Clearinghouse on Educational Policy and Management College of Education · University of Oregon
	"Search Help" Note that this is a web site search and will not search our databases ("Directory of Organizations", "In-Process Abstracts", the ERIC Database, "Publications").	Trends and Issues: School Finance Discussion Links References Resources New Attention to Outcomes and Adequacy Equity is beginning to be addressed in terms of educational outcomes, not just dollars, and in terms of adequacy of educational opportunities. Linking equity and outcomes is complex, since definitions vary, and outcomes rely on results of an educational process less easily manipulated by policy interventions than are resources or inputs (Berne 1995). Catherine Sielke (2000), an educational administration professor and finance expert, spells out this new outcomes/adequacy emphasis: "Current trends indicate that dollars per student alone will not be the object of equity, but rather the things that districts can purchase (people, materials, services, etc.) and/or the test scores (product) that students achieve." New York State's Example The wide-ranging per-pupil expenditure variances among New York State school districts at the 90th and 10th percentiles have already been mentioned (see the "Persistent Disparity" section). According to the State Education Department's 1997 and 1998 annual reports, NYS districts evinced a "dismaying alignment of disadvantaged students..., schools with the poorest educational resources (fiscal and human), and substandard achievement," whereas schools serving "the fewest at-risk children ha[d] the greatest financial resources, teachers with the best credentials, and the highest levels of achievement" (Books 1999). A study group convened by the New York State Commissioner of Education concluded that outcomes should focus on the whole child and that "differences in broadly defined outcomes should not be related to social distinctions such as race, ethnicity, and gender" (Berne). The group found resource equity a necessary but insufficient condition for reducing outcome inequities. It called for flexibility in using resources and "argued against a multitude of categorical aid streams," claiming that funding should be based on causes of low outcomes, such as poverty, not on the outcomes themselves (Berne). A landmark January 2001 trial court decision that invalidated New York's educational funding system as discriminating against poor and minority New York City children appears to uphold the study group's conclusions. The decision was anticipated by a New York State Regents 1997-98 Symposium addressing how the state's school-finance system should be "restructured to achieve uniform high learning standards for all students," particularly in historically low-achieving schools (Wyckoff and Naples 2000). Contributors to a special issue of Economics of Education Review unearthed several policy implications for New York State, including the need to increase overall capacity for school districts, align the finance system with districts' and students' different needs, and encourage districts to reallocate resources to meet learning goals. Two other researchers concluded that most New York State districts could not meet minimal performance standards "without large increases in state aid and local tax rates, accompanied by reforms that improve the productivity of teachers and administrators" (Duncombe and Yinger 2000). Status of Adequacy During the 1990s In a special issue of Educational Policy, William Clune's leading paper (1994) discusses the shift in attention from equity to adequacy, and from inputs to high minimum outcomes as primary policy and finance goals. Defining equity as financial equality among schools and districts and adequacy as sufficiency for some purpose (usually student achievement), Clune calls the 1990's stage of litigation "equity-plus." At that stage, emerging student-outcome goals had modified the old equity framework, but true adequacy had been neither required nor widely implemented. Implementing true adequacy would require each district to adopt a set of high minimum goals, identify needed resources for achieving them, and devise a long-range investment plan for deploying these resources and developing instructional programs. The price tag would be $5,000 per disadvantaged pupil, or $25 billion nationwide (Clune). In a study of policy-linkage models, Marilyn Hirth (1996) supports Clune's argument that concepts of equity and adequacy should be major elements of any systemic educational-reform policy. Both concepts are prominent features of recent litigation efforts. Judicial Decision-Making Trends In an article examining three decades of school-finance litigation, Deborah Verstegen and Terry Whitney (1997) observe that judicial decisions have turned on finance systems' adequacy. Judges have evolved a bifurcated theorizing process, employing "a minimalist basic-skills notion of adequacy" when upholding state-finance systems, and an equity/adequacy notion when invalidating them. According to these authors, there is a "broad movement underway to secure... the rights of poor children to equal opportunity and nondiscrimination [resembling] past civil rights activities on behalf of linguistic minorities and children with disabilities." Although court decisions over the past 35 years have been focused on disparities (in money, available resources, services, state support levels, and local tax effort), more attention is being paid to "determining whether the resources available in all districts are sufficient to meet statutory requirements and the implicit expectations of a state's constitution" (Smith 2001). Increasingly, plaintiffs represent one or only a few districts desiring changes that will affect only a few jurisdictions, or they bring suits involving a specific component of the school-finance system, such as funding for capital improvements or treatment of special or "at-risk" populations of students. Resource disparities seem to be more acceptable to courts, so long as "they exist above a level considered to be adequate" (Smith). Currently, adequacy is being defined by courts and legislatures as "leveling up," but the concept could easily go in a minimalist direction in the future (Schrag 2001, Books 1999). The development of academic standards to raise student achievement "could open states to lawsuits from groups of students who are struggling to meet the standards or from districts with large numbers of such students" (Whitney 1999). According to Whitney, states are especially vulnerable to lawsuits if they hold students accountable for meeting high standards yet fail to "provide adequate resources and allocate them equitably." A growing body of research is considering the validity, reliability, and equity of state accountability systems when used in an inequitable education system (Hunter 2000, Olsen 2001, and Moran). State Responses: Implementation Problems and Possibilities Although recent court decisions (notably in New York, Wyoming, and South Carolina) have upheld the civil and educational rights of poor, minority, and special-needs schoolchildren, there are no guarantees that these vulnerable populations will receive an adequate education or achieve substantially improved outcomes even if restructured state-finance systems become more equitable (Evans, Murray, and Schwab 1999). Mary Moran, writing about standards and assessments as new adequacy measures, cites several reasons why "judicial rulings often lead to unfulfilled promises" and legislatures craft inadequate remedies: "The disproportionate influence of property-rich districts; underrepresentation of the school plaintiff's interests in the political process; resistance to changes in existing systems of educational finance; and scrutiny of judicial candidates for their school finance views in judicial elections and appointments" (Moran). Some states, like Arizona and Michigan, have been sued repeatedly over failure to provide and/or fund appropriate special-education services (Fine 2001, Fine 2001a). Ordered by a superior court judge to reshuffle its finances in favor of serving at-risk students (including disadvantaged preschoolers), the state of North Carolina is finding that planning for and funding these new priorities is extremely difficult (Manzo 2001). Governors can also resist or challenge lawsuits, as in the case of California's Grey Davis, who officially has blamed poor districts for dilapidated facilities (Gewertz 2001), and New York's George Pataki, who has decided to appeal a trial court's January 2001 unconstitutionality ruling (Keller 2001). Several states have been embroiled in protracted struggles to match funding allocations to court mandates. Ohio has been trying for over 10 years to develop a solid finance plan (Sandham 1999, Archer 200, Howe 1999). New Jersey has struggled for three decades to come up with suitable programmatic, funding, and facilities plans to satisfy the courts and ensure its students' academic success (Goertz and Edwards 1999). Parity funding costs New Jersey an additional $250 million yearly; "the cost of renovating facilities in the [28 urban] districts is $1.8 billion, not counting the cost of addressing growing enrollments" (Goertz and Edwards). The Robin Hood paradigm has proved a political minefield in New Jersey and several other states. Some decisions, such as New Jersey's, address inequities of only one type of district (poor and urban), overlooking adequacy of resources for educating children in rural and middle-income districts. In Verstegen and Grider's study of finance litigation's effects on rural and small schools, the rural schools in most of the 22 states studied reported unchanged funding formulas and unimproved financial conditions, regardless of whether courts had upheld or overturned their states' school-funding systems (1999). Rural states like Vermont and New Hampshire are struggling mightily to fund and implement their new statewide school tax systems. The New Hampshire governor's latest proposal is for a sales tax to pay for schools (Viadero 2001). Despite a restructured statewide property tax, Vermont has recently experienced some huge interdistrict disparities in tax rates on similarly valued properties (Howe). Howe believes the only salvation for Vermont and New Hampshire may be their more limited constitutional view of school equity (compared with New Jersey's more expansive notion). Funding Formulas and Tax-Equalization Schemes In the interest of adequacy, school-funding formulas and tax equalization are receiving considerable attention. According to economist Lewis C. Solomon and former Ohio assemblyman Michael Fox, such formulas are "fatally flawed" unless they are based on seven principles: adequacy, equity, efficiency, performance incentives, stewardship, promotion of learning, and community tax effort (1998). Tax equalization efforts in certain states, like West Virginia, are also helping to close the gap between wealthy and poor districts (Johnston 1998). Converting adequacy to a funding formula is quite challenging. According to three finance consultants, there are several options: historical-spending, expert-design, econometric, and successful-schools approaches (Augenblick and others 1997). The successful-schools approach may be superior, as it examines actual expenditures in several demographically "typical," but highly successful districts. Need for New Finance Structures Many experts believe adequacy can only be achieved by constructing and implementing a new school-finance structure linked to educational standards. A report by the National Conference of State Legislatures (1998) identifies three building blocks of an adequate school-finance system: "(1) articulating educational objectives for students, (2) identifying and acknowledging the education capacity needed to accomplish those objectives, and (3) supporting that capacity with sufficient funding." For Allan Odden (1998), an adequacy-driven statewide policy initiative must contain four elements: "a base spending level considered adequate for the average child to reach high standards, an additional amount of money for low-income, disabled, and LEP students to reach standards, a price adjustment for all dollar figures to ensure comparable spending power, and annual inflation adjustments to stabilize base spending levels." Districts can expedite the process by giving schools greater control over resources, revamping teacher compensation, and providing school-based performance incentives (Odden 1998). Recent court rulings also suggest that a new special-education finance system is needed. According to Deborah Verstegen (1998), such a system must be cost-based and uniform across the state. The real costs of providing special-education services must be incorporated and supported by the state, and facilities must be "safe, healthy, and accessible to all children." Unintentional Consequences of Litigation As yet, there is little research on litigation's effects beyond a tendency toward equalizing resources in some states and "inching toward adequacy" in others (Evans and others; Cohen-Vogels 2001). As mentioned earlier, it is unclear whether "finance reform alone can turn low-performing urban schools around or narrow achievement gap differentials" Minorini and Sugarman 1999). A few experts are beginning to consider litigation's side effects on school leadership. In theory, "an adequacy formula becomes the nexus of a new relationship between the state and school districts" based on results (WestEd July 2000). The state is expected to set standards and performance measures, backed up by adequate funding, and allow "districts to spend the funds however they want, in exchange for tight accountability for performance." In actuality, school leaders may not have the degree of autonomy they want and need to implement these reforms. According to James Van Keuren (2000), "The frustrations of finding solutions to school finance litigation has caused governors and legislators to seek more control over education policy development" in several states, including Ohio, Alabama, Arizona, Kentucky, New Jersey, Missouri, and Vermont. Van Keuren believes these changes in governance place more responsibility on secondary teachers and principals to raise students' academic performance and reduce practitioners' policymaking role to an advisory one. Principals have less control of the budgeting process, especially in states where legislation gives the state more budgetary and school-management authority. Loss of local control has made secondary teachers and schools less powerful and more subject to state intrusion. Neil Theobald, an educational finance professor at Indiana University, says the "shift in the balance of power—away from school leaders and toward state-level officials—is likely to continue and could even accelerate" (2000). He attributes this recentralizing trend to state policymakers' growing impatience while awaiting "discernable and substantial indications of school improvement." More prescriptive, top-down management approaches could result, driven by state court mandates for "additional funding to support higher testing standards." Additional Equity Issues Few scholars have analyzed how fundraising and other outside revenue sources are affecting equity. Although these funds are not counted in per-student expenditures, "they can enhance students' educational opportunities" (Arnold 1998). Poor districts have less fundraising capacity and opportunity than wealthy ones. Arnold believes, along with other experts (Molnar 2000, Manning 1999), that exclusive on-campus vendor-marketing arrangements, often involving millions of dollars, should be sharply scrutinized. Others question whether escalating fees for sports and extracurricular activities are treating students and taxpayers equitably (Tatz 2000). Arnold notes another major obstacle to achieving school equity—citizen apathy. People satisfied with their own local schools "often see no reason to raise their own taxes to improve schools in other communities." Localized self-interest seems to be the prime motivator in improving financial equity. James Comer (1997) would regard that attitude as irresponsible, since acting in one's own children's best interest neglects the well-being of the least powerful. Local control, a hallmark of American public education, is coming under criticism because it can be seen as retarding states' progress toward fiscal neutrality (Hadderman 2000). According to Books, "significant disparities in educational resources can often be justified [in courts' eyes] as an unintended but inevitable consequence of the exercise of local control." Books questions why communities need local control of funding (a system of privilege and advantage) when other environmental factors are anything but local—the job market, performance expectations, and the curriculum itself. The above observations dealing with citizen responsibility and local control lead to a second, inescapable conclusion: The most adequate and equitably financed schools in the world cannot "remedy social ills that have deep and varied causes" (Hess 1998). Moreover, Hess asserts, trying to "direct increasing amounts of money into schooling rather than into facilitative services such as crime-fighting, job-creation, recreational facilities, or local infrastructure" may fail to "enhance either social justice or equal educational opportunity." Three decades of research have shown socioeconomic background to be the prime determinant of academic achievement. Hess believes that "schooling can make a huge difference," but it may not be as efficacious as social measures directed at disadvantaged children's home and neighborhood environments. Of course, changing neighborhoods or moving kids to safer homes would take substantially greater commitment and resources. Bruce Hunter (2000), AASA's director of public policy, would agree with Hess about "mobilizing families and communities to act on their own accompanied by a massive redistribution of resources in education, social services, health, mental health, and economic development." He also wants federal program monies to reach the disadvantaged kids for whom they were intended. Because it has become unpopular to spend on the poor and rurally isolated, Hunter notes, Congress and the President were constructing competitive block grants suitable for middle-class communities, instead of fully funding Title I and the Individuals with Disabilities Education Act (IDEA). Hunter questions the ethics of ignoring the poorest districts to help schools already inclined to succeed. Economic incentives and tax abatements should be reconsidered, some argue. Corporate tax incentives used to lure companies "are costing school districts across the country hundreds of millions of dollars each year," according to some experts (Books 1999). Minnesota legislators say such deals erased $112 million from their schools' coffers in 1996. Texas schools lost $480 million in revenues between 1985 and 1995. The economic intentions may be honorable, but in this protracted "economic war between the states," schoolchildren are turning into casualties (Books). Devolving financial responsibility to schools can raise issues of fairness. As site-based management (SBM) becomes more prevalent, there may be need for central-office referees. Since SBM's basic tenet is that decisions should be made closest to student needs, "each building will allocate resources based on the school's core values and instructional programs" (Polansky 1998). Great disparities can result if SBM is mishandled. Since principals are subject to community pressures, central-office staff will need to define and limit roles, provide training, build consensus, promote inventory sharing, and assess resource management.