1 Adequacy in School Funding: A National Perspective Jay G. Chambers, Ph.D. Senior Research Fellow American Institutes for Research (AIR) National Forum on Education Policy Education Commission of the States July 13, 2006

2 Overview of my presentation School funding & evolution of equity & adequacy Cost-based funding Adequacy & Costing-out

3 K-12 Revenues Sources & Trends in School Funding

4 Why Adequacy Cases are Winning. Built on state education law –State has the duty to serve all students. Standards-based reform movement pushed states to establish standards. –States have raised standards & –Holding students accountable. Systemic lack of resources  barrier to learning –Most states have not provided the sufficient resources to help students reach higher standards.

5 Transition from Equity to Adequacy & Cost-based Funding Horizontal equity: –treat similar children & taxpayers similarly. Vertical equity: –treat different children & taxpayers differently. Access to resources –An input orientation Cost-based funding –An output orientation

6 Differences in Expenditure Demand factors = local choice –How much do you want to spend? OR –What level of outcomes do you want to produce? Supply factors = cost differences –Input costs - labor costs –Pupil-needs – poverty, Engl learners, disabilities, Voc –Scale of operation – school & district size (rural factors)

7 Designing an “Adequate” School Finance System What are the goals? –Establish learning standards –Specify desired results (proficiency levels) –Measure the results What does it cost? –Design instructional programs –Specify resources to delivery the programs –Estimate the Costs (Costing out studies) Who pays for it? –Design a funding formula

8 Public School Funding Process State Allocation for K-12 Education Set Standards & Goals Determine Cost To Achieve Goals Design Funding Formula Balance against non- education needs

9 Approaches to Costing-out: Cost Function Professional Judgment Successful Schools Evidence-Based Hybrid Approaches

10 ELEMENTS OF THE HYBRID PROFESSIONAL JUDGMENT MODEL Professional Judgment Process Public Engagement Literature Review (What works) Analysis of Overhead (Central Adm, M&O) Stakeholder Panel Supporting Studies (GCEI, Transp, & Facilities) Beating the Odds Analysis

11 Sample Results From New York Adequacy Project

12 Results The Bottom line –Cost estimates for each school or district –Total cost estimate for the state Formula Development –How does this fit into a formula? –Who pays – local v state v federal?

13 Total and Marginal Costs by Type of District

14 Scale, Need and GCEI by District Size

15 Policy Perspectives on Adequacy Adequacy is a political & technical process –No one right answer Accountability is critical to success –Educators need to be held accountable Block grant approach offers simplicity –Flexibility at the local level

16 Adequacy & NCLB Adequacy as a national issue NO CHILD LEFT BEHIND what?

17 Under NCLB, we have 50 different accountability systems 50 different funding systems 50 different levels of commitment to children

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19 State Average Per Pupil Expenditure K-12 Education, FY2002 Actual Real (Cost adjusted) MAXIMUM $ 12,102 $ 11,269 MINIMUM $ 4,900 $ 5,132 RATIO

20 U.S. Federal commitment % of Revenues from various sources Among lowest federal commitment of developed nations. (7%) Highest in local contribution (43%).

21 Poverty Differences used to Distribute Federal Funds A single poverty threshold used. –% Poverty reflects COL differences across states. Federal $ not adjusted for cost differences

22 Policy Questions to Consider Is adequacy a national issue? Should we permit 50 different systems for children? Should a child’s education depend so heavily on the state in which they are born?