NEPC Resources on School Finance and Funding
NEPC Review: California Charter Schools: Costs, Benefits, and Impact on School Districts (Center on Reinventing Public Education, May 2019)
The Center on Reinventing Public Education recently released a series of three policy briefs on the financial impact of charter schools on nearby school districts in California. The briefs are intended to inform ongoing debates over charter school financing and expansion in the state of California. This review finds that the briefs fail to accurately or fully apply the relevant research and data. They are useful only in pointing to some important issues that policymakers should consider; their analyses of those issues are, however, generally superficial and misleading.
NEPC Review: Fairness in Facilities: Why Idaho Public Charter Schools Need More Facilities Funding (Bellwether Education Partners, January 2019)
A report from Bellwether Education Partners contends that more funding should be given for charter school facilities. Focusing on a series of case studies in Idaho, the report argues that charter schools are unfairly denied funding for the construction and renovation of their school buildings. The examples the report relies on, however, are not “apples-to-apples” comparisons, and this makes any statewide generalizations suspect. Further, the report’s calculation of “costs-per-seat” ignores the reality that different students have different needs. Consequently, public district schools, which enroll proportionally more English language learners and students with disabilities, will likely have greater facilities expenses per pupil than charter schools. The report bemoans the fact that charter school facilities are not part of local school districts’ bonds and tax levies, yet it does not acknowledge that charter facilities are often owned by private entities. Mandating that local taxpayers support charter facilities would, therefore, force them to pay for buildings they would not own. Given these limitations, the report provides little guidance for policymakers and other stakeholders at a time when Idaho is working to overhaul its school funding system.
Does Closing Schools Pay Off?
NEPC Review: Everything You Know About State Education Rankings Is Wrong (Reason Foundation, November 2018)
The libertarian Reason Foundation recently published a policy brief that offers an alternative ranking of states’ education systems. The brief is based on a working paper from the Department of Finance and Managerial Economics at the University of Texas at Dallas (UTD). These two reports begin with the presumption that high average test scores combined with lower school spending should be the basis for state rankings, which are reasonable premises, depending upon how the analyses are approached. But the reports then head off the rails. Offering a ‘corrected’ representation of student outcomes and a crude analysis asserting that spending has no relation to those outcomes, the reports declare states such as New Jersey and Vermont to be poor-performing, highly inefficient systems by comparison to states like Texas. The reports then estimate a regression model to confidently assert that the higher performing states are those with a) weaker teachers’ unions and b) more children in charter schools. However, the reports’ corrected outcome measures, weighting significantly unbalanced racial groups as equal and treating racial groups as equated across states without regard for economic status, are specious at best. Regressing multiple, highly related, interdependent measures against a specious outcome measure leads to even more suspect findings, and would only mislead policymakers.
The Education Debt
NEPC Review: Money for Nothing: The Relationship Between Various Types of School Spending and Academic Outcomes (Wisconsin Institute for Law and Liberty, August 2018)
The cost and productivity of schools is hotly debated across the nation. Left-leaning groups argue for equitable funding and equality of opportunity. Right-leaning organizations contend that costs are too high and money is unwisely used. The Wisconsin Institute for Law and Liberty (WILL) joins this debate with Money for Nothing, which claims that Wisconsin does not get a good return on its educational investment. The report is based on three analyses: (a) of the ratio of non-teachers to teachers, (b) of per-pupil spending, and (c) of teacher pay. The report suggests there are too many non-teachers, per-pupil spending is not linked to higher outcomes, and teacher pay makes no difference in test scores. But critical errors in study design fundamentally negate these conclusions. The report flounders in arguing causality from correlation and misinterpreting statistical significance as representing meaningful policy effects. While “statistically significant” in many cases, the results are minuscule. This leads to false or unsupported conclusions clouded by the omission of critical details that prevent replication or confirmation. Rife with undocumented policy claims, the results run contrary to the literature on spending, administrator effects, and teacher effects. Unfortunately, no literature review is provided. The report fails to address the efficacy of interventions such as class size and early high-quality childhood education. The off-point theoretical base, flawed assumptions and meager findings shows the report earned its title, “money for nothing,” which could leave unsuspecting policymakers in dire straits.
NEPC Review: Fiscal and Education Spillovers from Charter School Expansion (Massachusetts Institute of Technology, July 2018)
A paper by two researchers at the Massachusetts Institute of Technology examines the consequences that follow from an expansion in the number of charter school places available for enrollment. The study uses data from Massachusetts, where charter school growth has been carefully managed and where there was significant excess demand for charter school places. In 2011, the state increased the cap on charter school enrollments in districts with low test scores, resulting in a large increase in charter school enrollment in some of these districts. The paper analyzes three outcomes: (a) changes across charter and non-charter public schools in funding (how much resource was available per student), (b) resource allocation (how schools spent their funds), and (c) achievement (how well students performed on academic tests).
Are Private Schools Really Better?
NEPC Review: Is Public Schooling a Public Good? An Analysis of Schooling Externalities (Cato Institute, May 2018)
A report from the Cato Institute opens with Horace Mann’s well-known conviction that public schools are the bedrock of a democratic society – a public good that should be made available to all. Yet the report, Is Public Schooling a Public Good? An Analysis of Schooling Externalities, improperly conflates the civic and economic definitions of a public good. Although the report begins with Mann’s vision of the role of public schools as building a better society, it then misleadingly shifts the analysis to the economic value of public schools as a market-based “good” like steel or corn. The report relies on a false equivalence of the civic and economic definitions of a public good to advance a proposal for de-funding public schools and introducing a nationwide education savings account (voucher) program. While there is extensive research on the educational purposes of schooling, the Cato report’s limited review of this literature consistently misrepresents the meaning, scope and implications of this literature. The result is a portrayal of public schools as “agents of harm” for what appears to be an ideologically driven thought experiment. Even for those who might be in favor of vouchers, the report’s imbalance, flawed logic and limited research base render the report of no use to policymakers.
NEPC Review: Bigger Bang, Fewer Bucks? (University of Arkansas Department of Education Reform, February 2018)
A report released by the University of Arkansas Department of Education Reform contends that charter schools produce more achievement per dollar invested, as compared to public schools. This newest report is focused on city-level analyses in eight US cities (Atlanta, Boston, Denver, Houston, Indianapolis, New York City, San Antonio, and Washington D.C.) and uses cost effectiveness and Return on Investment (ROI) ratios. It concludes that charter schools deliver a weighted average of an additional 4.34 NAEP reading points and 4.73 NAEP math points per $1000 invested. The report also argues that that charter schools offer an advantage of $1.77 in lifetime earnings for each dollar invested, representing a ROI benefit of 38%. However, there are a variety of methodological choices made by the authors that threaten the validity of the results. For example, the report uses revenues rather than actual expenditures – despite well-established critiques of this approach. The report also fails to account for the non-comparability of the student populations in charter and comparison public schools. Three other problems also undercut the report’s claims. First, even though the think tank’s earlier productivity report included a caveat saying that causal claims would not be appropriate, the new report omits that caution. Second, the report’s lack of specificity plagues the accuracy and validity of its calculations; e.g., using state-level data in city-level analyses and completely excluding race and gender. Finally, the authors again fail to reconcile their report with the extensive literature of contrary findings.
NEPC Review: Evaluation of the Teacher Incentive Fund: Final Report on Implementation and Impact of Pay-for-Performance Across Four Years (Institute of Education Sciences, December 2017)
This review examines a report evaluating four years of implementation of the 2010 Teacher Incentive Fund (TIF) to determine whether pay-for-performance (PFP) bonuses to teachers and principals improve student achievement. The report notes that the goal of PFP is to motivate improved educator performance and to attract and retain more effective teachers, thereby increasing student achievement. The report found that PFP marginally increased student test scores in reading and math by year two and that it was associated with slightly higher classroom observation ratings; it also found that classroom observation ratings were not associated with student test scores and that PFP had no effect on filling teacher vacancies. Problematic issues in the report involve combining non-comparable sites, employing different outcome measures, and generating a misleading cost-effectiveness analysis. Although several thorough analyses are presented, the data do not support the report’s suggestion that PFP holds promise to address achievement disparities. Overall, because of the report’s incorporation of a polyglot of outcome measures of questionable validity, this review finds that the report lacks utility for policymakers.
NEPC Review: Student-Centered State Funding: A How-to Guide for State Policymakers (The Foundation for Excellence in Education (ExcelinEd), November 2017)
The policy brief Student Centered State Funding: A How-to Guide for State Policymakers attempts to illustrate and explain to state policymakers how to design a state school funding system whereby all state and local dollars may flow freely, by parental choice, following children to local district, charter or private schools. In particular, the brief seeks to provide state policy guidance on setting specific funding levels for each child. These “money follows the child” approaches provide a system that eases the process of funding an assortment of school choice programs. Unfortunately, this colorful multi-page infographic suffers from three major shortcomings as a guide for state policymakers: First, the brief advances the false dichotomy that advocates for state and district school finance systems to focus on funding the child, not funding the essential institutions that serve those children. This dichotomy wrongly promotes the idea that there is no benefit to children of equitably and adequately financing educational institutions. Second, the brief is based on overly simplistic, frequently misrepresented, and often outright incorrect versions of the status quo, including overbroad mischaracterizations of how schools are currently financed. Third, the details of the brief’s proposals and espoused benefits are entirely speculative and unsubstantiated, in some cases simply made up and in other cases supported only by insular and circular self-citation to previous work that itself cites no strong empirical support. For these reasons and others, the report is of absolutely no value to policymakers for informing the design of state school finance systems or school district resource allocation formulas.
NEPC Review: School District Reform in Newark (National Bureau of Economic Research, October 2017)
In 2010, Facebook CEO Mark Zuckerberg announced, with great fanfare, a $100 million challenge grant for the support of a series of reforms in Newark, NJ schools. The two reports reviewed here are the first attempt at a comprehensive assessment of the impact of the Zuckerberg donation on student achievement. As such, the reports, which were written by a team of economists, have garnered significant attention. The reviewers evaluate the reports and their potential contribution to education policy research.
NEPC Review: Charter School Funding: Inequity in New York City (University of Arkansas Department of Education Reform, August 2017)
A report by researchers at the University of Arkansas concludes that charter schools in New York City are not fairly funded, in comparison to district schools. The report asserts that this inequity is especially big for charter schools that are not co-located in public schools; and describes expenditure patterns across schools that show no clear differences between charter schools and district schools. This review of the report raises several concerns. Perhaps most importantly, the report simply does not attempt a rigorous comparison across schools. It assumes that any differences in student characteristics across charter and district schools are trivial, therefore concluding that raw, unadjusted funding amounts are sufficient for assessing fairness. It does not undertake any sensitivity testing to identify the precision of its estimates, nor does it investigate in detail what the optimal amount of funding should be for charter schools that are not co-located in public school buildings. Finally, New York City has significantly reformed its funding regulations for charter schools since the data upon which the report is based were collected, rendering the report’s estimates policy-irrelevant.
NEPC Review: The Tax-Credit Scholarship Audit: Do Publicly Funded Private School Choice Programs Save Money? (EdChoice, October 2016)
This report asserts that tax credit scholarship programs, that distribute scholarships to students via Scholarship Tuition Organizations (STOs), have saved state treasuries between $1.7 and $3.4 billion dollars since 1998. The report argues that these programs are able to realize fiscal savings as a result of students leaving public schools and entering private schools (defined as “switchers”). The report claims that the percentage of students leaving public schools, coupled with the offset of variable per-student costs that districts no longer need to expend, have resulted in the sizable financial savings for state governments. This review questions the method used to estimate the percentage of switcher students across these various programs, and examines how the report determines variable cost fluctuations for each student that leaves public schooling. Since no STO programs require officials to track data on which students transfer out of public schooling into private, these lax accountability standards have led the report author to estimate fiscal savings using conjecture. Instead of following students, they interpreted broad population changes to STOs. Consequently, the results of this report do not provide an acceptable causal conclusion for policymakers. Suggestions for more extensive accounting procedures along with more nuanced methodologies for calculating true variable student costs are discussed.
NEPC Review: Renewing Our Cities (EdChoice, March 2017)
Two reports contend that the introduction of school choice can promote economic development in economically distressed urban areas. The first report, published by EdChoice, presents a case study of a charter school that has, according to the report, contributed to the economic development of the city of Santa Ana, California. The second report, published by the American Enterprise Institute, presents a proposal for a hypothetical voucher-like program that, if implemented, would purportedly spur economic development in high-poverty neighborhoods by luring higher income families into those neighborhoods. This review explains that both reports overlook significant bodies of relevant research literature and make unsupported claims that rely on flawed logic and data. The EdChoice report fails to collect and analyze data related to the report’s causal assertion that economic development in Santa Ana resulted from the establishment of the charter school. The American Enterprise Institute report’s claims about the benefits of the proposed program to publicly fund private schooling are unsupported by existing research. We conclude that these reports offer little useful guidance for policy or practice.
NEPC Review: Hidden Money: The Outsized Role of Parent Contributions in School Finance (Center for American Progress, April 2017)
While inequalities in school funding resulting from state and local policies have long been a source of concern to education researchers and policymakers, a report from the Center for American Progress examines a source of educational inequality that receives less attention: private fundraising by parents. It focuses on the 50 Parent-Teacher Associations (PTAs) that raised the most money in 2013-2014, with two main findings. First, the PTAs raising large amounts were located in schools and districts with low rates of student poverty. Second, while a PTA in a high-poverty community may raise only a few hundred dollars, PTAs in this sample raised hundreds of thousands of dollars each year. Using case studies, the report considers district regulation of private fundraising. This review concludes that the report’s findings about the scope and beneficiaries of private fundraising are credible and important—showing the impact successful PTAs can have. However, the focus on a small number of schools and districts, a lack of attention to school and community context, and problems with the case study design limit the report’s overall relevance. In addition, it is important to note that most funding inequalities arise at the state level; funds raised by parents represent only a minute portion of overall school spending. Nevertheless, the report’s recommendations, especially in support of equity grants, will be useful to district-level policymakers.
NEPC Review: Leveraging ESSA to Support Quality-School Growth (Thomas B. Fordham Institute and Education Cities, March 2017)
A report offers a how-to guide for reform advocates interested in removing communities’ democratic control over their schools. The report explains how these reformers can influence states to use the Every Student Succeeds Act (ESSA) Title I school improvement funds to support a specific set of reforms: charter schools, state-initiated turnarounds, and appointment of an individual with plenipotentiary authority over districts or schools. While the report acknowledges that the research evidence on the effectiveness of these reforms as school improvement strategies is limited, it uses a few exceptional cases to explain how advocates seeking to influence the development of state ESSA plans can advance them anyway. As this review explains, support for the effectiveness of these approaches is simply too limited to present them as promising school improvement strategies. The report omits research that evaluates the models relative to other school reform initiatives, and it fails to take into account the opportunity costs of pursuing one set of policies over another. It also relies on test-score outcomes as the sole measure of success, thus ignoring other impacts these strategies may have on students and their local communities or the local school systems where they occur. For these reasons, policymakers, educators and state education administrators should be wary of relying on this report to guide them as they develop their state improvement plans and consider potential strategies for assisting low-performing schools and districts.
Virtual Schools in the U.S. 2017
Review of Reimagining Learning: A Big Bet on the Future of American Education
Philanthropic involvement in K-12 education is growing, and it increasingly shapes the direction of reforms pursued throughout the country. A recent report from the NewSchools Venture Fund offers a thought experiment on how philanthropists can make a “big bet” over the next decade on innovative schools—a broad category that generally includes schools with a high degree of education technology use and so-called personalized approaches to learning that likely utilize digital platforms. Unfortunately, the report fails to provide a meaningful examination of research or a thorough basis for its recommendations. This critique focuses on six key concerns regarding the report: it fails to consider human capital constraints or to sufficiently consider obstacles confronting classroom technology usage, it overlooks equity concerns and past problems with dependence on external professional services, and it ignores both the potential for disruptive reform churn and the danger of philanthropic efforts altering public education systems in undemocratic ways. For these reasons, the report’s usefulness to policy and practice is limited.
NEPC Review: Bang for the Buck: Which Public Schools in Milwaukee Produce the Best Outcome Per Dollar Spent? (Wisconsin Institute for Law and Liberty, May 2016)
The authors of this report created “efficiency scores” for Milwaukee schools and, on the basis of those scores, draw conclusions about the relative efficiency of Milwaukee’s charter and traditional public schools. A first set of scores was generated by dividing test scores in math and science by per-pupil funding. In a second analysis, “efficiency scores” were estimated for school types using a regression model that also accounted for selected student demographic characteristics. Several major problems arise from the authors’ approach: First, test scores do not comprehensively represent the purposes of schools. Second, threats to the validity of the author’s assumption that there is uniform financial accounting across schools and types are not addressed. Third, the analytic description of the study was incomplete, making interpretation difficult. Fourth, the report makes strong but unmeasured claims about the superior “efficiency” of charter schools based on their having greater autonomy. Finally, the authors did not appear to adjust for selection effects – effects that would prove fatal to their conclusions. As a result of its manifold flaws, and because its conclusions are not supported by the evidence presented, the report is of little if any use to policymakers.
Update: Will Flanders and CJ Szafir, the report's authors, have posted a response to the review. The response can be found immediately below Cobb's original review of their report and at: http://www.will-law.org/will-blog-will-responds-criticism-colorado-group/.
Casey Cobb's rejoinder to the authors' response to his review is posted immediately below the authors' response.
NEPC Review: School Spending and Student Achievement in Michigan: What's the Relationship? (Mackinac Center, April 2016)
A report from Michigan’s Mackinac Center asserts that there is little or no relationship between student achievement and marginal increases to what the report characterizes as the already “high” levels of spending in that state. Yet the report never substantiates its assertion that present spending levels are high, on average, or uniformly high across all children, districts, or schools statewide. The report discounts a significant body of peer-reviewed research that specifically shows positive effects of previous Michigan school finance reforms, including positive effects on state assessments and educational attainment, concentrated on those students who attended, before those reforms, the lowest funded schools or lower performing schools. Additionally, while the report argues that increased spending on schools as they presently exist would necessarily be inefficient and ineffective, this contention is undermined by the lack of evidence for more efficient alternatives and by existing research validating the value of traditional resources. Both a major national study and a Michigan-specific study show funding increases as efficacious when allocated primarily toward traditional investments (increased teacher salaries and smaller class sizes). Finally, the empirical analysis included in the report lacks depth and rigor when compared to four other studies—three of which were peer-reviewed—each of which find positive effects of prior school finance reforms in Michigan.
NEPC Review: The Policy Framework for Online Charter Schools (Center on Reinventing Public Education, October 2015)
Relative to earlier research, this study from the Center on Reinventing Public Education provides a more in-depth analysis of policy features across the 27 states that allow online charter schools. It presents a well-organized description of policy features and includes a set of policy recommendations that generally, but not always, follow well from the study’s evidence. Because the findings are largely negative, this report may be seized on by groups that are broadly critical of charter schools. But the report is published by an organization that often advocates for charter school growth, and the authors’ discussion of findings suggests that the charter school establishment is advocating for separating online charter schools from brick-and-mortar charter schools and governing them with a separate policy framework. While there is some justification for such an approach, online charter issues are not completely distinct from issues that arise from other charters. Overall, the detailed analyses of policy environments and the summary of problems in the online charter school sector included in this report should be useful to policymakers who are willing and able to pursue more restrictive oversight and increase accountability for online charter schools.