School Funding Gets Put Under States' Microscope

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Orlando, Fla.

State officials gathering for the annual school finance seminar by the National Conference of State Legislatures and the Education Commission of the States started with the premise that they should plan to stretch their dollars before looking for ways to spend more.

With the theme of ''maximizing the investment in education reform," school spending was quickly under the microscope.

John Augenblick, a consultant to states on school finance issues and the president of Augenblick & Myers, a Denver-based firm, said his firm's studies show school operating budgets at their highest level ever, about $270 billion a year. And state aid to schools, he said, represents the largest item in states' budgets, typically taking up from 25 percent to 40 percent of spending.

Outside of inflation, according to Mr. Augenblick, the leading reason for rising school costs is a "dramatic increase" in the number of students enrolled in special education programs, followed by the growing portion of students from low-income families. More--rather than higher-paid--teachers and aides also account for higher costs.

Raising needed school funds, he said, is only part of the battle. The real challenge lies in making state formulas work better. Mr. Augenblick said a good finance system is one in which the needs, wealth, and tax efforts of school districts are taken into account--where all districts are spending at an adequate level.

States with sound distribution formulas usually avoid prolonged legal fights and hear fewer complaints from districts about pressures on local budgets.

Panelists here tried to translate school finance messages arising from the trend toward creating charter schools--independent public schools, often outside the regular district, that get state funding in exchange for meeting performance standards.

The system of charter schools in place in many states "may be the first time the education system has had to think about what accountability means," said Eric Premack, the director of the Charter Schools Project at the Institute of Education Reform at California State University-Sacramento.

The upstart schools, he said, are forcing lawmakers, district officials, and taxpayers to ask: "Whose money is it?"

Mr. Premack, a supporter of the new brand of schools, said that in many states, restrictive charter school laws tend to keep the new schools under the fiscal control of a school district, and therefore "tend to reinforce the status quo." But states that grant charter schools more flexibility are "allowing innovation here and there and leveraging change in the broader system by putting fiscal pressure on the administration."

Despite their promise for tying money to management, many charter schools, he said, still need better financial expertise at the state, district, and school levels.

Meanwhile, Bob Wehling, a senior vice president at Procter & Gamble Co. and a longtime advocate for public schools, exalted the benefits of good early-childhood-education programs and implored state officials to focus resources on the early grades.

"Most cases of delinquency and failure can be traced back to K-3," Mr. Wehling said. "Our children do not recover well from early failure. ... So pay me now or pay me more later."

Finally, authorities from California, Nevada, and North Carolina discussed their experiences with reducing class sizes--and the resulting benefits to students, teachers, politicians, and parents--in the seminar's concluding session.

Patrick Harman, an analyst for SERVE, a federally funded think tank at the University of North Carolina at Greensboro, pointed to Tennessee's reduced-class-size program in the mid-1980s and the results of such an initiative in North Carolina's Burke County schools in the early 1990s. Overall, he said, studies showed a relationship between smaller class size and higher student achievement. Children in the early grades also appear to benefit more from the smaller classrooms, he said, citing research.

But H. Pepper Sturm, an analyst with Nevada's legislative-counsel bureau, said studies of his state's reduced-class-size efforts, which began in 1990 and were completed last fall, have demonstrated mixed results. The conclusion, he said, is only that "warm, fuzzy surveys"--those measuring satisfaction among parents, teachers, and principals--reflect positively on the state's smaller-class-size programs.


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