Benchmark for Funding System Proposals

Benchmarks for Assessing Basic Education Funding System Proposals
April 2015
Pennsylvania’s Public School Funding System Is Failing Our Children
Our system for funding public schools is broken. Pennsylvania is one of only three states without
a basic education funding formula to distribute sufficient resources both fairly and predictably.
The result is a funding system that fails to provide enough resources to educate all students to
academic standards, produces a wide gap between the wealthiest and poorest schools, and is so
unpredictable from year to year that school districts cannot effectively budget or plan.
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A recent national study determined that Pennsylvania has the widest funding gap between
wealthy and poor school districts of any state in the country. Per pupil spending in PA’s
poorest districts is 33% less than in PA’s wealthiest districts.
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The absence of a funding formula to distribute dollars based on real costs and true needs,
combined with state funding cuts in recent years, have hit our students hard. A survey of
PA school districts earlier this year found schools have experienced unprecedented
reductions in academic programs and school staff over the last few years, with more
anticipated for next school year. About three of four surveyed school districts cut or
reduced at least one academic program since 2010-11, with nearly 40% reporting cuts in
2014-15 alone. Most districts reported at least one round of class size increases since
2010-11, and 93% reduced teaching and other staff through furloughs or other means.
Money Matters: There Is a Link between Resources and Outcomes
Money does matter. Student performance has tracked funding level changes in Pennsylvania.
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A 2011 Education Law Center study found that as state education increased by 40% from
2003 to 2010, test scores in the lowest-achieving districts increased by 50%. Conversely,
as state funding was cut since 2011 and our system grew more inequitable without a
formula, state test scores dropped and the achievement gap did not close.
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Increased per-pupil spending as part of school finance reforms in other states led to an
increase in the likelihood of graduating from high school and other educational
attainment for poor children, narrowing differences between those raised in poor and
affluent families. One study found that increasing spending per student for low-income
children by just 20% throughout school results in children gaining one more year of
education, which increases their earnings by 25% and reduces poverty levels by 20%.
The Campaign for Fair Education Funding Proposes a Better Way to Fund Our Schools
The Campaign for Fair Education Funding wants to ensure that every public school student has
access to a quality education no matter where they live. It proposed a new long-term basic
education funding formula that is student-driven, sustainable, equitable, and provides sufficient
resources so students in every school have a fair shot at academic success. The proposal calls for
about $3.6 billion in new state education investments – to be phased in over six to eight years.
Our aim is to help inform the deliberations of the Basic Education Funding Commission, the
legislature and the governor as they work to enact a new funding system. The Campaign will be
assessing proposals that will be released by other parties to determine whether they are consistent
with the Campaign’s goals and contain the elements the Campaign considers essential to a
student-driven, adequate, equitable, sustainable, and long-term funding system.
Elements That Are Essential to an Effective State Basic Education Funding System
The Campaign will be asking the following questions about any proposals that are presented:
1. Does the proposal provide enough resources to educate every Pennsylvania child to
meet state academic standards?
Funds must be sufficient to get the job done. A proposal must provide adequate resources to
support the real and actual costs of educating students to meet academic standards, starting with
a base rate and adjusting for student factors like poverty and district factors like tax effort,
district sparsity and the impact of charter school costs. The Campaign’s proposal estimates that
cost at about $3.6 billion in new state investments once fully phased in.
2. Is the proposal built on a base amount that reflects the number of students enrolled
and the actual costs associated with what it takes to educate a student to meet state
academic standards?
Proposals should start with a base cost, calculated by using accurate counts of students attending
each school district and multiplying that by the actual instructional expenses required to educate
students in this state. For example, the Campaign’s base cost for educating each child is $7,266.
3. Does the proposed funding system fairly distribute dollars to cover the costs of
educating students with different needs and additional barriers?
A state school funding system must direct resources to students and school districts with the
greatest needs. It is widely recognized that some children, such as those living in poverty or
learning English, require more support to overcome challenges and meet academic standards. A
formula must address that reality by adjusting the per pupil cost based on the number of children
in a school district who live in poverty, are English Language Learners (ELL), or are homeless or
in foster care. The Campaign’s proposal applied weights for each of these student factors.
4. Does the proposal take into account cost implications of factors such as school
district size and student population sparsity?
Factors like district size and sparsity of student population affect per-student costs. For example,
in smaller, rural districts, fixed costs must be spread over a smaller student population, limiting
economies of scale savings. At the same time, there are about 50 districts that cover at least 200
square miles, most with sparse populations, which must operate small schools across a district to
avoid subjecting students to long bus rides each day. A school funding formula must account for
these unique district needs by applying a district size and sparsity weight.
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5. Does the proposal adjust for local tax effort and district wealth?
Some districts with higher student costs due to factors like higher poverty, but with a limited tax
base because of lower property values, end up paying more in local tax effort to support their
schools. Other districts have fewer students with greater challenges but higher wealth and
property values, allowing them to provide more resources with much lower tax effort. This
contributes to wide fiscal disparities among school districts and aggravates the achievement gap
among students based on income and other factors. A formula must adjust for local tax effort and
district wealth, but with a new, more comprehensive measure of local wealth to replace the
current market value/personal income aid ratio now used in basic education funding allocations.
6. Does the proposal adjust for charter school enrollment and related “stranded
costs”?
Districts paying tuition to charter schools have “stranded” and other mandated costs. State
dollars follow a child to a charter, but the district still must cover its fixed and mandated costs
even with fewer students, particularly in the first few years. Funding to a district should be
weighted to account for the number of charter students in a district, with a higher weight for
newly enrolled charter students in recognition that it takes time to reduce stranded costs.
7. Does the proposal provide stability for school districts that are in flux because of
population and enrollment shifts?
School districts experiencing enrollment shifts still must carry some fixed and mandated costs, at
least for a period of time. Yet some of these districts may already be at the level of full state
support under a funding formula and might otherwise see flat or reduced state funding if no
protections are in place. They should have some buffer from the impact of these demographic
changes, particularly during the period when a new funding system is being phased in. The
Campaign’s proposal provides for every district to receive a minimum annual increase set in law
during the phase-in period, with annual adjustments based up-to-date student count thereafter.
8. Does the proposal include provisions for increased efficiencies and greater student outcome
and fiscal accountability?
The Campaign recognizes that every tax dollar must be spent effectively and efficiently in the
education of our children and the first step in that process is to make certain that schools
demonstrate outstanding stewardship of every tax dollar they currently receive. School funding
proposals must promote expanded initiatives to generate greater potential costs savings at the
school district level, such as expanded use of shared services, and contain a system of
accountability at the district and school level to assure that tax dollars are being effectively
invested to prepare students to meet state academic standards.
The Campaign for Fair Education Funding will be closely examining each state basic education
funding system proposal to assess the extent to which it contains the elements that it deems
critically important for full and fair basic education funding. It will also examine the overall
impact of each proposal to ensure that it provides sufficient funds and addresses income, racial
and other disparities to meet the goal of ensuring that all children receive an opportunity for a
quality education no matter where they live.
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