A Framework for Assessing Equity and Adequacy in School Finance 4/14/2017 A Framework for Assessing Equity and Adequacy in School Finance 4/14/2017 Public School Finance Public School Finance

4/14/2017 Today’s Lecture Defining and measuring equity and adequacy in school finance 4/14/2017 Public School Finance Public School Finance

4/14/2017 First, Some Basic Terms Revenues for public schools derive primarily from local (42%) and state (51%) sources, with about 7% from the federal government State revenues derive from a variety of state taxes—income both personal and corporate, sales, and fees. States rarely dedicate any tax or portion thereof to education. Sometimes that happens, but for only small amounts. 4/14/2017 Public School Finance Public School Finance

4/14/2017 Basics, Continued… Local revenues derive largely from local property taxes Local property taxes are a result of a property tax rate—%, dollars per hundred, mills—levied against a property tax base The local property tax base is assessed value of property Revenues or yield is the product of the rate times the base—see Chapter 3 4/14/2017 Public School Finance Public School Finance

4/14/2017 More Basics… Sometimes assessed value is only a percent of market value—in Wisconsin, it is supposed to be market value Since local assessments vary in their ability to identify the precise value, states often adjust local evaluations to a common base, using assessment–sales ratio studies, and use the “equalized” valuation in the school aid formula 4/14/2017 Public School Finance Public School Finance

4/14/2017 Basics—Revenues Revenues are identified as from local, state, federal, or other sources and whether for general purposes or restricted or “categorical” purposes, such as aid for disabled students, transportation, the federal Title I program for students coming from families with low incomes, etc. 4/14/2017 Public School Finance Public School Finance

4/14/2017 Basics—Expenditures Expenditures are divided into total, which includes capital, and operating, which excludes capital (buildings, buses, computers?) Current operating expenditures are reported by: Object: salaries, benefits, etc. Function: instruction, instructional support, administration, operation and maintenance, transportation, food, debt service, etc. 4/14/2017 Public School Finance Public School Finance

Basics—Expenditures, Continued 4/14/2017 Basics—Expenditures, Continued Program—regular education, special ed, bilingual ed, comp ed, gifted & talented, instructional support (which could have a professional development program), central admin, site admin, transportation, operations and maintenance, etc. “Educational” expenditures are generally instruction, instructional support, and administration, and exclude transportation, operations and maintenance, food, etc. 4/14/2017 Public School Finance Public School Finance

Basics—Expenditures, Continued 4/14/2017 Basics—Expenditures, Continued Beginning to report expenditures by numbers, types, and deployment of professionals—core academic teachers, instructional facilitators/mentors, noncore teachers (art, music, PE, library), tutors, resource room teachers, inclusion teachers, counselors, instructional aides—and how deployed 4/14/2017 Public School Finance Public School Finance

4/14/2017 Basics—Pupil Counts Enrollment—students enrolled as measured on a day, month, or whatever ADM—average daily membership—closer to an enrollment figure ADA—average daily attendance—measure of number of students who attend school Weighted pupil counts—WADA or WADM—give extra “weight” to students with special needs who require more help and thus expenditure 4/14/2017 Public School Finance Public School Finance

School Finance Analysis 4/14/2017 School Finance Analysis Ex ante or ex post The unit of analysis District, but moving towards the school Statistically weight for number of kids Objects Fiscal and physical inputs Processes Outcomes or results 4/14/2017 Public School Finance Public School Finance

Objects Usually operating on current expenditures 4/14/2017 Objects Usually operating on current expenditures Total current operating? Or some subset excluding items like transportation, food, etc. If revenues, just state and local, or from all sources: local, state, and federal? Some movement to class size, numbers and quality of teachers, actual class size (i.e., not pupil–staff ratios) 4/14/2017 Public School Finance Public School Finance

4/14/2017 Data Sources Always indicate data sources after the above decisions—where data came from, what specific data one has, etc. 4/14/2017 Public School Finance Public School Finance

The Group Students, taxpayers, teachers, parents, etc. 4/14/2017 The Group Students, taxpayers, teachers, parents, etc. Taxpayer equity analyzed within a public finance, tax framework We focus on equity for students Equal spending Equal spending plus adjustments for needs Spending not linked to local “wealth,” (i.e., property value per pupil) 4/14/2017 Public School Finance Public School Finance

4/14/2017 Four Equity Concepts Fiscal neutrality—equal opportunity in first edition Horizontal equity Vertical equity Adequacy 4/14/2017 Public School Finance Public School Finance

4/14/2017 Fiscal Neutrality Educational objects (resources, etc.) cannot be a function of local wealth Measure connection between property wealth per pupil (or family income) and object Measures Correlation coefficient Simple wealth elasticity Standard is less than or equal to 0.1 4/14/2017 Public School Finance Public School Finance

School Finance Structure Linked to Fiscal Neutrality 4/14/2017 School Finance Structure Linked to Fiscal Neutrality Guaranteed Tax Base or Power Equalizing The “solution” to varying levels of property tax base per pupil But, this structure lowers the price of educational services, so it stimulates education spending And, today we know this type of system exacerbates fiscal differences when the “new” school finance problem characterizes the data—as it does in WI 4/14/2017 Public School Finance Public School Finance

4/14/2017 Horizontal Equity Object, such as spending per pupil must be equal across all districts or schools Measured by Range, restricted range—problems with these measures Coefficient of variation (<0.1) McLoone Index—bottom half (>0.95) Verstegen Index—top half 4/14/2017 Public School Finance Public School Finance

School Finance Structure Linked to Horizontal 4/14/2017 School Finance Structure Linked to Horizontal Uniform, state-determined spending per pupil for all districts and schools or maybe Very high foundation expenditure level with a modest amount of local spending discretion 4/14/2017 Public School Finance Public School Finance

Degree of Horizontal Inequities 4/14/2017 Degree of Horizontal Inequities Two-thirds of all spending differences across districts are caused by between rather than within-state disparities If eliminate all within-state spending differences, 2/3 of all differences would remain (50% if adjust all numbers for geographic price differences) Need for cross state approach to reduce fiscal disparities, which would be a federal initiative 4/14/2017 Public School Finance Public School Finance

4/14/2017 Vertical Equity Caused by varying student (low income, disability, English proficiency), district (large or small size, price differences), or school needs (size, etc.) Former can be addressed with pupil weights that indicate degree of additional need, or by categorical programs—we can make size adjustments but controversial; we do have geographic price indices, but… 4/14/2017 Public School Finance Public School Finance

Measuring Equity with Vertical Equity Adjustments 4/14/2017 Measuring Equity with Vertical Equity Adjustments Exclude state and federal categorical programs when calculating fiscal neutrality or horizontal equity statistics Include state and federal categorical programs but then weight the students Use actual state weights OR Use weights from research (GAO; Odden, Busch, and Kucharz, WI research)—2.3 for disabled, 1.25 for low income, and LEP are the common pupil weights 4/14/2017 Public School Finance Public School Finance

4/14/2017 Educational Adequacy Sufficient programs and services to teach students to state and district standards PLUS additions for students with special needs Determining the cost Implement through a foundation school finance program 4/14/2017 Public School Finance Public School Finance

Measuring Adequacy Odden–Picus Adequacy Index 4/14/2017 Measuring Adequacy Odden–Picus Adequacy Index Based on the adequate spending level 100 minus the Adequacy Index times the adequate spending level indicates how much more money per pupil is needed to bring all students up to an adequacy expenditure—this extra would only be for students now with an inadequate expenditure level 4/14/2017 Public School Finance Public School Finance

4/14/2017 Determining Adequacy Identifying inputs and costing them out, professional consensus—Washington, Resource Cost (Chambers), and now Guthrie Linking spending levels to performance levels—successful district approach of Augenblick and cost function research of Reschovsky, Duncombe Identifying research findings and elements of a comprehensive school reform model: state of the art—Odden 4/14/2017 Public School Finance Public School Finance