School Finance
Overview
Q.
Since education is such a major factor in our country and our economy, the way
that we pay for it is very important. What's the lay of the land in school
finance?
Big numbers and big issues. And with the soon-to-retire Baby
Boom, immense federal debt, declining rates of productivity growth, and a
smaller savings-to-debt ratio in this country, the ever-increasing costs of
K-12 education are likely to swirl around in a "perfect storm" one of these
days.
The U.S. Department of Education predicts that the echo of
the Baby Boom, combined with immigration's effect on enrollment, will cause a
peak student population of 53.2 million by 2009-10 or so. At the same time,
K-12 school spending has now reached a half a trillion dollars in the United
States, with average spending per pupil, per year of $9,154. The spending
figures have doubled in real dollars over the past 30 years, while enrollment has
mostly stayed beneath the peak year, 1971, with 51.3 million students,
according to the federal education statistics keepers.
Property taxes are thought to be the most stable source of
school funding, although outcries over increases have caused politicians in
many states to rely more and more on state sales and income taxes. In addition,
tax policies have basically subsidized the growth of suburban school districts,
which in turn has created declining enrollment and declining revenue sources in
many urban school districts. For property tax equity, courts and legislatures
have attempted to shift more of the load for the urban schools onto suburban
and rural taxpayers, which has been controversial. And moving sources of
funding away from the local officials and into the hands of state officials
shifts the power of the purse from local school boards and administrators, to
statewide education bureaucrats that local parents and taxpayers don't have any
way to influence the way they can local school boards, and to state senators
who represent their parts of the state, and not necessarily those of other
school districts.
What has held back a tidal wave of opposition to increased
school spending is the simple fact that, so far, real estate valuations have
kept ahead of the increases in school taxes. So the increases don't "hurt"
individual voters and taxpayers as much as they would without the future
realization of profit. Homes that are taxed more are also worth even more, so
it will all work out all right in the end. But of course, if the bubble bursts,
as it is in many places in this country, that will change rapidly. And there's
always the ethical problem of taxing older people out of their homes if their
everyday incomes can't keep up with the taxes.
Some of the biggest issues in ed finance:
Changes in funding
systems. Because of
court rulings, state laws, tax policies, voter-approved initiatives, and
governmental regulations, the ways that we pay for our schools is changing
fast. Relatively new and often controversial sources of funds, such as lottery
or casino revenues, are in the mix, as are ways to get around voter-imposed
spending lids, such as "interlocal agreements" between school districts that
can obtain tax funding without being subject to the spending lids.
Funding sources. The trend is less and less local
funding of schools, and more and more statewide funding. This is controversial,
since the further away from the point of spending that you put the
decision-making power and accountability tools, the less cost-effective the
programming is likely to be. Hawaii's
schools draw no local funding sources at all, but in states such as Nevada,
well over 50% of the school budget still comes from local tax revenues. Ratios
of federal spending on schools are higher where there are high populations of
students living in poverty, including Native Americans, whose schools are
mostly federally funded. With less local funding has come more and more state
and federal control and the hated "unfunded mandates" in the form of new
regulations, paperwork and imposed procedures.
Unfunded mandates. Even though the federal government
makes up around 10% or less of most school systems' budgets, it still requires
an array of policies, procedures and paperwork to comply with such laws as No
Child Left Behind. The additional expenses of that are almost countless, from
additional levels of assessment, to immense amounts of student record-keeping
and the computerization required for that. To turn back federal funding in
order to get out from under what many educators believe to be ineffective and
counter-productive regulations is always an option, but then districts would
have to do without about 10% of their revenues.
School spending
characteristics. Costs
in many industries don't go up nearly as fast as costs in education. Education
happens to center on cost items that are going up faster than the Consumer
Price Index and are more difficult to control or plan for. Examples: salaries,
health insurance, retirement costs, fuel costs, transportation costs, and
construction.
Student
characteristics.
Minnesota usually ranks high on standardized test scores, probably reflecting
that state's high level of educational attainment among parents, who set high
levels of expectations for their children. Similarly, Massachusetts students do
well as a group, probably reflecting the spike in the average created by the
children whose parents attended the top-level universities in that state or
work in the high-tech industries there. But mostly rural Utah finds students
generally rank very high on test scores even though that state spends near the
bottom per-pupil, probably reflecting the high importance that families in that
state place on education. States like Arizona, with high dropout rates, have
relatively more poverty, Native American students, or non-English speaking
students, all of which are known to be factors creating more dropouts than in
the general student population.
Staffing. According to the National Center
for Education Statistics, U.S. Department of Education, there is one staff
member for every eight students in U.S. public schools. So the idea of one
teacher going it alone in a classroom of 30 students is just not reality.
Special education. You can't just look at the overall
enrollment figures. You have to consider the additional expense of educating a
certain percentage of those students who have extra learning needs, along with
the various funding mechanisms that may be enticing school districts to label
children as having disabilities in order to get more money from federal
sources. The variance appears to be greater than what statistics can usually
explain: according to the 2005 State Fact
Finder of Congressional Quarterly,
for example, 20.7% of the children in their public schools were labeled as
having disabilities, while California reported half that rate, 10.7%.
Poverty. While it is true that poor people
have higher incomes and a better standard of living than a generation ago, the
breakdown of the family and the array of social problems that it causes have
indeed created more challenges in schools with relatively high percentages of
low-income students. While low-cost
solutions for underachieving academics and substandard student behavior are
readily available - chiefly school choice and "direct instruction" that is more
systematic as an instructional philosophy than what most suburban classrooms
use - it is ironic that educators themselves oppose these innovations, causing
school costs to explode for extra services for disadvantaged children and
youth.
Immigration is also a factor. For example, from
1979 and 2004, the number of school-aged children in the United States who come
from homes in which English is not the primary spoken language has increased
from 3.8 million to 9.9 million, according to the Center for Education
Statistics, U.S. Department of Labor. That's from 9% to 19% of the student
body. Addressing their language-based student needs certainly costs money, as
does addressing income-based learning needs and also the high cost of remedial
reading and learning-disability infrastructure.
With all of these issues, finance
and taxation can seem difficult to comprehend and try to improve. But that's
happening, too:
·
Merit
pay for teachers and "battle pay" for those who accept challenges with the
"hard-to-teach" student populations
·
Tying
additional state resources to demonstrated improvements in various facets of
student development
·
Giving
school boards more leverage and more freedom in contracting
·
Outsourcing
more non-educational goods and services in school
·
Privatizing
wherever it's possible to get better service at less cost
·
Exploring
some of the exciting, more cost-effective models of delivering education, such
as the hybrids between public, private and online schools.
Any way you slice it, the domain of the dollar remains a
fast-changing and interesting facet in education.
Homework: Get data about education from the
U.S. Bureau of the Census:
www.census.gov/compendia/statab
or the
National Center for Education Statistics, U.S. Department of Education:
http://nces.ed.gov/pubs2008/expenditures/findings.asp
and for good graphs on the national
picture, see:
http://nces.ed.gov/edfin/graph_index.asp