FUNDING REFORM OUT OF THE ASHES: Get new fairer, simpler system in place now

By John Fensterwald - Educated Guess | http://bit.ly/hwMjk1

3/24/11 • With K-12 schools facing financial disaster if state taxes aren’t extended, it takes a pie-eyed optimist to discuss better times ahead. But, under rules for repaying schools what they’re owed, money for K-12 schools will eventually come in “buckets” when the economy does turn around, says Rob Manwaring, former K–12 education director of the California Legislative Analyst’s Office.

Knowing that is one reason why the Legislature should now set in place a more rational and fairer system to fund schools, Manwaring said Wednesday at an Assembly Education Committee hearing. The other reason is that a clearer, simpler method is a prerequisite to asking Californians to spend more on education. As Manwaring put it, “If I cannot explain to my mom how schools are funded, it will not work for voters.”

There is a fundamental agreement on what that funding system would look like, at least in concept, Manwaring and other finance experts said. And, with districts’ temporary discretion to spend categorical money as they want due to expire in a few years, school officials are craving stability and predictability.

That’s why Education Committee Chairwoman Julia Brownley, a Santa Monica Democrat, is bullish that the Legislature will pass her bill, AB 18, which will set the new funding framework in place, this year or perhaps next. Erin Gabel, Superintendent of Public Instruction Tom Torlakson’s legislative director, endorsed the concept at the hearing. Gov. Jerry Brown endorsed the principle of a student-centered finance system as part of his campaign platform. State Board of Education President Michael Kirst was a co-author of a funding formula that has become a basis of discussion.

Manwaring was joined at the hearing by Margaret Weston, a research associate with the Public Policy Institute of California, and Jon Sonstelie, an economics professor at UC Santa Barbara, who together wrote Pathways for Education Finance in California, incorporating the approach that Kirst  and others have proposed.

The details among the various proposals vary, but the principles are fundamentally alike. The funding formula would be reduced to three, maybe four, components. It assumes a growth in school spending under Proposition 98 of about 30 percent over the next 20 years, based on PPIC projections. That’s enough to make the  formula fairer, but not enough to raise California’s spending to the national average. If the Legislature or voters do eventually approve more money for schools – and the two current lawsuits are attempting to force that issue – the system for allocating the money would be in place.

• Uniform base grant. This would be the largest piece, as it is now, but it would incorporate many of the categorical programs that districts must spend as the state dictates. The current revenue limit varies from district to district, with disparities amounting to a few hundred dollars per student in most cases to some mostly small, rural districts claiming $1,000 or more per student. The reasons are obscure, dating back decades, and no longer are justifiable or even explainable. The goal would be to raise all districts to the 90^th percentile of revenue over time. Today, that would be about $5,600 per student (see Manwaring’s graphic), but it could rise to about $7,400, as Proposition 98 revenues increase over the next 20 years. The lucky 10 percent  of districts whose revenue limit exceeds the 90th percentile would get to keep what they have.  Potentially contentious details to be worked out: Should there be regional costs of living factored in, recognizing that it’s more expensive for teachers to live in San Francisco than Fresno? How much extra per student should high schools and unified districts receive; how much for small and rural districts? How should transportation costs be factored in? (The PPIC study and Manwaring’s figures cover the 2009-10 year. They do not factor in the impact of deferrals – about $9 billion in delayed payments to districts; correcting that could problem could delay funding reforms.)

  

  The goal would be to raise all districts' base grants to the 90th percentile or $5,600 at the current spending level. The vertical axis shows the number of students in districts funded at the various levels. (Courtesy of Rob Manwaring. Click to enlarge it.)

• Targeted grants, providing more money for English learners and low-income students, recognizing they need extra resources. This is the basis for the weighted student formula, though each proposal approaches this slightly differently. Sonstelie estimated the added cost, based on a survey of principals, at $1,000 per needy student in state funding. In 2008, Gov. Schwarzenegger’s bipartisan Committee on Education Excellence figured it would require about 20 percent extra funding for low-income students. In their calculations, Kirst and co-authors Alan Bersin (Schwarznegger’s former Secretary of Education) and Goodwin Liu (professor at UC Berkeley Law School and President Obama’s nominee for a federal judgeship) added a density factor, doubling the extra dollars for low-income students and English learners in schools where they comprised more than 50 percent of the student body.
• Special education. These costs would be excluded from the targeted and base funding, although various proposals would adjust the special aid formulas to end disparities in funding among districts.
• Adult ed, regional occupational centers. Districts now have flexibility over adult ed spending, and some districts are eliminating the programs or cutting them back severely. Defenders say they and vocational centers deserve protection from categorical consolidation. Advocates of other programs, such as arts education and phys ed, will argue that as well. The more programs that the Legislature shields, the more complex the formula and the less money there will be for weighted student funding and equalizing base-level funding.

As Eric Premack, executive director of the Charter Schools Development Center in Sacramento, noted in an earlier post, the state has already moved toward the system that reformers are advocating in funding charter schools. There is a General Purpose Grant and a Categorical Block Grant, with a supplement for English learners and poor students. But moving the rest of the state toward that simplified approach may not come easily, despite promises of simplicity, equity and transparency. Minor tweaks in the formula could produce significant shifts in revenues for some districts. There will be relative winners and losers. And holding districts harmless for current – or past levels of funding, before severe cuts of the past two years – will prolong the time it will take to create funding equity.

There’s also the critical issue of accountability – requiring that districts actually spend extra dollars on needy students and account for how they do it. That’s a subject for another day.