I’ve been asked at least a few times this past week about what types of requirements should be included for states to qualify for Race to the Top federal stimulus funding. Interestingly, there seems thus far to be little focus on whether states are actually financing their schools equitably and adequately and putting up reasonable effort to finance their schools as a requirement for accessing stimulus funds. More disconcerting is the fact that there also seems little emphasis on even whether stimulus stabilization funds are being used to advance equity and adequacy of funding. In some cases, which I will elaborate at a later date, stabilization funds have actually been allocated in ways that erode equity and reduce state effort. That being water under the bridge, what might be some reasonable requirements for Race to the Top and second year stimulus funds, and which states might qualify and not qualify?
Category 1: Fiscal Effort
A state’s effort in school finance is often measured as the aggregate state and local pk-12 public education resources allocated as a percent of Gross State Product (now labeled Gross Domestic Product – State). Some have suggested that states which maintain current effort levels should qualify for stimulus funds. This seems a low bar for states that put up very little effort like Delaware and Louisiana. It seems to me that low effort states – states below the average state – should have to show that they’ve increased effort significantly. But, states that are above the average should perhaps be held to the maintenance standard. I discuss Louisiana’s effort here.
Category 2: Fiscal Adequacy
Effort and adequacy are somewhat linked, as one can see in my rant about Louisiana and Mississippi. Louisiana is low effort and low adequacy in funding whereas Mississippi is average effort and low adequacy. That is, Louisiana is perhaps more to blame for its own inadequacy than Mississippi, which simply lacks the economic base.
I would argue that any state which has (a) below average effort and (b) per pupil spending adjusted for regional variation in wages (using the NCES Comparable Wage Index) should be low on the list for additional stimulus funds. States with below average regional adjusted spending and below average effort should be required to increase both in order to qualify. Sadly, however, I suspect that states like Louisiana would gladly further deprive the less than 85% of children who actually attend their public schools of these additional resources (LA has the highest share in private schools). Indeed, these requirements are a double-edged sword.
Category 3: Fiscal Equity
This one is a little more complicated, but the general idea is that states should have to be able to show that they’ve made effort toward targeting additional resources – state and local district revenues – to higher poverty school districts. In a forthcoming indexing system, we control for a variety of school district characteristics to evaluate whether, on average, a state school finance system results in systematically more state and local revenue per pupil in higher poverty school districts than lower poverty ones. Unfortunately the Education Trust approach of looking at the highest and lowest 25% of districts by poverty misses the boat – because it fails to capture whether the pattern is systematic across all districts. A good example is Connecticut, which shows a positive differential in state and local revenue between high and low poverty districts, but when measured statistically across all districts, the relationship is not statistically significant – or systematic. That’s because Connecticut district revenues are all over the map. The average spending for high poverty districts is skewed by only two (Hartford and New Haven) which are relatively higher state and local revenue districts. Meanwhile, districts like Bridgeport, Waterbury, New Britain and others are pretty much left out.
So, that in mind, what needs to be measured here? Well, to qualify for Race to the Top funds, I believe that the first states in line should be those where there exists a systematic positive relationship between state and local revenues per pupil and either/or (a) US Census Poverty estimates (b) NCES Common Core Free/Reduced Lunch rates. This includes only a handful of states such as New Jersey and Minnesota (although also driven by Minneapolis and St. Paul, but better than CT). For states with either no relationship between state and local revenue and poverty, or a negative one, those states should have to show that they have improved significantly the relationship between state and local revenue per pupil and poverty. For example, New York State, one of the nation’s most “regressively” funded states could reduce it’s negative relationship significantly by following through with planned increases to funding to New York City schools and to many other poor, small city districts around the state which remain, in the hole, so to speak. Similarly, Pennsylvania which until recent reforms was the most regressively funded state in the nation, could really put a dent in its negative funding relationship by following through with the Governor’s plan to continue phase in of the new funding formula. This, in my mind would make PA an ideal candidate for Race to the Top funding.