Simplify the School Funding Formula

schoolsby Chris Braunlich

George Allen and Standards of Learning reform. Jim Gilmore and car tax reduction. Bob McDonnell and transportation reform. That’s what we remember.

So what does Governor-elect McAuliffe want to be remembered for when he walks out of the office?

How about reforming K-12 education through “Weighted Student Funding?” This is a concept attracting attention from governors as diverse as Jerry Brown, D-Calif., and Rick Snyder (R-Mich., and policy analysts from Ronald Reagan’s Secretary of Education Bill Bennett to John Podesta, who chairs the center-left Center for American Progress. Here’s why:

Johns Hopkins professor Dr. Susan L. Aud summarized Virginia’s education funding formula like this: “To determine the Basic Aid associated with each student in a school division, the maximum number of teachers the state will fund for each grade level in each division is calculated, based on the ADM (Average Daily Membership) and pre-determined guidelines for the minimum and maximum number of students per type of teacher. The average salary for each type of position is then multiplied by the number of positions required by the enrollment to arrive at a total allowable salary cost. This number is divided by the number of students to derive an average Basic Aid dollar amount per ADM, known as the Basic Aid PPA.”

If you’re confused, you’re not alone.

This formula is intended to fund Virginia’s Standards of Quality (SOQ). Created more than 40 years ago when Virginia was finally coming out of the segregation era, the SOQs were designed to ensure an equivalent standard of quality inputs: textbooks, teachers, principals, and other instructional components. The formulas funded those inputs: If you have “x” number of students, you need “y” number of teachers.

But the world has changed in 40 years. Educating low-income, highly mobile, Limited English Proficient, or disabled students simply takes more, and our funding formulas fail to recognize that harder (and more expensive) task.

Worse, while principals and teachers are now held accountable for their results, they have little control over how money is used at their school or in their classroom. How school dollars are spent is decided elsewhere, using complex budgets and allocations that leave educators, parents, and taxpayers in the dark.

This gives us with the worst of all worlds – expenses that can’t be tracked or understood, funds that don’t reach the targeted populations, and an inflexibility that is both archaic and inefficient in a 21st-century world.

A “Weighted Student Funding” mechanism is designed to provide increased budget transparency, local school flexibility, and targeted resources. Details differ around the country, but it operates on five fundamental principles:

  • Funding should follow the child, on a per-student basis, to the public school that he/she attends.
  • Per-student funding should vary according to the child’s need and other relevant circumstances.
  • Funding should arrive at the school as real dollars (i.e., not teaching positions, ratios or staffing norms) that can be spent flexibly, with accountability systems focused more on results and less on inputs, programs, or activities.
  • These principles for allocating money to schools should apply to all levels (federal, state, divisions and schools).
  • Funding systems should be simplified and transparent.

The idea is simple: Determine a dollar value for each student. Make it higher for students requiring more help. Drive those dollars down to the school level, empowering school-based leadership to decide how best to spend the funds educating the students.

By putting resources for decision-making at the school level, principals can do for children what’s needed at their school, not what’s decided at the division level. If one school needs more tutoring, or another needs an additional aide, or a third needs more teacher training for new teachers, the school chooses, rather than a “one-size-fits-all” central office decision.

To be sure, there are plenty of questions: Which decisions should be centralized? Which should not? How much weight should be assigned to different student categories? Should local funding be included, and how? Will any school divisions “lose” state funding under such a system? How can they be “held harmless?”

But that’s precisely why the time to think about such a reform is now—not in the third year of an administration. A blue-ribbon panel – with experienced national experts as well as state leaders well-versed in the current system – can start exploring the idea with a long-term deadline that looks over the horizon of the next legislative session. Finding a solution shouldn’t be limited to a political deadline.

It’s time to put reform of education funding on the table – not with a timid “nibble around the edges” discussion but with a major overhaul that merits full-throated debate and recognizes the demographic and social forces confronting education in Virginia.

Getting that done would be a notable accomplishment, and one worth being remembered for.

This column was originally published in the Jefferson Policy Journal.


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15 responses to “Simplify the School Funding Formula”

  1. DJRippert Avatar

    Chris – great article! I still remember your “Withdrawals from the Bank of Northern Virginia” piece.

    My only comment is that fairness has nothing to do with anything in Virginia. The entire state is dedicated to taking money from Northern Virginia (and to a lesser extent Tidewater and the Richmond suburbs) and spending it elsewhere. It’s how the Republicans stay in office. They buy votes with other people’s money.

    I suspect the con-men and con-women in the General assembly will run the numbers through your plan and either like it or dislike it based on whether they get more or less money for their districts.

    For example, I suspect your plan would find that the high number of ESOL (English for Speakers of Other Languages) students in Northern Virginia qualifies NoVa for a larger share of the education funding pie. Well, that has to come from somewhere. And the GA member from somewhere isn’t going to agree regardless of the merits of the plan.

    Maybe watching the last election along with the Star Scientific scandal, the CONSOL Energy scandal, the Orion Air scandal, the Tobacco Indemnification Fund scandal, the Phil Hamilton Affair, etc have jaundiced me as to the honesty of our elected officials.

    How might this be achievable politically?

  2. Fairfax County pays about 22-24% of the Individual Income Tax and gets c. 13% of state aid to K-12 education. So unless someone else gives up money, Fairfax County has to pay more to get less. Now the Morons at the WaPo think that’s a good idea, but any thinking person should not. At least a dollar of my real estate taxes stays in the county.

    FCPS budget people have said that, if the County enforced its occupancy limits, school operating costs would go down measurably. Likewise, it is generally believed a sizable number of non-resident students are being educated by FCPS and Fairfax County taxpayers when they should be paying tuition. The law provides that only a parent or legal guardian who resides in Fairfax County can have their children educated without paying tuition. So all those kids who live with uncles and grandmothers should be paying tuition.

  3. I got a little confused….

    ” Funding should follow the child, on a per-student basis, to the public school that he/she attends”

    then

    ” Drive those dollars down to the school level, empowering school-based leadership to decide how best to spend the funds educating the students.”

    but the purpose of the SOQs is to ensure that each kid in Va has access to the same level of resources no matter their geography or demographic or economic circumstances.

    you cannot “short” any student – that’s fundamental.

    the state collects 1% of the sales tax for this exclusive purpose.

    the state does mandate a floor level upon which they give aid – they do require the locality to provide their share based on their “ability to pay” which is argued. the locality also gets to keep 1% of the sales tax for schools.

    but in virtually every jurisdiction in Va, that jurisdiction willingly increases it’s property taxes to pay over and above more money into local schools and they have complete control over what that money goes for – and as far as I know the state has little. Most of it in most localities does not go to help at-risk kids or even for core academic programs. It goes for things the state will not fund – because they are not directly linked to SOLs and SOQs.

    Most localities depend on the state to provide additional funding for at-risk kids – including the Federal Chapter 1 programs which restrict spending to at-risk kids.

    I don’t think this is a State or Fed problem.

    Both of them focus their funding specifically core academics and/or at-risk kids and it is the locality that spend much more discretionarily like for sports and non-SOL electives.

    in terms of transparency and accountability – the Feds actually require that Title-funded teachers and programs be explicitly shown. THe state does not so when you look at a local school budget – you cannot usually tell what the state money is spent on and what the local money is spent on.

    One simple thing could change this. The state could do what the Feds do and require that state-money be shown in the budget – then…local citizens could actually see what their local tax money is actually being spent on.

    I really don’t have a problem with the way that Fed and State money is spent in that it is, in my view, targeted – appropriately – either for core academics or at-risk.

    but the idea that in one breath -funding goes with the kid – and in the next breath -the school can spent however it pleases.. is a concept I do not understand and I suspect would trouble me if it did.

    we have to remember – in most counties – 1/2 or more of the school funding comes from the county – from local taxpayers , from taxes on their property and it is not restricted in how it can be spent – and it is usually not explicitly accounted for. I’m not sure how advocating for no-strings-attached for Federal and State funding solves any problems at all to be honest.

  4. While I find it refreshing to read additional viewpoints in BR and especially so from Chris Braunlich, I am a bit frustrated with the way that k-12 schools report their finances – as much as I am with those that want to “reform” the schools – based more on ideological conventional wisdom and leanings than real substance BECAUSE in no small part that trying to decipher how SOQ/SOL money is spent is virtually impossible.

    The Feds apparently require that Chapter money be explicitly identified in the school budgets (at least I see it explicitly shown in many) while the State apparently does not similarly require the identification of state money in the school budgets – which is getting co-mingled with local money.

    Chris Braunlich has written before on the SOL/SOQ – composite index issue outlining how local schools cut their budgets in accordance with what they get from the state but we know that the state requires a certain match and that the percentage of match is based on the locality’s “ability to pay” which is based on real locality income, real locality property values and real locality sales tax revenues.

    Most schools in Va if not virtually ALL of them budget MORE than the required local match – but what we do not know is what the additional over the required match – is spent on.

    there is no explicit identification WHAT the local and state money mandated for SOLs/SOQs is spent on – and what local money not associated with the State mandates is spent on.

    we don’t even know simple stuff – like how much is spent per kid on elementary school versus Middle and High.

    One would hope that it’s NOT 1/3 for each level and that taxpayer money is specifically targeted at the elementary grades and that optional/elective/non-core things in the upper grades have less state/taxpayer funding for those things and that they are more fee-based to not have those things competing against core academic needs for state/taxpayer funding.

    In other words – the reform advocacy – which I do not just oppose – it needs the financials as a basis for justification… and we simply do not have that and because we do not – we have no real way to truly understand how money is being spent – much less advocate for reform.

  5. Each school division should be required to prepare a baseline budget for the costs of compliance with every state and federal mandate -not a cent more or less. Then the division should propose alternatives – what it would like to fund; the additional costs; the desired benefits; and how the latter would be measured.

    Today, much of the “debate” gets no deeper than “schools are too expensive” and “it’s for the children.” Neither of these positions are worth a darn thing. What do we get from spending more money on third grade than the state says we must spend? What do we get when we offer a course in Korean (which my son took his junior and senior years in high school)? What do we get by X, Y & Z?

    If we had better budget information, we’d get better discussion and, IMO, better results for our tax dollars. I’d love to see McAuliffe take on school finance/school reform issue.

  6. Clare booth Luce did a study a while back that compared money per pupil vs SOL scores or some such.. Chris B. might have been involved with it.

    If anyone can find the study and post it, would appreciate it.

    but the flaw in their study as I recall – is that they did not deduct local money spent – over and above what was required for SOQ/SOL match.

    had they done that – they would have been able to show a more legitimate comparison of money spent for core academics vs results.

    that then leaves up for question what the extra local money was spent on – and how much, if any of it, was spent directly on core academic instruction.

    but the way budgets are done – you’d never be able to ascertain that ….

    but the basic study of actual money spent towards core academic vs academic SOL achievement results would be interesting I think.

    To remind folks – I’m strongly support education and public schools but I also believe we waste money hand-over-fist for non-academic things – popular and important with parents and kids but separate from core academic curricula.

    I’m not opposed to that extra spending if 1. – it does not take resources away from core academics and 2. – that’s what parents want and are willing to pay extra for.

  7. Another issue that leads to anger in places like Fairfax is that the Va Constitution affirmed by the Va Supreme Court – and in turn affirmed by SCOTUS requires that the state – ensure that all kids in the state regardless of geography or demographics get an equal share of state-directed education resources.

    this has led to some issues in various states where there is significant local funding instead of predominate state funding.

    Texas, for instance, is in court right now because some school districts end up providing more base funding than others.

    but if you think about this concept – that all kids get access to equivalent resources, it almost guarantees that the richer jurisdictions will end up contributing a bigger share unless the state is going to dramatically reduce it’s base funding to more align with the ability of the poorest counties.

    I’m trying to think of an alternative way of meeting the “equal funding” requirement without transferring wealth from the richer counties to the poorer counties.

    TMT – any ideas?

    and of course the irony here is that Blue Va is subsidizing Red Va – which invariably votes for the party that would more likely reduce educational funding….

    how would you do this TMT? how would you guarantee each child gets equivalent educational resources without transferring from the wealthier counties?

  8. A couple things I would explore are: 1) mandatory, minimum local contributions to K-12 education; 2) offsetting credits to a school division by the amount of state taxes paid within that jurisdiction. The former would require a substantial local tax contribution to public schools. The latter would reduce overall state funding and limit transfers from high-income localities to low-income ones. The bulk in the middle would pay lower state taxes, but get less or no state aid.

  9. TMT – thank you!

    On the mandatory minimum – would you use some other criteria than what the LCI uses right now ?

    http://www.doe.virginia.gov/school_finance/budget/compositeindex_local_abilitypay/2014-2016/composite_index.pdf

    would you use this and change it or use a different method?

    how would low income counties with no ability to pay more – get the same equivalent resources as wealthier counties (for basic SOL/SOQs)?

    I’ve thought about this and the only way I can see is if the state standards are lowered… so that the poorer counties would not get more and the wealthier would not have to contribute.

    so it sounds like you are opposed to the idea that the wealthier counties would contribute to the poorer counties for education, correct?

  10. Larry, I don’t oppose sending money to help fund public schools in poor parts of Virginia. I do oppose sending money to a locality that doesn’t tax itself comparably to other lower-income jurisdictions.

    Ten years or so ago, I calculated per capita real estate taxes as a percentage of adjusted gross income per capita. The “burden” ranged from 7.35% in King George County to 0.81% in King & Queen County. It would not bother me to see some of my income and sales tax payments help students in King George County, ceteris paribus, but get me pretty PO’d to send money to King & Queen County. If local officials aren’t willing to tax their residents and businesses comparable to other localities, why should I subsidize their low real estate taxes?

    I also think the LCI needs to take account of jurisdictions with higher cost of living. There are places where $60 K will buy a decent house. What would you get in Fairfax County for that amount? Not much.

    1. DJRippert Avatar

      “I also think the LCI needs to take account of jurisdictions with higher cost of living.”.

      Hallelujah!

      Ignoring cost of living is just another Clown Show trick.

      1. doesn’t NoVa receive supplements for cost of competing?

    2. I thought the LCI took into account the “ability to pay”.

      http://www.doe.virginia.gov/school_finance/budget/compositeindex_local_abilitypay/2014-2016/composite_index.pdf

      do you think the LCI is wrong?

      by the way – King George County is the home of the Naval Surface Warfare Center – a base with about 5000 govt and contractor employees working on everything from Trident to Tomahawk to Aegis.

  11. It appears to me that the LCI is a process to ascertain what the local share should be -as opposed to no process.

    Are we saying the LCI is wrong and unfairly advantages the poorer counties ??

    it appears to me that it takes into account the income of the county as well as the value of the property. where exactly is the problem?

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