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Rethinking Public School Funding: Back To A New Future.

February 12, 2015

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The Washington State Constitution crafted in 1889 includes these mighty words in Article IV, section 1:  “It is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.” This language is as unique as it is powerful.  We are the only state in the nation where our state constitution has this forceful paramount duty clause.  Our founders believed–and the common perception today–is that this strong state constitutional language directly translates into better educational quality and higher funding for our kids.

As chair of the Finance Committee grappling with funding of our state budget, I believe there is philosophical and policy value in raising the uncomfortable argument that our foundational premise may not, in fact, be true.

The state’s paramount duty clause was penned in the day of the one-room schoolhouse when we had a kindergarten through 8th grade system. The core purpose of Article IX was to establish state oversight of the system of hundreds of local school districts and to ensure good management of the public lands granted to the state by the federal government for the benefit of public schools. There is no question that framers of our state constitution thought this lucrative endowment would result in an unprecedented level of funding for common schools.

Since 1889 this philosophical assumption has not played out for real kids living real lives.

Today, early learning and higher education are more than ancillary, they are core to our desire to educate the whole child and whole person. We cannot have a system where “the paramount duty” is only K-12 and leave the other aspects of education as second class citizens. It doesn’t work for kids, parents, business or an educated civic society.

Washington is a “state” funded education system where most tax dollars are sent to Olympia to be distributed back to local schools and small local levies are intended for modest enhancements. The model has been so fractured, grandfathered, redesigned and reconfigured that it’s unrecognizable.

Our global challenge states—those with high quality of life that we aspire to compete with in constructive ways—have generally chosen to follow a different path through primarily locally funded school systems. The state’s role in those other states is to focus not on primary funding but on structural tax fairness and educational quality.

In our state, the romantic image of strong funding from the state government has not been realized. Political impasse over generations has created a system with unconstitutional funding structures, relatively poor student outcomes and great inequality.

A case can be made that Washington’s top-down approach disconnects schools from their natural, strongest base of support—local families and communities.

The paramount duty has not been fulfilled. Many factors have contributed to the disjointed, ineffective tax and funding structure we have today, a structure that virtually guarantees inequitable access and outcomes. Unfortunately, longstanding political and social constructs bar meaningful progress. Nothing, over 40 years of legal battles where the State has been consistently been told to address the inadequate and inequitable system, has really changed.

We are so much more as a state than what we’ve become.

There are, in fact, other models that might deliver on the Paramount Duty in a more fulsome way than our top-down, centralized approach.

A new model would have to have some critical elements:

  • The State’s responsibility is to provide education at all levels. Operating and funding common schools is a fundamental duty of the State but shared with local districts. The State must ensure equity, taking into consideration each schools property values, student need and the cost of implementing the state’s definition of Basic Education.
  • General and Uniform-The State must provide for a system of public schools and must define a minimum program that all districts offer. The implementation duty is shared with local school districts, which are authorized to provide funding and programming beyond the foundational program established by the district base regular levy, the state equalization system, and state law establishing minimum program requirements.
  • State must require school districts to collect a base regular levy, the amount of which will vary per law based on property values and student needs.

There are states with both higher funding levels and educational quality outcomes that are worth a look. Here’s how they do it.

Massachusetts

School funding in Massachusetts is meant to ensure that all school districts have enough resources to provide all students with a high-quality education, taking into account the ability of each local government to contribute financial resources. The formula directs more money to students who need it more and directs more money to districts that have a lower ability to provide local resources. The one, central job of the state government is to ensure equity for all its students through tax equity and thus ability to pay.

Step 1: Calculate district foundation budget

Multiply the number of students at each grade level and demographic group (Low-income, Special Education and more) by a series of education spending categories (Compensation, professional development, etc…).The total across all categories in summed and put into per-student terms. ELL, Special Education, and low-income students generate additional allocations.

Step 2: Required Local Contribution

Each municipality is required to contribute a defined amount in locally raised tax revenues. A uniform statewide percent of local property and state income tax is determined and each municipality must contribute that amount, at minimum, to public education.

Step 3: Fill in the gaps

The required local contribution is subtracted from the district foundation budget (Step 1). The state then pays the difference between those two amounts to the district to make their budget whole.

Step 4: Municipalities may contribute additional local support if they desire

The district budget determines the minimum amount needed to provide a high-quality education, but districts are able to raise local dollars beyond the foundation budget to enhance their local education system.

The state of Massachusetts pays for 42% of public education, while 51% comes from local sources.

http://www.massbudget.org/report_window.php?loc=Facts_10_22_10.html

Minnesota

Every student generates a base per-pupil allocation. This base allocation is further enhanced for students participating in the Free and Reduced Price meals program, the extended time program, and English language learner program. Additional funding is also provided through gifted students funding and alternative compensation revenue among others.

Alternative Revenue Compensation is additional money provided to districts that develop an alternative compensation model and get it approved by the state.

State covers about 60% of the cost of education with local revenues contributing 32% and federal sources contributing 8%.

http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf

Maryland

The Foundation Program provides base per- student funding for public schools in Maryland, $6,694 in 2010. The state pays districts a certain portion of the Foundation Program amount with a minimum state contribution per student of $1,004 or 15% of the Foundation Program base. Districts are required to contribute the shortfall between the Foundation Program base amount and the actual state contribution. The amount of expected local contribution varies depending on the average per-student wealth of the district relative to the state average.

Additionally, the Foundation Program base amount varies across districts due to the Geographical Cost of Education Index. This index adjusts for variations in the cost of providing education across the state.

Districts receive additional enhancements for low-income, special education, and English language learner students. The enhancement for these categorical programs is dependent on the relative wealth of the district. Property poor districts receive a higher per-pupil categorical enhancement for these programs than property rich districts

Guaranteed Tax Base Formula – Additional enhancements are provided to districts that provide more local funding than is required by the state formula; this Guaranteed Tax Base formula gives greater enhancements to lower-income districts.

The state of Maryland pays for 42% of public education, while 51% comes from local sources.

http://files.eric.ed.gov/fulltext/ED508459.pdf

Educational outcomes

The real point is to pursue a funding system that produces results for students. Washington ranks 30th in the nation in our high school graduation rate with 79% of incoming freshman graduating in four years. Minnesota ranks 7th in the nation at 88%; Massachusetts ranks 12th at 86%; Maryland ranks 16th at 84%.

The national average in 2011-2012 for per-student funding was $10,667. Washington came in below the average at $9,617 while Minnesota came in above at $10,781; Massachusetts at $14,844 and Maryland at $13,871.

Here is the data from each of these states in three areas (4th grade reading, high school graduation and post-secondary enrollment)

Subgroup WashingtonGrad Rate MassachusettsGrad Rate Maryland Grad Rate Minnesota Grad Rate
Black 68% 75% 81% 58%
Latino 67% 69% 78% 59%
Asian 87% 92% 95% 78%
White 81% 91% 92% 85%
Native American 54% 76% 87% 49%
ELL 54% 64% 54% 59%
Low-Income 66% 76% 78% 64%
Special Education 56% 69% 64% 58%
All Students 77% 86% 86% 80%

2013 NAEP Data

4th Grade Reading

Subgroup Washington Massachusetts Maryland Minnesota
Black 25% 21% 22% 21%
Latino 19% 20% 35% 23%
Asian 61% 56% 73% 44%
White 46% 57% 60% 47%
Low-Income 23% 25% 24% 23%
Non Low-Income 53% 62% 58% 52%
All Students 40% 48% 44% 41%

Postsecondary Attendance

Below is a chart showing the college going rate for students who graduate high school and enroll directly into a postsecondary institution

College Going Rate

  Washington Massachusetts Maryland Minnesota
2010 48% 73% 64% 71%

http://www.higheredinfo.org/dbrowser/index.php?measure=32

There is a clear, compelling and influential linkage between those states with locally-oriented education funding systems and both quality outcomes and higher funding levels.  It doesn’t mean they are right and we are wrong or there is only one answer.  It just opens the dialogue for us to put tough questions on the table about what type of modern, 21st Century educational finance system we want to build.

Ironically, perhaps we can implement the values of our state constitution to invest in public education more effectively by making a change to our constitution to reconnect our local dollars to local schools.

Perhaps we should use of the opportunity of the crisis—the McCleary lawsuit and public pressure to increase funding and improve outcomes—to reconsider our approach itself.

Your partner in service,

Reuven.

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17 Comments leave one →
  1. Eric permalink
    February 12, 2015 10:45 am

    Reuven, there are a couple of problems w/ ed funding in Washington state. The fix does NOT require constitutional changes.

    First, do NOT limit the local levies. Communities who value education should be able to invest in education. Period. It is very un-American to ‘equalize’ by holding people back. An American virtue is to let excellence thrive and to lift and create opportunities for others. So, eliminate the levy limits and let communities thrive.

    Second, use the higher levies as a lever to put more money into stingier and/or poorer school districts. A simple formula to require levy assistance to districts who can’t or won’t raise local money.

    Third… and this is super important, require a 2/3 majority vote in each school district that qualifies for levy welfare (I mean levy assistance) to actually collect the welfare check. (I mean levy assistance). The text of the ballot measure should also inform voters which counties are funding the additional money… and should require a modest local investment to earn collection of welfare money. (levy assistance)

    Finally, understand that today’s levy formula is broken. Today, some of the “richest” areas of the state have schools that are funded at the lowest levels per pupil. This is a disgrace. Issaquah SD. LWSD, Northshore SD… are great examples of underfunded districts with levy caps that prevent them from self funding. The mostly richly funded districts are predominantly in anti-tax voting counties. A policymaker should ask herself, “why would an anti-tax county that is collecting large welfare payments from the state and enjoying relatively extraordinary school funding vote to raise taxes?”

    Eric

  2. Steve permalink
    February 13, 2015 2:06 pm

    Reuven,

    Thanks for a constructive article that has potential to move the dialog forward. I agree with Eric that not limiting local levies needs to be part of revisions in education funding, but I don’t get the sense from your article that you disagree with that.

    There are some data issues with your article, particularly Minnesota. The overall average you give for high school graduation rate is higher than the average of any of the subgroups. That is not mathematically possible, so either the overall average number is incorrect, or one or more of the subgroup numbers are incorrect. Overall, Minnesota and Washington look comparable from the data you’ve presented, except for college entrance rates.

    I think comparing school funding across states is a super complicated issue, and it isn’t really meaningful to say “State X spends $1000 more per pupil than State Y” for several reasons.

    Different “Colors of Money” Counted as “Funding”

    Washington state’s funding numbers are always partially incomplete because they include only the M&O budget but not capital budgets and it’s unclear what percentage of capital budget might be included in other state’s numbers. Simply having categories for “M&O and “capital” doesn’t mean the issue has actually been addressed.

    Even within Washington state, this creates problems in comparing budgets across districts. For example, Bellevue’s M&O budget per student looks worse than a lot of districts with higher Title I populations. If you looked only at the M&O budget numbers (which is what I think your blog entry is about) you would think that lots of districts support their students to the same degree Bellevue does or better. But when you look at the capital budget, Bellevue is able to raise more money for capital projects than many other districts.

    This all sets up a “color of money” exercise where, due to restrictions on how much a district is allowed to raise for the M&O budget, the district puts everything it possibly can into the capital budget, subject to byzantine and often seemingly-arbitrary rules defined by the state. So a textbook comes out of M&O budget and counts toward our levy lid cap, but a computer comes out of capital budget and we’re allowed to buy as many of those as we want. The state would let us buy 10 computers per student, but not one new textbook, in some instances.

    It would not be incorrect to say that Washington state’s funding model systemically understates what we spend on education, if we just look at the M&O budget numbers. Our state has set up funding rules that have the effect of pushing as much spending from M&O budget into capital budget as possible. For example, let’s say that we are considering spending $2 million dollars on a geothermal heating system for a school that will save $50,000/year in heating costs. If this were a pure business decision, we wouldn’t do it because that $50K represents only a 2.5% return on the $2M investment (it’s actually less than that, but I’m keeping the example all in present-day dollars to make the math easy to follow).

    But in a Washington state school district, that $2 million comes out of our capital budget, whereas the $50K we save comes out of our M&O budget. So it becomes rational for a district to spend the $2M in the capital budget because it frees up $50K in M&O budget. That M&O budget is precious because it’s capped by the state, whereas there’s no limit to how much we’re allowed to raise in the capital budget.

    Going back to the state comparisons, unless you can tell me that other states have identical rules about what gets counted in M&O budgets and what gets excluded, there’s no way to make a meaningful state-to-state comparison.

    Variations in Cost of Living

    Cost per student is a function of cost per teacher, and cost per teacher is affected by regional cost of living. If you look at the NEA’s data, for example (http://www.nea.org/assets/docs/NEA-Rankings-and-Estimates-2013-2014.pdf), New York is #2 in funding per student (NEA’s table F-1). That implies very little about the degree to which New York is supporting public education because New York is such an expensive area. So New York is #2 in revenue per student, but tied for 17th worst in student/teacher ratio (NEA’s table C-7). Nebraska is 38th worst in school funding but second best in student teacher ratio.

    It is not a coincidence that all the states at the bottom of the funding per student table (F-1) also happen to be low cost of living areas. That doesn’t mean they’re doing a bad job of educating their students. It means they’re low cost of living areas and don’t pay their teachers as much. The NEA’s funding table (F-1) tells you more about cost of living in each state than it does about education. Cost per student is an all-but-irrelevant number in cross-state comparisons.

    Table C-7 on average student/teacher ratios per state is a better proxy for per-student support than any of the monetary tables are.

    Educational Performance

    It’s also hard to compare statistics like graduation rates across states because graduation standards vary state by state. As far as I can tell, the NAEP data does the best job of adjusting for varying exam difficulties across states. In that data, Washington state does pretty well. In 4th grade math, 8th grade math, and 8th grade reading we’re in the top 10 nationally. In 4th grade reading we’re in the top 15. According to the NAEP data, Washington is also improving faster than most states, i.e., we’re in the top 10 in most categories. There’s always room to get better, but I think we beat ourselves up about education in our state more than we need to.

    Thanks again for a really thought-provoking article.

  3. February 13, 2015 2:13 pm

    “Our founders believed–and the common perception today–is that this strong state constitutional language directly translates into better educational quality and higher funding for our kids.”

    Yes, there are those that just don’t get that our state doesn’t even fund to the national average. To note, we are 30th in graduation rate (79% versus the high of 90% in Iowa but not far off the national rate of 81%) and yet we fund near the bottom.

    There is this “throwing more money at public education won’t help” school of thought. But that’s wrong. Our state doesn’t even fund to the national average and yet we are near the national average in graduation rates.

    But our school buildings are worn out, textbooks old (and there’s that question of whether we should have hard copy textbooks at all), nearly 1 in 4 kids lives in poverty, the number of homeless students continues to go up and, as well, all of the state standardized testing HAS to be done on computers. That kind of technology outlay costs money.

    So to anyone who thinks the schools are cash-rich – you’re wrong. Is too much money being spent at many district headquarters? I would say yes. Or, it’s being spent on the wrong things.

    We need counselors, nurses, and librarians. We need to keep close watch over kids and have early interventions at all grade levels.

    We don’t need to be spending massive amounts of money on data collection on students (which is the newest fad).

    Reuven, I welcome this opening to a dialog when so many just want to sling arrows.

    I hope it catches on.

  4. February 13, 2015 7:37 pm

    What is required to adequately fund education in our state was established by those who researched it and all agreed to it.

    Stop back peddling Reuven.

    Get the money and don’t do it by cutting social services.

    You know what needs to be done, cut subsidies to oil refineries in our state, ensure that Microsoft, Amazon and Boeing pay their fair share, at least as much as I do in terms of percentages, deal with capitol gains and let’s get on with it.

    No excuses.

    Dora

  5. February 13, 2015 7:38 pm

    If you don’t. we’ll find representatives who will.

  6. K Quinn permalink
    February 14, 2015 6:25 am

    Interesting that the legislature cannot figure out or agree upon how to fund our existing public schools, and now we’re going to have charter schools in the mix – publicly funded private schools that do not fulfill the basic tenet to accept all children. As has been shown in numerous other states, charters segregate, educate fewer ELL and special ed students, cherry-pick and counsel out kids, and don’t backfill seats when spots open up. Charter schools in Washington State will be no different than those in Arizona or Utah or NYC or Ohio, no matter what the charter lovers at DFER or the Gates Foundation say, because the charters of today are derived from market-based ideology. Supporters use free-market rhetoric to claim poor charters will shut down, reality is that the operator simply finds another venue to scam the public out of tax dollars – close down, reopen under a new name with a different partner, move to a different building, etc. Yet legislators like you have openly embraced the educational deform and fraud that comes with charter schools as necessary to “fix” a “failing school system”, even as you admit that you have not adequately funded public schools so they can do their job properly. Nice.

  7. Mary permalink
    February 14, 2015 7:26 am

    Thanks, Dora. And kudos to the preceding posters who seem to understand the numbers better than I do. I understand that Washington State is a very rich state comparatively. If I’m wrong, tell me. Given that we are a rich state, where’s the money? It isn’t just education. Our whole safety net is in tatters. Trying to isolate education from a plethora of needs doesn’t work. Get a little gutsier and get the Republicans to sell an income tax. Quit trying to find reasons not to fund education and go demand support for a truly fair and equitable tax system in Washington State. That’s your job.

    Eric, I really appreciated your argument about “welfare” districts. That’s a problem nationally as well. Rich states subsidizing poor states that vote R over and over and over. I’m tired of it.

  8. February 14, 2015 6:29 pm

    The Washington State Budget and Policy Center provided people in our district with an excellent presentation on the McCleary Act and why our state legislators are in contempt of court because they have not met their Paramount Duty to fund education adequately in our state. The presentation was sponsored by the Seattle PTA and kudos to them for informing the public.

    For more on what the the WA State Budget and Policy Center has to say about funding education see:

    About Capital Gains:

    “We need long-term structural reform to fuel economic recovery and stabilize Washington state’s public resources. A tax on some of the profits from the sale of corporate stocks, bonds, and other high-end financial assets would bolster health care, education, and other investments proven to build a strong economy.”

    http://budgetandpolicy.org/policy-areas/state-revenue-1/capital-gains

    And their policy brief “A Paramount Duty: Funding Education for McCleary and Beyond”,
    http://budgetandpolicy.org/reports/a-parmount-duty-funding-education-for-mccleary-and-beyond/

    If I can find the video of the presentation, I will post it here.

    There is no excuse for making good on the promise that has been made to our students to fund education so that all of our children have a well-rounded education that prepares them for life.

    Dora.

  9. February 14, 2015 7:05 pm

    It’s not clear relying on local districts for the funds would be any more successful. I suggest our state Dems pull out all the stops to push for meeting McCleary: hold press conferences, organize to build support, call out R’s. If this is really a priority, Dem’s can’t be timid: fight for it.

    To really consider the idea of relying more on local funding, we need a much stronger argument. The states being compared here are just anecdotes: there’s no attempt made to control for variables so it’s unclear whether their funding mechanism is leading to these better outcomes. It’s also not clear if these are better outcomes since the demographics of the students and other factors are not considered.

    Fight for funding ed!

  10. February 16, 2015 8:23 am

    Another attempt to weasel out of the McCleary decision. In my years of service in education, (57 of them) the state has NEVER fully funded educations. That is NEVER! The legislature has been sued in the past, and the result has been the same. However there has been no “teeth” in the decision, and nothing constructive was done. The legislature has responded by writing their own definition of basic education, and then abdicating that. Much of importance was left out to save money.

    Even in years when there was more than adequate money to put some extra into education, they didn’t do so, I guess because they didn’t have to. For many years your (underpaid) teachers CARRIED the education of our students. We used our own money foe supplies that the district couldn’t fund, or the state wouldn’t fund. Often we graduated students out of high school who could ‘t read. That wasn’t the teachers’ fault. We did our jobs out of emphathy for the students and pride in our necessary jobs. Still we took much criticism for the “poor” reputation of our state’s schools.

    I am sick of hearing the old ruse “It won’t work to throw money at it.” That was only an excuse to not fund schools the way they need to be funded. If I am wrong, please tell me ONE time that has been done. Never in my 57 years have I seen it.

    I am now a member of our school board, and I know how hard it is to struggle to beep our schools open and operating with regard to today’s high prices, unfunded mandates, the strings attached to much of the funds, etc.

    Something I have seen over the years is that (1) everyone who went to school once is an expert on education and (2) those who know the least about education are the ones who pass the laws about it. Get in the schools and classrooms to find out what it’s really like. My dad impressed me years ago with two definitions (1) EXPERT: an ex is a has-been, and a spurt is a drip under pressure, (2) figures don’t lie, but liars figure.

    Your ideas have some merit. The underlying goal is to rescue our educational system. If it’s a change in the method of funding, or compliance with the McCleary decision, I don’t really care. Please support our schools and our teachers who are doing a very important job. Maybe try throwing money at it this time.

    George D.
    Naches Valley Schools

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  12. Kathy permalink
    September 7, 2015 4:55 pm

    Interesting blog post.

    Clearly, Washington State’s funding model isn’t working and there are many challenges moving forward.

    The concept of local funding- with supplemental state funding is worthy of further exploration and discussion.

    Good luck.

    Kathy

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