Arun Ramanathan
School finance has the power to bring tears to my eyes. Sometimes, when I am reading the latest School Services of California bulletin, I start squinting. Then I start yawning. Then, before I know it, I’m squinting and yawning simultaneously, causing my eyes to water. When I see the words “revenue limit,” I begin looking for a pillow. The explanation of the difference between a “Test 1” and a “Test 2” year for calculating Proposition 98 funding can actually cause my brain to melt out of my ears.
Despite these disturbing effects, my organization, the Education Trust-West, is focusing our attention on education finance. Earlier this year, we released “The Cruel Divide,” looking at the difference in funding between wealthy and poor districts. After running the numbers, we found that the poorest districts in California actually receive $620 less per pupil than the wealthiest districts. Around the time that we released that paper, the “Occupy” protests were in full swing, and the issue of income inequality was in the media spotlight. To this day, I wonder if I shouldn’t have taken our finance briefs to the Occupy encampment in downtown Oakland and given a detailed explanation of the impact of Proposition 13 on unrestricted school district revenue. My speech would have given protestors something useful to attack – or saved downtown by turning them catatonic.
Last week we released our second finance paper, “Tipping the Scale Towards Equity,” using a new set of school finance data collected by the U.S. Office of Civil Rights (OCR). This paper examines differences in spending on teachers and schools inside California’s 20 largest school districts.
Having worked at the district level, I find this stuff interesting. But I understand why it might not thrill a normal person.
Take our first finding – the presence of large teacher salary gaps between the highest- and lowest- poverty schools in most of the 20 districts. Why should a parent, community member, or teacher care?
Well, as a district administrator, I spent a lot of my time staring at spreadsheets in order to staff schools and central office departments. These spreadsheets contained thousands of FTEs (Full-Time Equivalents) – the term that finance people use when they’re referring to human beings. One of the strange things about these spreadsheets was that each type of FTE cost the same exact amount of money, no matter how many years someone had worked for the district. A first-year teacher costs the same as a teacher with 30 years of experience.
It turns out that most districts use a practice called “salary averaging” when staffing their schools. Even though employees with more seniority cost more money, every teacher at a school site is assigned an identical salary. Unfortunately, because high-poverty schools tend to have a lot of turnover, they are typically assigned younger and less expensive teachers. As a result, they receive a lot less funding than wealthier schools with more senior teachers. If the average salary gap between a poor and a wealthier school is $5,000, a higher poverty school with 30 teachers would be shortchanged $150,000 a year.
This funding gap has a huge impact during a budget crisis. Poor schools get hit with a double whammy. They get less funding for personnel because they have lower-cost teachers. Then, those teachers are the first to get laid off because layoffs are based solely on seniority (not teaching effectiveness or any other factor). The only way to correct this problem is for districts to use real salaries when staffing schools and for state lawmakers to allow districts to base personnel decisions on job performance instead of just seniority.
Connect funding, student needs
This leads to our paper’s second finding – that there is no clear connection between school funding and student need. Fixing the teacher spending gap would go a long way toward solving this problem. But if we want to really fix school funding inequities, we have to provide high-poverty schools with additional dollars based on student need. Low-income students and English learners often enter school academically behind and need additional supports to catch up. Unfortunately, when we looked at the data from California’s 20 largest districts, it wasn’t clear that poor schools were getting more funding than wealthier schools.
Some folks argue that Gov. Brown’s weighted student formula proposal would fix this problem. They’re right that his proposal would provide poor districts with a lot more funding. But if those same folks spent more of their time at school board meetings, they might be less sanguine about the impact of the governor’s proposal on students.
The fact is, there really is no rhyme or reason to district spending. The numbers are twisted by precedent and politics. Without strong state-level requirements, districts could use the extra dollars they would receive through a weighted student formula – money intended for low-income students and English learners – for other purposes. They could even divert the extra dollars generated by poor students to supplement the higher salary costs of more experienced teachers in wealthier schools.
Make reporting uniform and transparent
This leads me to our report’s third finding – that there are big gaps between the per-pupil funding that districts receive from the state and the funding they spend on schools. This finding gave me some serious flashbacks to my budget-cutting days at the district level.
Back then, I was once asked to separate out my $350 million budget for Students Services into central office and school-level FTEs. The goal was to identify more district employees in order to satisfy the school board members who wanted more central office cuts (heads on stakes). To comply with this order, I spent weeks working with department administrators trying to parse out who was working at the district or school level. It’s pretty clear cut with some employees, but not so easy for others who provide direct and indirect services. Without a clear set of rules, we came up with our own.
California lacks a common set of accounting rules covering district- and school-level expenditures. If we had these rules and required districts to use them, we would know exactly how much districts were spending at the central office and at the school level. We would also know what they were spending their dollars on, and be able to compare them against each other.
Requiring that districts follow the same set of accounting rules is no easy task. District lobbyists would wail about mandates and increased costs. But if district leaders thought about it, they might see the benefits of financial transparency. After all, the people who speak at school board meetings are generally saying three things: “Cut them, not me,” “Cut the district, not the schools,” and “The district is hiding money.” If a school district gets $8,500 per student, its leaders should be able to tell every school community exactly how much they’re getting, as well as what’s being spent at the district level and on what. It should be able to tell state policymakers how much money for high-need students is actually reaching their schools.
This level of transparency would empower folks at all levels. Stakeholders could actually check to see whether districts were prioritizing school sites or holding onto dollars intended for high-need students to spend on other obligations such as pension and benefit increases (as critics often claim). Schools and stakeholders would actually see the impact on their budget of failing to implement efforts to reduce inappropriate special education referrals or the extra costs of maintaining under-enrolled sites. They could also compare their expenditures and performance results to those of other schools.
The lingo and rules of school finance might be boring, but their impact isn’t. Funding equity and financial transparency are more than just tweaks to our school finance system. These changes would finally level the playing field for our underserved students and allow us to have adult conversations about how, where, and why we are investing our education dollars at the local level. They could begin to transform our education system in California.
Arun Ramanathan is executive director of The Education Trust–West, a statewide education advocacy organization. He has served as a district administrator, research director, teacher, paraprofessional, and VISTA volunteer in California, New England, and Appalachia. He has a doctorate in educational administration and policy from the Harvard Graduate School of Education. His wife is a teacher and reading specialist, and they have a child in preschool and another in a Spanish immersion elementary school in Oakland Unified.
To get more reports like this one, click here to sign up for EdSource’s no-cost daily email on latest developments in education.