How Much Is Enough?

Two years ago, Wyoming came up with a new funding recipe for its 49 school districts. It went something like this: Take two panels of teachers and school administrators. Ask them to determine the ingredients of a successful school. How many students should be in a class? Or a school? What sorts of training will teachers need?

Then, take their recommendations, total up the costs, and adjust the numbers to account for geographical price differences. Voila! A rich and hearty education, with healthy portions for all.

A third of a continent away, however, Ohio cooks up its funding stew differently:

Take all the districts that meet the state criteria for success--the ones, for example, with high graduation rates and most students passing state tests. Discard the poorest and richest districts and the ones that spend significantly more or less than the rest. Look at what the remaining 102 districts spend on each student. Adjust and serve similar amounts to the other 500-plus districts.

Though vastly simplified, both cases represent new and different ways of thinking about school finance.

Where courts and lawmakers once used fairness as the gold standard for school funding, many are now beginning to think about whether the amount of money that gets allocated is enough. The question is deceptively simple: How much should an education cost?

As they try to determine a level of funding that is “adequate,” many states are turning to school finance consultants and researchers. But even the experts are divided. Does Wyoming’s recipe bake better schools than Ohio’s? No one knows. The benefits and drawbacks of both are still widely debated.

Nevertheless, courts and legislators are demanding clear solutions now.

“In not fully realizing how complicated this issue is, some judgments appear to expect greater precision than our craft can provide,” says James W. Guthrie, a professor of education and public policy at Vanderbilt University in Nashville, Tenn., and an architect of Wyoming’s funding plan.

Court-Ordered Changes

Much of the current emphasis on sufficiency in funding is driven by the courts. Alabama, Mississippi, New Hampshire, North Carolina, Ohio, Vermont, and Wyoming all are struggling to define adequacy in response to rulings issued over the past 10 years in school finance lawsuits.

But an equally important impetus for the shift from equity to adequacy is the nationwide movement to raise academic standards and to compel schools to make sure that students meet them. From state capital to state capital, policymakers are holding schools accountable for the performance of the students they serve.

“It begs the question, do they have enough resources to realistically be expected to achieve that level of success?” says John Augenblick, a Denver-based consultant who has advised several states on school finances. “How much is enough?”

That turn in thinking is promising, experts say, for two reasons. First, it forces states to ask the question: Enough to do what? The answers often take the form of specific performance targets for students. Second, it firmly harnesses the finance system to educational objectives.

“The problem is that there’s been all the research unresolved at this point on the relationship between spending and achievement,” Augenblick adds. “It would be wonderful if we could use research,” he adds, to settle the issue once and for all. “The debate has involved all sorts of scholars for 35 years without being resolved to anybody’s satisfaction.”

Four Approaches

As states try to come up with their own versions of an adequate education, at least four distinct approaches have emerged.

All are essentially block grant formulas that hand districts a lump sum of money that they could spend more or less as they chose:

• The “professional judgment” approach, using panels of education experts, that was developed for Wyoming by Guthrie and his colleague Richard Rothstein, a research associate at the Economic Policy Institute in Washington.

• Attempts such as Ohio’s to draw funding levels from typical high-performing districts.

• Sophisticated statistical analyses in which economists use extensive data from districts to correlate acceptable levels of pupil performance with the dollar amounts needed to meet those targets.

• Attempts to figure out what schools need based on the costs of popular school improvement programs, such as Modern Red Schoolhouse or Success for All.

Each approach has its strengths and weaknesses. Critics of the professional-judgment model, for example, point out that it’s not clearly yoked to results for students.

“There’s no evidence that what professional educators say it will take will actually work,” says William D. Duncombe, an associate professor of public administration at Syracuse University in Syracuse, N.Y.

In Wyoming, the panelists looked at studies suggesting that students fare better in small classes, for example, but there’s no way to know for sure exactly how small those classes should be in order for students to achieve at specific high levels.

Other experts, though, count that method’s reliance on educators’ opinions as a unique asset. “Educators know what’s working and what isn’t working, and we don’t rely on their judgment very often,” says Jay G. Chambers, a senior research fellow at the American Institutes for Research in Palo Alto, Calif.

Ohio’s approach, which is also used in New Hampshire and Mississippi, has been criticized for “cherry picking” districts that meet the state’s success criteria and assuming that districts receiving similar amounts of dollars can produce the same results, even though they may have different mixes of students and different challenges.

To be fair, Augenblick, who developed that approach, recommends that states later make some adjustments. He suggests looking at such factors as the percentage of students in a district who are poor enough to qualify for free or reduced-price lunches.

But that kind of tinkering, other analysts say, may not go far enough to assure that poorer districts aren’t penalized--particularly since the original estimates may not include a state’s most distressed urban centers.

Complicated Analyses

The method’s strength--one it shares with Wyoming’s formula--is that it’s easy to understand.

“Both these approaches represent a step that is logical to legislators, makes some sense on its face, allows the state to come up with a procedure that can be replicated, and that produces a number,” Augenblick says.

It’s hard to make the same kinds of arguments for the newer statistical approaches, which are more admired by academics than they are by legislators and policymakers. “When one takes these econometric approaches and tries to explain on the stand or before a legislative panel what a ‘multiple regression’ is or what ‘beta coefficients’ are, legislators’ and jurists’ eyes glaze over,” Guthrie says.

In simple terms, the goal of some of those strategies is to come up with cost indexes that are linked to specific levels of performance in districts with certain characteristics. “If you want to assure that everybody has a minimum level of resources, then you have to recognize there are cost differences,” says Duncombe, who, with a Syracuse University colleague, John M. Yinger, conducted some of those analyses. “You have to pay teachers more in New York City than someplace on Long Island.”

What is more, for a variety of reasons, teachers of the same caliber teaching the same grade level in both districts may not necessarily be able to produce the same results. The researchers take those efficiency factors into account.

In a paper prepared for a National Research Council panel on school finance, Duncombe and Yinger draw an analogy with calculating the costs of maintaining an indoor temperature of 72 degrees in similar homes in different parts of the country. Such an analysis would have to account for: geographical variations in fuel prices; the amount of fuel required; decisions that families living in those homes make, such as whether to use weather stripping; and actual temperatures inside and outside, among other factors.

A Minneapolis home in wintertime would naturally cost more to heat than a similar house in sunny Miami.

“I think the real strength of our approach is that we can provide estimates of how much more it costs to educate kids in some areas based on empirical evidence,” Duncombe says.

But the two economists’ methods have also, in some cases, produced some startling numbers. By one such estimate, for example, the per-pupil cost of enabling districts to ensure that every high school student passes the rigorous New York State regents’ exams would be 2 to three times greater in New York City than it would be in a more typical district on Long Island.

In reality, however, New York City spent $5,000 per pupil in 1996, compared with an average of $8,600 in suburban districts around the state. “One of the things about our approach that really grates on people is that we’re talking about pumping significant, additional resources into large cities, and many people view those large cities as black holes,” Duncombe says.

“The fundamental objective is not efficiency,” adds Yinger, a professor of economics and public administration. “The fundamental objective is helping kids.”

‘Costing Out’ Improvement

One thing all three methods fail to do is give schools a blueprint for improving learning, according to Allan R. Odden, a professor of educational administration at the University of Wisconsin-Madison. Even Wyoming’s approach, which is based on recommendations for what constitutes the state’s legal definition of a “proper education,” does not dictate how districts should spend their dollars.

For that reason, Odden advocates basing school costs on popular, off-the-shelf models for school improvement. He has “costed out” the expenses involved in all seven of the designs supported by New American Schools, a private group based in Arlington, Va., that promotes innovation in public schools, and calculated the investment needed to bring every school district in the country up to the same spending levels.

“They represent some of the best thinking in America about what works,” Odden says of New American Schools’ models. “So at least it provides a starting point for what we need.” The drawback is that the track record for many of those models is mixed. It’s not yet clear that they can definitively improve learning or that they can do it in every district--a weakness Odden concedes.

“There’s no perfect recipe,” says Helen F. Ladd, a co-chairwoman of the NRC panel that examined the adequacy issue in a report on school finance released this month. “We recommend that states do two things. One is recognize that there’s not one simple recipe, and the other is to keep trying as hard as possible.”

States may, in fact, use several methods at once. The statistical approach, for example, could be used as the standard against which policymakers could check some of the simpler, easier-to-understand approaches to calculating sufficient funding, Ladd says.

Political Concerns

Whatever direction states choose, the panel concludes, they should keep some important caveats in mind. First, adjustments have to be made for the extra cost of schooling in districts with high concentrations of poor students.

Second, adequacy is ultimately a value judgment.

“A key danger,” the panel warns in its report, “is that political pressures may result in specifying adequacy at so low a level as to trivialize the concept ... or at so high a level that it encourages unnecessary spending.”

New Hampshire lawmakers, for example, had several options when they built a funding formula this year using Augenblick’s methodology. They could have taken a simple average of all the high-performing districts that fall in the typical range. Or they could have followed Ohio’s example and focused on the bottom half of the districts that fell in that range.

They chose instead an even cheaper option: They tagged per-pupil spending to that of the single lowest-spending district in the lot.

In Ohio, the legislature rejected Augenblick’s estimates on the amount it would take to bring districts up to adequate levels and opted instead to phase in incremental increases in funding over a period of years. The state is not scheduled to reach the amount originally recommended--$4,294 per pupil--until the 2001 fiscal year. In Wyoming, Guthrie and Rothstein recommended spending $6,580 per pupil.

Both the Ohio and New Hampshire plans are being challenged in court, as is Wyoming’s. And experts say adequacy issues will continue to be contentious well into the new century “For me, this is what’s going to dominate school finance discussions for the next 15 or 20 years,” Odden says.

Though they may disagree over the methods, Odden and other experts agree that the new approaches are an improvement over current practices. Many states, Augenblick says, base their school finance plans on “almost nothing,” often looking primarily at how much they have to spend.

“It’s more of an improvement to go down any of these roads,” he says, “than it is to not to have any road you’re going on.”

The Research section is underwritten by a grant from the Spencer Foundation.