School Finance

Van Schoales
CEO of A+ Denver

Guest blogger Van Schoales is the CEO of A+ Denver and a Colorado DFER advisory board member. This post originally appeared on the Democrats for Education Reform blog.

We recently did some research on the state of school turnarounds in Colorado. I was reminded of that great “spaghetti” western The Good, The Bad and the Ugly.
For those of you that don’t remember the movie, it was a tale of
intrigue, deceit and murder among three men (not so good, bad, and ugly)
in a quest for buried gold in the context of the chaos of the Civil
War. It’s one of my favorite movies for the remarkable cinematography,
directing, and character acting, not to mention one of the best scores
ever. Oh yes, there’s also the interesting sub-texts on war and the

So, what’s the connection with the federal School Improvement Grant
(SIG)/ turnaround schools program? The SIG program is hardly as
interesting as the movie, but turnarounds are filled with struggle,
conflict, and failure; often the only ones benefiting are the outside

Few issues as serious as the pension crunch are equally
as dull. Addressing unfunded liabilities and implementing defined-contribution
plans simply aren’t compelling calls to arms, despite the widening consensus
that the balance sheets of public-sector retirement-benefit systems pose grave threats to state budgets. That’s why the
clarity and concision found in this recent “solution paper,” penned by Josh
McGee for the Laura and John Arnold Foundation, are so valuable. The piece may be
light on detail, but that’s part of the point: It doesn’t aspire to wonky
analysis. Instead, it aims right at policymakers and the public in explaining
why the set payouts of the traditional defined-benefit (DB) retirement-benefit
structure are unsustainable. McGee efficiently makes the case that
irresponsible pols inevitably underfund DBs, explains the challenges in
projecting their costs, and lays out how they incentivize expensive (and
counterproductive) employee behaviors. He then outlines the major cost-saving
alternatives on the table—including defined contributions, cash-balance plans,
and “stacked hybrids.” (OK, it’s just a little wonky.) There’s far more to this
complex topic than McGee includes in this brief paper (case in point: Fordham’s
recent ...

As I was reading Richard Vinen’s op-ed about Margaret Thatcher from this weekend’s New York Times,
I couldn’t help but think of Florida’s beleaguered governor. Rick Scott
ran as a staunch Tea Partier dead set on getting public spending under
control, cutting $1.35B from the state’s education budget last year.
With the 2012 elections looming, however, Scott has suffered a crisis of nerves,
calling for a billion in new money for education — and no new reforms
of note — in an effort to improve his flagging popularity. He has turned
to the kind of likability-oriented politics that Thatcher eschewed in
her program to remake 1980s Britain.

Scott is not alone. After losing a ballot measure over his signature public-sector reform, Ohio’s John Kasich declared, “It’s time to pause,” despite the fact that voters largely support
the education reform portions of the law. Where 2011 was defined by
tough discussions about how to balance competing state-level priorities
in an era of austerity — with teacher unions frequently on the losing
end of those battles — many politicians gearing up for 2012 are striking

This latest from the Department of Education—the
first national analysis of school-level funding—confirms what countless smaller
studies have implied: Schools with higher proportions of poor students often
receive less funding than lower-poverty schools in the same district. In fact,
more than 40 percent of Title I schools had lower per-pupil personnel expenditures
than non-Title I schools in their districts. This finding holds across multiple
measures of expenditures, from teacher salaries to non-personnel resources—and
despite the feds’ efforts at ensuring “comparability.” For those scratching
their heads as to how this could possibly be so—doesn’t Title I’s
“comparability provision” mandate that districts spend about the same for all
the skinny
: Schools can prove comparability without figuring in teacher salaries. Per Title I rules, the number of staff must be comparable, not
how much they’re paid. Thing is, low socio-economic status schools often have
newer, cheaper teachers. This is an onion of an issue—with onerous layers of
salary structure, staff placement, and control of funds—and there’s no easy
solution. (Even the policy
brief that ED released
with this report agrees.) But one thing’s for...

Charged up by our governance conference last week, Dave DeSchryver says we should open the black box
of school finances and shine some much needed light on how school
dollars are really spent. This kind of accountability, with some
easy-to-use tools along the lines of, is sorely needed as
education budgets have ballooned out of control.

But hoping that district leaders will be shamed into spending more
frugally is not enough. How do I know? Because even when they’re
required to report on financial problems publicly, district leaders and
politicians are utterly shameless in nearly all cases, tinkering around
the edges rather than facing facts.

Take Montgomery County, Maryland. Last week the county released a report showing the school district’s pension costs have increased by 369 percent
over the past eight years. The state pays for teacher pensions, but the
county is on the hook for everyone else’s plan.  The council president
claims this is “a huge cause for concern,” but no one is seriously
considering changes to build a better retirement system. They’re pushing
for quick fixes, increasing teacher contributions to a fundamentally

A major impediment to improving outcomes for disadvantaged children
in the nation’s schools is misallocation of the more than $600 billion
we spend annually on K-12 education. Marguerite Roza from CRPE and Cindy Brown from the Center for American Progress brought up this very point at our governance conference this morning. (Live feed is here if you want to tune in.)

The Department of Education just released a national study
(pdf) confirming with hard data what many experts have said for years:
rigid salary schedules established are a major source of inequity within
school districts. (It’s important to stress that this is not a
“loophole,” but a carefully structured policy embedded in most contracts
at the behest of teacher unions.) Here’s CAP’s Cindy Brown in the New York Times:

A few researchers have documented the problem with
statewide data in Florida and some other states, said Cynthia Brown, a
vice president at the Center for American Progress,
a liberal research group. “But I’m excited because this is the first
time that data documenting the problem has ever been collected


Two-thirds of schools in the UK were closed for a day recently as
teachers went on strike over proposed changes to pensions. Unions are
trying to force the government’s hand during negotiations over
contributions to the pension system, which has become unaffordable
(there as here in the US) due to rising life expectancy and rules that
permit retirement as early as 55.

The UK’s schools minister, Nick Gibb, didn’t mince words in condemning the strike:

Mr Gibb said: “Strikes benefit no-one – they will disrupt
pupils’ education, hugely inconvenience parents, and damage teachers’

“It’s irresponsible to strike while negotiations are ongoing. Many
parents will struggle to understand why schools are closed when the
pension deal on the table means that teachers will still be better
rewarded than the vast majority of workers in the private sector.

“Reforms to public sector pensions are essential – the status quo is
not an option. The cost to the taxpayer of teacher pensions is already
forecast to double from £5bn in 2006 to £10bn in 2016, and will carry
on rising rapidly as life expectancy continues to improve.


moolah photo

It's my money; I'll do what I want.
Photo by sushi♥ina

Do well-heeled parents have the right to heap donations
on their students’ public schools to pay for teacher aids, extra library hours,
or a media lab? Of course—though, as the Los
Angeles Times
explains, expect a fight. This week’s example comes from the
Santa Monica-Malibu Unified School District, where the PTA at one Malibu
elementary school adds over $2,100 per pupil to the school’s coffers compared
with a mere $96 raised at another district elementary twenty miles down the
road. The school board is mulling a plan to centralize all PTA donations,
allowing for more equitable student funding. Our position on school financing
is clear: Funding formulas should include weights that ensure that more public
resources be allotted to higher-need students. But, when it comes to private
dollars, districts and states should tread carefully. If parents want to donate
more, so be it. Barring...

Zachary Janowski at the Yankee Institute has an interesting take on school efficiency in Hartford, CT:

Ten Connecticut school districts can produce two high
school graduates for the price of one Hartford high school diploma,
according to Department of Education data.

The most recent 13 years of education, representing kindergarten through 12th grade, cost $165,275 in Hartford. With a graduation rate of 69.3 percent, the cost per diploma in Hartford is $238,492.

In 2010, Hartford’s costs were less than double the costs of the most efficient school districts.

Presumably, students who drop out gain some benefits from
their schooling, even if they don’t receive a degree. But a partial high
school education is not much of an asset in the labor market relative
to completion of a rigorous secondary program and vocational training.
This analysis reveals just how much of Hartford’s K-12 investment is
being squandered for likely little gain in outcomes for kids who don’t
make it to graduation day.

The Yankee Institute’s analysis reveals an important side of the
“doing more with less” coin: Schools that can deliver higher quality and
better outcomes for the same...

Protestors on UC campuses in California are focusing attention on the rising cost of higher education
in the state’s public university system, which has seen cuts in state
support of over a billion dollars. A Berkeley administrator sums up the

“The rapidly rising fees give us all heartburn,” said
Gibor Basri, the vice chancellor for equity and inclusion at Berkeley,
who has met with the protesters several times. “We don’t believe that
higher education is a private right but a public good.”

The funding challenge in higher ed has implications for K-12 spending
as well. Society has a responsibility to fund education — both to
provide equality of opportunity for all children and to develop human
capital for the improvement of civic life and our economy. But what to
do when taxpayers have already provided massive increases in funding
after inflation over a sustained period, as they have for K-12 over the
past several decades?

We can’t afford to focus only on the revenue side of the equation
anymore if our goal is to ensure that quality education remains a public
good. Just...