New Service Will Help Compare Districts’ Spending With Results

By Lynn Olson — February 16, 2000 3 min read
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A Wall Street company that provides independent financial analyses and credit ratings for businesses and school districts is offering a service that will enable states to link data about financial expenditures with academic results and compare performance across districts.

Standard & Poor’s, a division of the McGraw-Hill Cos., announced the introduction of its School Evaluation Services earlier this month. In an address to the Pennsylvania legislature last week, Gov. Tom Ridge announced plans to use the system in his state. Gov. John Engler of Michigan made a similar commitment in his State of the State Address in January.

“Until now, many states and school systems have had no consistent and independent way to link academic and financial-performance indicators,” said William J. Cox, a managing director at Standard & Poor’s in New York City. “SES fills that void by assembling and clarifying disparate data, analyzing academic and financial trends, and offering our independent view of the comparative performance of school districts.”

Eugene W. Hickok, the secretary of education in Pennsylvania, said the new service offered several advantages.

“First of all, it puts information that’s understandable in the hands of decisionmakers at every level, from buildings to districts to the state,” he said. “And it’s done by an organization that is known for its neutrality and objectivity, so it can’t be seen as a Republican agenda or a Democratic agenda.” Instead, he observed, the service appears driven by “a management-information-improvement agenda.”

By looking at performance as a function of spending, he added, the service “has the potential to really change the paradigm.”

“It establishes, for the first time, an educational bottom line,” Mr. Hickok argued.

Available Online

Developed after three years of research, SES will provide both quantitative and qualitative analyses of existing data in six categories: district expenditures; student outcomes; return on resources; finances, taxes, and debt; learning environment, such as class and school size; and demographics.

The analyses will be available on a World Wide Web site created for each interested state and updated annually. The company is offering a similar service to individual districts.

One of the more unusual features will be measures that gauge a district’s return on its expenditures. For example, SES reports will include “performance cost indicators,” which calculate a numerical ratio for each district that factors in operating expenses, students’ scores on statewide tests, and participation rates in those tests. The ratios can be used by states to identify districts that demonstrate comparatively strong bang for the buck.

“We specifically do not rank or rate school districts,” Mr. Cox said in an interview. Instead, the system will compare a district with its neighbors, the statewide average, districts with similar demographics, and its own performance over time. The system also will provide extensive information on the contextual factors, such as the proportion of children living in poverty, that can influence student performance.

“We see the service as complementary to what states are already doing in the form of their accountability measures,” Mr. Cox said.

Michigan’s Gov. Engler, addressing the state legislature Jan. 19, said the service will let local officials and the public see how their districts stack up.

“For example,” he said, “I can envision school business officers accessing the Internet to see if their district is putting more money into their classrooms than peer districts, or if they are achieving consistently better performance on standardized tests. Whatever the use, Michigan citizens will be better informed about our $13 billion investment in public education.”

Cost Will Vary

States must make a multiyear commitment to using the system, which could cost anywhere from a few million dollars to $10 million annually, depending on the state and its needs. Gov. Ridge, for example, has requested $2.5 million for the coming fiscal year in Pennsylvania.

Although SES won’t be able to provide state-by-state comparisons on every data point, Mr. Cox said, the framework and the format will be the same, facilitating comparisons that are often difficult to make.

And while few states have the data necessary to do such detailed analyses on a school-by-school basis, the company will make that option available to states and interested districts, he said.

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A version of this article appeared in the February 16, 2000 edition of Education Week as New Service Will Help Compare Districts’ Spending With Results


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