Education Funding – A National Perspective Providence, Rhode Island

November 13, 2007

Michael GriffithSchool Finance Analyst

Education Commission of the States

Education Commission of the States

• The only nationwide education interstate compact

• Founded in 1965 to enlighten, equip and engage education policy makers

• Forty-nine states, three territories and the District of Columbia current membership. Each member state or territory is represented by seven commissioners -- the governor and six other individuals, typically legislators, chief state school officers, state and local school board members, superintendents, higher education officials and

business leaders. • Web Site: www.ecs.org

Overview

1. School finance facts

2. School finance formulas currently in use

3. Defining what a successful formula is

4. Does a perfect formula exist

School Finance Facts

District Information (2004-05)

Number of Districts Avg # of Students Per District

Rhode Island  36 4,198

Connecticut  192 2,852 

Maine  231 (90est) 800(1900est)

Massachusetts  387 2,364 

New Hampshire  165 1,144 

Vermont  286 288

United States  15,399 2,951

School Finance Facts

• Average per student spending (2005-06):– National: $ 9,022– New England: $11,603– Rhode Island: $11,089

• Spending varied from $5,347 (UT) to $13,781 (NJ).

Funding Sources for education (2005-06):

State Local Federal

Rhode Island 36.5%  60.2% 3.4% 

New England States 48.0%  45.6%  6.4%

United States 47.6%  43.3%  9.1% 

Adjusting Expenditures

If Rhode Island contributed 47.6% of the funding to public education (the national average) it would equate to an additional $176 million in annual state spending.

(08-09 Budget 690 million) (total state budget 6.9 billion)

State & Local Revenue For Public SchoolsPer $1,000 of Personal Income

2003

Rhode Island  $40

Connecticut  $46

Maine  $50

Massachusetts  $43

New Hampshire  $41

Vermont  $56

National Average  $44

Increase in Spending

• Each $1 increase in relative spending effort would equate to $23.9 million extra in education spending in Rhode Island.

• If Rhode Island were to spend at the national level it would increase education spending by $95.5 million.

School Finance Formulas

School Funding Formulas

• Foundation/Base Formula (38 states)

• Teacher Allocation (6 states)

School Funding Formulas

• Dollar allocation per student (MA & WY)

• Combination of Foundation Program & Teacher Allocation (DE)

• Based on previous years allocations (PA & RI) (now only RI)

• Hawaii has no funding formula due to the fact that it operates as a single school district.

School Funding Formulas

Foundation Programs (38)Teacher Allocation Systems (6)Other (6)

Foundation Formulas

• Became popular starting in the 1920s and 1930s replacing “Flat Grant” programs.

• Allows states to target funding to low wealth & high needs districts.

• Flexibility: – In how funds are distributed– How funds are used by districts

• Relative ease of use.

How A Foundation Formula OperatesStep 1 – Determining The Foundation Payment

1. Determine a per student foundation funding amount

• The foundation number should equate to the amount of funding needed to educate a general education student in an average wealth district to state standards.

2. Adjust the foundation amount based on the local school district’s ability to pay

• The state and local school district share the cost of the foundation amount.

How A Foundation Formula OperatesStep 1 – Determining The Foundation Payment

3. Multiply this new number by a district’s weighted student count

Students with special needs often require additional funding - this can be achieved in a foundation formula by providing students with additional weights. These may include students who are enrolled in the following programs:

– Special Education– At-risk– English language learners– Early learning programs

4. Adjust for other financial considerations such as regional cost or district size.

How A Foundation Formula OperatesStep 2 – Determining Full State Funding

1. Once you determine the foundation payment, add

2. Categorical funding for specific programs or services, add

3. Funding for capital outlay, food services and transportation.

Teacher Allocation Systems

• Guarantees that funding will be used to provide a minimum number of teachers.

• These formulas tend to have stronger language about the amount of local funding that is required.

• Control Expenditures:– Limit expenditures for administration

– Target funding toward teachers.

Defining a Successful Formula

What Makes a Quality Funding Formula

• Adequate– Ensure that state and local funds are able to meet the

state’s educational goals.

• Just– Every student in the state receives the funding that

he/she needs to achieve state standards.

What Makes a Quality Funding Formula

• Flexible– “One size fits all” never works. Districts all

have different needs and different resources.

• Straightforward– Districts and schools should know how much

funding they will be getting in the coming year.

• Produces Educational Results

Does Any State Have A Perfect Formula?

NO

Have Any States Come Close to Creating a High Quality Formula?

• Arkansas

• Maryland

• Wyoming

How Did Maryland Change Their System?

• Four years ago the state established the Thornton Commission to review the equity and adequacy of its school finance system.

• The Commission hired consultants to undertake two different school finance studies.

• The recommendations of the studies were adopted by the legislature and passed into law in 2006.

Maryland

Adequate:– The state undertook two different studies to make sure that

educational funding was adequate to meet their educational goals.

Just:– Adjustments are made on each district’s base figure for:

• At-risk students

• Students with disabilities

• Regional cost

Maryland

Flexible:– The new system uses a two-tiered approach.

• The two finance studies that were undertaken for the commission recommended two funding figures.

• Every district is guaranteed the lower figure – and each is allowed to increase the local spending up to the amount of the higher figure.

Straightforward:– 27 categorical programs were eliminated.

Produces Educational Results– Districts must now enter into agreements with the state about standards

for student performance.

Questions & Comments

Michael GriffithSchool Finance Analyst

Education Commission of the StatesDenver, Coloradomgriffith@ecs.org

Additional Work by Mr. Griffith

Michael GriffithSchool Finance Analyst

Education Commission of the StatesDenver, Coloradomgriffith@ecs.org

State Funding Programs for High-Cost Special EducationMay 2008

Cost Per-Day for Extended School YearFebruary 2008