State Aid Chapter 8 in Guthrie DR. LEN ELOVITZ. Objectives TLWDTAT: Describe and evaluate the historical methods for allocation of state funding

State AidChapter 8 in Guthrie

DR. LEN ELOVITZ

Objectives TLWDTAT:

Describe and evaluate the historical methods for allocation of state funding

Describe and apply the current NJ state aid formulas

JUSTIFYING THE TRANSFER OF STATE FUNDS

EDUCATION IS A FUNCTION OF THE STATE – THEY ARE RESPONSIBLE FOR CREATING AND MAINTAINING A SYSTEM OF PUBLIC EDUCATION

THEY PROVIDE STATE AID GRANT DISTRICTS THE AUTHORITY TO TAX

LOCALLY

HIGHER LEVEL OF GOVERNMENT CAN BETTER ENSURE THAT ADEQUATE PUBLIC EDUCATION IS AVAILABLE THROUGHOUT THE STATE

STATE CAN TAKE ADVANTAGE OF A HIGHER TAX BASE

TYPES OF AID1. GENERAL - FEW RESTRICTIONS 2. CATEGORICAL -

A. CERTAIN GROUPS OF PUPILS – SPEC. ED., BSIP

B. SPECIAL PURPOSE – TRANSPORTATION, FOOD SERVICE

C. PARTICULAR PROJECT – BUILDING AID

FEDERAL – MOSTLY CATEGORICAL

A. ENTITLEMENT – BASED ON NUMBER OF QUALIFYING PUPILS – TITLE 1, IDEA

B. COMPETITIVE

C. SUPPLEMENT RATHER THAN SUPPLANT

D. BLOCK GRANTS

1. LESS RESTRICTIVE2. COVER A WIDE RANGE OF

AREAS – IKE, 4B

KEY CONCEPTS REGARDING FUNDING FORMULAS

1. ADEQUACY – IS LEVEL OF SUPPORT SUFFICIENT TO MEET EDUCATIONAL GOALS - GENERALLY EXPRESSED AS DOLLARS PER PUPIL

2. DIVISION OF FISCAL RESPONSIBILITY – PERCENT OF

STATE & LOCAL CONTRIBUTION 3. LOCAL ABILITY – CAPACITY OF COMMUNITY TO RAISE

TAXES - EQUALIZED VALUATION OR PERSONAL INCOME PER PUPIL

4. EFFORT – WILLINGNESS OF TAXPAYERS TO PAY - TAX

RATE

5. OFFERING – BUDGETED APPROPRIATIONS 6. EQUITY – EQUALITY OF EDUCATIONAL OPPORTUNITY

7Peabody College Series. Copyright © Allyn & Bacon 2009

Equity

Equity = Equality of educational opportunity

As an education finance expression, this melding of terms recognizes that it is not reasonable to expect to educate all students to the same level.

Assures equal dollars per student or assuring sufficient resources to provide comparable programs


Equity

Horizontal equity model- identical resources for each student Vertical equity model- ensuring adequate resources tailored

to the needs of each student is difficult to achieve conceptually and politically

VE model must take into account three separate kinds of inequalities Wealth Educational need Educational costs

Separate remedies are needed for each. The strategies must be combined to construct a school finance system that is truly equitable.

Types of State Funding Programs MATCHING GRANTS FLAT GRANTS FOUNDATION PROGRAMS PERCENTAGE EQUALIZATION DISTRICT POWER EQUALIZING FULL STATE FUNDING

Matching GrantsA. ONE OF THE FIRSTB. PURPOSE WAS TO GET LOCAL AREAS TO RAISE SOME TAX MONEY

C. LOCALITIES MATCH STATE CONTRIBUTIONS ON A DOLLAR FOR DOLLAR OR PROPORTIONAL BASIS.

D. EXAMPLES1. FOR EVERY $500 LOCAL, STATE PAYS $5002. FOR EVERY $100 LOCAL STATE PAYS $500

E. WHAT’S WRONG WITH THIS SYSTEM? 1. DISEQUALIZING – FAVORS RICH DISTRICTS 2. LITTLE EFFORT PRODUCES MORE LOCAL & STATE MONEY

F. NO LONGER USED FOR GENERAL STATE FUNDING – THERE ARE CATEGORICAL EXAMPLES - USUALLY FOR CAPITAL PROJECTS

FLAT GRANTS A. FIRST – EQUAL MONEY TO EACH DISTRICT

REGARDLESS OF ENROLLMENT – PROBLEMS? B. THEN – EQUAL $ PER PUPIL TO EACH DISTRICT

REGARDLESS OF DISTRICT WEALTH C. OPTIONAL LEVY – DISTRICTS FREE TO INCREASE

EXPENDITURES D. USED BY 38 STATES UP TO 1900 – USED BY

NONE TODAY E. RATIONAL – MINIMUM OF SCHOOLING MUST BE

GUARANTEED

Flat Grant Problems 1. HOW MUCH ED. IS MINIMUM? 2. HOW MUCH DOES IT COST? 3. SIZE OF GRANT IS DETERMINED POLITICALLY 4. LACKS CONSIDERATION FOR NEEDS OF ATYPICAL

CHILDREN 5. ADEQUATE EDUCATION COULD COST MORE IN ONE

DISTRICT THAN ANOTHER 6. LOCAL OPTIONAL LEVY FAVORS WEALTHY

DISTRICTS

FOUNDATION PROGRAM A. STATE SPECIFIES AMOUNT NECESSARY TO

INSURE MINIMUM LEVEL OF EDUCATION B. STATE SPECIFIES TAX RATE FOR FOUNDATION

PROGRAM

C. STATE MAKES UP THE DIFFERENCE PER PUPIL

D. RECAPTURE - RETURN OF FUNDS ABOVE THE SPECIFIED AMOUNT FOR DISTRIBUTION TO POORER DISTRICTS – NOT POPULAR <WHY?

E. OPTIONAL LEVY

Foundation Problems

1. SAME AS FLAT GRANT

2. GUARANTEED MINIMUM AID

PERCENTAGE EQUALIZATION A. TWIST – EQUITY AS ACCESS TO EDUCATION ON

THE SAME TERMS B. THE AMOUNT OF EDUCATION PURCHASED

SHOULD BE DETERMINED BY THE COMMUNITY

C. MAKES ALL DISTRICTS EQUALLY ABLE TO RAISE TAX REVENUES – THE TAX RATE ALONG WITH STATE AID WILL RAISE THE SAME AMOUNT IN ANY DISTRICT

D. NJ before QEA

Formula

yi is equalized assessed valuation per pupil in the district y is equalized assessed valuation per pupil state wide f is the scaling factor

STATE SHARE = 1 – (f X yi/y)

STATE SHARE = 1 – (.5 X 10,000/40,000) = .875 STATE PROVIDES 87.5% OF DISTRICT’S BUDGET –

DISTRICT PROVIDES 12.5 %

Problems

1. COULD BE AN ENORMOUS DRAIN ON THE STATE BUDGET IF NOT CAPPED, THEREFORE IT USUALLY IS

2. SOME DISTRICTS WILL GET NO AID –

MINIMUM AID 3. DISTRICTS WITH HIGH AID RATIOS MAY

SPEND MORE MONEY THAN NECESSARY.

POWER EQUALIZING A. DISTRICT SELECTS BUDGET (OFFERING)

FROM TABLE B. TAX RATE (EFFORT) CORRESPONDS C. DIFFERENCE IS STATE AID D. RECAPTURE WHEN TAXES EXCEED

BUDGET NEED

A FORM OF PERCENTAGE EQUALIZATION WHEN TABLE IS LINEAR BUT IT DOESN’T HAVE TO BE

FULL STATE FUNDING A. MEETING INDIVIDUAL DISTRICT NEEDS B. SOURCE OF REVENUE C. INCREASED STATE CONTROL


Equal Total Provision Philosophy: Full State Funding It is the state’s responsibility to provide an

education for all children There are no geographic variations Adjustments can be made for special

needs and costs Expenditures are supported by statewide

taxes Does not imply state operations of schools-

just a state gurantee of funding


Equal Total Provision Models

Parish & Chambers Resource cost model Experts determine inputs Costs developed by district State provides necessary funding Closest to Current NJ formula

Management Analysis and Planning, Inc. Education experts design the instructional programs

Full state assumption All revenue generated through statewide taxes All monies spent equally Eliminates tax and spend discrepancies Both state and districts become involved in the operation


Need Equalizaton

The preceding models assume that all students are alike in their need for education

Nothing could be farther from the truth Special needs Learning styles Career and vocational education

These differences can be incorporated into a wealth equalizing scheme using… Entitlement – Amount of aid is specified in advance Reimbursement - Actual costs of special needs Organization schemes – Special needs students are

handled by an intermediate district


Entitlement

These models entitle a school district to an amount of aid independent of the actual costs to the district of operating these programs with special needs. Weighting systems

All students start out weighing the same A special needs student weighs more due to the higher costs incurred

to render an education to this child State does not dictate the weighting scale

Practical Problems Getting accurate costs Frequent revisions Gaming

Flat Grant for Special Programs Implies that cost of program is same for every district

Individually Calculated EnrollmentIEPs


Reimbursement This model compensates districts from

actual costs of providing special needs District reimbursed for portion of extra costs

incurred for special needs - only Grant is based on an analysis of the district’s

expenditure pattern Practical Problems

No incentive for efficiency Funds are restricted Restricts district freedom Reimbursed after the expenditure made - delays in

payment affect new program implementation


Organization Arrangements

This model benefits larger school districts by assigning special program responsibility to an intermediate education district

This model provides programs to local districts who cannot afford to run them

This is a pull-out program Practical Problems

Not feasible for all special programs Inhibits mainstreaming Local district loses money in transportation of

students Local district may lose some control


Overview of weighting systems Each model useful to a district But weighting is best left for levels of

education rather than special needs Guards against misclassification or failure to

offer specific programs Severe special needs best handled by

distinct location Reimbursement programs probably best

deterrent to gaming


Cost Equalization This model balances the differences among

districts in the cost of providing services of similar quality and kind. Differences in amount and cost of supplies Differences in the amounts districts pay to

attract and retain quality teachers The equalization is applied to fixed costs rather

than discretionary spending differences The model varies in its application when

adjusting to differences in cost


Do these models make us more efficient in the delivery of education?

Efficiency as a goal is expressed in education as how to obtain adequate education for as little money as possible. Goal is difficult to attain

Disagreement on what education is to accomplish Disagreement on how it is to be accomplished Disagreement on how accomplishments are to be

measured


Political Pressure on the distribution of monies to schools Spending Limits

Restrictions on categorical aid Restrictions: tax rate limits, annual budget

votes, expenditure or revenue limits Tax Rate Limits

Most common form restriction Annual Budget Votes

School board proposes budget Transparency a problem Timing of vote can intimidate


Political Pressure on the distribution of monies to schools (cont’d)

Direct Revenue or Expenditure Limitations State control Limits per pupil expenditures Disparity allowed politically District’s individuality Equality v. efficiency

Categorical Aid States can’t make school efficient so leave it to the district States determine the priority areas Erodes use of discretion

Choice State delegated responsibility of education to local

communities Kind, amount, and quality of education

Choice only mildly held by parents, state


Goal of Efficiency in distribution of state aid (cont’d) Vouchers & Tuition Tax Credits

Advantages Parents choose, not the district Brings competition to how schools do business Market forces drive items such as salaries

Disadvantages Can invite fraud GI Bill


Goal of Efficiency in distribution of state aid (cont’d) Family Power Equalizing

While the amount spent on education not dependent on local wealth, education decisions are made by the community

Families may disagree on how to allocate resources

Magnet Schools Provides choice Maintains district’s control


Comprehensive State School Finance Plans Composed of fearsome complexity Aimed to foster adequacy, equity, efficiency,

and choice Designed in the political arena Intended to serve the diversity of size, special

needs and unusual situations found within the state


Summary States can distribute education funds to

school districts in a number of ways. Three philosophical orientations guide

these disbursements: Minimum Provision Plans Equal Access Plans Equal Total Provision

The goal of distributing state education funds drives at the heart of equity and adequacy issues

State Aid Chapter 8 in Guthrie DR. LEN ELOVITZ. Objectives TLWDTAT: Describe and evaluate the historical methods for allocation of state funding

Documents

state state

state funding slide

local state money

local state pays

general state funding

allocation of state

state aid chapter

equity equity