Conversations in California on District Budget Transparency

Lindsey Luebchow — Thu, 20 Mar 2008 14:00:00 -0400

In California, Governor Arnold Schwarzenegger's Committee on Education Excellence released its long-overdue final report last week with recommendations for reforming the state's K-12 education system in four areas: governance, finance, teacher recruitment and retention, and administrator preparation and retention. The finance section, titled "Ensure Fair Funding that Rewards Results," offers a number of good, detailed ideas for making state funding more flexible and student-centered, and better tied to incentives to improve learning.

One specific proposal in the report caught Ed Money Watch's eye: Recommendation 2.1.8—make school budgets more understandable. We believe that changing school district budgeting practices is a key first step in school finance reform. Education advocacy groups in California have been talking about this for a long time, and it's encouraging to see a state committee acknowledge the need for change. We hope that other states will take note.

Specifically, school districts need to report how funding is allocated—using the actual cost of resources—across all of their schools. Currently, districts do not report school-level funding figures, instead using district averages to calculate budgets. As the California report recommends, districts should "clearly delineat[e] the total resources (i.e., the financial value of the personnel, supplies, and services) that reach each school."

Why is this important? Many school districts—specifically, large, diverse districts, which are common in California—systematically spend less on their poorest schools than they do on more affluent schools. Policymakers, parents, and the public are largely unaware of these disparities, because school districts are not required to report them, and district budgeting practices mask their existence.

If the state is going to invest its money in a funding formula that gives additional money to districts based on student needs (as the Governor's Committee recommended), it must ensure that the additional resources actually reach the students who need them. Without more transparent budgeting practices at the district level, the state, parents, and other stakeholders will never know.

Loophole Makes School Finance Inequity Within Districts Possible

Ed Policy — Tue, 19 Feb 2008 00:00:00 -0500

When the federal government started distributing compensatory education (i.e. Title I) funding in 1965, it wanted to ensure that federal money was supplementing, not supplanting, support to schools educating disadvantaged children. Thus, the government added fiscal requirements to Title I of the Elementary and Secondary Education Act that require communities to establish an even state and local school finance playing field within district — before supplemental Title I money is given to the highest-poverty schools.

For a school district to be eligible for federal funds under Title I, Part A of the Elementary and Secondary Education Act, it has to fulfill three fiscal requirements:

Maintenance of effort
School districts must maintain expenditures from state and local funding sources from year to year.
Comparability of services
School districts must provide services in Title I (high-poverty) schools that are at least comparable to the services provided in non-Title I (low-poverty) schools.
Supplement, not supplant
School districts must use Title I funds to supplement the activities supported by state and local funds that would have taken place in the absence of federal funds.

In theory, the "comparability" requirement has the greatest potential to help low-income students and schools. It's supposed to require school districts to change their long-standing practice of spending more money per pupil on schools with the lowest poverty rates. The maintenance of effort and supplement, not supplant and don’t address underlying finance structures.

But the legislative statute and regulations that define comparability contain a major loophole that renders the guarantee meaningless. The loophole allows school districts, when comparing education services provided at Title I and non-Title I schools, to ignore differences in spending on teachers, which consitutes over half of all state and local education spending.

In the first draft of a No Child Left Behind reauthorization bill released last fall, the House Education and Labor Committee proposed closing the comparability loophole. Done correctly, it could be the most important change to NCLB for low-income children.

[slideshow] Within-District Spending Disparities, and Why They Exist

Within-district, between-school spending disparities aren’t frequently discussed, but they are widespread, particularly within diverse districts that house a socio-economic range of neighborhoods and students. Disparities result mainly from an unequal distribution of teachers and teacher salaries among schools—more experienced, better paid teachers gravitate towards the lowest-poverty schools, while the highest-poverty schools are left with the least experienced, lowest paid teachers (and thus the highest-poverty schools receive less money per-pupil).

This type of teacher movement is allowed, because of the structure of union contracts with school districts. Staffing provisions in collective bargaining agreements grant preference for seniority, meaning that the most experienced teachers get first choice where they want to transfer and teach. And the better teaching conditions at lowest-poverty schools attract the higher-credentialed, more experienced teachers.

The Teacher Salary Loophole, and How it Undermines Comparability

It sounds like the comparability requirement might force districts to remedy these teacher spending disparities. Unfortunately, the legislation contains one major loophole that throws any possibility of meaningful comparability out the window:

For the purpose of this subsection, in the determination of expenditures per pupil from State and local funds, or instructional salaries per pupil from State and local funds, staff salary differentials for years of employment shall not be included in such determinations.

This means the principle cause of within-district, school finance inequity—teacher salary differences—need not be remedied.

Currently, all school districts have to do to demonstrate comparability among schools is submit a written assurance to the state that they: (1) use a district-wide salary schedule, and (2) have policies "to ensure equivalence among schools in teachers, administrators, and other staff…and in the provision of curriculum materials and instructional supplies." (Oh, and they must "keep records to document that the salary schedule and policies were, in fact, implemented." But states do such a poor job monitoring comparability that it’s unlikely those records would ever be needed.)

Thus as long as the teachers are all paid on the same scale and distributed evenly in terms of numbers, not quality, it doesn’t matter that the lowest-poverty school has 20 highly-credentialed, experienced teachers and the highest-poverty school has 20 rookie teachers. In this regulatory world, Wilson High School in Northwest Washington, DC is comparable to Anacostia High School in Southeast Washington, DC. And thus, the comparability provision has become a cruel joke.

Giving Comparability Teeth

The most robust demonstration of comparability would involve a straight-up, no-gimmick state and local teacher salary expenditure comparisons between schools—with salary differentials for years of employment included. This is what the House has proposed, and where Congress should continue to head, in its NCLB reauthorization bill.

(Side note: One obstacle to using teacher salary spending per-pupil for comparisons is that many school districts do not track real teacher spending at each school, instead only monitoring teacher allocation numbers. These local budgeting practices, which mask teacher spending disparities, would have to change.)

There will be (and already has been) intense opposition to any comparability changes from teacher’s unions and school administrators, as such changes might require renegotiating teacher collective bargaining agreements, changing seniority and transfer provisions that enable the most experienced teachers to cluster in lowest-poverty schools, or adding pay incentives to attract high-quality teachers to highest-poverty schools.

But if the federal government wants to ensure that its investment is truly enhancing the education of disadvantaged children—not making up for disparities in teacher quality—strengthening comparability is a critical first step.