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Redoing the Math: States Push To Tie Formulas to Real Costs

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The state of Texas last year promised school districts $2,053 for every child on the attendance rolls.

Why exactly $2,053? Easy. It's what they had.

Texas officials usually arrive at the amount of money they will spend on schools the same way that legislators and governors in every other state do. They do one simple math problem: They figure out how much money is available in the budget. And they arrive at per-pupil expenditures by dividing that figure by the number of students.

In Texas last year, after dividing the roughly $9 billion they had to spend on schools by the 3.7 million children in the state's classrooms--and parceling out some money to categorical programs--lawmakers came up with $2,053 per child.

But a group of education associations in Texas and officials in states across the country are beginning to formally question the wisdom of such seemingly arbitrary budgeting. In Texas, researchers say that in the fall they will propose a school budget number they can prove pays for the state's mandated programs and provides the expected results. Whether that number is higher or lower than $2,053 for each child, they plan to challenge the state to pay it.

Backing Up the Bill

As state politicians continue to push for tougher academic-performance standards and take a harder line with students and schools that don't make the grade, observers say it is only natural that people will start to question how states pay the bill for higher quality.

"Tradition is certainly not a very good basis for making a judgment about how much is enough or how much is too little," said Sue E. Berryman, the senior education specialist at the World Bank in Washington, who has researched school-productivity issues.

In Wyoming, the state supreme court last year unanimously overturned the state's school-funding system, finding that spending levels had no grounding in research or reality. There, a special legislative committee is at work on a kind of new math: figuring out the cost of an adequate education.

School-finance debates across the country have increasingly focused on the elements of the "adequate" education most state constitutions guarantee. Lawsuits that traditionally pleaded for equitable spending between wealthy and poor school districts have begun to more carefully address the adequacy issue. (See Education Week, June 17, 1992.)

In most states, a long list of accreditation and performance standards provides a definition of what the state expects from schoolchildren. And as the pressure builds for schools to accomplish more, many observers want states to be as precise about their budgeting as they are about their expectations.

A task force in Illinois this year alerted legislators that the $2,950 the state grants to school districts for each child is not enough to meet the state's performance targets for schools. The panel said the number was more like $4,225.

And the governors of New Jersey and Oregon have said this year that their states' school-funding formulas should be reworked to reflect an accurate cost of educating children.

"Right now, anywhere you want to look, education is revenues," said Bruce S. Cooper, a school-finance professor at Fordham University in New York City. "You give the schools $200, and they spend $200. That's how education funding works."

But Mr. Cooper and others who have worked in recent years to dissect school spending and tie costs to results are noticing the first statewide efforts to make sense of the billions of dollars that are poured into the nation's public schools each year.

States at Work

In Texas, the state's own longtime finance expert is leading a research project aimed at making better sense of school funding.

The state has one of the nation's oldest school-cost studies, published every two years by the legislative budget office. But the numbers the study produces are widely recognized as nothing more than a way to keep spending increases within budget estimates.

Lynn M. Moak, a former finance analyst for the Texas Education Agency and now a consultant in Austin, is working with several state education associations on a new cost analysis--one that uses the state's extensive testing records, local program and payroll accounting figures, and student database to connect spending to achievement and then determine how much it would cost to meet the state's goals.

"This is the new threshold of a lot of work that combines school-finance research and performance-based accountability," Mr. Moak said.

Last year, the Wyoming Supreme Court took a huge step when it told lawmakers that they must be able to defend the state's per-pupil appropriation.

The court laid out a simple, though potentially costly, way to fix the situation: "The legislature must first design the best educational system by identifying the 'proper' educational package each Wyoming student is entitled to have whether she lives in Laramie or in Sundance," Chief Justice Michael Golden wrote in the unanimous decision. "The cost of that educational package must then be determined, and the legislature must then take the necessary action to fund that package."

A legislative panel will wrestle with the order for the rest of this year. The court ruled that the new system be passed by July 1997.

For most states, such rejiggering amounts to a political earthquake.

In Illinois this spring, the idea of meeting the $4,225-per-pupil recommendation of the cost study was proclaimed dead on arrival by legislative leaders not interested in passing a tax increase in an election year.

But state officials are sticking by the number. A 1993 state study that went nowhere with lawmakers tried to conjure up a prototypical school and calculate its costs. This time around, officials studying costs based their recommendation on a study of several low-spending, high-performing schools.

"No one can say this may or may not work because we can point to campuses and districts where this is happening," said Richard D. Laine, an associate superintendent in the Illinois education department. "Unfortunately, the debate has been clouded by political issues."

Political sniping also has taken center stage in New Jersey. Critics there were quick to decry Gov. Christine Todd Whitman's plan to write new core-curriculum standards and estimate the cost of meeting them, which would recalibrate state aid. They have argued that the governor is trying to find an inexpensive way out of a court order to revamp the school-funding system. (See Education Week, May 1, 1996.)

Gov. John Kitzhaber of Oregon said last month that he will lead a four-member task force over the next three years to determine the cost of meeting the targets of the state's 1991 school-reform law. In announcing his plan, he said programs driven by new performance standards inevitably force more pressing questions about costs.

Out of Pandora's Box

But the goal of establishing an actual cost of education may become a Pandora's box, unleashing a host of vexing issues, education-finance observers say.

The first obstacle is reaching consensus on the ingredients of a state-funded education. If that is overcome and a cost is agreed upon, observers note, states will then be forced into finding the money, and school districts will be under even greater pressure to boost their performance.

"I've been trying to get educators to agree to work on a study of elementary school costs for years, and they will not cooperate," said Herman Badillo, the special counsel for fiscal oversight of education to New York City Mayor Rudolph W. Giuliani. "People aren't interested because they don't want to be pinned down on how they are spending money and what they are producing."

"Commendably, states are muddling toward a better way of looking at school funding," said Ms. Berryman of the World Bank, "but it is a very big job that is likely to become just one more political battle.

"But we need to start looking in a technical way at school funding. Right now, we can't even find out what a particular program is costing, much less what it's buying--it's all still based on hand waving."

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