Funding. Public Education. Issues of Adequacy, Equity and Sufficiency. By Jo Anne Anderson, Melanie D. Barton and Amy L. Braman

Transcription

1 Funding Public Education Issues of Adequacy, Equity and Sufficiency By Jo Anne Anderson, Melanie D. Barton and Amy L. Braman USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH - PUBLIC POLICY & PRACTICE JANUARY

2 South Carolina s public education system receives the lion s share of state revenues. For FY 2003 the pre-kindergarten through grade-12 system received $1,918,683,001 (35.3%) of the state s General Fund revenues, $543 million from the Education Improvement Act, and $85,819,583 from the Education Lottery program (S.C. General Assembly, 2002). The system is appropriated more dollars for FY 2003 than were appropriated (or received after mid-year budget cuts) for FY 2002, yet critics claim the system remains underfunded. Critics also argue that, within that funding shortfall, available dollars are distributed in a manner that runs counter to the needs of students. South Carolina s per pupil expenditure for FY 2000 was $6,130, compared to a national average of $6,911 (National Center for Education Statistics, 2002). Education Week s annual publication Quality Counts describes South Carolina s per pupil expenditure as 105% of the national average when cost-of-living adjustments are made (Orlofsky, 2002). There seems to be little agreement on how many dollars are needed and how those dollars should be distributed. In 1991, 41 school districts sued the State of South Carolina (Abbeville County School District v. the State of South Carolina, April 22, 1999), claiming that the funds appropriated for school districts were distributed in a manner that resulted in an inequitable system of public education. The plaintiffs won the case when it was before the South Carolina Supreme Court in The Court stated that students were to have access to a minimally adequate education and remanded the case to the lower courts for determination of relief (S.C. Supreme Court, 1999). That remedy is to be argued in June of During the last decade the dissatisfaction with the school finance system in South Carolina has expanded from arguments for equitable distribution of available resources to provision of adequate resources, and now to the concept of resources sufficient to ensure achievement. Changing achievement expectations have not been matched with changes in the distribution and utilization of resources for our state s education foundation program. Today s schools are expected to provide programs and supplementary services so that all students perform on grade level and graduate on time a very different expectation from providing access and opportunity. This concept of adequacy has been the cause of action for litigation in a number of states (Heise, 2002, p. 2). For example, Rose v. Council for Basic Education resulted in a 1989 Kentucky Supreme Court decision that restructured the entire public education system in Kentucky. The focus on outcomes in the Kentucky case laid the foundation for litigation in New York (Campaign for Fiscal Equity, Inc. v. the State of New York, 1995) and North Carolina (Leandro v. State of North Carolina, 1997). Just as other states are struggling with the concepts and practicalities of changing their finance system, South Carolina continues to debate core issues. To understand fully the change discussion, a review of the current school finance system is beneficial. STATE SUPPORT FOR PUBLIC SCHOOLS The Education Finance Act (EFA) of 1977 is the centerpiece of school funding for South Carolina. Constructed to replace the state s headcount allocations, the EFA provided each student with instruction appropriate to his/her need. One of the most progressive state and local funding mechanisms, the EFA has maintained the structural elements of the base student cost, the weighted pupil unit, and the index of taxpaying ability throughout the last 25 years. First, the EFA s base student cost is projected from a compendium of regulations identified as the Defined Minimum Program (e.g., the number of pupils per teacher, maximum teacher load, and minutes of instruction per course) applied to a hypothetical district enrolling 6,000 students in grades kindergarten through 12th grade. Today, only 10 of the 85 districts have an average daily membership between 5,000 and 7,000 students, and many of the statutory and regulatory requirements have changed. Before any mid-year reductions, the FY 2003 base student cost was funded at $2,033. Mid-year budget cuts reduced the base student cost allocations during the late 1980s and, more recently, between 2001 and Professional educator organizations have argued that the mid-year reductions, and subsequent applications of the annual inflation factor to a lower base, have compounded the financial challenges before schools. The base student cost has not grown significantly over the last 10 years, even with inflationary adjustments as shown in Figure JANUARY 2003 PUBLIC POLICY & PRACTICE - USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH

3 FIGURE 1 History of the Base Student Cost FY 1995 to FY 2004 Fiscal Year Revised Estimate of Base Student Cost to Match Inflation Estimate of Base Student Cost Provided for Budget Base Student Cost Approp. Base Student Cost After Budget Cuts $1,679 $1,652 $1,619 $1, ,716 1,718 1,684 1, ,771 1,778 1,760 1, ,814 1,839 1,839 1, ,896 1,879 1,879 1, ,957 1,937 1,937 1, ,052 2,012 2,012 2, ,112 2,073 2,073 1, ,173 2,133 2, ,201 2,201 Source: S.C. Budget and Control Board, Office of the State Budget, Second, the EFA provides that students are counted in 1 of 15 classifications, according to their instructional needs. Each classification of students is assigned a weighting factor that estimates the cost of providing the basic instructional program to a student at an assigned grade level or in a special program. For example, a student in a regular education program between grades 4 and 8 is assigned a weight of 1.0. A student in a career technology program is assigned a weight of 1.29 and an emotionally disabled student is assigned a weight of The number of weighted pupil units is projected annually by the Office of Research and Statistics in the state s Budget and Control Board and generally yields a total approximately 1.2 times the actual student count. For FY 2004, the projected EFA weighted pupil count is 832,600 for 670,000 students. Over the past 20 years the distribution of weighted pupil units has changed little among the categories, with the exception of a 50% increase in students identified as having learning disabilities (see Appendix for a 20-year comparison). There is no weighting for students who are English language learners or for students from economically disadvantaged backgrounds. The third element of the Education Finance Act is the index of taxpaying ability. The index of taxpaying ability is the ratio of a district s assessed value of property to the total assessed value of property in the state. The allocation of funds to a district is determined by multiplying the base student cost times the number of weighted pupil units times the district s index of taxpaying ability. Indices range from over 90% to less than 0.06%. The total EFA dollars required are divided among districts in accordance with an intended 70% state contribution and 30% local match. Other General Fund appropriations support a variety of state educational funding responsibilities. Among these are employee benefits, textbooks, transportation, school building aid, career and technology education, and adult education. These appropriations do not reach the magnitude of the EFA but do represent substantial financial commitments from the state. Local matching funds are not required, yet local school districts are compelled to supplement state appropriations when they are insufficient to meet the actual cost. For example, the state funds a minimum salary for school bus drivers. Many districts find that minimum salary insufficient to compete for drivers in local markets and therefore provide for supplemental compensation. Additionally, local school districts pay mileage fees and driver salaries for transporting students other than to-and-from school. The State Department of Education estimates that state appropriations for transportation account for only 40% of the total costs. Further it should be noted that school building aid has not been provided in the General Fund since FY Costs were shifted initially to the Education Improvement Act Fund (1992), then to the Children s Education Endowment (Barnwell) Fund (1997), and finally to the School Construction Bond program (1999). The Education Improvement Act (EIA) of 1984 was constructed to supplement the foundation program by providing additional or specialized instruction so that all students acquired basic skills, compensating or remediating for student academic deficiencies, and making teaching a more attractive profession. The Act was accompanied by an increase in sales taxes held in a dedicated fund. For FY 2004, projected EIA revenues are $546.9 million. In contrast to the Education Finance Act, the state bears all the costs of Education Improvement Act programs (i.e., there is no local share required although there is a minimum local effort requirement). 1 These EIA funds support higher standards in USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH - PUBLIC POLICY & PRACTICE JANUARY

4 an array of programs requiring, for example, additional units for high school graduation, advanced placement courses, teacher recruitment, and others. Funds originally dedicated solely for compensatory and remedial programs are now targeted toward accelerating the learning of students who are performing below grade level. The EIA also funds an increase in teacher salaries to the southeastern average. Between 1984 and 1991, the southeastern average teacher salary was determined using the teacher as the calculative unit of analysis. Since 1991, the state is the calculative unit of analysis. Twelve southeastern states, including South Carolina, are included in the southeastern average. The projection of the average teacher salary incorporates as well the length of teacher contract year. Further, the average includes only classroom teachers as defined by the National Education Association. (Principals, librarians, guidance counselors, and other non-classroom school employees are not included in the average.) Teacher salaries have continued to rise over the past decade and even during the last three years of economic downturn. Teacher salaries in South Carolina have risen 38.7% between FY 1992 and FY 2002 (National Education Association, 2002). For FY 2003, the South Carolina General Assembly funded teacher salaries at $300 above the southeastern average and protected those salaries through a legislative proviso that bars mid-year reductions from application to EIA teacher salaries funds. The EIA also included an elastic fund for school building aid. Collections in excess of EIA expenditures were placed in a school building fund. The EIA fund supplemented the school building funds between the years of 1984 and During those years the level of contribution ranged from a high of $55,738,136 in 1984 to a low of $1,412,000 in The South Carolina Chamber of Commerce Issue Brief, K-12 Education Funding in South Carolina, suggested that despite increases in total dollars for education, the proportion of the state s budget dedicated to public education has declined (Tetrault, 1998, p. 7). Much of this decline was attributed to growth in the numbers of students, the weighted pupil units, and inflationary adjustments. Other groups also suggested that the state support for public education has declined through the transfer of costs from the state to the local school districts. In its 1995 and 2002 publications, Critical Issues: School Finance, the S.C. School Boards Association cited several examples of cost shifting (S.C. School Boards Association, 1995, p. 3 and 2002, p. 6). Specifically, these cost shifts are attributable to the following: The cumulative effect of mid-year budget cuts and underestimation of the weighted pupil units; The fact that since 1982 the state has shifted at least 30% of employee benefits costs to the school districts; The state has required school districts to pay bus drivers on a state-defined salary schedule; and The failure to fund facilities costs related to lowering class sizes. In 2001 South Carolina enacted a lottery to provide supplemental funding for education, primarily higher education through endowed professorships and scholarship programs. The lottery yielded 18-month revenues of $85,819,583 for FY 2003 appropriations to the pre-kindergarten through grade-12 programs. These funds are divided among $46,915,900 recurring and $38,903,683 non-recurring amounts. Aside from endowed chairs and scholarships, these funds are dedicated to technical assistance for underperforming schools, school grants to improve the teaching and learning of mathematics, reading, science, and social studies in grade K-5, school buses, and related smaller programs. EQUITY, ADEQUACY, AND SUFFICIENCY As mentioned earlier, the Abbeville suit, pending before the courts, argues that funds are not distributed in an equitable manner. This argument rests on the two contrasting state systems for allocating funds to school districts. First, while the EFA recognizes differences in student needs and the local district s capacity to provide the minimum program though the index of taxpaying ability adjustment for community wealth, the EIA distributes funds in accordance with program participation and uses a per student methodology. Other General Fund and lottery revenues are distributed outside the EFA formula. Approximately one-third of state education support is distributed outside the EFA. Second, inequities increase when local communities are able to raise millage rates beyond the state-required minimum. Because there is no uniform statewide fiscal authority among school districts, district boards with fiscal autonomy and those in more prosperous communities may be able to provide an instructional program substantially stronger than districts less advantaged, despite accountability systems that require similar results. Analyses of FY 2000 school district spending indicate that the range of per pupil funding among South Carolina schools yields a gap of over $4,000 from the lowest funded to the highest funded school (Education Oversight Committee, 2002). Anticipating that the costs of providing services and the ability to generate revenue vary considerably among communities, the concept of adequacy has emerged. What level of funding is adequate to meet the requirements in statute or regulation? The EFA is built upon a defined minimum program, yet over the past 25 years the elements of that program have changed. Some regulations have been 28 JANUARY 2003 PUBLIC POLICY & PRACTICE - USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH

5 repealed; other special programs and expectations have been added. In 2000, the S.C. School Boards Association commissioned a projection of adequate funding for South Carolina schools to achieve the expectations of the Education Accountability Act of 1998 (EAA). The study employed a professional judgment methodology in which educators propose a program of support to achieve a defined goal for an average school district. The study projected a $6 billion cost across federal, state and local revenues (Augenblick and Myers, 2000, p. 2). The study did not incorporate a review of South Carolina statutes and regulations. In fact, there has been no systematic study of the combined program requirements in the last 25 years. In its work to support a strong public education system, the Education Oversight Committee (EOC) raised the issue of sufficiency. Analyses of school performance data suggest that sufficiency must include student access to highly qualified teachers, stable school staff and administrations, and supplementary resources for students and schools that underachieve. The concept of sufficiency is built upon a commitment that each child should have the quality of education necessary for that child to compete successfully in the 21st century economy. The concept of sufficiency seeks to eliminate inter-district competition and to create a system that supports all students. In that regard, the EOC has commissioned a cost study of the current program elements and the program requirements necessary for all students to achieve the standards-based curriculum goals. Preliminary results of the study are to be reviewed by the EOC in July CHALLENGES TO THE CURRENT APPROACH TO PUBLIC SCHOOL FINANCING The current system of state financing of schools is challenged on many fronts, not the least of which is a 3-year cycle of economic difficulties and revenue shortfalls. This article concludes that four primary issues challenge the efficacy of the system: (1) increasingly diverse student populations, (2) increased school outcome expectations, (3) teacher salaries, and (4) governance of the system. South Carolina educators are building a system of instruction that must respond to an increasingly diverse student population. The state s cultural diversity is increasing with significant growth among Hispanic and Asian student populations. Beaufort and Saluda County School Districts reflect this change. Hispanic students make up approximately 10% of the student population in those districts. Census data suggest that the families are young, have one or more children, and frequently the adults struggle with literacy in both Spanish and English (S.C. Budget and Control Board, 2002). Cultural diversity is but one change. The proportion of students identified as exhibiting learning disabilities is increasing and many students come to school trying to overcome the barriers of poverty. Expectations for school outcomes have changed. The EFA brought in an era of responding to a student s individual needs; the EIA added to the system by establishing a basic skill performance level for each student; the 1998 Education Accountability Act is structured so that each school achieves for its students a level of performance to make the state more economically competitive; and now, the federal No Child Left Behind amendments to the Elementary and Secondary Education Act extend the expectations to each student performing on grade level and graduating on time. The cumulative effect is that schools are expected to perform differently and at higher levels, yet the finance system has not been restructured to address these expectations. Analyses conducted by the Education Oversight Committee find the highest statistical correlation among student and school achievement and adult actions. Those elements that are correlated highest include: (a) teacher contract status, teacher advanced degree status, and teachers returning to a school; (b) administrator years at the school; and (c) parental participation in conferences. The EFA and EIA allocations provide resources to schools by student or teacher but do not ameliorate inter-district compensation differences. In Tennessee Small School Systems v. Ned Ray McWherter, the Tennessee Supreme Court found that funding equalization efforts that did not include equalization of teacher salaries as being flawed substantively. Since teacher salaries account for 50 or more percent of expenditures, the state could not consider the equalization issues addressed. The Tennessee Supreme Court went on to outline expectations that equalization of teacher salaries should go beyond the establishment of a minimum salary. Finally, the school finance system is challenged by a patchwork of governance structures. Currently, one-third of districts have fiscal autonomy, one-third have limited autonomy, and one-third have no autonomy. Critics of the system call for greater state funding and greater local control, concepts that may be contradictory. Should increases in state funding be accompanied by increases in state direction or control? Is the accountability system sufficient to focus on outcomes, thereby permitting increases in flexibility for local school districts? CONCLUSION The issues of equity, adequacy, and sufficiency do not have easy solutions nor should we expect a court decision to define the specific program components and resource allocations. The experiences of other states suggest that courts do recognize flaws in school finance systems and mandate USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH - PUBLIC POLICY & PRACTICE JANUARY

6 corrections. The details of those corrections are left to the educational profession, and the legislature. South Carolina awaits a court decision that may promote specific actions to respond fiscally to 21st century expectations of schools and our students needs. NOTES 1 The EIA does require that school districts maintain a level of local support equivalent to that provided in 1984 and adjusted for inflation annually. Districts may seek a waiver of that requirement from the State Board of Education. REFERENCES Abbeville County School District #1 et al. v. State of South Carolina et al. Opinion (South Carolina Supreme Court, April 22, 1999). Augenblick, J. & Myers, J. (2000). Financing education in South Carolina. Columbia, SC: South Carolina School Boards Association. Campaign for Fiscal Equity, Inc. v. State of New York, 86 N.Y. 2nd 307 (New York, June 13, 1995). Education Oversight Committee. (2002). Staff analyses of school and district report card data. Columbia, SC: Author. Heise, M. (2002). Educational jujitsu. Education Next, Fall, Leandro v. State of North Carolina, 488 S.E. 2d 249 (North Carolina, 1997). National Center for Educational Statistics. (2002). State by state public education finance, Washington, DC: United States Department of Education. National Education Association. (2002). Rankings of the states and estimates of school statistics. Washington, DC: National Education Association. Office of Research and Statistics. (2002) census data reports. Columbia, SC: South Carolina Budget and Control Board. Orlofsky, G. (2002). Quality Counts. Washington, DC: Editorial Projects in Education. Rose v. Council for Better Education, 790 S.W. 2d 186 (Kentucky, 1989). South Carolina General Assembly. (2002). General Appropriations Act. Columbia, South Carolina, SC: Office of Legislative Printing. South Carolina School Boards Association. (1995). Critical issues: School finance. Columbia, SC: Author. South Carolina School Boards Association. (2002). Critical issues: School finance. Columbia, SC: Author. Tetrault, D. (1998). K-12 education funding in South Carolina. Columbia, SC: South Carolina Chamber of Commerce. ABOUT THE AUTHORS Jo Anne Anderson, B.A., M.A., Ph.D., is currently Executive Director of the South Carolina Educational Oversight Committee. Prior to this Dr. Anderson has worked extensively in the field of education and educational policy. Dr. Anderson has a B.A. and M.A. from George Peabody College, and a doctorate from Florida State University. Dr. Anderson can be contacted at jander@eoc.state.sc.us. Melanie Barton, B.A., M.A., is a Program Coordinator with the Educational Oversight Committee. Ms. Barton has worked in several related areas of public education policy, including with the S.C. Senate Education Committee. Her academic background includes a B.A. from Furman University and a masters degree from Duke University. Ms. Barton can be reached at mbarton@eoc.state.sc.us. Amy Braman, B.A.I.S., is a graduate assistant with the Educational Oversight Committee. Ms. Braman has a BAIS from the University of South Carolina and is currently pursuing a Ed. S. in counseling at USC. Photo by Keith McGraw, USC Distance Education. 30 JANUARY 2003 PUBLIC POLICY & PRACTICE - USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH

7 APPENDIX 10-Year Comparison Of Weighted Pupils Units (Wpu) CLASSIFICATION FY % OF TOTAL FY % OF TOTAL FY % OF TOTAL Kindergarten 22, % 25, % 53, % Primary 153, % 164, % 158, % Elementary 220, % 225, % 226, % High School 89, % 90, % 101, % Educable Mentally Handicapped 26, % 13, % 16, % Learning Disabilities 32, % 46, % 68, % Trainable Mentally Handicapped 4, % 5, % 5, % Emotionally Handicapped 10, % 9, % 10, % Orthopedically Handicapped 1, % 2, % 3, % Visually Handicapped 1, % 1, % 1, % Hearing Handicapped 2, % 2, % 2, % Speech 40, % 51, % 58, % Homebound 1, % 3, % 3, % Vocational 122, % 107, % 108, % Autistic 2, % TOTAL 730, % 751, % 821, % Source: SC Budget and Control Board, Office of the State Budget, USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH - PUBLIC POLICY & PRACTICE JANUARY