School Finance

Late last Friday, when it would attract little or no news coverage, the National Education Association offered its detailed feedback on Arne Duncan's "Race to the Top" plans. 26 pages worth.

Strictly speaking, these are comments on proposed federal regulations that will guide the Education Department in disbursing these billions, including funding priorities, rules for eligible applicants, etc. This is the mechanism by which the Obama team is striving--against considerable Congressional and school-establishment opposition--to turn the education portion of the "stimulus" dollars into a driver of reform rather than simply a back-filling budget subsidy for strapped states and districts.

Duncan has been clear from the outset about his priorities. Here is how he stated them in late July when the guidelines were published:

States seeking funds will be pressed to implement four core, interconnected reforms. We sometimes call them the four assurances, and those assurances are what we are going to be looking for from states, districts, and their local partners in reform. For starters, we expect that winners of the Race to the Top grants will work to reverse the pervasive dumbing down of academic standards and assessments that has taken place in many states....That's why we are looking for Race to the Top states to adopt common, internationally-benchmarked K-12 standards that truly prepare students for college and careers. To speed this process, the Race to the Top program is going to set aside $350 million to competitively fund the development of rigorous, common state assessments.


Education Next has just released an interesting and tantalizing debate on school funds. In the wake of Flores, issues of funding equity have again risen to the fore. It's lucky then that the participants in this debate, Eric Hanushek and Alfred Lindseth (authors of the tome??Schoolhouses, Courthouses, and Statehouses: Solving the Funding-Achievement Puzzle??in America's Public Schools) and Michael Rebell (author of the forthcoming??Courts and??Kids: Pursuing Educational Equity through the State Courts) are here to hash it out. Hanushek and Lindseth argue that spending the money already going into education more wisely is the ticket, specifically by reforming teacher pay scales to a performance-based model. Rebell counters that if you take a second look at the numbers, American education funding is actually neither adequate nor equitable. Definitely worth a read!

And if this topic interests you, Fordham (in concert with Brookings) will be publishing its own (slightly more general) contribution on this conversation in the form of the forthcoming book From Schoolhouse to Courthouse. Keep an eye out for its release in August.

Voucher opponents often argue that it's unfair to hold public schools accountable for results under the No Child Left Behind Act and various state rules while allowing private schools that participate in voucher programs to receive taxpayer dollars without similar accountability.

We at the Thomas B. Fordham Institute don't entirely buy that argument but we also believe there's room for a reasonable middle ground. It's time for the school-voucher movement to embrace accountability done right, just as most of the charter-school movement has done. But it's also vital to preserve the capacity of private schools to be different and not to deter them from taking children who would benefit.

In pursuit of that middle ground, we sought the advice of twenty experts in the school-choice world. This paper presents their thoughts and opinions, as well as Fordham's own ideas.

The majority of experts agree that participating private schools should not face new regulation of their day-to-day affairs. They also see value in helping parents make informed choices by providing data about how well their own children are performing.

However, experts are not of one mind when it comes to making academic results and financial audits transparent. Some would "let the market rule" and are averse to transparency or accountability around school-level results. Others would "treat private schools like charter schools" when it comes to testing, financial transparency, etc. Some would also like government (or its proxy) to intervene if individual schools aren't performing adequately.

We suggest a "sliding scale" approach...

Ohio Governor Ted Strickland's education plan calls for modernizing Ohio's K-12 education system, including the state's school-funding system, but the plan's so-called "evidence-based" approach would actually scuttle any modernizing efforts, argues this study issued by the Thomas B. Fordham Institute.

The governor's funding plan "would prop up an outdated system of school finance that establishes funding levels based on convention rather than need, sustains institutions whether they work or not, spends money with little regard for results and holds adults accountable for compliance not results," says author Paul T. Hill, Corbally Professor at the University of Washington, director of that university's Center on Reinventing Public Education, Senior Fellow at Brookings and former senior social scientist at RAND.

In fact, Hill says, "Once one gets past the rhetoric, one finds that the main active ingredients in the governor's plan are spending increases towards helping schools and districts employ more administrators, teachers and support staff."

Hill was lead author on the six-year, $6 million, Gates-funded, nationwide study Facing the Future: Financing Productive Schools. This report, issued in December 2008, is the most comprehensive study of its kind ever conducted, prepared by more than 40 economists, lawyers, financial specialists, and education policy makers. It was comprised of more than 30 separate studies, including in-depth looks at Ohio, North Carolina, Texas and Washington.

Much of Gov. Strickland's evidence-based approach to school funding runs counter to what the Gates report recommended in December. That study shows that "schools and systems that work...

Ohio can boast of praiseworthy gains over the past decade in making school funding more equitable across districts. The next step must be to make funding fairer within districts, according to this study from the Thomas B. Fordham Institute. This imperative also gives Ohio the opportunity to modernize its public-education finance system to keep pace with powerful changes in the education system itself.

To mitigate the school-finance inequities that remain within districts and gear school funding toward the realities of student mobility, school choice and effective school-based management, the report recommends that Ohio embrace Weighted Student Funding (WSF).

Weighted Student Funding makes equity a reality within districts by allocating resources based on the needs of individual students and by sending dollars directly to schools rather than lodging most spending decisions at the district level.

Today, one in seven Ohio students is educated in a school other than their neighborhood district school. Families increasingly change schools during the course of their children's K-12 careers and more and more of them select options other than their assigned district schools, options that include magnet schools, community (charter) schools, and STEM (Science, Technology, Engineering, and Math) schools. Yet there is no mechanism to ensure that as students move from one school to another, resources move, too.

And while Ohio has made a start at modifying education funding according to the singular needs of individual children, most school dollars are doled out without regard to student circumstances and needs-and even when they are, districts may...

Margaret Spellings addressed the Reading First state directors on Thursday and complained about Congress's "devastating" budget cut of the program. It's about time. If she had shown even an iota of courage 18 months ago, when the so-called scandal first broke, the program might have remained in-tact. But as Sol Stern shows in painful detail, she and the rest of the Administration headed for cover instead. Such decisions have consequences, Madame Secretary, consequences that are all too real for the 4,000-odd schools likely to see their Reading First funds disappear.

Dating to 1920, Ohio's State Teacher Retirement System (STRS) is the oldest of the Buckeye State's five public pension systems. It now covers close to half a million members--active, inactive, and retired--or one member for every ten Ohio households.

Despite its long history and prodigious size, all is not well with Ohio's teacher pension system. In this Fordham Institute report, nationally renowned economists Robert Costrell and Mike Podgursky illuminate some of the serious challenges facing STRS.

Among the report's findings are serious questions about the system's long-term health and sustainability. STRS is becoming increasingly expensive for all contributors. Employees contribute 10 percent of their earnings to the pension fund and employers contribute 14 percent, for a total contribution of 24 percent. This total has drifted up from 10 percent since 1945. Yet this is still insufficient to meet the state's funding goals: the system's unfunded liability is $19.4 billion, which represents a debt of over $4,300 per Ohio household. This liability far exceeds that of the state's other four public pension systems combined, despite the fact that STRS's membership is little more than one-third of those systems.

A system that is so large and increasingly costly should meet basic public policy requirements of transparency and efficiency. Sadly, the system fails to meet either requirement: it lacks transparency, and its incentives are perverse. As a result, Ohio's pension system almost certainly hinders rather than helps in the recruitment and retention of a highly qualified teaching workforce.

Related Resources

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Everyone agrees that education funding today is a mess. But a broad, bipartisan coalition now urges a new method of funding our public schools--one that finally ensures the students who need the most receive it, that empowers school leaders to make key decisions, and that opens the door to public school choice. It's a 100 percent solution to the most pressing problems in public school funding--and it's called Weighted Student Funding.

Of all the controversies swirling around the nation?s charter schools, none is more hotly contested than the debate over funding. Into the fray leaps Charter School Funding: Inequity's Next Frontier, the most comprehensive and rigorous study ever undertaken of how public charter schools are funded, state by state, and how their revenues measure up to dollars received by district-run schools.

In just more than five years, Mary Anne Stanton has led 13 Catholic schools from high-poverty Washington, D.C. neighborhoods into a consortium that has not only strengthened each school's financial health, but has also greatly improved the academic performance of the children the schools are charged with educating. To get there, she's installed a new standards-based curriculum, shaken up old bureaucratic approaches, and streamlined operations. In its latest Fwd: Arresting Insights in Education, the Thomas B. Fordham Foundation presents a compelling story of just how much change can be made by one determined school leader with a vision.