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Clearinghouse on Educational Policy and Management
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| College of Education · University of Oregon |
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Trends and Issues: School Finance
Concerns about equitable and adequate distribution of educational opportunities are matched by equally pressing worries about productivity and efficiency in public schooling. Although historically the productivity problem has been about "rising resources with flat or only slowly rising student achievement," the future challenge will be to produce substantially higher student achievement with flat or stable resources (Odden and Clune 1995). Researchers Debate the IssueResearchers are divided on the productivity issue, which is a debate over whether money matters in education outcomes. Some researchers, such as Eric Hanushek (1996), find little advancement in student achievement over the years that can be traced to increased funding. Others are more optimistic, claiming that some expenditures are tied to improved student achievement (Hedges and associates 1994, Kazal-Thresher 1993). Still others are mindful of difficulties in applying the productivity concept to K-12 education. According to David Grissmer (1998), "The private sector is geared to producing a variety of goods that are automatically valued in dollars." Schools, however, yield varied outputs that resist aggregation and "are directed toward the cognitive, emotional, and social development of children, defying easy measurement. It is equally hard to separate schools' contribution to education from that of families (Grissmer). Also, most empirical studies make no allowance for multiple-risk family situations, contextual family effects (like parents' educational background), or the cumulative effects of all previous schooling and family effects on achievement. Moreover, there are problems with collecting data on student performance and characteristics, relying on cross-sectional data (snapshots), and measuring actual inputs (Picus 2001). An alternative group of experts, the educational economists, approach the "money matters" issue by examining how educational inputs influence adult earnings (Picus 2001). This rationale is based on human-capital theory, which holds that "investments in education lead to improvements in economic productivity generally, and to higher income for those individuals who ‘invest' in that education." The best-known studies, according to Picus, are those of Card and Krueger and Julian Betts; however, results are inconclusive regarding the influences of increased school spending on individual adult earnings. According to Gerald Bracey, Krueger's most recent study did find "that society gets back about $2 for every dollar invested in small classes" (Bracey 2001). Diversity and equity advocates have begun to explore the educational and societal costs of failing minority schoolchildren. Carolyn Talbert-Johnson (2000), an education professor at Dayton University, believes that the programmatic costs of academic failure (increased remedial instruction, low-ability tracks, and grade retention) are unjustifiably high. The national economy also gets shortchanged, according to another expert with the Educational Testing Service (Carnevale 2001). Carnevale says equalizing learning opportunities among blacks, Hispanics, and non-Hispanic whites would increase national productivity, adding "more than $230 billion in national wealth and $80 billion on new tax revenues every year." Carnevale is not alone in insisting that a sound education, including postsecondary training, is the "key ingredient in the 21st century recipe for growing the economic pie." Experts have managed to reach agreement on three points: Available resources are shrinking even in good economic times; research should uncover how funds are actually spent; and schools will have to discover more cost-effective ways to use existing resources (Hadderman 1998). What Factors Can Drive Productivity Downward?Allan Odden and William Clune say "wasteful administration" and high teacher salaries are not the reason, as some people claim, for low productivity. They point instead to poor resource distribution, unimaginative use of existing funds, schools' bureaucratic structure, and schools' focus on services and labor-intensive practices that drive up costs. Others attribute low productivity to schools' unstable governance structure, lack of incentives, inefficient budgeting and reporting practices, and tendency to backload, or overspend, on veteran teachers' salaries (Consortium on Productivity in the Schools 1995, Hanushek 1994, Lankford and Wyckoff 1997). Some researchers claim that regardless of available funding, "school districts tend to utilize their resources in the same basic proportions," with 60 percent earmarked for instruction and about 40 percent going for support services (Picus 1996). Others have shown that most new funding dollars have gone for specialists and services, not the core instructional program (Odden 1996). Expenditures That MatterResearchers have tried to isolate the types of expenditures that make a difference in the school-productivity equation. For example, Crampton (1995), after analyzing inputs affecting achievement in New York State schools, concluded that expenditures seemed to matter when they bought smaller classes and more highly educated teachers. Harold Wenglinsky's (1997) national study of fourth- and eighth-graders showed that math achievement was positively associated with lower teacher-student ratios and with expenditures on instruction and district-level administration. However, expenditures on facilities, recruitment of highly educated teachers, and school-level administrators were not related. Studies of Existing PracticeAnother kind of efficiency research explores schools' resource-allocation practices. David H. Monk's (1996) study of the New York State K-12 system found a 55 percent increase in secondary-level special-education instructional resources between 1983 and 1992, alongside modest increases in allocations for science and math teachers. These findings raise questions concerning the proper, most efficient distribution of teacher resources across different programs and subject areas. Linda Hertert's 1995 resource-allocation study of 1,000 California schools in 30 districts disclosed similar findings. Besides uncovering considerable disparities among districts and among schools within the same district, Hertert found that "the distribution of teacher-pupil ratios, teacher experience, teacher education, and course offerings in higher-level math and science was less equitable across schools than was the allocation of money used to buy these resources" (Picus 1996). However, Nakib's study of sixty-seven Florida counties found "remarkably stable allocation patterns for both expenditures and staff allocation practices" (Picus). A recent resource-allocation study by the Public Policy Institute of California (2001) discovered that average class size differs little across California schools, but that teacher preparation and high-school curricula (particularly, availability of advanced-placement courses) vary considerably. Urban schools serving mostly disadvantaged students receive fewer resources, including well- qualified teachers. In this study, socioeconomic status (SES) was found to be alive and well as a determinant of resource distribution and student outcomes. A study of resource-allocation patterns in Chicago schools that use school-based budgeting found relatively consistent spending patterns across groups of schools (Rubenstein 2001). However, higher performing schools "tend to allocate a larger share of their discretionary resources for instructional purposes," whereas lower performing schools are apt to spend more in noninstructional areas, such as security. Three states (Kentucky, New Jersey, and Texas) with restructured finance systems used their new "reform dollars" to raise staff salaries, augment staff-development efforts, add technology and other instructional resources, implement new programs, and refurbish old facilities and/or build new ones (Goertz and Natriello 1999). However, researchers found few examples of standards-driven resource-allocation decision-making at the local level. Developing Conscious Resource-Reallocation StrategiesNew education dollars are better utilized in districts that have a vision or a plan for education reform (Goertz and Natriello). Many experts would agree that older dollars should receive the same consideration! For example, Wyoming panelists working on a definition of educational adequacy devised an instruction and resource-allocation strategy for elementary schools based on resource intensity in the early grades, smaller classes and schools, enhanced professional development, use of alternative ways to identify and serve exceptional students, and enhanced participation of teachers in instructional decision-making (Guthrie and Rothstein 1999). These instructional/resource strategies were then assigned costs and used to compute an ideal, yet reasonable, per-pupil expenditure figure for Wyoming schools. In a recent book and article, Allan Odden and Sarah Archibald (2001) show how educators can develop new strategies for using existing resources more wisely in a standards-driven environment. Acknowledging that "restructuring programs and reallocating resources constitute a complex, large-scale process," Odden and Archibald studied schools that successfully considered certain issues (school size, overall class size, targeted small classes for reading and other subjects, student instruction groupings, planning and preparation time, and professional development) and made deliberate decisions regarding them. The schools that Odden and Archibald studied took different approaches to implementing their reading program decisions, including those directed at helping exceptional and struggling students. Some schools adopted "a proven research program like Success for All; others reduced class sizes to 15 all day." Both types of decisions had financial implications, as they required extensive investment in professional development. Comprehensive reading programs needed more tutors and instructional facilitators; smaller classes needed more teachers. Paying for these innovations required the type of resource reallocation that Odden had already observed in previous investigations. Schools had to learn to use categorical funds creatively, eliminate classroom aides, reduce public-support personnel, and, in some cases, eliminate one or two teaching positions to pursue their improved performance goals. Additional Ingredients for SuccessPicus (2001) sees resource allocation as only one component of a productive system. Other important ingredients include incentives (like waivers from district regulations) for improved student and school performance, development of a public-sector version of "venture capital" to pay for comprehensive school-restructuring programs, and a more market-based budgeting environment featuring privatized school-choice options. WestEd researchers (2000) would supplement Odden's and Picus' suggestions with a list of "best practices" for using resources wisely: reducing class size to 25 or fewer students; using even smaller classes to teach reading; increasing teacher professional development and common planning time; providing tutors for struggling students; employing full-time master teachers to assist regular classroom teachers; and providing access to computer technologies. Policy implications for resource reallocation and accompanying approaches to school productivity and improvement are enormous (see final section). As one finance expert sees it, there are no easy solutions to making more effective use of money in schools, since "values are in conflict, conditions vary widely from place to place, and knowledge about the link between resources and learning is incomplete" (Bolton 2000). Bolton believes citizens must pay closer attention to wider social and economic inequalities. Schools alone (no matter how much money they have) cannot overcome disadvantages affecting children's capacity "to gain full benefit from what education has to offer."
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