States Confront New Mandate on School-Spending Transparency
A tricky financial-transparency requirement in the Every Student Succeeds Act has cranked up tensions among state politicians, school district administrators, and civil rights activists over public understanding of how districts divvy up their money among schools.
ESSA requires districts to break out school-level spending by December 2019—a first-time federal requirement. It's a level of detail unknown even to most district superintendents.
Various interest groups are split over whether such items as transportation, technology, special education, and pre-K—some of the biggest drivers of the rise in school spending—should be categorized as regular school costs, or as extraordinary costs or overhead.
Civil rights activists, meanwhile, expect that the reporting of school-level-spending amounts will reveal to the public where districts' most-experienced and highest-paid teachers work, if those data are presented in a coherent and comparable way.
But state education departments are realizing that it's a daunting task to come up with school-by-school data using districts' sometimes-antiquated finance systems.
The debate has ramped up in recent months as more and more district administrators and state politicians learn about the requirements through their member associations and as state departments look to start collecting the data this fall to meet the deadline. Considering the complexities of the requirement, the U.S. Department of Education last summer gave states a one-year extension to comply.
Starting in December 2019, the Every Student Succeeds Act requires districts to publicly report per-pupil spending by school, not just by district. That school-by-school information must include:
✔ Money spent on staff versus other expenses, such as curriculum, textbooks. and classroom supplies.
✔ What proportion of that spending comes from federal, state, and local sources.
✔ The socioeconomic picture of each school’s enrollment based on student poverty levels.
✔ Demographic breakdown of student enrollment by racial, ethnic, and other designations such as special education and English-language learner.
Many Americans are already familiar with average district per-pupil-spending costs, and superintendents usually explain to their board members and parents during budget hearings how they plan to use that money on salaries, curricula, and new learning initiatives.
But the school-by-school spending figures may fuel debates over teacher-seniority and -placement policies, how much value lawmakers place on some children's education, and whether principals are most effectively using money to boost academic results.
State department officials in recent weeks have attempted to quell superintendents' anxieties through committee hearings, webinars, and communications campaigns.
They argue the data will bring to the public yet another level of transparency on how school practitioners spend taxpayers' dollars. Some state officials say the data could play to their favor as legislators look to overhaul school funding formulas.
Governors and legislatures in recent years have accused districts of wasting money on pet projects and central-office administrators' salaries, and they've called for more accountability of spending strategies.
Last month, New York Gov. Andrew Cuomo, a Democrat, proposed that by next year, the state's education commissioner and budget and finance office should approve school-level-spending amounts for a handful of districts, including New York City. The governor has proposed to add more districts in the future.
Superintendents Push Back
The request, which is currently being debated by the New York assembly, alarmed superintendents' associations across the country.
"It's interposing officials in Albany for the decision of local leaders and school board members and superintendents and other administrators, all of whom are closer to the schools and students," said Robert Lowry, the deputy director of the New York State Council of School Superintendents. "We question whether the state officials would even have the expertise and the capacity to evaluate spending levels between schools."
Dictating school-level-spending amounts will sour district officials' attitudes toward the ESSA reporting requirement similar to the way teachers' attitudes toward standardized testing shifted after test scores began to be used as part of teacher evaluations, Lowry said.
But Cuomo's proposal thrilled civil rights activists and fiscal conservatives who have long theorized that state and federal money meant to equalize funding levels between property-rich and property-poor districts is not targeted toward the most academically struggling and poorest schools, but instead toward the schools where parents' groups hold political sway.
"This data has the huge potential to empower equity-minded advocates and practitioners," said Ary Amerikaner, the director of P-12 resource equity for the Education Trust, an advocacy group that pushes for more school accountability. "If budgets are our most meaningful value statement, we have to date not been able to actually have a conversation about which schools and which students we are valuing within our districts up until now."
Because the data could potentially cause so much consternation, school board members, district administrators, teachers' groups, and parents have turned their attention in recent months toward state departments as they decide how districts will collect and present the data.
State departments in turn have corralled large task forces to decide how to comply with the law.
Illinois' department of education several months ago began meeting with pre-K and special education advocates and district superintendents to decide how to treat certain costs.
Some school costs, such as pre-K centers, building maintenance, and special education can make a school's costs look bloated, leading to faulty conclusions about school spending, said Robert Wolfe, Illinois' chief financial officer.
Illinois ultimately decided to leave some decisionmaking authority with district officials over how to split those costs.
"There are ramifications for each decision point," Wolfe said. "We had to ask how does it help make data-driven decisions within districts?"
The most vexing challenge in complying with the financial-transparency requirement is actually technical rather than political, many state officials say.
In many states, there are hundreds of districts, and not all districts in any one state necessarily use the same finance software. While many large urban districts can easily use their school finance software to come up with school-level-spending data, other districts cannot.
Illinois, like several other states, says that many districts will need to update their school finance software, a potentially expensive and burdensome process.
In other states with especially complex funding formulas, such as Delaware or Wyoming, officials are struggling to determine how to break out state and local revenue sources as ESSA requires.
But state officials and school finance experts who have seen school-level-spending data say the hurdles states face now will soon be all worth it.
They predict the information will lead to robust discussions between policymakers and parents about whether district and school leaders are putting their money where their mouths are.
Federal, state, and district leaders in recent years have heaped myriad initiatives on schools to improve test scores. School-level-spending data, many predict, will reveal whether the money behind those initiatives is being directed as intended or, more crucially, how much money matters in the end.
"I think it's critically important that we activate the measures inside schools that matter so much for kids," said Marguerite Roza, a school-finance expert based at Georgetown University who has been heavily involved in helping states comply with the law's requirement. "Parents and educators have to believe they live in a fair world. But we have not had that financial information to prove that to them. With this information, we'll be able to say, 'You're spending the same amount as several of your peers, but your outcomes are so much worse.' That's an entirely different conversation."
Vol. 37, Issue 22, Pages 18-19Published in Print: February 28, 2018, as States Confront ESSA Mandate on Spending Transparency