By Richard Phelps, Ph.D.
Economist
Education Consumers Consultants Network
As one may recall from history class, the U.S.
constitution includes no mention of education.
Therefore, as one may also recall from history
class, that issue remains in the domain of our
country's original founding entities, the states.
Most state constitutions do provide some general,
vague guarantee for the public provision of education.
But, most of these constitutions were written
between the late 1700s and late 1800s, when the
average duration of an education was just a few
to several years. The oldest of the state constitutions
were written at a time when simple mastery of
the alphabet was considered a successful outcome
for a school career, which might have lasted less
than a year.
How the words written in those contexts can
be construed to mandate an average per-pupil expenditure
of over $12,000 per year as a legally-enforced
minimum, or adequate expenditure threshold
provides the story behind the currently popular
"funding adequacy" movement.
The movement for funding adequacy receives a
good deal of encouragement from the expected sources:
teacher unions, administrator associations, and
education professors. Riding point in the charge,
however, are legal pressure groups, such as the
ACLU, NAACP, and the Campaign for Fiscal Equity.
These groups recruit parents who are willing to
serve as plaintiffs in protracted lawsuits against
state governments, sometimes in partnership with
local school districts. The object is to get more
money from state taxpayers to fund public schools
in poorer districts (see Siobhan Gorman's article
in the December, 2001 Washington Monthly
re: Campaign
for Fiscal Equity, http://www.washingtonmonthly.com/features/2001/0112.gorman.html).
Most of these suits are supported by research
"proving" that state funding is not "adequate."
The primary intellectual home for the scholars
producing such research is the American Education
Finance Association (AEFA). The AEFA is a reputable
organization, much more open-minded and balanced
in its approach to research than, for example,
the much larger American Education Research Association
(AERA).
Nonetheless, the AEFA has its policy preferences
and one of them is to provide more money to the
public schools. Indeed, the AEFA leadership is
often open in declaring such to be a goal of the
organization. Perhaps that should not be surprising
given the organization's membership. It is dominated
by education school professors and other members
of the "chalk triangle" (i.e., administrator associations
and teacher unions)-- all of whom are permanently
represented on its board.
Only a small number of consulting firms in the
United States perform virtually all funding adequacy
studies. The two most prominent are Augenblick
& Myers (A&M), based in Denver, and Management
Analysis and Planning (MAP), headed by James Guthrie
of Vanderbilt's Education School and Richard Rothstein,
of organized labor's Economic Policy Institute.
A study done by A&M and MAP typically will
compare the results of their calculations to those
of studies done in other states, as a sort of
validation that the results are in line with the
state of the art. The studies done in the other
states, however, are likely to also have been
performed by A&M or MAP.1
Adequacy versus Equity
One explanation for the current popularity of
the notion of funding adequacy can be found in
its historical genesis. Some advocates of increased
public spending for poor children had labored
for years arguing an equity case in state
courts, without success. Specifically, cases were
brought in state courts in which plaintiffs argued
that children residing in school districts in
poor communities, funded largely from a local
tax base (usually a local property tax), were
being treated in an inequitable manner. They argued
on constitutional grounds (that unequal school
financing violated the equal-protection clause
in some state constitutions) for more state funding
of education and for more equitable state funding.2
State judges, for the most part, decided that
the constitutional grounds for expecting equal
fiscal treatment was shaky, as there is no specific
language in the constitutions that specifically
addresses the notion of educational equity. Some
state constitutions, however, require the provision
of an adequate education. So, some equity
advocates, seeing greater prospects for success
with cases based on the notion of adequacy
have shifted their arguments and strategies.3
The standards movement in education also plays
a role in the story of funding adequacy studies
and arguments. The logic goes like this: if states
are requiring that students and schools meet specific
performance targets, they must be given adequate
resources. Adequate resources can be defined as
that which is necessary to achieve the performance
targets.
From Equity to Adequacy by way of Efficiency?
As Lew Solmon points out in his excellent and
accessible critique of funding adequacy studies,
"Fatally Flawed," the word "adequate" in reference
to education funding is found much less commonly
in state constitutions than is the phrase "thorough
and efficient." Should we expect to see suits
being brought to court to force public education,
under constitutional authority, to become more
efficient? (see "Fatally
Flawed," Education Week , June 17,1998,http://www.edweek.org/ew/ewstory.cfm?slug=40solmon.h17&keywords=Solmon).
According to economists, "efficiency" is maximized
when consumers have abundant choice and information
with which to make informed selections from among
those choices. By contrast, the U.S. public education
system, if anything, minimizes choice and information,
and thus could be considered inherently inefficient.
Thus funding adequacy cases offer a remarkable
exercise in semantics. Pressure groups whose aim
is funding equity sue for funding adequacy
in states constitutionally required to provide
funding efficiency. For example, in Maryland,
a "thorough and efficient" state, a district judge
got around the problem of inconvenient constitutional
language by simply declaring, ex cathedra,
that "thorough and efficient" means "adequate."
He then ordered what was, essentially, a funding
equity solution.4
In truth, successful funding adequacy suits
tend to bring about less efficiency, not more.
Funding Adequacy Studies: Methodology
There are a number of methods for conducting
a funding adequacy study. The two most commonly
employed are the Successful Schools and
Professional Judgment approaches. Both
are fairly straightforward. The Successful Schools
approach identifies schools that have met the
relevant performance standard, say, a high average
score on a state test, and compares the poor schools
to them. Successful schools, naturally, tend to
be more plentiful in some districts than others.
Typically, A&M or MAP assemble a list of
successful schools for each level of education
(i.e., primary, middle, and high school) and then
look in detail at those schools' expenses. How
much did each of these schools spend on each of
the variety of ingredients that, collectively,
comprise the total per-student expenditure?
The Professional Judgment approach is a bit
different. With it, a panel of education experts
is assembled, and they estimate what resources
are needed, and in what quantity, for a school
to achieve the relevant performance level. These
professional judges should be people with expert
knowledge, either through direct experience with
schools or with similar functions at similar organizations.
Typically, the professional judges are all public
school affiliated, either administrators, teachers,
board members, or members of associations of one
these three groups.
Evaluating The Successful Schools Approach
Assumptions
It will not surprise most readers to learn that
schools deemed "successful" by A&M and MAP
stand out more because of the unusually high socioeconomic
status and other favorable demographic characteristics
than because of anything the schools do programmatically.
Indeed, A&M and MAP are not concerned with
what these schools do programmatically. They know
only that students at these schools exhibit high
levels of achievement; they do not know why. However,
by failing to control for student advantages such
as entering skill and knowledge levels-factors
that may influence exit test scores more than
school programs-A&M and MAP tend to identify
schools that have relatively lavish resources
and ignore ones that may not only be doing a superior
job of increasing student achievement, but doing
so with more efficient practices.
After A&M "found" their "successful" schools
in Maryland, out of curiosity, I attempted to
identify equally well-funded schools in the same
districts that were producing very low average
test scores. They were plentiful. What was different
about them? Generally, the "unsuccessful" schools
were found in geographic areas of the districts
with lower levels of achievement-related demographic
factors, i.e., relatively lower income, lower
parental education levels, and so on. Based solely
on per-pupil funding from state and district sources,
the "unsuccessful" schools actually were better
funded, because they had more students receiving
Title 1, ESL, and special education supplements.
In order to make more detailed comparisons,
I compared two groups of middle schools on available
background factors. The difference in the proportions
of students receiving free or reduced-price meals
-- a proxy for parent's income level -- was statistically
different (at p <.001). Unsuccessful schools
were far more likely to be located in lower income
areas.5 In contrast,
more than one third of A&M's successful Maryland
schools lay within the boundaries of the wealthiest
of Maryland's 24 school districts, almost all
of them from three of the wealthiest suburbs in
the United States-suburbs that also contain some
of the country's most highly-educated parents.
As one would expect, kids enter the successful
schools as high achievers, before any public school
money is spent on them. For all we know, the schools
identified as "successful" might be poorly organized,
add little value to their students, and generally
waste taxpayers' money. Without controlling for
background factors, one cannot know what impact
particular schools have had on the students.
The Counter-Argument
Some defenders of the successful schools approach
argue that wealthier communities tend to have
more highly-paid teachers and access to parents
who may make financial donations to their children's
schools. That's simply unfair, they say.
In fact, however, most schools do not pay their
teachers directly. Instead, teachers receive their
paychecks from the district. Average salaries
can differ from school to school, however, because
schools prefer experienced teachers and teachers
prefer to work in wealthier schools, i.e., the
schools in wealthier communities. Capitalizing
on their attractiveness to teachers, the wealthier
schools hire more experienced teachers and thus
have higher salary profiles.
The phenomenon of experienced teachers gravitating
to wealthier schools presents something of a conundrum.
Schools can hardly be blamed for hiring the best-qualified
teachers and teachers can hardly be expected not
to notice that schools in wealthier communities
have students that are better prepared for school
and better supported by their parents-financially
and otherwise. Given that teachers are paid the
same no matter where they teach within a district,
these preferences will influence staffing and
salaries.
Relevant to the present discussion, however,
is the point that the added funding brought to
poor school districts by funding adequacy suits
does not address the problem. Schools will still
seek experienced teachers and the wealthier schools
within districts will still be more attractive
to teachers. And in any case, the numerous studies
on the subject of teacher salaries indicate that
salary increases, by themselves, have only a weak
effect on student achievement.6
Evaluating the Professional Judgment Approach
Assumptions
A&M and MAP's alternative to the Successful
Schools approach is the Professional Judgment
study. They gather a group of experts--professionals
familiar with how much it costs a public school
district to effect results-and ask them how much
it will cost to bring a school to a certain threshold
level--for example, the school performance index
level that Maryland deems a successful school.
This group then considers all the cost components
required labor, materials, supplies, services,
and so on and sums them.
As the reader might surmise, results will depend
substantially on the matter of which experts are
chosen. In their Maryland studies, both A&M
and MAP employed only public school professionals
as experts. While this makes some sense -- public
school officials are most intimately familiar
with what it takes to run a public school -- it
also creates at least three threats to the validity
of the studies:
First, there's a danger of professional myopia.
School personnel may assume certain conditions
to be the way things are and must be. Outside
experts might question these assumptions.
Second, public school educators generally have
little training in operations research, logistics,
or finance, and little experience operating in
a marketplace and competitive pressures on costs.
Third, public school educators have some degree
of incentive to estimate costs liberally. They
may be the direct or indirect beneficiaries of
any increase in funding.
What Adequacy Studies Leave Out
There is an alternative to the above-described
approaches that would avoid most of their shortcomings.
However, it would cost more and be somewhat more
technical; and it would entail identifying schools
that do the best job of improving student achievement.
Some students begin their schooling career with
disadvantaged backgrounds and low levels of knowledge
and skills. Others are more affluent and advanced.
Schools that produce the greatest gains for students
over their individual baseline performances can
be called high value-added schools and
they are found in wealthy and poor communities
alike.
They would present a substantial advancement
over current funding adequacy studies because
they would identify and provide a basis for rewarding
the schools and districts that are doing a good
job of bringing about student achievement, and
not the ones that are simply benefiting from fortunate
circumstances.
Funding Adequacy Studies Promote Cost Inflation
When proponents argue that increased spending
is needed for the sake of the children, they imply
that the additional funds, or most of them, will
result in the children receiving more and/or better
services. Funding adequacy studies, however, produce
static analyses, i.e., they assume that today's
cost structure will be tomorrow's. For example,
they assume that teacher and administrator unions
will sit on their hands when the funding windfall
arrives and not seek gains in salaries, benefits,
and job protection. In fact, the availability
of more funds typically results in same services
costing more.
Some education finance scholars have developed
education cost indexes that vary by geographic
region (based primarily on prevailing local teacher
and administrator salaries) and these indices
are sometimes used in funding adequacy studies.
These cost levels are accepted as a given and
the consultants merely calculate how much more
state funding would be needed for poorer districts
to spend as much as richer districts. Costs can
only go up.
Analysts using these approaches to cost estimation
have no reason to do otherwise. Teacher organizations,
administrator associations, teacher educators,
and other public education advocates find them
entirely satisfactory; and policy makers can always
make an impressive argument to taxpayers, to wit:
objective scientific evidence proves that
we must raise per pupil spending in order to reach
an adequate level of education for our
children. How can anyone sleep at night knowing
that poor, innocent children have not been provided
an "adequate" level of funding?
Critics of the funding adequacy logic might
argue that some demonstrably successful schools
systems, such as the diocesan parochial Catholic
schools or the public schools in many Plains and
Mountain states, spend half as much per student
as the public school systems in Midwest and Northeast
states, and seem to achieve much better results.
Higher spending advocates, however, will argue
that the Catholic schools are too different to
provide a fair benchmark (actually, they are not),
and the Western states have a much lower education
cost index.
The critic might retort that that just proves
the point that money is not the most important
factor in determining student achievement. After
all, why is the education cost index twice as
high in the Midwest and Northeast states? It is
not because the cost-of-living is twice as high;
public education costs are twice as high.
And, education costs are determined, overwhelmingly,
by the level of teacher and administrator salaries
and benefits.
How to Make More Funding Work
Advocates of more spending often bristle at
the argument that how money is spent is more important
than how much is spent. Indeed, they are affronted
by the implication that schools are not already
making their best effort to spend productively.
But, simply given more money, schools are likely
to spend it in the same old cost-ineffective ways:
raising teacher salaries (regardless of productivity),
increasing the number of certified teachers, subsidizing
the certification of teachers, lowering class
size, increasing employee benefits, building more
sports facilities, and so on. Given a windfall
and typical political pressures, the easy road
is to give teachers and administrators what they
want, buy showpieces, and otherwise spend the
money in ways that have little impact on student
achievement.
Districts could take steps that would directly
impact student achievement with little increased
cost, but they don't. Typically, the reason is
that one or more of public education's internal
interest groups find them objectionable. For example,
better measurement of learning and better linkage
of learning to teacher and administrator salaries
would be far less expensive than across-the-board
salary and benefit increases, more personnel,
and new facilities. Court mandated funding windfalls
coupled to such measures would have a far better
chance of actually improving student achievement.
Understandably, however, teachers and administrators
are more comfortable with a work environment that
does not tie consequences to productivity.
A&M and MAP both advocate providing increased
state funding to receiving school districts with
no strings attached. They justify this recommendation
by arguing that managers should have the flexibility
to manage within the local environment that they
know best. Mission, money, and measurement should
come from the top; method should come from the
bottom is one phrase used by MAP. Set outcome
targets and then hold their feet to the fire to
achieve them, was used by another advocate. School
district officials tend to agree with the notion.
What works in theory, however, is unlikely to
succeed in practice because most public school
districts have little discretion in how they spend
the overwhelming majority of their funds. They
have signed binding legal (labor) contracts encumbering
most of their funds. Moreover, they are subject
to extremely restrictive laws and regulations
as to whom they can hire. Under these conditions,
very little of any added funding is likely to
serve as an incentive for improved quality or
efficiency.
More funding adequacy settlements are likely
only to increase costs. Indeed, acceding to the
recommendations of funding adequacy proponents
could lead to an endless succession of adequacy
studies and court-mandated funding increases.
Poor districts are unlikely to ever meet the state-required
performance thresholds if they continue to spend
in the accustomed ways. Years of spending and
failure are then likely to be addressed by another
blue-ribbon commission, another study by A&M
or MAP, and another spending increase. The unthinking
belief that spending alone will improve things
only puts off the day when productivity issues
must be seriously examined. Meanwhile, another
generation of children is lost.
For further reading:
Erik Hanushek, "The Productivity Collapse in
Schools," in William J. Fowler, Jr. (ed.), Developments
in School Finance, 1996 (Washington, D.C.:
National Center for Education Statistics, U.S.
Department of Education, 1997), pp. 183-195.
Erik Hanushek,"A Jaundiced View of 'Adequacy'
in School Finance Reform," Educational Policy,
8(4), December 1994, pp. 460-469.
Erik Hanushek,"Can Equity Be Separated from Efficiency
in School Finance Debates?", in Emily P. Hoffman
(ed.), Essays on the Economics of Education
(Kalamazoo, MI: Upjohn Institute, 1993), pp. 35-73.
Michael Podgursky, "Regulation Versus Markets:
The Case for Greater Flexibility in the Market
for Public School Teachers." Presented at the
New Teachers for a New Century Conference, Johnson
Wingspread Conference Center, Nov. 17-19, 1999.
Dale Ballou and Michael Podgursky, "Teacher Recruitment
and Retention in Public and Private Schools."
Journal of Policy Analysis and Management,
Vol. 17, No. 3, June 1998, pp. 393-417.
Dale Ballou and Michael Podgursky, "Teacher Training
and Licensure: A Layman's Guide." in Marci Kanstoroom
and Chester E. Finn, Jr. (eds) Better Teachers,
Better Schools. Washington DC: Thomas
B. Fordham Foundation, 1999.
Dale Ballou and Michael Podgursky, "Teacher Unions
and Education Reform: Gaining Control of Professional
Licensing and Advancement." in Tom Loveless (ed.)
Conflicting Missions: Teacher Unions and
Education Reform. Washington DC: The Brookings
Institution, 2000.
ENDNOTES
1. See, for example, James W.
Guthrie and Richard Rothstein, "Enabling Adequacy
to Achieve Reality: Translating Adequacy into
State School Finance Distribution Arrangements,"
Chapter 7 in National Research Council, Committee
on Education Finance, Equity and Adequacy in
Education Finance: Issues and Perspectives,
1999.
2. See Paul A. Minorini and Stephen
D. Sugarman, "Educational Adequacy and the Courts:
The Promise and Problems of Moving to a New Paradigm,"
Chapter 6 in National Research Council, Committee
on Education Finance, Equity and Adequacy in
Education Finance: Issues and Perspectives,
1999.
3. See Melissa C. Carr and Susan
H. Fuhrman, "The Politics of School Finance in
the 1990s," Chapter 5 in National Research Council,
Committee on Education Finance, Equity and
Adequacy in Education Finance: Issues and Perspectives,
1999.
4. See Bradford, et.al. v. Maryland
State Board of Education, et.al., Order,
October 18, 1996 [Case #94390058/CE189672]
5. Using a t-test comparing means.
6. See, for example, NAEP Mathematics--Average
Mathematics Scores by Teachers Reports of Total
Years Taught at http://nces.ed.gov/nationsreportcard/mathematics/results/experience.asp;
Dale Ballou and Michael Podgursky, "Teacher Pay
and Teacher Quality." W. E. Upjohn Institute
for Employment Research, 1997.
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