Equity

Layers of Inequity

Jennifer Cohen — Thu, 22 May 2008 20:04:00 -0400

Poor states, communities, and children persistently get the short end of the stick in school funding. Education spending policies at all levels-federal, state, and local-layer on inequities that disproportionately benefit high-wealth school districts and lead to large funding disparities between high- and low-poverty communities. A new report from Education Sector and the Center on Reinventing Public Education seeks to quantify the cumulative impacts of these inequities on local schools. The results are striking. Addressing these inequities should be a key priority for federal and state policymakers.

The Education Sector/Center on Reinventing Public Education report examines two elementary schools in neighboring states that serve similar populations but receive very different levels of federal, state, and local funding. Cameron Elementary in Fairfax County, Va., receives more than twice the per pupil funding Ponderosa Elementary in Cumberland County, N.C., receives even though both schools serve predominantly low-income populations in poorer sections of their respective counties. These funding disparities are the result of funding distribution structures that disproportionately benefit wealthier states, districts, and schools over poorer states, districts, and schools.

The federal government distributes Title I funds to states based on the number of poor children in each state to improve the quality of the services they receive. However, the specific amount allotted per student depends on how much money a state and its localities spend on education. Because state and local spending is more a function of the wealth of the state and locality than a function of the cost of providing that education, wealthy states like Virginia receive more Title I funds per poor child than poorer states like North Carolina.

While federal funding disparities are significant, 90 percent of the funding schools receive comes from state and local sources. State policies determine both the amount and distribution of these funds, and are a major source of inequities. In Virginia, state funds provide a minimum foundation for education funding-40 percent-that each locality must match out of local funds. Localities can also choose to supplement school funding with additional local tax revenues. North Carolina, in contrast, uses a district funding formula based on student enrollment and cost of hiring teachers and staff that benefits wealthier districts and has no local matching requirement. As a result, local funding constitutes 31 percent of education funding in North Carolina and more than 53 percent in Virginia. Less flush districts like Cumberland County, N.C., are unable to supplement education spending as much as wealthier districts like Fairfax County, Va., and have no incentive to do so.

Finally, district-level funding distribution practices benefit wealthier, easier to staff schools over schools with poorer, more challenging populations. Seniority staffing rules and experience-based salary schedules mean that higher poverty schools are generally staffed by cheaper, less experienced teachers.

We've written previously about how the No Child Left Behind Act's funding comparability requirements contribute to this problem, by allowing districts to overlook these experience-based salary differences when determining whether teacher salary funds are allocated equitably between Title I (read: more poor) and non-Title I (read: more affluent) schools. As a result, poorer schools spend less money on teacher salaries and therefore have fewer resources overall.

The impact of these differences is striking: Despite its high poverty population, Cameron is succeeding at retaining qualified and experienced teachers, while Ponderosa has a constantly cycling staff of inexperienced teachers. As a result, the average teacher at Cameron makes $62,533, compared to $35,610 for the average Ponderosa teacher. Whatever Cameron is doing right to maintain its teachers is worth thousands in increased spending on teacher salaries at the school.

The ES/CRPE report provides a series of policy recommendations to mend the funding disparities at the federal, state and district level. Among these is eliminating the section of the federal comparability requirement which allows districts to ignore experienced-based salary differences when determining whether funding is equal across schools. This change would force districts to recognize the mal-distribution of experienced teachers in their schools and act accordingly to fix it.

The report also suggests that districts give schools a standard amount of funding per student for paying teacher salaries rather than basing funding on the salaries of the actual teachers each school hires. This way schools will be able to prioritize between hiring many inexperienced teachers or a few experienced teachers and consider offering incentives to highly desirable teachers. Both of these changes would be important steps toward improving the equity of school funding and would give poorer schools a real chance to attract and retain qualified and experienced teachers. Other policy recommendations include:

Basing Title I funding on national average per student funding (adjusted for both state wealth and actual cost of education in that state), rather than state and local funding;
Encouraging states to provide minimum floors and maximum ceilings for state and local education funding contributions; and
Distributing state education funding in inverse proportion to district wealth, in order to mitigate disparities in spending due to differences in the amount of property tax revenue districts can raise.

Each of these proposals is likely to face political opposition-especially those that seek to lessen the role of property taxes, and therefore local control, in education funding. However, they would be significant strides towards equalizing both inter- and intra-state education funding disparities across the country and giving low-income students the education they need and deserve.

School Finance Equity: National Trends

Lindsey Luebchow — Tue, 29 Jan 2008 00:00:00 -0500

Little known is that since the No Child Left Behind Act (NCLB) was passed, the federal government has prioritized "school finance equity" as a goal for states to achieve. In fiscal year 2008, 21 percent of NCLB Title I funds will be distributed based on an Education Finance Incentive Grant formula, a funding stream that has been increasing since NCLB first passed. But few people understand why certain states are deemed more "equitable" than others. You hear a lot of praise and criticism about equitable school funding, but little explanation of what it means or what produced it.

School finance equity typically measures how much per-pupil expenditures vary across districts within a given state. Greater equity means less variation. Sounds simple, but there are many different formulas used to calculate it, and their specifics can be quite complicated (remember statistics and weighted coefficients of variation?). The federal government has its own definition of school finance equity, which you can read more about here from www.EdBudgetProject.org.

Some states are more equitable than others for two basic reasons: (1) decisions made at the state level about how to distribute funding, and (2) the size and number of school districts within a state.

Ed Money Watch will discuss the first reason at length in the future, as we’ll be looking at how different states choose to distribute their funding to districts (for example, in ways that minimize per-pupil expenditure variation and sometimes even take into account the additional needs of students in poor districts).

But there’s also the more basic, easily explained reason for school finance equity differences across states (as seen on this interactive map): the size and number of school districts. If a state has a large number of small school districts, it tends to have more variation in per-pupil expenditure. A smaller number of large school districts translates into less variation and more equity.

This makes sense intuitively—if you aggregate funding in large school districts, and then distribute it among a large number of students in a uniform fashion, local funding disparities are minimized. Small school districts, on the other hand, magnify the influence of local property taxes and thus disparities in local property wealth. Moreover, funding decisions are less centralized, leading to wider variation in per-pupil expenditure levels.

This is one of the reasons why, when you look at national trends in the federal school finance equity factor on this map, the Northeast and the Midwest fare so poorly. They have lots of small school districts. Southern and Western states generally do better because they have fewer, large school districts. In the South and the West, states have an average of 200 districts, with approximately 5,650 students per district in the South and 4,350 students per district in the West. The Northeast averages 330 districts per state, and the Midwest averages almost 430, with significantly fewer students per district (2,670 and 2,055 respectively).

The South is the most equitable region, with finance inequity between districts averaging 10.5%, or $769 (see explanation here). Among Northeast states, average inter-district inequities are much starker than in any other region—14.9%, or $1,618. Of states that rank in the top half of the country in the federal school finance equity factor, only one is in the Northeast and only four are in the Midwest. The other 20 most equitable states are located in the South or West.

Here’s a quick comparison: Florida and Illinois have approximately the same number of students. But Illinois has 881 school districts, with an average of 2,381 students per district, while Florida has 67 school districts, with an average of 39,761 students per district. Florida is ranked 3rd in the county on the federal school finance equity factor, while Illinois is ranked dead last.

Of course there are other reasons while Florida is equitable and Illinois is not—but at a basic level, the size and number of school districts definitely contributes. This isn’t necessarily to say that larger school districts are better. Local control of schools and funding is important in that taxpayers are more involved and stay more engaged in education (and thus are often more apt to agree to higher spending). But it’s a fact that the more localized the monetary decision-making, the wider the variation in school funding.

A similar analysis with more detail is available below this interactive map from www.EdBudgetProject.org. There are also additional maps and analyses that compare spending and achievement trends nationwide.

Fairness & Equity Hearing

Annette Nellen — Mon, 10 Sep 2007 01:00:00 -0400

On 9/6/07, the House Ways & Means Committee held a hearing on Fair and Equitable Tax Policy for America's Working Families. The emphasis was on the AMT, the future of the 2001 tax cuts, and carried interests.

What about these inequities?

Allowance of a mortgage interest deduction on up to two homes and on mortagages totaling up to $1.1 million. There is no reason to allow a mortgage interest deduction on a home other than one's principal residence and the debt amount is too high. Even in Silicon Valley, the median home price is not $1.1 million.
Fantastic benefits for employees who have employer-provided health insurance and health care. The benefit generally is not taxable to the employer and the employer gets to deduct the cost.

These are two examples of "tax expenditures." They cost the government in terms of lower tax collections. However, they are not direct spending so they do not show up on the budget expenditures. But, they are the equivalent of spending. Example: The government could give write a check to homeowners to help subsidize the debt on their home or they could give them a tax deduction of that would result in the equivalent amount.

These tax benefits are worth more to individuals in higher tax brackets - those with higher incomes.

Why not lower these (and other generous) tax provisions and use the freed up funds to reduce taxes for everyone or use the funds to help provide health insurance to more people or provide housing benefits to more people. The mortgage interest deduction "costs" the government about $80 billion per year and the non-taxable health insurance provision "costs" about $100 billion per year (per 2006 Joint Committee on Taxation report). That's a lot of money!

Where do you think greater equity and fairness can be brought to the federal tax law?

This post was originally published at http://21stcenturytaxation.blogspot.com.