Improving the Equity and Efficiency of Connecticut s State K-12 Education Funding

Transcription

1 A non-partisan, not-for-profit research organization dedicated to developing responsible, research-driven public policy for Connecticut. Improving the Equity and Efficiency of Connecticut s State K-12 Education Funding A Student-Based Funding Proposal April 13, 2015 By Ben Zimmer & Sam Hodgson Ben Zimmer is Chairman of CPI s Advisory Board. Sam Hodgson is a senior at the University of Chicago and a CPI policy analyst.

2 Table of Contents Introduction... 1 Shortcomings of Current Funding Structure... 2 How State K-12 Education Funding Works... 2 Problems With State Education Funding... 4 Proposed Solution: Student-Based Funding... 8 The Idea Behind Student-Based Funding... 8 A Proposed Formula... 9 Formula Impact Comparing Our Proposal to the Current ECS Formula Absolute Spending Levels State Aid to Poorer Districts Eliminating Arbitrary Discrepancies Funding for Schools of Choice Aiding Municipalities With Lower Property Tax Bases Potential Modifications to Formula Conclusion... 18

3 Introduction Connecticut has one of the country s highest educational achievement gaps between high and low poverty students. 1 Recent education reform efforts in Connecticut have resulted in little to no improvement in low-income student achievement. 2 Connecticut s ongoing failure to provide an adequate education to all of its students results in large part from the state s antiquated, ineffective, and inequitable school funding system. In spite of 3.7 billion dollars of state spending on K-12 public education, many high poverty municipalities are unable to adequately fund their students educations. 3 Connecticut s funding structure has failed to reduce the funding gap between high and low poverty districts; it includes arbitrary and inefficient discrepancies in funding for similarly situated schools districts; and it poorly integrates school choice into the funding system. The result is inequitably funded programs and a system that does not incentivize educational excellence. This paper is hardly the first to articulate problems with school funding in Connecticut. In fact, the situation is so severe that a lawsuit alleging that Connecticut s inequitable school funding system violates the state constitution is currently pending in a Connecticut superior court. 4 But too often, analyses of school funding in Connecticut have been long on (justified) criticisms and short on solutions. This paper begins to fill that gap by offering a detailed proposal for how to reform state education funding in Connecticut. The paper first reviews the shortcomings of the current system of state funding. It then lays out a detailed proposal for replacing this structure with a new funding system centered on students, not educational bureaucracies. Finally, it discusses how much state educational aid each municipality or district would receive under this proposal, along with the implications of tweaking different aspects of the proposal. 1 Achievement gaps are generally measured through NAEP-administered 4 th- and 8 th -grade reading and math tests. In 2013, the latest data available, Connecticut s poverty achievement gap was among the worst five states in the country on one of these tests and was the very worst in the country on the other three exams Based on state spending on education as reported by the US Census Bureau; see 1&prodType=table 4 CCJEF v. Rell was initiated in The plaintiffs claim that the state has failed in its obligation to provide an adequate education to its resident students. For more information, see the plaintiffs website: 1 P a g e

4 Shortcomings Of Current Funding Structure How State K-12 Education Funding Works Connecticut provides education aid to towns and schools through a complicated network of grants. The biggest component is the formula-driven Education Cost Sharing (ECS) grants, listed in the state s budget under Education Equalization. The ECS formula first uses $11,525 as a per-student funding baseline, or foundation. It then multiplies that baseline by a need student count estimating how many students educations the town pays for. This count includes extra weight for students who qualify for the Free and Reduced Price Lunch Program (FRPL) and includes a partial count for resident students who are attending schools in other districts with financial support from the town. The state multiplies this value by a complicated weighting formula based on municipal property values to determine each town s grant. The idea is that wealthier towns should receive less aid from the state than poorer towns, though, as will be discussed more below, average property values are not the best proxy for town demographics in the context of education. This basic ECS formula is already quite complex, but it is further complicated by two additional factors. First, rather than denying particularly wealthy towns any funding, the state ensures that they each receive a minimum percentage of the foundation from the state 2 P a g e

5 (known as the minimum aid ratio ), which is 10% for the 30 lowest-performing districts and 2% for all others. 5 In the year, the minimum aid ratio ensured that 32 of the 169 towns receiving grants under the ECS program received more state funding than they otherwise would have under the ECS funding formula alone. 6 Second, the state attaches a no-harm clause to the formula, mandating (with a few small exceptions) that no city is to receive a smaller grant than it did in the previous year, despite decreased enrollment or increased wealth. While enrollment has dropped across the state as a whole, certain school districts have seen steeper drops than others. Thus, this no-harm clause results in arbitrary discrepancies in state funding levels across districts with similar demographics and wealth. Some municipalities receive up to twice their unadjusted ECS entitlement as a result of this clause. The ECS formula calls for significantly more educational assistance to towns than the state currently provides. Specifically, the fully funded ECS formula called for the state to provide nearly $2.68 billion in aid to towns in fiscal year 2014, almost $700 million more than the $1.99 billion actually appropriated. 7 Rather than using the formula called for in the general statutes governing ECS funding, the state uses an implementation formula that appropriates towns a certain percentage of the difference between the previous year s grant and the amount they should be receiving under the fully-funded formula. This phase-in formula results in many towns from receiving significantly smaller grants then they are due under an unfettered ECS formula. 8 State education funding is further complicated by numerous distinct schemes for funding school choice programs. Charter schools, Open Choice programs, magnet schools, technical schools, and agricultural programs are funded through a complicated and uneven mix of state grants and tuition charged to the sending district. 9 As a result, similar programs receive drastically different levels of state support. For example, magnet schools receive very different grants depending on their location, the hometowns of their students, and their governing organization. None of these factors is directly tied to the need of the individual students, nor are they tied to the particular programs these schools offer. Appendix A includes a full explanation of the different funding schemes for school choice programs. Finally, Connecticut funds numerous categorical grants to support particular programs or fill in the gaps left by an underfunded ECS. The two largest aimed at solving the state s funding Derived from state calculations of the ECS grants. 7 Derived from calculations and data provided by the State Department of Education. 8 This description of ECS funding is a synthesis of an Office of Legislative Research (OLR) backgrounder on ECS ( the Task Force to Study State Education Funding Final Report, ( % pdf), and OLR analyses of recent legislation affecting ECS. For an additional explanation of the ECS grant calculations, see Connecticut Council for Education Reform s blog post on the subject: 9 Throughout the paper we use school choice program or schools of choice to refer to all publicly funded opt-in schools or programs students can choose to attend rather than their home district s standard public school option. Open Choice refers to the particular program set up by the state allowing students from certain municipalities to attend schools in neighboring residential districts. 3 P a g e

6 gap are the Commissioner s Network and Priority District grants, which give extra funds to poorly performing districts. Other significant grants include Excess Cost grants to cover expensive special-education programs, grants to cover the cost of student transportation, and grants funding the state-run technical education system or regional agriscience centers. 10 Appendix B provides data on the need-based funding each town or school district receives, including ECS grants, Priority District, Commissioner s Network, magnet school grants, Open Choice grants, and charter school grants. Problems With State Education Funding Until the 1970s, public education in Connecticut was funded almost entirely at the municipal level, meaning that students in wealthier districts had access to more funding than students in poorer districts. In 1977, the Connecticut Supreme Court decided in Horton v. Meskill that this system was unconstitutional, compelling the state legislature to provide significant equalizing state support. 11 Horton v. Meskill returned to the court in 1985 and, as a result of the decision in that case, the state legislature created the first ECS formula. The court s later decision in 2010, as part of the ongoing case of CCJEF v. Rell, further strengthened educational rights, establishing that Connecticut s students have a right to a minimally adequate education in addition to a substantially equal one. 12 Connecticut s system of education finance has also been adapted to serve the state s various schools of choice. In 1996, the Connecticut Supreme Court held in Sheff v. O Neill that the de-facto racial, ethnic, and economic segregation found in Hartford schools violated the state s constitutional obligation to provide all students with a substantially equal educational opportunity, regardless of family income or where they live. 13 This decision and subsequent ones pushed the state to provide numerous schools of choice with the goal of reducing segregation. The current system of state funding grew out of well-intentioned efforts to respond to the Horton and Sheff decisions. But, for a variety of reasons, the state is still failing to provide a substantially equal opportunity to all students. As the chart on the following page shows, Connecticut s highest poverty districts remain disproportionally represented among the districts that spend the least on public education. 14 This is particularly problematic since providing an adequate education to a lower-income student actually costs more than providing an adequate education to a middle-income or wealthy student (many low income students are English language learners and / or lack the family resources to pay for things like after school programs). 15 Ideally, most of these highpoverty schools would be able to spend more per student than the state median Spending per student data is available at The Connecticut Council for Education Reform (CCER) makes a similar argument here: P a g e

7 Net Expenditures per Student By District, $25,000 $20,000 $15,000 Wealthiest 80% of Districts $10,000 Poorest 20% of Districts $5,000 $0 Source: Connecticut Policy Institute, Using Dept. of Education Data. Wealth Is Measured By Poverty Rate, Using Data from the US Census ACS, Compiled by the Connecticut Economic Resource Center One reason for this is the underfunding of the ECS formula and a continued over-reliance on local government to fund public education. In Connecticut, 43% of public education funding comes from state government, compared to 45.3% in neighboring states and 55.5% in the country as a whole. Bringing Connecticut s state funding percentage in line with regional averages would involve an additional $734 million in state education funding, effectively equivalent to fully funding the ECS formula. Bringing the state funding percentage in line with national averages would require an additional $1.6 billion, representing a 70% increase in state government spending on public education. 16 The chart on the following page illustrates how much more Connecticut relies on local government to fund public schools than most states P a g e

8 But fully funding the ECS formula would not alone resolve Connecticut s school funding inequities because the formula itself is focused on bureaucracies rather than students. ECS aims to redistribute money not to poor students but rather to municipalities whose property tax bases are not among the state s highest. The achievement gap, however, is student-based, not municipality-based. Poor students in wealthy municipalities struggle in school just as poor students in other districts struggle. If state aid is intended to alleviate the achievement gap, it should be focused on guaranteeing funding to low-income students and then supporting those students at whatever school they attend. The chart below, comparing each town s per-capita ECS grant to the percentage of resident students on the national Free and Reduced Price Lunch (FRPL), illustrates the result of this bureaucracy-focused funding: many towns with widely divergent student need profiles receive roughly equal levels of state education funding Based on data from the school year. 6 P a g e

9 In addition to underfunding low-income school districts, Connecticut s state education funding system does not equitably or effectively fund school choice programs. Connecticut has three main school choice programs charter schools, magnet schools, and Open Choice, in which low-income students attend school in neighboring wealthier districts. These programs help low-income students in two ways. First, they allow low-income students in struggling schools an opportunity to attend a better school, even if their family cannot afford to move. Second, when all schools have to actively attract students to enroll (rather than receiving students by default) they are incentivized to offer as excellent an educational product as possible by spending money efficiently and adopting pedagogical and administrative best practices. 18 Unfortunately, the way Connecticut funds school choice undercuts the ability of these programs to achieve their potential benefits. The state legislature must make individualized appropriations for each individual student s spot in every charter school in the state, resulting in long waitlists of high poverty students; these students are trying to attend high performing charters that simply cannot access the funding they need to expand. 19 Magnet schools are funded through a complex and bizarre system in which otherwise identical schools receive different levels of per-student funding from the state. As a result, at some magnet schools a student would receive less state funding than if he/she attended a non-magnet school, while at other magnet schools that same student would receive more funding than at a non-magnet school. This funding system distorts students choices and fails to incentivize excellence. State grants for schools accepting Open Choice students, meanwhile, vary depending upon the particular school a student attends, not that student s need. State support to suburban districts voluntarily accepting Open Choice students from urban areas is relatively low, ranging from $745 to $5,575 per student. 20 As receiving districts cannot charge tuition to sending districts, the receiving school must voluntarily bear a large percentage of the financial burden of educating each Open Choice student. Ultimately, receiving schools have little fiscal incentive to participate in, expand, or improve the program, which limits opportunities for low-income students. Finally, the resident student count used to allot ECS grants allows towns to receive partial funding for students attending schools of choice in other districts. In many cases, this is true even if a student s hometown is not responsible for financing the student s education. This includes all students participating in the Open Choice program. 18 Students also have the option of attending school in the state run technical high school system or at district run regional agriscience centers P a g e

10 Ultimately, the education funding system is more concerned with municipalities than students. The ECS formula and the state s byzantine system of school choice funding fail to ensure equal distribution of funds to students with similar levels of need regardless of their town of residence. In Connecticut, state funding for education is not set up to effectively alleviate our achievement gap. Proposed Solution: Student-Based Funding The Idea Behind Student-Based Funding Connecticut can correct the flaws in its current funding system by transitioning to a studentbased funding model in which money follows the child. This model would distribute funds on a per-student basis, with the grant weighted by student need, defined as Free and Reduced Price Lunch eligibility. Unlike ECS, the per-student funding would be constant for each student, regardless of which district or program they attend and would integrate schools of choice and school districts into a single funding system. Through a well-funded moneyfollows-the-child program, state funds could ensure that all students in the state receive an adequate education, regardless of where they are enrolled. By focusing on student need rather than town property tax revenues, student-based funding can ensure that all lowincome students have the educational resources they need to succeed. Student-based funding would distribute funds more equitably than both current ECS allocations and fully funded ECS grants: By allocating funds based solely on FRPL eligibility a measure of both student need and town residents wealth a weighted money-follows-the-child funding system would distribute state funds more heavily to the districts with the heaviest concentrations of poor students. In contrast, the ECS funding formula s propertybased weighting system has not successfully directed funds to many districts where the state s neediest students are located. This proposal would also eliminate features like the minimum aid ratio, hold harmless clause, and phase-in formula, each of which arbitrarily protects bureaucratic interests at the expense of student interests. Districts with decreased enrollment would no longer receive a disproportionately high level of funding while districts with growing enrollment would receive full state support for each new student. A district with low numbers of FRPL students would no longer be guaranteed an arbitrary minimum level of state support, freeing up resources for schools that lowincome students actually attend. Student-based funding would also address the redundant and ineffective funding structures for school choice programs, allowing these initiatives to fulfill their potential as drivers of improved low-income student achievement. 8 P a g e

11 Student-based funding would end the unequal and illogical distribution of state funds in which school choice programs are treated differently from other public schools in ways that have little to do with student need or program cost and would eliminate the arbitrary discrepancies in funding among different school choice programs. State education support would thereby provide equal opportunity to all students, regardless of whether they participated in a school choice program and which program they joined. This proposal would also provide the proper incentive structure for school choice programs to grow or not grow based on how well they were meeting the needs of low-income students. High poverty school districts would not be punished because they would receive full funding for every low-income student actually enrolled in a district school. Student-based funding schemes have been demonstrated to work at the district level in numerous instances. Both New York City and San Francisco saw an increase in student performance following their implementation of similar funding systems. Hartford, the city with the highest poverty rate in Connecticut, implemented its own Student Based Budgeting (SBB) program in 2008 with promising improvements in test scores and graduation rates. 21 Successes in large districts like these indicate that this is an effective distribution mechanism for school funding on the local level. Implementing student-based funding on a statewide level would obviously present a new challenge, but, as we argued above, it would more efficiently and equitably fund Connecticut s schools. A Proposed Formula What would student-based funding look like in practice? We developed a specific studentbased funding formula Connecticut could implement to provide adequate education funding to all students in the state. This formula generates a per-student, need-based grant distributed to each student s district or school. First, the formula sets a foundation approximating the minimum cost to provide an adequate education for each student. The foundation for most students is set at $11,000. In order to account for the higher costs of educating lower income students, the foundation for students who qualify for FRPL is $16,500, 50% higher than for non-qualifying students. The $11,000 foundation is based on per-student spending levels in high-achieving Connecticut school districts and analysis conducted by the consulting firm Augenblaich, Palaich, and Associates Inc., commissioned by the Connecticut Coalition for Justice in Education Funding. 22 The 50% weight for FRPL students is based on a comparison to other states (especially Rhode Island s Weighted Student Funding model, a model based on empirical analysis developed with the support of faculty from Brown University s Department of Education 23 ) and a CCJEF-sponsored study that examined the additional costs for at-risk students, measured by FRPL eligibility Sources/State-Education-Aid-Funding-Formula/FAQ-Updated pdf 24 (In comparing potential formulas, we adjusted key values from this study for inflation) 9 P a g e

12 Next, the formula determines what percentage of the foundation the state will provide for each student. As with the foundation, this distribution percentage differs between FRPL eligible and ineligible students. For each student who does not qualify for FRPL, the school district in which he or she is enrolled will receive a state grant equal to 10% of the standard foundation. For each student who does qualify, his or her district will receive a grant equal to 90% of the FRPL foundation. The effect of this distribution mechanism is to significantly decrease a town s burden for educating high need-students, while leaving them to pay the typically lower cost of education for students who are not at-risk and whose families pay into the tax revenues that fund local school budgets. Standard Students FRPL-eligible Students Foundation $11,000 $16,500 State Contribution Percentage 10% 90% For annual appropriations, the state will need to determine the total grant for each district, a relatively simple two-part calculation: one for students who qualify for FRPL and one for those who don t. For each portion, the state simply needs to take the relevant foundation, multiply it by the enrollment count of qualifying students, and multiply that figure by the appropriate state contribution percentage. The sum of the FRPL and non-frpl calculations produces the total state grant for each town or school. This is an inclusive grant intended to replace the inefficient and complex map of overlapping grants the state currently distributes with a single formula that adequately and equitably funds all public school students. It is intended to integrate and replace ECS grants, Priority School District, Commissioner s Network, Open Choice, Charter School grants, and Magnet School grants. Our formula explicitly excludes several other grants, including categorical grants for specialized programs, the state run Technical High School System, Excess Cost for special education students, grants to regional Agricultural Science and Technology Centers, and transportation grants. The particular costs of these programs would not be well served by a generalized funding scheme. 25 This formula is designed to apply to all public schools, regardless of whether they are part of school choice programs. Our formula uses a pure enrollment count to ensure that funding for each student goes directly to the district or school that they attend, rather than his or her home district. For each school year, the enrollment count would originally be based on the enrollment count on October 1 st of the previous school year. It would be adjusted to account for changes in enrollment following the start of the relevant school year. If a student 25 This is not an endorsement of the current grant system for those areas, but rather a qualification that our proposal is not designed to address any of the potential problems in the those programs funding systems. 10 P a g e

13 attends an inter-district magnet school, charter school, or Open Choice program, the student s home district will be responsible for paying any remaining tuition costs above the state grant. The tuition charged should be no greater than the difference between the state grant and the foundation for that student. This will benefit school choice programs without unduly burdening district schools. Some schools that currently receive generous state grants given the need level of their students would receive less money from the state. However, allowing them to charge tuition would ensure that their per-student revenue would remain at or above the foundation. Public schools receiving students in Open Choice would receive additional funding to more fairly compensate them for the cost of educating these students. And towns, for their part, would begin supporting students at charter schools and some magnet schools that were previously completely funded by the state. However, for low-income students the state would still be bearing 90 percent of the cost. For higher income students, there is no reason families paying into municipal tax revenues should not benefit from municipal education spending simply because they attend a public school of choice. When students decide to enroll in school choice programs instead of the school districts in which they reside, their school districts costs go down due to reduced enrollment. Fundamentally, this funding system is based on the idea that towns should be responsible for the education of their residents (helped by $14,850 of per-student state aid for each lowincome student), not the education of students who happen to attend district schools. Formula Impact Comparing Our Proposal to the Current ECS Formula Our funding formula outperforms the current grant system in ensuring that all Connecticut children have an adequate education. It more effectively aligns state funding with student need and equitably distributes funds across traditional public schools and schools of choice. The grants that would have been produced if this formula had been used for the school year are featured in Appendix C. The remainder of this section compares these grants to current education spending across several dimensions. It also compares our proposal to a fully funded ECS formula without the structural changes we propose. Towns that currently receive educational grants but do not have their own school system are not included, as the funding for their students would go directly to whichever school those students attend. 26 The data used for the figures in this section are featured in Appendix D. 26 Our choice of year to model was based primarily on data availability. The is the most recent school year for which we have the calculations for ECS entitlements, as the ECS grants have been set by legislative statute, rather than by the ECS appropriations formula. In addition, it is the most recent school year for which we have the total payments for Priority District, Magnet School, Open Choice, and Commissioner s Network grants data was used for calculating the grant amount under our formula, as our formula would likely use the previous year s data for grant calculation if implemented. School enrollment and FRPL student counts were taken from the Strategic School 11 P a g e

14 This data only includes towns that have school districts offering a complete K-12 education. 27 Regional school districts and schools that send their students to those districts or elsewhere for part of their education are excluded from certain of these comparisons. While our funding is distributed directly to districts because the formula uses enrollment, ECS distributes funding to towns based on resident student counts. Comparing the two systems impact on towns in which the resident students do not primarily attend school in a town-run district would not reveal useful results. Absolute Spending Levels Our formula would increase state funding levels above current spending, and to a slightly higher level than would be provided if the ECS program were fully funded and implemented without a no-harm clause. The level of state education funding we propose would place Connecticut in line with neighboring states in terms of state government contributions to total public education spending. $3,500,000,000 $3,000,000,000 $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 Funding Totals across Models $0 Current Formula Fully-funded ECS Our Formula (Models include funding for schools of choice) Profile compiled by the state, available through Connecticut Department of Education s CEDAR database. ( 27 For enrollment counts, we take the reported enrollment of each district reported in their Strategic School Profile, available through Connecticut s Department of Education s CEDAR database. Counts were based on enrollment on October 1 st, The choice of this particular enrollment count was made primarily on data availability and standardization across districts and types of schools. Unlike ECS resident student counts, our figure is a pure enrollment count, with no weighting given for resident students attending schools of choice outside of their home district. 12 P a g e

15 Per Student Expenditures (in dolllars) State Aid to Poorer Districts A comparison of our funding system to the current system of grants demonstrates that our model more equitably funds education. The following figures compare our formula to the current funding system and to what it would be if the ECS program were fully funded and did not have a no-harm clause. The measures of the current funding system and a system including a fully-funded ECS grant program include current grants for schools of choice, Priority District grants, and Commissioner s Network. These comparisons only include districts that offer resident students elementary and secondary schools. Our formula distributes funds to high-frpl districts more effectively than both the current system and the fully-funded ECS formula. The first chart compares these three formulas based on the average per-student grant for districts with different levels of FRPL enrollment Per-Student Compared by FRPL Quintiles Our Formula Current Fully Funded ECS 0 1st Quintile (Lowest FRPL) 2nd Quintile 3rd Quintile4th Quintile 5th Quintile (Highest FRPL) Our formula clearly does a better job than current ECS grants and a fully funded ECS program at increasing per-student funding as the FRPL rate increases. In the lowest FRPL quintile, the fully funded ECS program would call for $100 more per student in state aid than our plan. In the highest FRPL quintile, our plan would result in more than $1,000 more per student in state spending in the fifth quintile. However, using FRPL quintiles belies the true disparity in family resources. The fifth quintile includes towns with FRPL rates ranging from 46% to almost 100%, while the first only ranges from near 0% to 8%. To solve this problem, we also compare the funding plans across groups composed of schools with similar FRPL rates. The chart on the following page shows a similar effect: state funds increase as FRPL rates increase. Compared to our proposal, the fully funded ECS formula would disburse roughly $100 more per student in schools with a FRPL rate below 25%. Our proposal would disburse roughly $1000 more per student in schools with FRPL rates above 75%. 13 P a g e

16 Ratio of Town Grant to Average Grant Per-Student Grant (in dollars) Per-Student by FRPL Rates Our Formula Current Fully Funded ECS % 25-50% 50-75% % District FRPL Rate Eliminating Arbitrary Discrepancies Our formula also distributes state education funds more evenly and efficiently than the current and fully funded ECS formulas by minimizing the wide variation in funding to towns with similar levels of need. The figure below illustrates, along the vertical axis, the amount of state funding each of these formulas would distribute to each Connecticut town as a ratio of the formula s average town grant. This ratio simply expresses how much state funding each district would receive compared to every other district. The horizontal axis arranges towns by their percentage of resident FRPL students. The jagged lines of the current and fullyfunded ECS formulas illustrate that under those formulas towns with similar percentages of FRPL students receive widely divergent amounts of state funding. Unlike those formulas, our funding system ensures that similarly situated districts receive similar amounts of state funds and that the amount of state funds is based on student need. How Much State Funding Each Town Receives, Arranged by Town FRPL Rate Our Formula Current Formula Fully Funded ECS Towns By FRPL Rate 14 P a g e

17 Funding for Schools of Choice Our model both increases overall funding for charter schools and distributes it more equitably. The pre-existing flat grant for charter schools ignores student need, resulting in an inequitable distribution of funds between students in charter systems and students in public school systems. Under our model, there is no fiscal penalty or benefit for a student attending a charter school. Our model would increase state funding for students in some schools and decrease it in others. However, by requiring towns to provide tuition no greater than the difference between the charter school s per-student grant and their previous year s per-student expenditures, the ultimate impact would be to increase overall funding for charter schools. In the school year, each charter school received a grant of $11,000 per student. Given that at least 30% of each charter school s student body is eligible for FRPL, the resulting per-student funding would be higher than at present. Finally, our formula would eliminate the disparity in funding between magnet schools, the Open Choice program, and other district or Regional Education Service Center (RESC) operated schools of choice. By eliminating grant payments to districts not fiscally responsible for a students education, in the case of Hartford Host Magnet schools and RESC-Sheff schools, the state will no longer send money to a child s resident district unless that district is fiscally responsible for educating him or her. 28 Aiding Municipalities With Lower Property Tax Bases Our formula is focused on using state aid to ensure that Connecticut s lowest-income students receive sufficient education funding at whatever public school they attend. ECS, in contrast, is focused on providing aid to municipalities with lower tax bases, irrespective of whether those municipalities have large numbers of low-income students. Nevertheless, as the charts on the next page show, when comparing the distribution of funds to districts with different property tax bases (measured by Equalized Net Grand List, or ENGL, per-capita), our formula is generally similar to ECS with one exception: the districts with the highest per capita property values receive proportionally more money in our formula than in ECS. The main reason for this is Stamford and Norwalk two municipalities that have large numbers of low-income students but also have some wealthier neighborhoods with very high property values due to their proximity to New York City. Because our formula is student-based, Stamford and Norwalk receive large amounts of state funding to help with the large number of low-income students currently in failing schools. We believe it is important that the state commits to funding low-income students regardless of where those students attend school. This provides an incentive for schools and districts to try to attract low-income students, rather than to try to get rid of them. This, in turn, will help increase the quality of education for low-income students across Connecticut and will help close the achievement gap. 28 We do not conduct a direct comparison between funding levels under our model and the current system of funding for schools of choice because the proposed change in the relationship between schools of choice and local school districts makes it impossible to directly compare the current level of overall funding for each school to what it would be under our proposal. 15 P a g e

18 Per Student Expenditures (in dollars) However, for those committed to ensuring a closer relationship between the state grant level and a district s property tax base, one potential modification to our formula would be to link the state-aid percentage for non-frpl students to a district s ENGL per capita. So, for instance, while Norwalk and Stamford would still receive full state funding for their lowincome students, they might receive no funding (rather than 10% of the minimum) for non- FRPL students. For reasons discussed in the next section we do not recommend this change, but it is a simple mechanism to ensure that state funding generally goes to those districts with the lowest property tax bases. Per Student by ENGL Per Capita st Quintile (Lowest ENGL Per Capita) 2nd Quintile 3rd Quintile 4th Quintile 5th Quintile (Highest ENGL per Capita) Potential Modifications to the Formula Our Formula Current Fully Funded ECS The formula presented above could be adjusted to accommodate a number of concerns, with impacts of varying magnitude. First, the formula could be adjusted to provide extra weight for students with special needs and English Language Learners. As proposed, our formula excludes special needs students because the costs associated with each special needs student is extremely idiosyncratic, depending on the level of need. We therefore think that funding special needs through specialized grants makes more sense. 29 English Language Learners are not given extra weight because most ELL students qualify for FRPL. 30 We felt additional weight for these students would be redundant, as the extra costs of ELL students are likely accounted for by our substantially increased expenditures for all FRPL students. 31,32 29 This is not an endorsement the current system of grants. We simply believe that a generalized funding formula is not the best tool to address state support for special education. For more information on the topic, including potential problems with the current system and suggested solutions, see the Connecticut Council of Municipalities 2012 report on education finance ( and the recommendations made by the ECS Task Force in their final report Sources/State-Education-Aid-Funding-Formula/FAQ-Updated pdf /Education%20Cost%20Sharing%20Task%20Force%20Final%20Report% pdf 16 P a g e

19 Second, a regional bonus could be added to the formula. According to Augenblaich, Palaich, and Associates Inc., regional school districts tend to have slightly higher per-student funding costs. They propose that each town participating in a regional district would receive up to $100 per student, prorated by the number of grades shared through regional school districts. We do not include a regional bonus here because the affect is relatively minimal on the ultimate funding levels. Third, the formula could differentiate between students who qualify for free lunch and those who qualify for reduced-price lunch. This would require greater precision in state data on FRPL eligibility, which generally does not make a distinction between the two groups. The impact on funding distribution would need to be tested, but implementing this change would likely improve the formula s efficiency in distributing funds where they are most needed. Fourth, the specific method of taking enrollment counts could be changed. For initial budgeting purposes, the state would likely have to proceed using the enrollment count from the previous year. However, it may be beneficial to create a more flexible enrollment count system for recently founded or expanding schools of choice, potentially using a projected enrollment count or allowing a certain range of enrollment adjustment after the initial grant determination. Fifth, a small weight for ENGL per capita could be added to allay any remaining concerns about giving large grants to towns with large property tax bases. The most feasible and effective option would be to stagger the state s contribution percentage for non-frpl students based on the ENGL per capita of their hometown. This plan would allow the state to continue covering the majority of educational expenses for the neediest students. However, this modification would inhibit the mobility of a students funding: a significant benefit of our proposal is its facilitation of clear and equitable open choice funding. By tying per-student grants to a wealth measure of the student s hometown, it would reduce the transparency and equity of the broader funding scheme. Finally, any of the weights in our formula could be adjusted. The foundation and the state share of FRPL student funding are the most easily changed. The state s share of spending on non-frpl students is too sensitive to easily change: decrease it, and many towns will lose significant amounts of funding. Increasing it would produce higher levels of funding for towns that do not require it to provide an adequate education. Our proposal results in a very high level of funding: nearly $3.3 billion, roughly $250 million more then what the fully funded ECS formula and the other replaced grants call for. The most efficient and equitable way to reduce this total is to reduce the base foundation and FRPL foundations in proportion. The base foundation is highly sensitive: slight increases or decreases will dramatically change overall state expenditures, so changes should be at the margins. Over time, it would need to be adjusted to match inflation, changes in the cost of living, or other factors that would unavoidably increase the cost of education in the state in the future. While we advocate against decreasing state support for education, state budget constraints may require it. 17 P a g e

20 Conclusion The state s current solution to the achievement gap between Connecticut school systems is failing to solve the problem. ECS, state funding for school choice programs, and other grants to poorly performing school districts underfunds the state s schools, inequitably distributes support, and undercuts the state s school choice programs. Focusing levels of state funding on municipalities wealth rather than on students need cannot solve the achievement gap between rich and poor students. By implementing a student-based funding model Connecticut can take a significant step towards ensuring that all students in the state receive an adequate education. Our model demonstrably improves the distribution of state funds by more equitably distributing support based on student need and eliminating the inefficiencies in funding for schools of choice. This solution alone is not likely to completely eliminate the achievement gap, but we cannot fix our schools unless they are efficiently and adequately funded. 18 P a g e

21 Appendix A Funding For Schools of Choice Charter Schools State Support ECS Grant to Sending Town? Charges Tuition to Sending Town? State Charter Schools $11,000 per Student No No Local Charter Schools Up to $3,000 per student Yes N/A Note: State charter schools are funded by the state through per- student grants and are chartered by the State Board of Education. Local charter schools are established and primarily funded by local or regional school districts, with the approval of the State Board of Education. These schools receive limited per- student grants and start- up funding from the state, contingent on available appropriations, to support their operations. (

22 Open Choice Schools State Support ECS Grant to Sending Town? Charges Tuition to Sending Town? Districts where Open Choice students are less than 2% of the total student population Districts where Open Choice students are 2-3% of the total student population Districts where Open Choice students are 3-4% of the total student population, OR If the Commissioner of Education determines that the receiving district has an overall enrollment of more than 4000 students and the number of Choice students has increased by at least 50% Districts where Open Choice students are greater then or equal to 4% of the total student population $3,000 per student $4,000 per student $6,000 per student 50% is sent to the receiving district, while 50% is sent to the student's home district No $8,000 per student Note: If actual enrollment in the program is lower than the number of students for which funds were appropriated, the first $500,000 of the excess money is used for supplemental grants of up to $1,000 per student. These supplemental grants are distributed pro rata to receiving districts for any students who attend a school that enrolls at least 10 Open Choice students. Excess funds over $500,000 and up to $1 million are distributed pro rata to districts that increased their numbers of out- of- district students enrolled compared to the prior year.

23 Magnet Schools State Support ECS Grant to Sending Town? Charges Tuition to Sending Town? Sheff Host Magnet School (Hosted by Hartford or another Sheff District) RESC Operated Sheff Magnet School (Hartford Region) Non- Sheff RESC magnet with 55% or more of enrollment from a single town $13,054 for each student from outside host district and $3,000 for each student from within the district $10,443 per student for a school enrolling less than 60% of its students from Hartford. $7,085 for each student from outside the dominant district and $3,000 for each student from the dominant district Yes (two of these magnets receive higher grants for students from their dominant districts) Non- Sheff RESC magnet with 55% or less enrollment from a $7,900 per student single town $7,085 for each student from outside the host district and General Host Magnet $3,000 for each student from the host district No Yes, cannot exceed the cost of educating the student minus any state grants to the magnet Yes, cannot exceed the cost of educating the student minus any state grants to the magnet Yes, cannot exceed the cost of educating the student minus any state grants to the magnet Sometimes, cannot exceed the cost of educating the student minus any state grants to the magnet