that the bottom half is closer to the median. But, states with a higher McLoone index seem to have, on average, lower spending relative to spending needed for average outcomes. This finding might be intuitive if states with especially low spending effectively “bottom out” on spending. That is, the bottom half lies at a bare minimum threshold which is also very close to the median – which is very low. This is the case, for example in Arizona and Mississippi. Because this is the case, the McLoone Index is an especially poor indicator for evaluating adequacy (or equity) of spending.  Notably, Vermont and New Hampshire, which have very low McLoone indices also have among the most adequate average spending, largely because they hare relatively low need student populations coupled with relatively high average per pupil spending. 

Figure 5

Figure 6 relates the proportion of children attending districts with above national average spending to our measure of the relative adequacy of current per pupil spending (toward achieving national average outcomes). Here at least we see a modest positive relationship. States with more children attending districts with above average spending do, on average tend to have more adequate spending by our more precise and accurate measure. But if we choose to focus on adequacy for high poverty districts with our measure, as we have done here, we can see that children in high poverty districts in states like Pennsylvania actually only spend 60% of what they would need to spend to achieve average outcomes, even though the state share of children attending districts at or above national average spending is near 100%. By contrast, using our measure, spending in Kansas and Iowa is near the level needed for national average outcomes, even though only 20% of children attend districts at or above national average spending.

Figure 6

Figure 7

Figure 7 relates our measure of spending relative adequacy – spending relative to the cost of achieving national average outcomes in reading and math – to the EWQC spending index. There exists a modes relationship between the two, which makes sense in that weighted average spending relative to national averages should be at least somewhat associated with the relative adequacy of funding toward achieving national average outcomes. But even then there are some significant disconnects.  The EWQC spending index rates Utah as similar to Arizona and Vermont as similar to Pennsylvania.  But our measure of relative adequacy for high poverty schools differs significantly between these pairings, primarily because we account more fully for costs associated with the student populations served.

Figure 8 shows the position of Vermont and Pennsylvania school districts, by their poverty rate, on our measure of relative adequacy. The figure includes only unified K12 districts with greater than 500 enrolled students. All districts nationally are in the beige background. The horizontal red line indicates the “cost” of achieving national average outcomes (or $0 gap). In Pennsylvania, several districts, many of them very large districts including Allentown, Reading and Philadelphia fall well below the parity line. Poverty rates in Vermont districts are much lower and spending higher. As such, none of these Vermont districts fall below “adequacy” (defined modestly as the cost of achieving national average outcomes). Clearly, there exist substantive differences in the relatively adequacy of funding for Vermont and Pennsylvania school districts. Differences which are not picked up by the EWQC spending index.

Figure 8

Figure 9 compares two very low spending states rated similarly on EWQC spending index. In fact, Arizona was rated somewhat higher than Utah. But, as Figure 9 shows, while both are relatively low spending states, Utah districts fall much nearer the adequacy bar.

Figure 9

Finally, we relate the two alternative measures of teacher competitive wages – ours which applies a regression based approach to estimate the difference between teacher and non-teacher wages at constant age, degree level, hours per week and weeks per year, and the Economic Policy Institute “Teaching Penalty” which compares weekly wage data by degree level. Figure 10 shows that the two indicators are reasonably related and identity the same sets of states as having particularly competitive versus non-competitive teacher compensation.

Figure 10

Summary

To summarize:

  • Our indicators of resource equity across districts within states remain the only indicators to comprehensively account for differences in spending associated with student needs, regional competitive wage variation or economies of scale and population sparsity.
  • Our approach is conceptually similar to the Urban Institute approach to measuring “progressiveness” and thus we find that state ratings and rankings show some similarities.
  • Education Week’s Quality Counts equity indicators are especially poor measures of state school funding equity, failing to sort out variations in funding that are legitimately associated with costs, largely unrelated to more accurate and precise measures, and often yielding erroneous findings and conclusions.
  • Our indicators of resource adequacy derived from the National Education Cost Model are similarly more comprehensive, estimating specifically the costs associated with achieving existing national average outcomes in reading and math, and comparing current spending to those estimates.
  • Education Week’s Quality Counts spending level indicators are modestly associated with our adequacy measure, but lacking any connection to student outcomes or sufficient consideration of student needs, EWQC’s measures fail to pick up substantive differences in spending adequacy between states, including differences between Pennsylvania and Vermont, and differences between Utah and Arizona.

It is increasingly important in debates over state school finance systems that we achieve a greater degree of consensus around what a good school finance system looks like and how to measure it. Scholars have begun to converge on the importance of systematic progressiveness, and sufficient levels of funding as two key features of a good state school finance system.  Urban Institute and Education Trust, along with our School Funding Fairness system adopt progressiveness with respect to child poverty as a central feature of a good and fair school finance system. Education Week does not and relies on measures which often conflict outright with this guiding principle.

Persistent use of inappropriate and misleading measures of equity and adequacy introduces unnecessary confusion and encourages obfuscation in the context of legislative and judicial deliberations with the potential for profound, adverse influence on the quality of education for our nation’s children. Undoubtedly, Pennsylvania lawmakers will continue hold up their “B” grade from EWQC both in the context of legislative deliberations and while defending their school finance system in court, as a basis for claiming that they are doing a good job on school funding. I and other experts will then have to waste precious time of the judicial system in Pennsylvania explaining just why that “B” grade from Education Week really doesn’t mean anything, and is especially unhelpful for children subjected to year after year substantive deprivation and egregious inequalities in Allentown, Reading and Philadelphia. The consequences of this misinformation are not benign.

We first levied these same concerns regarding the Education Week indicators in 2009 in blog form[7] and in 2010 in our original technical report for Is School Funding Fair? Nearly a decade later, the misinformation persists and it remains as consequential as ever.  It’s time for this to end, and time for consensus on core principles and measurement of state school finance system fairness, equity and adequacy.

Notes

[1] https://drive.google.com/file/d/0BxtYmwryVI00Wmstai1qZXhlWmM/view

[2] Baker, B. D., Taylor, L., Levin, J., Chambers, J., & Blankenship, C. (2013). Adjusted Poverty Measures and the Distribution of Title I Aid: Does Title I Really Make the Rich States Richer?. Education Finance and Policy, 8(3), 394-417.

[3] Baker, B. D., & Imber, M. (1999). ” Rational Educational Explanation” or Politics as Usual? Evaluating the Outcome of Educational Finance Litigation in Kansas. Journal of Education Finance, 25(1), 121-139.

[4] Duncombe, W., & Yinger, J. (2008). Measurement of cost differentials. Handbook of research in education finance and policy, 238-256.

[5] Baker, B. D., Taylor, L., Levin, J., Chambers, J., & Blankenship, C. (2013). Adjusted Poverty Measures and the Distribution of Title I Aid: Does Title I Really Make the Rich States Richer?. Education Finance and Policy, 8(3), 394-417.

[6] https://www.epi.org/publication/teacher-pay-gap-2018/

[7] https://schoolfinance101.wordpress.com/2009/01/08/education-week-quality-lacks/

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