Education Funding

K-12 Cost Studies Add To School Aid Debates

By David J. Hoff — December 03, 2003 6 min read
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Arkansas legislators will have a shopping list when they convene next week to settle the state’s school finance dilemma.

For $356 million, they could improve the quality of the state’s teachers. Another $224.6 million would buy smaller classes, more technology, and improved instructional materials. A cool $100 million would ensure preschools for poor children. And $167 million would put communities with low property wealth on a par with other areas.

The total is $848.3 million—30 percent above what the state spends now on precollegiate education.

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See the accompanying table, “Itemizing Adequacy.”

The items are more reasoned than an 8-year-old’s Christmas wish list. They are in a report produced by a small but growing cadre of experts who specialize in telling states how much they need to spend to meet states’ constitutional requirements to provide an adequate education.

Over the past six years, consultants have been hired in almost half of the states to draw up similar itemized estimates of what it costs to provide the systems of schooling defined by their constitutions. Courts in several states have ordered such studies when they order remedies in school finance cases, as in Arkansas and New York.

Litigants in Nebraska, Kentucky, and other states have commissioned the studies before filing school finance lawsuits. In other states, policymakers are requesting the studies to help guide their funding decisions.

Advocates say the “costing out” studies are important to defining what students should learn, and how much state and local communities need to pay to give them a chance to learn at those levels.

“The logic of this is that the resources will be enough so they will have a fair opportunity to learn what they need to learn,” said Deborah A. Verstegen, a professor of education finance and policy at the University of Virginia in Charlottesville who does such studies.

The studies are vital, Ms. Verstegen and others say, because they give solid evidence of what it will cost for schools to offer the services necessary to improve student achievement.

“You need a methodology to tell you what the needs are in hard dollars,” said Michael A. Rebell, the executive director of Citizens for Fiscal Equity, based in New York City, which this past summer won a school finance lawsuit against the state of New York.

“Any state that is serious about standards is going to ask: What basket of resources do we need to give kids a fair shot at reaching these standards?” Mr. Rebell said.

School finance experts say that the popularity of cost studies started in 1995, when the Wyoming Supreme Court ordered the state to estimate how much was needed to meet the state’s educational standards. (“Court Again Strikes Down Wyo. Finance System,” Nov. 22, 1995.)

Since then, state courts in Arizona and Arkansas have completed such studies. New York state is conducting one to comply with the recent court decision there, which held that the state doesn’t provide enough money for the New York City schools. (“Court Orders New York City Funding Shift,” July 9, 2003.)

Mr. Rebell’s group is conducting a privately financed New York cost study.

Best Estimates

To provide the estimates for such studies, a group of finance experts first defines the elements of a successful educational system for a state, and calculates the cost.

For the Kentucky Department of Education, Lawrence O. Picus and his partners convened panels of educators across the state to craft a vision of the ideal school.

Ideal Kentucky schools, the study concluded, would have pupil-teacher ratios of 15-to-1 in kindergarten through 3rd grade and 20-to-1 in all other grades.

The school year would be 185 days—five days longer than now—and teachers would be under contract for 20 days of professional development, 15 more than now. Those and other changes would cost the state an extra $1.8 billion a year. It currently spends $3.9 billion annually on K-12 education.

“Once you specify the resources, you can cost them out quite accurately,” said Mr. Picus, who is a professor of education at the University of Southern California, in Los Angeles, and conducts the cost studies through his own consulting firm. “The big unknown question is: Did you specify the resources correctly?”

And that’s the reason different studies using the same methodologies sometimes can yield dramatically different results.

For example, Ms. Verstegen’s study, done on behalf of districts suing Kentucky for more money, found that the state needed to add at least $892 million—or 23 percent—to its education budget.

The dramatically different bottom lines are the result of different assumptions of need.

“You can look at each of the elements and argue about whether they should be included or not,” Ms. Verstegen said.

Arkansas’ Challenge

Regardless of which estimates are endorsed, lawmakers in Kentucky or other states are unlikely to appropriate monumental increases for schools in one year.

But last year, the Maryland legislature agreed to raise spending by $1.3 billion, as recommended by a cost study, and promised to do it over six years. The state appropriated enough money to keep the plan on track for the first two years, but budget officials are questioning whether the state can fulfill that pledge next year.

As Arkansas legislators prepare for a special session next week, they’ll review a study that suggests a wish list that just about everyone agrees can’t be fully met.

“We’re going to have to prioritize ... and try to keep moving up as quickly as we can without creating a taxpayer revolt,” said Sen. Brenda B. Gullett, the vice chairwoman of the Senate education committee. Ms. Gullett is a member of the special legislative commission responding to a state supreme court finding that Arkansas is inadequately funding its schools. The panel hired Mr. Picus to write a cost study that estimates how much more the state needs to put into the schools.

Gov. Mike Huckabee, a Republican, has proposed a package of $368 million in new spending that includes lowering class sizes to 20 in grades K-3 and to 25 in grades 4-12, adding professional development, paying teacher performance bonuses, and increasing preschool spending.

The governor’s overall package reflects his sense that Arkansas voters wouldn’t support such a large tax increase, and his belief that a big increase would be bad for the state’s economy, said Terri N. Hardy, Mr. Huckabee’s education policy adviser.

Sen. Gullett said the governor’s cost estimate fits the revenues from a 1 percent increase in the state sales tax. That levy is the only tax the legislature is able to pass with a simple majority; all others would require a two-thirds majority.

“He calculated the value of that and adjusted his figures to that amount,” said Ms. Gullett, a Democrat who represents the outskirts of Little Rock.

Such approaches have been common in the past, when policymakers simply decided how they would divide the money they had available into specific education programs. But that strategy might not pass muster with courts if potential litigants have their own cost study demonstrating that the state isn’t paying enough to meet its goals for schools, according to Mr. Rebell of Citizens for Fiscal Equity.

“On its face, it would strike me as unconstitutional [if decisions are] driven by what the available resources are,” he said. The amount spent on schools, he argued, should be based “on an honest assessment of what’s needed for an adequate education.”

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