Making Money Matter Financing America's Schools (1999) / Chapter Skim
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2 Setting the Stage
2 Setting the Stage
Pages 26-64
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From page 26... ...
ROLES AND RESPONSIBILITIES IN AMERICAN EDUCATION Education governance, and with it patterns of resource allocation, varies significantly across the United States. Because education is not mentioned in the Constitution, it has historically been viewed as a responsibility reserved to the states.
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From page 27... ...
Not necessarily counted among revenues for public schools, but still representing sizeable federal investments in elementary and secondary education, are other large programs such as the child nutrition programs of the Department of Agriculture ($8.8 billion in FY 1998) , the Head Start programs of the Department of Health and Human Services ($4.4 billion in FY 1998)
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From page 28... ...
Before the reform, about two-thirds of the rev TABLE 2-1 Revenues for Public Elementary and Secondary Schools, by Source of Funds (percentage of total) , Selected Years, 1919-1996 Date Federal State Local 1919-20 0.3 16.5 83.2 1929-30 0.4 16.9 82.7 1939-40 1.8 30.3 68.0 1949-50 2.9 39.8 57.3 1959-60 4.4 39.1 56.5 1969-70 8.0 39.9 52.1 1979-80 9.8 46.8 43.4 1989-90 6.1 47.1 46.8 1995-96 6.6 47.5 45.9 SOURCE: U.S.
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From page 29... ...
In Vermont, for example, a state that has recently revamped its school finance system to reduce disparities, 1995 per-pupil spending in Stowe was $8,585, whereas Bennington spent just $4,526 (National 2Only in three states Kentucky, Louisiana, and Pennsylvania does the local property tax account for less than so percent of local taxes for school districts. 3current expenditures include salaries, transportation, schoolbooks, materials, and energy costs but not capital outlays or interest on school debt.
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From page 30... ...
30 MAKING MONEY MAITER TABLE 2-2 Percentage of School Revenues from Local, State, and Federal Sources, 1995-96 Local State Federal Current Expenditure State Funds Funds Funds Per Pupila Alabama 21.0% 61.3% 9.2% $ 4,716 Alaska 20.2 66.1 11.1 9,012 Arizona 44.6 44.1 9.0 4,860 Arkansas 26.3 60.0 8.5 4,710 California 34.2 55.8 8.9 5,108 Colorado 47.6 43.8 5.3 5,521 Connecticut 55.5 38.0 3.7 8,817 Delaware 25.2 66.6 6.7 7,267 District of Columbia 91.5 8.1 9,565 Florida 40.2 48.6 7.4 5,894 Georgia 39.4 51.9 6.8 5,377 Hawaii 0.4 89.8 7.8 6,051 Idaho 26.9 64.3 7.1 4,465 Illinois 64.3 27.3 6.1 6,128 Indiana 37.3 54.3 5.2 6,040 Iowa 40.6 49.0 5.1 5,772 Kansas 34.7 57.3 5.4 5,971 Kentucky 25.6 65.3 8.3 5,545 Louisiana 34.9 50.3 12.1 4,988 Maine 46.4 47.0 5.6 6,546 Maryland 53.7 38.2 4.9 7,382 Massachusetts 55.4 38.3 4.7 7,613 Michigan 25.1 66.8 6.1 7,166 Minnesota 33.7 58.2 4.3 6,162 Mississippi 25.2 57.8 13.7 4,250 Missouri 49.8 40.2 6.0 5,626 Montana 37.2 48.6 9.9 5,847 Nebraska 56.9 31.6 5.6 6,083 Nevada 59.8 32.0 4.5 5,320 New Hampshire 87.1 7.0 3.3 5,958 New Jersey 55.7 38.6 3.4 9,955 New Mexico 11.8 73.9 12.2 4,587 New York 53.5 39.7 5.8 9,549 North Carolina 25.4 64.5 7.2 5,090 North Dakota 41.0 42.1 11.5 4,979 Ohio 49.0 40.7 6.3 6,266 Oklahoma 25.8 59.3 9.3 4,881 Oregon 35.8 54.1 6.5 6,615 Pennsylvania 52.9 39.8 5.5 7,492 Rhode Island 52.2 41.5 5.1 7,936 South Carolina 34.4 52.9 8.3 5,096 South Dakota 57.3 29.7 9.8 4,780 Tennessee 36.9 47.9 8.6 4,548 Texas 47.2 42.9 7.2 5,473
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From page 31... ...
Intradistrict spending disparities have received much less attention than interdistrict disparities among both school finance reformers and analysts, in part because until quite recently little effort was being devoted to developing reliable data systems about financial and nonfinancial resources available at the school level (Stiefel et al., 1998~. While generalizations are therefore difficult, it is clear that at least in some places there is substantial variation in fiscal resources across schools within districts, and that within districts schools with higher levels of student poverty sometimes receive lower allocations of both money and other educational resources (e.g., Rubenstein, 1998~.
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From page 32... ...
The districts at the two ends of the size spectrum large urban and small rural have frequently been the objects of special concern when it comes to education financing issues. Urban schools often must carry out their educational TABLE 2-3 Public School Districts and Enrollment, by Size of District, 1996-97 Number of Percent of Percent of Enrollment SizeDistricts Districts Students Total14,841 100.0 % 100.0 % 25,000 or more226 1.5 31.1 10,000to 24,999569 3.8 18.7 5,000 to 9,9991,024 6.9 15.5 2,500 to 4,9992,069 13.9 15.9 1,000 to 2,4993,536 23.8 12.7 600 to 9991,772 11.9 3.1 300 to 5992,066 13.9 2.0 1 to2993,160 21.3 1.0 Size not reported419 2.8 SOURCE: U.S.
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From page 33... ...
The Starting Point This great diversity represents the starting point for changes to the education finance system. We seek a finance system that facilitates higher achievement for all students in a cost-efficient manner; that breaks, or at least reduces, the nexus between student background and student achievement; and that raises revenues
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From page 34... ...
The "failure" argument neglects the quite extraordinary gains in educational attainment that have been realized over the 20th century and overstates the conclusions that should be drawn from available measures of student achievement. At the same time, there are numerous indications that the average achievement levels of American students have at best been stagnant over many years, and, moreover, that they are on average mediocre by international standards, although there are certainly pockets of excellence.
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From page 35... ...
The toll that economic change has wrought on workers has been particularly high for minorities and those from disadvantaged backgrounds, whose educational levels and performance on measures of academic achievement have typically lagged their more advantaged peers. Moreover, these are precisely the groups for whom education has been held out as offering the best route to social and economic opportunity.
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From page 36... ...
indicates that anecdotal stories of declining student achievement have characterized virtually all periods in American education. They cannot be proven or disproven with empirical evidence, since there are virtually no long-term testing programs that would permit scientifically valid "then and now" comparisons before 1968.
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From page 37... ...
level. While it provides important trend data on the academic performance of elementary and secondary students in key subject areas, it was never intended to measure all aspects of student achievement (for aspects not covered, see Chapter 4 and National Research Council, l999b)
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From page 38... ...
Department of Education, 1999a: Table 3~.4 In the face of this evidence of, at worst, stagnation but not decline in educational achievement and in public attitudes, what else might contribute to the sense that public schools are not living up to expectations? Another key aspect of educational performance that has drawn increasing criticism concerns the efficiency of educational spending.
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From page 39... ...
. This change is one of the factors frequently cited as proof of the inefficiency of public schools, which failed to translate more teacher resources per pupil into gains in student improvement.
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From page 40... ...
An alternative cost index specifically developed for primary and secondary education is available for the academic year (AY)
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From page 41... ...
Total costs for special education are currently estimated at $32 to $36 billion annually.6 The growing costs of special education have alarmed education practitioners, raised fears that mandated special education expenditures were "crowding out" funds for regular education, and have led to 6The cost estimates are marginal costs; that is, what was spent on special education over and above what these children would have cost if they were regular students enrolled in regular classrooms. Cost estimates for special education in particular are notoriously imprecise, for reasons discussed in Chapter 7.
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From page 42... ...
conclude that spending on special education had a disproportionate effect on the growth in education costs in the 1980s, but they doubt that increased resources for special education can be blamed for the largest portion of the recent increases in per-pupil spending. They attribute about 18 percent of the per-pupil expenditure growth during the 1980s to spending on special education and estimate that increases in special education spending accounted for less than one-third of the fall in the pupil-teacher ratio during the 1980s.7 They cite in support of their position the small percentage of students classified as having disabilities of the total student population.
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From page 43... ...
Nonetheless, it is clear that a significant part of the growth in education spending over the last quarter-century can be attributed to the growth in special education. Changes in Student Backgrounds Children whose home backgrounds deprive them of economic, social, and health "capital" come to school less ready to learn than their more advantaged peers.
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From page 44... ...
GOAL 2: BREAKING THE NEXUS BETWEEN STUDENT BACKGROUND CHARACTERISTICS AND STUDENT ACHIEVEMENT The increasing importance of education to success in the labor market highlights the significance of disparities in educational opportunity. Of particular concern are continuing gaps in academic achievement related to the background characteristics of students, such as race and family income.
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From page 45... ...
On some tests the typical American black scores below more than 85 percent of whites." Test scores in reading and mathematics on NAEP increased for black children in the 1970s and 1980s and the gap between black and white test takers' scores diminished by about half (Campbell et al., 1997~. Since the late 1980s, though, the trend toward smaller gaps between black and white students' scores has partially reversed as black student scores have dropped somewhat.
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From page 46... ...
Of particular interest to us as a committee on education finance are the relationships between family income and student achievement on one hand and between family income and district-level spending on the other. Given the large disparities in spending across districts already mentioned and the causes that are examined in much more detail in the next chapter, one important question is the extent to which these disparities are related to variations in the income levels of families residing in different school districts.
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From page 47... ...
These figures suggest that student background characteristics like race and income that are correlated with lower student test scores are also correlated with lower spending on schools. They signal the importance of examining what is known about the relationship between educational spending and student achievement, an issue taken up in Chapter 5.
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From page 48... ...
Special education students are given a weight percent of all Hispanic students attended schools that were predominantly minority, and 34 percent of each group attended schools that were 90-100 percent minority (Orfield et al., 1993~. Residential segregation declined, but only slightly, between 1970 and 1990.
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From page 49... ...
SETTING THE STAGE 49 Revenues per Student Cost- and Actual Cost-Adjusteda Need-Adjustedb Need-Adjusted $6,266 5,273 5,162 5,600 5,425 5,598 5,353 5,797 5,781 5,748 4,894 5,391 5,407 5,189 5,566 6,650 $5,863 5,289 5,409 5,557 5,558 5,541 5,454 5,538 5,539 5,533 5,477 5,707 5,389 5,339 5,374 6,113 $5,427 4,506 4,339 4,587 4,631 4,794 4,527 4,786 4,788 4,915 4,111 4,417 4,498 4,390 4,780 5,785 $5,080 4,521 4,547 4,554 4,739 4,741 4,610 4,574 4,593 4,730 4,597 4,677 4,489 4,518 4,617 5,321 of 2.3, compensatory education students a weight of 1.2, and limited-English-proficient (LEP) students a weight of 1.2.
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From page 50... ...
so · - ~ c)
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From page 51... ...
There are inner-ring suburbs and/or industrial suburbs in many metropolitan areas whose residents face problems and barriers similar to those in central cities, although research on intrametropolitan differences almost always examines central-city versus suburban differences. It is possible that some suburban neighborhoods with low incomes and high poverty levels are even worse off than some central-city neighborhoods, because they share similar problems but may lack the commercial tax base of a central business district.
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From page 52... ...
School Finance and the Interrelationship of Achievement and Student Background The fact that student academic achievement is strongly linked with family background, which is in turn is affected by the social, economic, and political environment in which families live, reflects deep societal problems that go far beyond schooling. We reiterate our view that changes in school finance, or school policies more generally, are not likely to solve problems that go far beyond education.
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From page 53... ...
We have already described the pattern across states and over time in the division of financing responsibilities by level of government. In the following sections, we document the large role of the local property tax and describe the other components of the financing landscape: the efforts of state governments to use state aid to school districts to offset some of the variation in revenue-raising ability across local school districts and the role of the federal government.
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From page 54... ...
Revenues at the state level come primarily from the personal income tax and the general sales tax (Table 2-8~. Most states rely on a combination of these two TABLE 2-7 Local Governments and School Districts' Reliance on the Property Tax All Local State School Governments Districts Alabama 36.26 100 Alaskaa 80.31 NA Arizona 72.77 100 Arkansas 64.93 100 California 69.37 99.27 Colorado 64.62 100 Connecticutb 98.86 NA Delaware 82.24 100 Florida 80.49 100 Georgia 69.01 100 HawaiiC 81.06 NA Idaho 95.23 100 Illinois 81.04 100 Indiana 89.59 99.82 Iowa 94.25 97.85 Kansas 81.99 100 Kentucky 50.19 64.90 Louisiana 38.92 40.80 Maine 98.26 100
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From page 55... ...
bConnecticut, Maryland, Massachusetts, North Carolina, Rhode Island, Tennessee, Virginia: Most school districts in these states are dependent on a city, county, or township. CHawaii has one statewide school district.
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From page 56... ...
56 TABLE 2-8 State Income and Sales Tax Revenues, 1996 MAKING MONEY MAITER Individual Incomes Taxes General Sales Taxes Percentage of Total Percentage of Total Own-Source General Own-Source General State Revenues Revenues Alabama 20.9 19.1 Alaska 0.0 0.0 Arizona 19.3 35.1 Arkansas 23.9 28.3 California 30.0 27.5 Colorado 33.9 19.7 Connecticut 27.2 25.4 Delaware 23.9 0.0 Florida 0.0 46.7 Georgia 32.8 29.6 Hawaii 24.1 34.5 Idaho 26.7 24.5 Illinois 26.4 23.1 Indiana 30.7 25.3 Iowa 26.5 24.3 Kansas 26.5 27.0 Kentucky 24.6 21.2 Louisiana 15.0 21.0 Maine 27.4 25.4 Maryland 32.4 18.6 Massachusetts 39.4 15.3 Michigan 24.1 27.0 Minnesota 32.9 23.1 Mississippi 15.6 38.5 Missouri 29.4 26.5 Montana 20.8 0.C Nebraska 25.1 24.4 Nevada 0.0 47.C New Hampshire 3.1 0.C New Jersey 23.7 21.6 New Mexico 14.2 28.4 New York 40.0 16.0 North Carolina 34.5 20.8 North Dakota 10.2 19.0 Ohio 28.5 24.1 Oklahoma 25.4 20.3 Oregon 42.6 0.0 Pennsylvania 21.4 23.4 Rhode Island 26.0 20.8 South Carolina 25.6 27.1 South Dakota 0.0 32.2 Tennessee 1.5 45.4 Texas 0.0 36.6
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From page 57... ...
In addition to generating revenue from a local property tax, many local governments also generate revenue from income and sales taxes to finance education. In addition, some state governments rely on a statewide property tax for some of their revenue.
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From page 58... ...
Plaintiffs in school finance cases have attacked the property tax because of its role in generating inequalities in spending across school districts. Because districts that are blessed with large per-pupil property tax bases can raise any given amount of revenue with lower tax rates than those with smaller tax bases, rich districts find it easier to raise revenue for education than do poor districts.
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From page 59... ...
Guaranteed tax base or district power equalizing grants are matching grant programs. In the standard program, the state pays for a share of the expenditures in each district, and the share, or the matching rate, varies inversely with the size of the district' s property tax base.
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From page 60... ...
The federal government plays a much larger but indirect financing role through the deductibility of state and local income and property taxes from personal income subject to federal taxes. The deduction of state and local property taxes alone amounted to about $18 billion in 1999 (Office of Management and Budget, 1999~.
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From page 61... ...
Meeting the new challenge of aligning school finance with the goals of enhancing achievement for all students and reducing the nexus between family background and student achievement will undoubtedly require increased attention in the years ahead to additional strategies for reforming school finance. One possible strategy is investing more resources in developing capacity.
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From page 62... ...
Views about the desirability of shifting decision making on the grounds that it will increase student achievement are balanced with additional considerations, such as how broken the current educational system is perceived to be, support for the tradition of public education, and attitudes toward the freedom for families to choose the children with whom their children will associate. These four generic strategies reflect the broad choices available to policy makers as they debate specific policy options for reforming education finance programs.
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From page 63... ...
that it will take many complementary changes for reform to have its intended results. Nonetheless, the strategies are useful as a framework for organizing the discussion later in the report of major options for changing the school finance system.
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From page 64... ...
On some tests the typical American black scores below more than 85 percent of whites." Test scores in reading and mathematics on NAEP increased for black children in the 1970s and 1980s and the gap between black and white test takers' scores diminished by about half (Campbell et al., 1997~. Since the late 1980s, though, the trend toward smaller gaps between black and white students' scores has partially reversed as black student scores have dropped somewhat.
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