April 2, 2009

Finding the Right Formula for School Spending

Posted by Aaron Tang at 7:12AM

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Yesterday, US Secretary of Education Arne Duncan announced the availability of a staggering $44 billion in stimulus funding to states for education. The primary purpose of the funds will be to help local districts and states bridge the growing gaps in their own education budgets, preventing teacher layoffs and other resource cuts. But the administration has also suggested secondary and perhaps tertiary purposes: to assist in new school facility construction and to provide financial incentives for systemic school reform.

While the three purposes of the stimulus funding may intersect in their ultimate goal of improving the quality of public education in America, there is a growing debate over just how the money should be spent. The issue is how the $44 billion pie should be divided up among the states. It's a pressing question, and one that the Department of Education just doesn't have enough time to tackle well given the more immediate to need to stimulate the economy. But here are a few of the ways that have been suggested along with the pros and cons. As you consider the options, think not only about which one you think is best but also how one might convince lawmakers to go that route in the future.

• Option #1: Use existing Title I formulas to distribute the stimulus funding to states. The existing formulas are based on a combination of three factors: (1) how high a concentration of poor students the state has, (2) how much money each state already spends per pupil, and (3) how many students the state in gross.

  While the three factors sound reasonable, a recent New York Times article highlighted some of the weaknesses of this approach, which is the one that the Department of Education will ultimately use. The main problems with this approach are first, that federal aid will essentially reward those states that already spend the most on their students, and second, that low-income students who face similar hurdles will receive different amounts of federal support simply based on where they happen to live. The reason why Congress has nevertheless chosen this approach is pretty straight-forward: Congress doesn't want states to take the federal dollars and just use it as a substitute for state dollars. By conditioning the amount of funding on how much the states are themselves willing to pony up, the idea is that you'll give the states reason to spend more and more of their own money on schools, which can only be a good thing. And by giving more money to states with higher concentrations of low-income students, the theory goes that you're targeting more intense areas of need.

  The problem, of course, is that the formula results in funding levels that are not based on need, and have no relationship to actual student improvement. For instance, New York, where there are high concentrations of low-income students and relatively high state spending, will receive roughly $1,700 per student. North Dakota and Wyoming will get similar amounts. But California, where educational achievement is quite a bit lower and where there are huge number of at-need youth, will only get $1,300 per student.

• Option #2: Give money to states based purely on need. The disparities in funding levels that seem to benefit higher spending and often higher achieving states has led to a natural counter-proposal to give the money based purely on need. In this approach, the Depart of Education would give money to those states that are (1) currently spending the least on students, and (2) show the lowest level of student achievement. This is a similar counter-proposal to those in the anti-No Child Left Behind camp who suggest that the federal government should not be punishing schools that fail to meet Annual Yearly Progress but instead subsidizing them with more federal support.

  The problem with this approach, of course, is that it may do exactly the opposite of what we want in the long run. Instead of giving states a reason to spend more of their own dollars on children, it encourages states to keep their school spending levels artificially low since that's one way to get more free federal money. Worse yet, it incentivizes states to care little about student performance, since the worse their kids do the more money they get. Adopting this approach, critics argue, would be tantamount to a parent awarding their son $50 for getting D's and F's while giving only $10 to their daughter who got straight-A's.

• Option #3: Condition grants to states on actual academic performance and improvement, rather than need. A third and more recent suggestion, one that is gaining popularity in state-level decisions on how to distribute state dollars to local districts, would instruct the federal government to give money to states based, at least in part, on how well the states are improving student achievement. States that show strong improvement in increasing their students reading and math skills would get funding boosts, while states that struggle would not. The idea behind this approach is similar to a parent rewarding their son with $50 when he brings his grades up from D's and F's to B's and C's, while giving their daughter less money when her grades go down from A's to B's.

None of the formulas is perfect, which only adds to Congress's and the Department of Education's challenge. But at the end of the day, this may be one of the most vital nuanced decisions that is made as part of the stimulus package when it comes to the long-term success of the program and of our nation as a whole.