Attaining School Finance Adequacy in a Time of Fiscal Constraint

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Attaining School Finance Adequacy in a Time of
Fiscal Constraint

• Lawrence O. Picus
• Professor
• USC Rossier School of Education
• February 7, 2003

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Todays Discussion

• Setting the Context
• School Finance Adequacy
• Revenue Stability
• Serving Children
• Truly Systemic Reform

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Education and the Fortune 500
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The Problem

• Perception of Low Per Pupil Spending
• Low Student Performance
• Limited Revenue Options
• Large At Risk Student Populations

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Finding A Solution

• School Finance
• Adequacy
• Simple easy to understand formula
• Services for all children
• Revenue stability

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School Finance Focus

• Equity (most of 20th century)
• Variation in per-pupil expenditures
• Uneven distribution of property tax base
• Productivity (1990s)
• Linkage between level and use of funds and
  student achievement
• Adequacy (now and in the future)

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What is Adequacy?

• Adequacy requires provision of sufficient fiscal
  resources to enable all students to perform at
  high levels

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Status of Adequacy in the States

• Wyoming
• Oregon
• Maryland
• Others
• Kentucky
• Arkansas
• Nebraska
• Montana
• Kansas

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Costing Out Adequacy

• Defining adequacy
• Establishing a system to achieve the educational
  standard or goal
• Measuring costs and expenditures
• Concerns and other issues

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Four Approaches to Defining Adequacy

• Cost functions
• Expenditures in districts/schools that meet
  performance benchmarks
• Professional judgment
• Cost of effective school-wide strategies

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Implementation

• How proscriptive should the model be?
• Who controls spending decisions?
• Simple, transparent and easily understood
• Establish a base foundation level
• Adjust for
• Student characteristics
• District characteristics
• Price differences

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Measuring Cost and Expenditures

• Understanding the difference between a cost and
  an expenditure
• Choosing which to use
• Wyoming ? Costs
• Oregon ? Expenditures
• Combinations of the two

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Concerns and Other Issues

• Look at the total picture
• Individual components of the funding model may
  not tell the whole story
• Details are important, but dont forget the major
  assumptions in the model

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What Does This Mean for the States?

• School spending levels
• Changes in school operations
• Tax rates and state finance
• Other implications?
• School Finance Reform

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Reform of School Finance

• Need for comprehensive reform of the finance
  system
• System must be simple, easy to understand and
  transparent
• Should be based on a measure of adequacy

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Revenue Stability

• Need mechanisms to handle the surplus and deficit
  years and smooth funding
• Rainy day funds and tobacco settlements are
  inadequate
• Tax cuts in times of surplus wont work

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Managing the Flow of Revenue
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Meeting the Needs of Children

• Its no longer schools vs. others
• Need to develop comprehensive models of services
  for children
• In CA, education is as top down as other social
  service programs
• Find ways to consolidate and coordinate programs
  to meet the needs of families and children

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Contact Information

• Lawrence O. Picus, Professor
• USC Rossier School of Education
• Division of Administration and Policy
• WPH 702G
• University of Southern California
• Los Angeles, CA 90089-0031
• Voice 213 740-2175
• E-mail lpicus_at_usc.edu