School Finance

According to the Annie E. Casey Foundation, 594,000 children live in poverty throughout the state of Ohio. Assuming a family of four, these Buckeye youngsters come from households with an annual income of less than $25,000—truly disadvantaged families. It’s no secret that children such as these are behind the proverbial eight-ball in life; as recent research demonstrates, it’s a longshot that kids who grow up poor will climb into the upper-middle class as adults—and Ohio’s low-income children face some of the longest odds nationally.

It has long been recognized that the best antidote to this vicious cycle of intergenerational poverty is an extraordinary education. Still, even today, tens of thousands of low-income Buckeye students are way off track in school—in an academic Siberia—and almost certainly not on the path to adult success. In fact, according to early results from last year’s PARCC tests, roughly 15 percent of students from poor urban areas are meeting career- and college-ready benchmarks, while the percentages reach 50 and 60 percent in the suburbs.

What can we do? One possible avenue for advancement is to create public finance policies that devote more dollars to the education of low-income students. In technical...

A new AEI report argues that private schools have a problem: They need more space. As more states use vouchers, tuition tax credits, and education savings accounts to help families access private education, schools will need to scale up and create new seats for incoming students. And the best way to do this, writes author Michael McShane, is to explore new funding mechanisms that will give the schools the necessary resources to handle growing enrollments.

One solution is for private schools to seek bond financing to help offset expansion costs. Public school districts already tap these financial instruments for capital projects because they expose investors to very little risk and the district itself pays less in interest than if it were to get a loan for the same amount from the bank (such financing for educational organizations is often tax-exempt). In 2012, the Colorado Educational and Cultural Facilities Authority (CECFA) gave $9 million to the Catholic Educational Capital Corporation, which then offered it to Iona Prep, an all-boys high school in New York, to help purchase real estate that would allow it to open an elementary school. CECFA is not a state agency, but it is able to provide bond...

Editor's note: This post is the final entry of a three-part series on Race to the Top's legacy and the federal role in education. You can read the first two entries here and here.

In two recent posts about Race to the Top (RTTT), I expressed skepticism about a sunny assessment of the program’s influence and critiqued the mindset behind federal efforts to remake complex education systems.

But my M.O. is not to disparage all federal K–12 activity. From Brownthe National Defense Education Act, and Title I to the charter school grant program, NCLB’s disaggregated data, and the D.C. Opportunity Scholarship Program, Uncle Sam has done some serious good for our schools. So I believe that there should be a federal K–12 agenda (for instance), and I hope both parties’ presidential candidates start articulating one.

What I’m interested in is fashioning some rules of the road. The agnosticism/nihilism of insisting on no federal activity ever would’ve amounted to a “Road Closed” sign to high-return investments like NAEP and seed funding for charters. The progressive hubris of believing that the feds can solve everything, on the other hand, is the on-ramp to P.J. O’Rourke’s bon mot about government-induced pileups. I think the...

When is a test not a test? Sure, there’s an easy answer—“When it doesn’t send opt-out parents running for their torches and pitchforks”—but that’s not what we’re looking for. Give up? It’s when the test is a “locally driven performance assessment.” An article in Education Week explains the rise of these specially designed student tasks in eight New Hampshire school districts, which have been granted authority by the Education Department to employ them as alternatives to standardized tests. The districts will work with the state and one another to develop Performance Assessment of Competency Education (PACE), a series of individual and group queries that allow students to exhibit mastery over a subject without filling in bubbles. The challenges (which include the design of a forty-five-thousand-cubic-foot water tower to show proficiency in geometry) sound stimulating, and the Granite State’s record in competency-based education is extensive. It’s not hard to see why such an option would be attractive to state and local officials, especially when testing has become roughly as popular there as a leaf-peeping tax. What remains to be seen is whether this approach to assessment captures the same vital data as traditional measures.

Of course, some folks...

School finance systems are complicated, often controversial, and subject to a certain amount of speculation. Are public schools “overfunded” or “underfunded”? Are they wasting precious taxpayer dollars or putting them to effective use? From which sources are they receiving their funds, and what strings might be attached? Are our public institutions on solid financial footing, or are they in dire straits?

These are fundamental questions that parents and taxpayers have every right to ask and to which they’re owed clear answers. One crucial disclosure is a district’s statement of revenues and expenditures—akin to a business’s income and expense statement. This report describes how a district raised revenue and how it spent those funds during the past fiscal year.

But you may be surprised to learn that the state revenues received and transferred to charters are also included in a district’s financial statement. You wouldn’t know it by simply looking at the statement: Consider, for example, the statement of revenues and expenditures for Cincinnati City Schools in the figure below.

You’ll notice that the presentation doesn’t clearly display the $57 million received to educate Cincinnati...

  • In the entire tortured lexicon of bureaucratese, no two words can inspire more dread in the hearts of academic administrators than “Dear Colleague” (well, maybe “NAEP scores,” but that’s a separate issue). President Obama’s Office of Civil Rights has issued a fusillade of “Dear Colleague” letters to educators at every level of schooling over the past few years, relying on the magic of governmental coercion to solve such diverse ills as campus rape, inequitably applied discipline, and the existence of languages besides English. In both the Wall Street Journal and Education Next, R. Shep Melnick has picked apart the legal rationale behind yet another pernicious edict, first disseminated late last year; this one pushes schools to shrink the nationwide racial achievement gap by providing their students with equal access to “resources” (read: funding, and everything else). The policy breezes past two Supreme Court rulings that explicitly reject its legal foundations, forcing schools to meticulously chronicle the “intensity” of their extracurricular activities and the condition of their carpeting if they wish to avoid a federal investigation. Educational disparities among ethnic groups are seriously concerning, but policymakers should consider whether the best way to counter them is
  • ...

A school district should never go broke. But unfortunately, they can, and do. Take Pennsylvania’s beleaguered Chester Upland School District. Teachers will once again work for free as the district faces a $22 million deficit, which the Washington Post reports could grow to $46 million. The district of approximately three thousand students was first tagged as “financially distressed” in 1994, and since then, its enrollment has declined by nearly 60 percent even as special education costs have risen substantially. Neither of these developments came as a surprise. Yet the district still overspent its coffers by $45 million between 2003 and 2012, despite millions in few-strings-attached bailouts by the state over the same period. In 2012, Chester Upland ran out of money completely and the teachers agreed to work without pay; that same year, the state finally enacted legislation to do something other than hand out more cash. Under Act 141, the state could declare small districts in financial distress, allow them to apply for loans, and appoint a chief recovery officer (CRO) to oversee finances.

Since 2010, Chester Upland has received $75 million (an enormous sum, considering that its yearly...

Wavebreakmedia Ltd/Wavebreak Media/Thinkstock

One of the most hotly debated issues in American education today revolves around low-performing schools and districts: how to define “low-performing,” what to do about them, and who gets to decide. That’s at the heart of the deliberations—and arguments—over the No Child Left Behind reauthorization now moving through Congress.

But there’s another species of “failing” schools and districts that doesn’t attract the same controversy, even though it should: institutions that are financially insolvent, or headed toward that status. For example, as of the 2014–15 school year, the School District of Philadelphia had massive deficits—to the tune of $320 million. In Michigan, nearly 7 percent of all traditional school districts and charter school districts (57 of 843) were operating at a deficit at the end of the 2013–14 fiscal year. Over 25 percent of New Mexico districts (23 of 89) required emergency state aid in 2013–14. And there are similar problems in Cleveland, Chicago, Detroit, and elsewhere.

Districts go insolvent primarily because there are insufficient counter-pressures on their leaders to stay fiscally solvent. Existing leaders are often rewarded—through elections, appointments, or re-appointments—when they make promises that...

A new study by Bellwether Education Partners examines the changes to teacher pension systems over the last thirty years. The report uses an historical data set from the Wisconsin Retirement Research Committee (RRC) and the state legislature that includes data from public employee pension plans in eighty-seven retirement systems across all fifty states. The data span from 1982 to 2012 and are based on annual reports, employee handbooks, statutes, and actuarial reports. Analysts examine defined benefit plans only—and, to facilitate comparisons, only the plans offered to hypothetical newly hired, twenty-five-year-old teachers who remain in those plans in each state. Analysts note several trends that have developed over the last thirty years, including:

  1. The median state offers a much lower vesting period compared to several decades ago, dropping from ten years to five years.
  2. States began lowering the normal retirement age in the 1990s and continued into the 2000s. But in recent years, states have increased the retirement age, which decreases retirement benefits and results in fewer years collecting a pension. In 2012 alone, nineteen plans increased their normal retirement age for new teachers, pushing the average retirement from age fifty-five to fifty-eight.
  3. Average employee contribution rates remained relatively constant throughout
  4. ...
Rebecca Sibilia

I’ve always appreciated Andy Smarick’s efforts to create a new vision for urban school districts, but his recent piece about the importance of data in education strikes an especially resonant chord. Understanding the context where we preach our policy “scripture” is pivotal if our ultimate goal is to improve children’s opportunities. EdBuild is very much rooted in the notion that student lives play out in this context, not in theory. 

That said, statistics can be dangerous. All of Andy’s examples are relevant, on-target, and interesting. The percentage of school spending on salaries and benefits, the gap between men and women receiving college degrees, and the demographic changes sweeping across our nation’s schools are all critical information for policymakers and advocates alike. But stopping at an average can often lead to overgeneralization. For instance, using numbers from the Department of Education, he states, “State and local governments provide the same amount of funding for schools—gone are the days when local districts were on their own financially. Today, property taxes produce a majority of funding in only a few states…”

While this is true at the aggregate level, it’s misleading. Without further context, the statement distorts a very stark picture of what’s...

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