Dear DOE – Wrong Again!

Posted on October 7, 2009



After starting my day with this NPR brief:

http://www.npr.org/templates/story/story.php?storyId=113533704

I am again perplexed by what Department of Ed Officials are thinking, who is advising them and what analyses are actually being done before certain states are identified as “good” and others as “evil.” In this story, DOE officials are chastising the states of Pennsylvania, Massachusetts and Connecticut for playing a shell game with ARRA funds – filling budget holes with those funds and not using the funds to prop up/increase public education support.

Here’s the link to the report from DOE:

http://media.npr.org/assets/news/2009/10/06/stimulus.pdf

The problem here is that the DOE’s metrics for evaluating whether a state is “good” or “evil” are, well, entirely screwed up and meaningless. I can’t think of  softer way to phrase that. As such, the DOE continues to criticize states like MA and PA, which are doing reasonably well (now that the PA budget is nearing adoption) and the DOE is missing entirely those states which have done particularly “evil” things with ARRA funds.

For example, DOE’s primary concern regarding Massachusetts is that the state percent of total education funding will not be the same as it was in 2006.

In order to meet the requirements for the MOE waiver, a State must show that it is spending at least as much State money on education, as a percentage of total revenues, as it did in the previous year.

Given DOE phrasing, it appears that they mean the percent of total state revenues that are allocated to education. This is hardly a meaningful metric because it has little to do with the availability of resources to children in school districts and little to do with measuring a state’s “effort” for public education. A state could simply have slashed taxes and cut dramatically their total budget, slashing all public services left and right, including public schools – all the while, still spending the same share on public schools. Silly.

A more reasonable perspective would be to look at whether cumulative state, local and ARRA resources are actually assisting districts in maintaining and/or expanding services over prior year. Looking only at the state aid apportionment tells us very little. Based on district by district runs of 2008-09 and 2009-10 Massachusetts Chapter 70 aid program, it would appear for2010 that districts will receive modest per pupil increases in the sum of state and local (with ARRA) funds. The increases are partially funded by expected increases in minimum local contributions (which might easily be considered state resources).

http://finance1.doe.mass.edu/chapter70/chapter_10.xls

Pennsylvania is a unique case since the state was a budget impasse until very recently. However, while at impasse, the high end in the debate included a plan to continue substantial increases to support the new school finance formula which begins to resolve substantial disparities among PA school districts. The low end was to merely hold districts at prior year Basic Education Funding Levels. To the best of my understanding, the final solution is nearer the high end than the low end and does support some significant increases toward the phase in of the new formula. I may be wrong since I’ve yet to see the district by district run of state and local BEF resources. So, even if PA had landed on the low end scenario, it would have been the same as New York for 2010 and 2011. New York, also phasing in a new formula, stopped phase in entirely, and froze foundation funding for 2010 and 2011. So how is PA worse than NY? Should NY be on the hit list for DOE?

Many states did far worse things with their stabilization funds than NY, PA or MA (or perhaps even CT) which used them to… well… stabilize! For example, Kansas actually implemented per pupil cuts in foundation budgets – actual reductions over prior year cumulative per pupil resources – not just failing to meet an increase target. Even worse, the per pupil cuts are systematically larger in higher poverty than in lower poverty districts. http://www.ksde.org/LinkClick.aspx?fileticket=J%2bZiki0vnrc%3d&tabid=119&mid=8049

The poorer the district, the larger the per pupil cut.

How is that better than PA and MA? Alabama also cut districts substantially, though not necessarily systematically by poverty.

Nebraska made a really fun move. Nebraska altered the primary aid formula which ARRA funds were to flow through and then used the modified formula to provide per pupil increases to the affluent and middle class suburban districts around Omaha, but held Omaha roughly constant over prior year funding. So, Nebraska used ARRA funds to restore inequities that had persisted before Omaha fought back in recent years. http://ess.nde.state.ne.us/SchoolFinance/StateAid/Default.htm

Guess what DOE – you can maintain the same state share of funding if you just cut everyone’s budget! Cut everyone’s state aid and their local contribution toward foundation aid and state share can stay constant. Even more fun, you can actually use additional state resources to drive more funds to those districts with less need and create even greater inequities? And you can prop up those inequities with ARRA funds? No harm, no foul under current DOE metrics.

DOE, am I missing something here? I’ll gladly help out for a nominal fee. But this is just getting absurd!

Cordially,

SchoolFinance101

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A quick lesson for DOE. What matters for the operation of local public school districts is the sum of the resources available. In many if not most states, Foundation Aid formulas are the formulas that identify the “sum” of state and local resources to be provided for annual operating budgets. The state share of that sum is backed out after determining the funds that would be raised by applying a specific local property tax or required local effort rate. That local minimum requirement toward the sum may as well be considered state funding (to the extent that it actually is required). What matters to districts and the children they serve, is the SUM here! The foundation budget (and other add-ons), adjusted for various needs and costs.

On a related note, DOE should also recognize that some states actually determine that SUM in an inequitable way (see: https://schoolfinance101.wordpress.com/2009/01/27/the-fine-art-of-inequitable-school-finance-policy/).  For states that have foundation formulas that promote inequity, running ARRA funds through their formulas means using ARRA funds to advance inequity (Nebraska pulled a bait-and-switch for 2010).

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