For Each and Every Child” — And Why Funding Reform is ... by: Ralph M. Martire, Executive...

Presented by:Ralph M. Martire, Executive Director

F o r :N a t i o n a l C o n f e r e n c e o f S t a t e L e g i s l a t o r s

G e o r g i a W o r l d C o n g r e s s C e n t e r2 8 5 A n d r e w Y o u n g I n t e r n a t i o n a l B l v d . , N W

A t l a n t a , G e o r g i a

“For Each and Every Child” — And Why Funding Reform is Crucial to Enhancing Student Achievement

70 East Lake StreetSuite 1700 Chicago, IL 60601www.ctbaonline.org

August 12, 2013© 2013, Center for Tax and Budget Accountability

The Equity & Excellence Commission’s Charge was to Advise the DOE on:

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© 2013, Center for Tax and Budget Accountability

“the disparities in meaningful educational opportunities that give rise to the

achievement gap, with a focus on systems of finance, and to recommend ways to which

federal policies could address such disparities.”

Why Was that the Charge?

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Public Education in America is not so much “Broken” as it is under-resourced to education all children


Test Scores

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The International Benchmark: Combined PISA (Reading, Math, Science, Critical Thinking)

Overall, U.S. schools scored a middling 500 with the OECD average @ 493

Reality #1

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But adjusting for poverty

U.S. schools w/ 0-10% poverty scored 551, best in the world (Finland was 2nd @ 536)

U.S. schools w/ 10-24.9% poverty scored 527, top in the world for similar profiles (Canada was 2nd @ 524 and 4th overall )

Poverty

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U.S. scores did not start to drop until poverty got over 25%

In Illinois, roughly 44% of kids live in poverty.

In CPS, the number is over 88%.

So the Charge of the Commission was on Point—The Core Issues Remain:

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Poverty

and

Insufficient ResourcesInequitably Distributed


Which is Nothing New

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Who first noted these as core issues in U.S. Education


“Who”

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The NIXON COMMISSION on Education in 1972!


The Nixon Commission Found:

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1. Educational funding at the state level is too tied to property taxes—and rarely is connected to the educational needs of children.

2. Money can help solve many of the Educational Problems that have surfaced.

3. States have the responsibility to reform school financing to eliminate disparities and ensure adequacyIf they don’t......

The Solution

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Scan Available Resources, Match to Demographically Driven Needs

Create a Comprehensive, Strategic Approach to System Changes Needed to Attain Desirable Outcomes

Integrate: Federal, state, local resources/programs to accomplish

outcomes; Utilize evidence-based approaches and advocacy, bridge rather

than reinforce ideological divides; Minimize inefficient competition maximize collaboration; and Develop resources to build and sustain the capacity needed for

success.

Evidence this Approach Works:

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Current Focus of Global Education Reform Movement (“GERM”)

Set higher standards for student achievement—standardize education generally

Enhance accountability metrics and implement punitive consequence matrix

Enhance competition between and among schools and educators

Impact of GERM on Programme for International Assessment or “PISA” Math Scores

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2000 2009 USA 493 487 UK 529 492 AUSTRALIA 533 514 JAPAN 557 529 NEW ZEALAND 537 519

Then There’s Finland

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Rejected GERM Focused on: Building collaboration/reducing competition; Building teaching profession; Investing adequately in poorest schools on up, focusing

on equity as core to excellence; Invest in early childhood, wrap-around services and

overall education funding; GOAL Build capacity so that every school provides

high quality education tailored to meet student need

http://www.emofaces.com/emoticons/finland-flag-waving-emoticon-animated�

The Results

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PISA Math Scores2000 2009

536 541

The Goal

Implementing a strategic, comprehensive approach for sustainable systems reform that:

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Is driven by evidence and best practice

Bridges, rather than reinforces, ideological divides

Results in promoting economic & social justice

Finance

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A State Should: Identify and publicly report the teaching staff, programs and

services needed to provide a “meaningful educational opportunity” to all students of every race and income level (including ELL and special needs) BASED ON EVIDENCE OF EFFECTIVE EDUCATION PRACTICES;

Adopt and implement school finance systems that provide equitable/sufficient funding for all students to achieve content and performance standards;

“Equitable” in some case means more than equal investment—as in other advanced nations, it includes providing additional resources for at-risk populations.

Finance Continued

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The Feds Should: Direct states, with appropriate incentives, to adopt school

finance systems that provide a meaningful educational opportunity for all students;

Enact “Equity and Excellence” legislation that:

i. Targets significant new federal funding to schools with high concentrations of low-income students, particularly where achievement gaps exist;

ii. Provides significant financial incentives to states that in fact enhance investment in “At-Risk” children.

What Will be Funded?

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Building Educational Capacity.—For purposes of this Act, building education capacity of Targeted Schools will mean implementing systems-based reforms, programs and/or initiatives which have been demonstrated, either in the United States or in any other nation, to enhance student achievement, learning and/or critical thinking skills over time. Such reforms, programs and/or initiatives MAY include:


Silo Mentality & Gaps, Overlaps

Failure to Coalesce Around a national, evidence-based strategy to drive systems reform

Lack of Capacity (Human, Service, Fiscal) to Generate and Sustain Meaningful, Evidence-Based Reform

Counterproductive Competition

Disjointed State, Local, Federal Efforts to Define and Meet Needs

Inefficient and Underproductive Resource Allocation/Service Delivery

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Partisan Rhetoric, Pandering to Worst Instincts, Designed to Create Political Advantage

Consider — IllinoisEnacted P-12 Appropriations for FY2014 Compared to FY2000

Enacted, Nominal & Adjusted for Inflation (ECI) and Population

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28.8%

-16.69%-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

% Change (Nominal) % Change (ECI + Pop)

Sources: Sources: FY2000 unadjusted appropriations from Governor’s final budget summary for FY2000; and FY2014 CTBA analysis of GOMB, FY 2014 Operating Budget Detail (March 6, 2013), http://www2.illinois.gov/gov/budget/Pages/BudgetBooks.aspx. Inflation for healthcare inflated by Midwest Medical Care CPI; all other appropriations adjusted using ECI-C and Midwest CPI from the BLS as of January 2013, and population growth from the Census Bureau as of January 2013.

Dollar Shortfall in State Per-Pupil K-12 Education Funding to Meet EFAB Adequate Education Standard by Fiscal Year

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$0 -$120

-$1,270 -$1,269

-$2,553

-$2,747

-$2,946

-$3,500

-$3,000

-$2,500

-$2,000

-$1,500

-$1,000

-$500

$0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sources: CTBA analysis of January 2013 EFAB data. Education Funding Advisory Board, Illinois Education Funding Recommendations, (Springfield, IL: January, 2013), p. 9.Appropriations adjusted using ECI and Midwest Medical Care CPI (for Healthcare) from the BLS as of January 2013, and population growth from the Census Bureau as of January 2013.

And YEAH, $ Does Appear to Matter

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Regression of ISAT Performance Vs. Per-pupil Instructional Expenditure for School Districts with 3-8% Low Income Rates

75

80

85

90

95

100

105

110

3000 5000 7000 9000 11000 13000

Per-pupil Instructional Expenditure

Perc

ent o

f Stu

dent

s M

eetin

g an

d Ex

ceed

ing

Illin

ois

Stan

dard

s on

the

ISAT

(200

6)

Active Model Conf. interval (Mean 95%) Conf. interval (Obs. 95%)

*Linear regression is a statistical analysis that shows the correlation of two or more variables, in this case, how per-pupil expenditures correspond to ISAT test scores. The regression line (heavy red) represents the predicted test score results a school district should obtain, given a specific level of instructional expenditure.

Local and State Share of Education Funding Spending

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Source: National Center on Education Statistics, 2011. “Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2008-2009 (Fiscal Year 2009).”

The Burden is Tough

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42.12%

2.84%

17.41%

0.83%0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

1990-2005 2000-2005

Illinois Total Property Tax Revenue Growth Vs. State Median Income Growth

Total Property TaxRevenue GrowthState Median IncomeGrowth

All data inflation adjusted to 2008

Income Data: US Department of Census

Property Tax Data: IL Department of Revenue

Really????

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YES: Illinois ranks 50th out of 50 states in portion of education funding covered by the state

But Education now matters more than ever to economic prosperity:

Generally: unemployment rates are highest for those with the least education.

Unemployment Highest Among Least Educated, 2010

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18.8

%

12.0

%

9.1%

6.9%

21.9

%

13.1

%

9.4%

5.2%

20.7

%

12.9

%

9.3%

5.7%

0%

5%

10%

15%

20%

25%

LT HS HS Grad Some Col BA or +

Per

cen

t U

nem

plo

yed

Source: EPI Analysis of CPS Data

Nation

Midwest

Illinois

Wages for Minorities Lag Whites

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Real wages for Whites increased modestly between 1980 and 2010, but :

The White-Hispanic wage gap is larger in amount, but increased by a smaller percentage, growing from $4.01 in 1980 to $5.86 in 2010, an increase of 46%over 1980

Real wages for African-Americans declined. The hourly wage gap between Whites and African-Americans grew from $1.60 in 1980 to $3.08 in 2010, an increase of 92.3% over 1980

Source: Appropriations from and FY2014 CTBA analysis SB 2555, SB 2556, HB 206, HB 208, HB 213, HB 214, HB 215, passed by the 98th

General Assembly; and hard costs from FY2014 GOMB Budget Book.

*This is the 23rd consecutive fiscal year with a General Fund deficit*

Category GOMB Revenue HJR-17 Revenue(i) Projected FY2014 Revenue $35.63 $35.08(ii) Projected FY2014 Hard Costs $11.16 $11.16

(iii) Projected Deficit Carry Forward from FY2014 $8.3 $8.3

(iv) Projected Net FY2014 General Fund Revenue Available for Services $16.17 $15.62

(v) Projected Net General Fund Service Appropriations $24.52 $24.52

(vi) Estimated Minimum FY2014 General Fund Deficit ($8.35) ($8.9)

(vii) Estimated Deficit as a Percentage of General Fund Service Appropriations -34.05% -36.29%

FY2014 Accumulated Deficit ($ Billions)

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That Huge Shortfall is a Real Problem Because……Over $9 out of $10 of G.F. are Spent on:

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Education (PreK-12 plus Higher Ed) 35%

Healthcare 30%

Human Services 21%

Public Safety 5%91%

FY2014 Enacted General Fund Services Appropriations (excluding Group Health & Pensions) Relative to FY2000, in Nominal and

Adjusted for Inflation and Population Growth

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Sources: FY2000 unadjusted appropriations from Governor’s final budget summary for FY2000; and FY2014 CTBA analysis SB 2555, SB 2556, HB206, HB 208, HB 213, HB 214, HB 215, passed by the 98th General Assembly. Inflation for healthcare inflated by Midwest Medical Care CPI; all other appropriations adjusted using ECI-C and Midwest CPI from the BLS as of January 2013, and population growth from the Census Bureau as of January 2013

Capitalist Tax Policy Should Be:

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FAIR PROGRESSIVE

RESPONSIVE TO MODERN ECONOMY

STABLE DURING POORECONOMIES

EFFICIENT DOESN’T DISTORTPRIVATE MARKETS

ILLINOIS IS 0 for 4

Which Creates a Structural Deficit

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Revenues of Goods and Services as a Percent of Gross Domestic Product: Illinois (SIC 1965-1985, NAICS: 1997-2012)

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36%41%

53%

68%72% 73%

32%

26%20% 21% 19% 17%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1965 1975 1985 1997 2005 2012

Services as a percent of GDP

Goods as a percent of GDP

Private producing industries Source: Bureau of Economic Analysis

Adam Smith, the father of modern capitalism, contended that for a tax system to be fair it has to be progressive

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According to Smith:

"The subjects of every state ought to contribute toward the support of the government, as nearly

as possible, in proportion to their respective abilities; that is, in proportion to the revenue

which they respectively enjoy under the protection of the state ….[As Henry Home (LordeKames) has written, a goal of taxation should be

to] 'remedy inequality of riches as much as possible, by relieving the poor and burdening the

rich.'"


The long-term trends in income distribution in America demonstrate that his reasoning was solidly on target.

Source: Economic Policy Institute's website: http://stateofworkingamerica.org/who-gains/ Data used is from Piketty and Saez, "Income Inequality in the United States, 1913-1998", Quarterly Journal of Economics, 118(1), 2003, 1-39 (Tables and Figures Updated to 2011 in Excel format, January 2013), http://elsa.berkeley.edu/~saez/ .

Change in Average US IncomeGrowth Over Time

Income Group 1979 — 2011

Top 10% 139.8%

Bottom 90% -39.8%

Change in Average US IncomeGrowth Over Time

Income Group 1947— 1979

Top 10% 34.1%

Bottom 90% 65.9%

Was Adam Smith Right?

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And it Won’t Hurt the Economy

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From 2000 - 2010 9 states with highest graduated income tax rate structures had:

Better growth in state GDP per capita Better change in median wage Identical unemployment rate

Than the 9 states with NO income tax

Source: Institute on Tax and Economic Policy

For More Information

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Ralph M. Martire Bobby OtterExecutive Director Education and Fiscal Policy Analyst(312) 332-1049 (312) [email protected] [email protected]


Website: www.ctbaonline.org

For Each and Every Child” — And Why Funding Reform is ... by: Ralph M. Martire, Executive...

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