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Making Money Matter: Financing America's Schools (1999)

Chapter: 7 Achieving Goal 2: Breaking the Nexus

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Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
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7
Achieving Goal 2: Breaking the Nexus

Completely severing the link between the background characteristics of students and student achievement will require much more than changes to schools and the school finance system. By themselves, schools cannot be expected to overcome the serious social, economic, and political inequities that contribute to large disparities in the academic achievement of children from different racial, ethnic, and economic backgrounds. At the same time, in the committee's judgment, schools, and the system of which they are a part, can and must do more to reduce the link between family and student traits and student achievement.

To that end, this chapter explores options for aligning finance policies with this goal. Finance policies with particular relevance for goal 2 include cost-adjusting school funding formulas and addressing inequities in access to facilities and technology funding; investing in children's capacity to learn via early childhood interventions and links between education and other community services; investing in schools' capacity to educate via reforms to enhance teacher quality, reduce class size, or adopt whole-school redesigns; altering incentives by rethinking the use of categorical programs such as Title I and special education; and giving schools or parents—or both—more control over how education dollars are spent.

REDUCING FUNDING INEQUITIES AND INADEQUACIES

If money did not matter, the large disparities in school funding across districts and states that have been so persistent over time might not matter very much. However, not only is the committee convinced that money can matter, but

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

we also are convinced that it can and should be made to matter more. Indeed, that is the intent of many of the finance reform strategies discussed in Chapter 6. The problem is that the more successful those strategies are, the more likely it is that the effects of funding disparities will be magnified to the detriment of the children in the underfunded schools. Given that many of the children in those schools are likely to be from disadvantaged backgrounds, the goal of reducing the nexus between family background and student achievement will require even greater attention than in the past to reducing those funding disparities and inadequacies. We reiterate the point we made at the outset: basic fairness compels attention to continuing inequities in American education.

Why has it been so hard to reduce these inequities? The answer lies more in the political tensions resulting from values in conflict than in lack of technical knowledge. Technical problems certainly exist; for example, measures don't yet exist that capture fully the differences among states in state tax wealth and effort, thus complicating efforts to design a fair way for the federal government to assist struggling states. The technical problems, however, are amenable to at least proximate solutions. The political challenges are more vexing. In most states, it has been politically difficult to redistribute resources from wealthy to poor districts, and only with pressure from the courts have states reduced some of the historical inequities. Federal aid constitutes so small a proportion of education funding that it is limited in its ability to overcome disparities within and among states.

While we have no easy solutions to the political challenge, we have no doubt that districts or schools serving disproportionate numbers of disadvantaged students will need more funding than other schools if they are to have a chance of raising their students' performance to acceptable levels. To that end, education finance programs will need to be adjusted to reflect the additional demands that educationally at-risk students place on schools. Hence, policy makers will need to include need-based cost adjustments in school finance formulas. In addition, policy makers should be concerned about disparities in educational facilities and technology funding, which are subject to different finance policies than are current operating expenditures and have not received the same scrutiny on fairness grounds as have the latter.

Adding Need-Based Cost Adjustments to School Funding Formulas

Need-based cost adjustments are important because schools or districts with large concentrations of difficult-to-educate students face many more challenges than other schools. Because their students come to school less ready to learn than students in higher-income suburbs, successful schools will need to provide more individual attention to their students and may need to offer smaller classes. In addition, such schools will have to pay more to hire teachers to induce them to teach in relatively harsh environments and, if they are unable to do that, to

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

provide more professional development to raise the skills of the teachers they are able to hire. Finally, they typically have to spend more to maintain a safe environment for their students.

In discussing funding adequacy, we emphasized that the amount of per-pupil funding that would be adequate for a typical district (or school) within a state would need to be adjusted for the differences across districts in the input prices they face and in the educational needs of their students if funding adequacy is to be ensured for all districts. Failure to make such adjustments works to the disadvantage of students in large cities, where the costs of inputs are typically high and where there are large concentrations of at-risk students.

We also pointed out that the art of calculating cost indices that accurately reflect the additional costs of educating at-risk students raises a lot of thorny issues that have not been fully resolved. A large part of the problem is that there is not a good understanding of the relationship between the inputs used in the education process and the outcomes produced. That is, the production function for education is not well defined in that researchers often cannot find systematic and stable relationships between inputs and outputs given current levels of outputs and current ways of delivering services. The challenge for analysts is complicated further in considering that production relationship (and its impact on costs) in a new environment in which outcome standards are more ambitious than in the past and schools are under pressure to become more efficient in generating those outcomes.

Yet despite the technical difficulties in estimating indices of how costs differ across districts because of the mix of students they serve, the committee strongly urges states to make the effort to develop reasonable indices and to use them in calculating state aid. (This could be done either by adjusting general aid formulas using these indices or by ensuring that the total state aid going to districts, schools, or students via general and categorical aid reflects cost differences.) This will require in part the development of better information on the cost of educating at-risk children. Some of our suggestions for the improvement of data collection activities of the National Center for Education Statistics, particularly about modifying finance data collection to better reflect the costs of programs and services, are important components in the development of improved cost indices (see Appendix A). States and districts should also take advantage of the improved statistics on children and families in poverty that will become available on an annual basis when the Census Bureau's American Community Survey is implemented in 2003.

Failure to take cost differences into account is detrimental to the districts and schools with large concentrations of disadvantaged students and can reinforce rather than reduce the nexus between family background and student achievement. At the same time, the committee is well aware that any additional funding for such districts and schools will not by itself ensure higher student achievement.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

While such funding adjustments may be a necessary step toward goal 2 of breaking the nexus, it is clearly not sufficient.

Financing Facilities and Technology

School facilities and technology are financed differently than general operating expenditures of public schools. States play a smaller role and while the federal government provides some support for technology, it provides little support for building and renovation. Since it is state and federal funding that tends to mitigate funding inequities resulting from differences in local wealth, the differences in financing patterns suggest that access to funds for facilities and technology tends to be more unequal across school districts than is funding for current operating costs.

Facilities

In 1995, the General Accounting Office (GAO) conducted the first comprehensive survey of school facilities in 30 years, examining the condition of 10,000 schools in more than 5,000 school districts. The study found that one-third of schools had at least one building in need of extensive repair or replacement; two-thirds had at least one inadequate building feature; and nearly three-fifths had at least one unsatisfactory environmental condition. GAO estimated that it would cost over $112 billion over three years to upgrade facilities nationwide to a good overall condition and to meet federal laws on accessibility and the removal of hazardous substances (U.S. General Accounting Office, 1995c). Moreover, a second GAO report found that school facilities are not up to the current demands being placed on them: three-fourths do not have a system or building infrastructure for modern technology; 40 percent cannot meet functional requirements for laboratory sciences; more than half do not have flexible instructional space; two-thirds do not have adequate space for such services as before-or after-school care or child care (U.S. General Accounting Office, 1995b).

State investments in educational facilities are currently growing, thanks to the booming economy; in 1998 states devoted a record $15 billion to school construction (Keller, 1999). Nevertheless, this level of investment is far below what GAO suggested is needed.

GAO also found that school conditions varied from state to state and that schools in central cities and schools enrolling more than 50.5 percent minorities or more than 70 percent students in poverty were disproportionately likely to suffer from deficiencies (U.S. General Accounting Office, 1996). An earlier study (Parrish et al., 1995) found that urban districts enrolling high percentages of poor students in 1989–90 spent more of their budgets on core instruction than on capital outlays, compared to less disadvantaged districts. Yet these are areas where construction costs may actually be higher, because of cost-of-living differ-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

ences. Honeyman (1990) also reported that districts with low taxing ability demonstrated the greatest level of deferred maintenance. Ladd (1998) found that districts in poor fiscal condition devote a smaller share of education spending to capital outlays than districts in better fiscal condition. About 10 percent of the $300 billion spent on public elementary and secondary schools annually is directed for capital expenses, primarily in connection with facilities construction, renovation, and extensive maintenance.

Facility construction and repair are undertaken through mechanisms and systems quite distinct from those used to support recurrent education expenses. Local revenue bonds have historically been the major source of support. State involvement has grown since the 1940s, when only 13 states subsidized the funding of educational facilities: now 40 states provide some funds for capital outlay (construction or major renovation) and at least 13 states have comprehensive facilities programs (U.S. General Accounting Office, 1995d). (A comprehensive program provides funding and technical assistance, conducts compliance reviews, maintains current information on the condition of school buildings statewide, and has more than one full-time staff member.)

School facilities appear to be an understudied aspect of school finance. Facilities finance systems have not been subject to the same equal protection scrutiny over the past 30 years as have systems for funding recurring education expenses. (This is beginning to change: e.g., the Arizona adequacy court case was a case specifically about facilities, and a few other court cases have also addressed facilities disparities.)

Neither has school facilities finance received much attention from either efficiency or productivity perspectives. The connection between the quality of school facilities and student achievement has been difficult to demonstrate (Monk, 1990; Duke, 1998, suggests it has not been much studied), but it has been suggested that the quality of school facilities is important in that they serve to attract teachers and families differentially to particular school districts where conditions are better and worse (Murnane, 1981). Another point worthy of greater research attention is the efficient deployment of school facilities and the capital they represent. In private-sector accounting, these assets would be under heavy pressure to produce outcomes. In public-sector accounting, these facility assets are assumed to be necessary and worthy of maintenance. However, little consideration is given to how these substantial costs can contribute more favorably either to student achievement or to lowered schooling costs.

Greater attention needs to be paid to facilities and to the relative ability of districts to fund necessary building and maintenance. States without programs to assist districts in equalizing the cost of facilities construction and renovation should consider establishing them.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×
Financing Technology

Technology, if it is used appropriately, has great potential to help students and teachers develop the competencies needed for the 21st century (National Research Council, 1999). Technology financing, however, is more piecemeal and idiosyncratic than other school financing (Pelavin Research Institute and American Institutes of Research, 1997). This is especially problematic given conclusions like that of the Panel on Educational Technology of the President's Committee of Advisors on Science and Technology (1997) that the nation needs to increase its technology-related expenditures from roughly 1.3 to at least 5 percent of all public K-12 educational spending. Both the panel and Pelavin Research Institute/American Institutes of Research, which examined technology-related issues in depth, point out that initial acquisition costs represent a minority of technology expenses. In addition to financing acquisition, schools must be concerned with making increased provision for technology in their regular operating budgets to cover, among other things, the costs of training teachers to make effective use of technology.

The Pelavin/AIR report (1997:39) points out that ''[l]ow-income school districts are likely to face the greatest funding challenge, not only because their sources of funding may be limited but also because the cost of deploying technology in their schools may be high for various reasons, including having more older buildings and greater security problems." While states and local areas devote about equal resources to current (operating) expenditures, local governments contributed twice as much as state governments to expenditures on educational technology in fiscal year 1994:40 percent compared with 20 percent; the federal government contributed 25 percent. The Pelavin/AIR report (1997:43) noted that the "piecemeal approach to funding technology prevalent in most schools cannot sustain widespread, substantial use of technology throughout the nation's schools." The "exceptional methods" used to date to fund many technology investments are not likely to be replicable in many schools. The Pelavin/AIR report assesses a variety of ways to fund initial technology-related costs and annual operating costs and emphasizes that state and federal governments have an important equity role to play in funding technology, as they do in other areas. It also highlights the need for schools and districts to treat technology separately in their budgets; technology is unlike any other budgeted expenditure (being a hybrid of traditional categories like labor and capital and recurring material expense). Giving it its own line item or budget category will help in projecting and planning for future needs and makes it less likely that districts and schools will ignore the post-acquisition expenditures that will be necessary if technology is to fulfill its promise in enhancing student learning.

Technology financing is one example of how attention to the capacity of the educational system to make good use of money interacts with issues of overall

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

funding levels and disparities. We turn in the next section to a broader discussion of capacity investments that may need to accompany sufficient funding in an overall effort to break the nexus between student background and academic achievement.

INVESTING IN CAPACITY

Research on improving the education of disadvantaged students emphasizes the importance of increasing the duration and the intensity of student exposure and instruction (Bloom, 1964; Slavin et al., 1989), as well as addressing the out-of-school conditions that limit children's readiness to learn. The following sections assess several promising investment policies for addressing one or more of these elements. The first set of policies involves investments beyond traditional K-12 education: early childhood programs and programs that link education and other children's services. The second set focuses on finance policies for K-12 schools that might lead to more intense educational experiences for at-risk youth.

Investing in the Capacity of Children to Learn

A strong consensus has emerged among policy makers, practitioners, and researchers about the importance of increasing investments in the capacity of at-risk children to learn, by focusing on the school-readiness of very young children and by linking education to other social services so that the broad range of educational, social, and physical needs that affect learning are addressed. Numerous ongoing programs providing early childhood intervention and school-community linkage provide evidence of the promise and problems of such policies, suggesting that there is still much to learn about how to make these investments most effectively.

Early Childhood Interventions

A major question for school finance is whether the nation is underinvesting in preprimary school education and child care and whether greater investment would contribute to minimizing later gaps in academic performance between advantaged and disadvantaged students. Of particular relevance for achieving goal 2 is the possibility of increasing the nation's investment in early childhood programs explicitly concerned with compensating for social-environmental disadvantages or developmental disabilities that are correlated with such later problems as low motivation and academic underachievement.

Available evidence supports the idea that early intervention programs targeted at disadvantaged children, especially high-quality programs with intense and comprehensive services, can have a number of positive benefits. The evidence is strong enough to warrant continued attention to expanding these pro-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

grams. Much remains to be learned, however, about how to preserve the gains that disadvantaged children make in early childhood programs, which now tend to fade over time. The absence of quality follow-through and the tendency for other children to catch up mitigate the early initial advantages that preschool programs can afford (Natriello et al., 1990; Zigler and Muenchow, 1992). The lasting effects from these programs seem likely to depend in part on increasing the effectiveness of K-12 schooling. As Ferguson (1998:365) points out, the ideal of universal access to preschool might ironically lead to greater achievement gaps (he referred to black-white test score gaps) if disadvantaged students later attend less effective elementary and secondary schools than their preschool counterparts from more advantaged backgrounds.

Enrollment of children ages 3–5 in preprimary programs has grown rapidly over the past 30 years, from 27 to 65 percent of the population between 1965 and 1997 (U.S. Department of Education, 1999a: Table 46).1 In 1997, 39 percent of 3-year-olds, 66 percent of 4-year olds, and 88 percent of 5-year-olds were enrolled in such programs. Private school programs dominated public school programs for 3- and 4-year-olds, while a large majority of 5-year-olds enrolled in school were enrolled in public kindergartens.

Despite the growth in preprimary schooling, it appears that by comparison to many other economically advanced nations, the United States invests less in its youngest children. Enrollment rates of 3- and 4-year-olds in early childhood and primary education are relatively low in the United States (Organisation for Economic Co-operation and Development, 1996). Enrollment of 3- and 4-year-olds in this country is also related to household income, with noticeably higher rates among families earning over $50,000 (U.S. Department of Education, 1999c:96). It has been estimated that average annual public spending in the United States on children from birth to age 5 is only about a quarter of average annual public spending on children from age 6 to 18, a difference due primarily to expenditures on elementary and secondary schools (Karoly et al., 1998:108).

Three recent articles review the literature on early childhood interventions aimed at at-risk children and emphasizing early childhood development (Barnett, 1995; Karoly et ak., 1998; Reynolds et al., 1997);2 the three reviewsreach very similar conclusions. Model or demonstration programs were generally of higher quality (as measured by such factors as higher-quality staff, closer staff supervision by experts, lower child-staff ratios, and smaller group size) than large-scale

1  

 Data collection procedures changed in 1994; data for that year and later are not necessarily comparable to earlier years.

2  

 Early intervention programs with other foci, such as public health programs providing prenatal care, immunizations, and nutritional supplements and welfare and other safety-net programs, while an important part of a comprehensive early childhood policy, are not included in the literature reviews examined by the committee.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

public programs, including Head Start.3 Services varied considerably (and are not always well documented in the literature, especially for the large-scale programs). The focus was generally on children age 2–5, although age of entry and length of participation differed from program to program. Services ranged from classroom services to home visits to parental support and development activities and health and nutrition assistance. Model programs had "much higher levels of funding per child" (Barnett, 1995:28) than did the large-scale programs. Virtually all of the programs targeted minority or low-income children.

The research reviews all emphasize shortcomings in the research and evaluation designs that raise cautions about relying too heavily on any particular study. Research on early childhood programs varies widely on elements as how comparison groups were formed, sample sizes, program attrition, and how effects were measured. Despite their shortcomings, however, when evaluated together they lead reviewers to a consistent set of conclusions about what is known and unknown about early childhood intervention programs.

Early childhood programs can benefit participating children and their families along a number of dimensions: "The hundreds of studies of demonstration and large-scale programs that now exist provide very strong evidence that most programs of relatively good quality have meaningful short-term effects on cognitive ability, early school achievement, and social adjustment. There is also increasing evidence that interventions can produce middle-to-longer-run effects on school achievement, special education placement, grade retention, disruptive behavior and delinquency, and high school graduation. Debate about the nature of the very long term effects continues, however. The cognitive and social benefits for children are in addition to the physical health, nutrition, and family benefits associated with program participation" (Reynolds et al., 1997:6).

The debate about long-term effects stems in part from the fact that evidence about them comes mostly from model rather than large-scale programs. Given the advantages that model programs have over large-scale programs in quality and cost, the implications that can be drawn from them about the likely effects of large-scale programs as they are currently structured are "inadequate to inform public policy" (Reynolds et al., 1997:10), although the model program whose graduates have been followed up for the longest time suggests that the payoffs from early and high-quality intervention programs might be very substantial (Barnett, 1995; Karoly et al., 1998).

Fulfilling the promise of early intervention programs depends on making greater investments in efforts to answer key policy questions where evidence is

3  

 Model or demonstration programs were specifically developed by researchers to study the effects of particular program designs; many have been implemented at just one site. Large-scale programs include the federally funded Head Start program and other state or local programs (some funded with federal Title I funding).

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

currently weak or nonexistent. In particular, analysts agree that there is still much to learn about optimal program designs and about whether programs have higher payoffs when targeted at children and families deemed to be at greatest risk. Within the overall at-risk population, little is known about how best to identify children who would benefit most and how program effectiveness varies across programs with different attributes. Better information to guide policy makers on these key issues could come from investing in more demonstration programs designed to address the impacts of different program designs, from making the most of evaluations already under way by funding further follow-ups and expanding the set of benefits measured, and from making sure that careful evaluation is a component of any large-scale public program implemented on the basis of existing knowledge.

Given the current state of knowledge, it is impossible to give a definitive answer to the question of how much more the nation should invest in early childhood intervention programs in hopes of breaking the nexus between student background characteristics and academic achievement. Clearly such programs have the potential for making a big difference in children's lives, but just as clearly the cost of such programs may be very high. (Barnett, 1995:46, estimates that serving all poor children under age 5 in quality part-day or full-day programs could cost $25 to $30 billion; adding subsidies to nonpoor families could raise this amount much higher.) The committee suggests that as policy makers consider the expansion and improvement of early childhood intervention programs, the following points should be kept in mind.

First, quality counts. The research evidence indicates that positive effects come from high-quality programs, which are comparatively costly. Existing large-scale public programs like Head Start typically cost less and have lower-paid and less-qualified staff than the most effective model programs. Policy makers may thus need to address the trade-off between serving larger numbers of children in programs of lower quality or focusing available resources on providing high-quality services to a smaller group. Another trade-off may face policy makers in states striving to reduce class size in the early grades of elementary schools at the same time they are expanding early childhood programs. Both strategies increase the demand for well-trained personnel, who may not be in sufficient supply (at least in the short run) to provide qualified individuals for both preschool and school programs simultaneously.

A corollary to this point is that in situations of limited resources policy makers should consider focusing services on children from disadvantaged backgrounds if it is impossible to guarantee services to all children. While the research evidence on how to target early childhood programs among at-risk children of different ages and with different needs is inconclusive, analysts agree that early intervention services provided to the disadvantaged have greater payoffs than services provided to children whose home environments do not place them at educational risk.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

Second, given the evidence of short-term and possibly significant long-term benefits from high-quality early childhood interventions, states and local areas that do not now provide early intervention programs for at-risk children should consider expanding their efforts. A recent survey (Mitchell et al., 1998) found that 39 states fund at least one kind of prekindergarten program, but 11 invest no funds in either prekindergarten programs or Head Start. (The survey does not consider local funding, nor does it count federal investments in Head Start or other programs.) State investments vary widely, from $1 million to over $200 million annually; and the number of children served in state-funded prekindergarten programs ranges from a few hundred per state to over 40,000. Programs differ significantly in the ages served, educational offerings and staff qualifications, quality control mechanisms, and provisions for planning and evaluation. While we cannot neatly quantify the need, this variability suggests that some states should give greater attention to developing high-quality early intervention programs for at-risk students as one facet of their overall approach to developing the capacity of all children to learn.

Linking Education and Other Community Services

In recent years it has become increasingly evident to policy makers and practitioners that improving educational opportunities for at-risk children requires not just reforming schools but also addressing the health, social, financial, and political inequities of their families and communities. An impressive array of programs have been initiated (see, for example, Blank and Steinbach, 1998) attempting to link and coordinate the many services—including, among others, education, foster care, protection from abuse and neglect, health care, housing, employment, and nutrition—that federal, state, and local governments provide to disadvantaged children and adults. In many cases, supporters have found the challenges in linking services larger than they expected; positive program effects have thus come more slowly than they hoped. Nevertheless, it is notable that, despite the difficulties, sponsors continue to believe that a comprehensive approach to reform is crucial in serving at-risk children and families. Some important lessons have already been learned about the need for stable, permanent, and sufficient funding accompanied by fewer categorical strings.

Two fundamental principles undergird the growing number of programs aimed at coordinating services: (1) children with multiple needs require comprehensive and coordinated service strategies and (2) local communities represent an indispensable asset for effecting linking programs and resources across agencies and public and private institutions (Hayes et al., 1995). These principles are applicable to all at-risk children wherever they live, but they have special power in high-poverty urban neighborhoods and in distressed rural areas (Stern, 1994), where the need is especially acute to rebuild community-wide opportunity structures as well as to improve schools.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

Foundations and local public and private agencies have supported coordination efforts, and federal and state governments have also encouraged cross-agency cooperation (Kritek, 1996; Orland and Foley, 1996; Woods, 1996). Congress has passed at least 12 laws since 1991 encouraging the development of more coordinated services for children. Title XI of the Improving America's School Act of 1994, for example, funds programs designed to encourage local education agencies, schools, or consortia of schools to undertake coordinated services projects. State efforts mirror the federal concern: for example, the 1991 Kentucky Education Reform Act, passed in response to a court decision invalidating the state's school system, required the formation of Family Resource and Youth Support Centers. Initially designed as school-based centers for linking services, they have since been disconnected from schools in order to establish expanded channels of communication between parents, school officials, and other social service providers.

Community-based service coordination efforts closely aligned with schools are a subset of a broader set of comprehensive community initiatives that seek to replace "piecemeal categorical approaches with 'comprehensive' efforts that cross sectoral and programmatic boundaries and attempt to build on the interconnections among economic, social, and physical needs and opportunities" (Aspen Institute, 1997:7). They also incorporate many of the burgeoning array of community-based programs aimed at improving the lives of children, youth, and families, including after-school programming aimed at ensuring appropriate after-school supervision for children and youth, reducing juvenile crime, and promoting student learning. School-linked initiatives "are set apart from the wider universe of community initiatives by a strong connection to the schools, a shared commitment to improved academic outcomes for students, and growing interest in eventually contributing to improvement in the overall quality of teaching and learning" (Blank and Steinbach, 1998:69). A new organization, the Emerging Coalition for Community Schools, is bringing together leaders in the areas of education, youth development, family support, and community development with government officials and representatives of foundations and the private sector to support the further development of community schools.

What have we learned so far about the potential for youth and community initiatives to make a positive difference in the lives of at-risk children and their families? Analysts reviewing the available evidence (e.g., Blank and Steinbach, 1998; Melaville, 1998) indicate that preliminary evidence is encouraging, although it also indicates that these initiatives face huge obstacles. They also caution that long-term evaluations are just beginning and that, as Melaville puts it (1998:7), what is known is "not nearly enough to support the rapid development of new initiatives and to ensure that knowledge and practice in this field are captured, made widely available, and expanded." A similar conclusion emerges from a recent publication on after-school programs issued by the federal attorney general and the secretary of education. This report identifies a number of innova-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

tive or promising after-school program activities, but also emphasizes the "critical need to fund and conduct more extensive, rigorous evaluations of after-school activities and their impact on the safety, social development, and academic achievement of children" (U.S. Department of Education and U.S. Department of Justice, 1998:6).4 Enhanced efforts to understand what works and how to replicate successful programs are crucial to make good use of the funds increasingly being made available for after-school efforts, including $40 million appropriated by Congress in 1997 for awards to rural and inner-city schools through the 21st Century Community Learning Program, which the Charles Stewart Mott Foundation has joined in supporting.

The promises of and problems facing efforts to expand coordinated and community-based services are well captured in evaluations of one of the major undertakings to date: the New Futures initiative of the Annie E. Casey Foundation. The foundation launched New Futures in 1988 as a five-year effort to prepare disadvantaged urban youth for successful lives as adults. It gave each of five mid-sized American cities5 between $7.5 and $12.5 million over the five-year period to restructure how they planned, financed, and delivered educational, health, and other services to at-risk youth. The goals for each city were to improve student achievement, reduce adolescent pregnancy and school dropout rates, and increase the number of youth who go on to a job or college after high school. The program was independently evaluated by an outside group (Center for the Study of Social Policy, 1995), and the foundation issued its own assessment of its experience with the program (Annie E. Casey Foundation, 1995).

Results of New Futures were at best mixed. The foundation's self-assessment was sober in tone, its continuing faith in comprehensive system reform initiatives tempered by experience that demonstrated that such change is extremely difficult, takes time, and won't work in every community. Some communities lack the interest, leadership, or management capacity needed to sustain long-term change processes. In many low-income communities, service-system and institutional change initiatives by themselves were insufficient to transform educational, social, and health outcomes. In these locations, initiatives involving

4  

 This report also warns that evaluating after-school programs will be challenging and that existing evaluations share the shortcomings of much education related research. Citing a study by Fashola (1998), the report notes that "few evaluations of after-school programs use comparison groups in their study designs. As a result, many studies are compromised by self-selection bias, meaning that students who choose to attend after-school programs may differ from those who do not. Students may be more motivated since participation is generally voluntary, or in programs that target students with difficulties in school, the participating students may begin the program with comparatively low achievement. Another challenge in evaluating after-school programs is the difficulty of isolating measures that can be attributed specifically to the impact of an after-school program" (1998:57).

5  

 Pittsburgh, Pennsylvania; Bridgeport, Connecticut; Savannah, Georgia; Little Rock, Arkansas; and Dayton, Ohio.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

social capital and economic development that target the whole community appear to be necessary precursors for change.

The outside evaluators found that none of the cities participating in New Futures made any progress in reducing annual school dropout rates, in reducing teenage pregnancy and parenthood rates, or in increasing the number of high school seniors who by April or May of their senior year had been accepted for college or had a full time job lined up. While substantial test score gaps remained between black and white students, there were measurable gains in reducing the numbers of low-achieving students on reading tests. The proportion of sexually active teens declined, and the reported use of birth control devices among sexually active teens increased.

While not fulfilling the original goals, these were hopeful signs, and the evaluators also determined that the New Futures cities built some of the interim steps that may in the longer term lead to improved outcomes for at-risk children. For the most part they were unable to define comprehensive action plans that cut across multiple agencies and compel interagency cooperation. In every city, though, collaboratives (1) raised awareness of the problems of at-risk youth; (2) started a new dialogue among leaders and community representatives who had not previously sat down together; (3) developed rich school-based information systems; (4) created a new body of knowledge around collaboration and local governance; (5) demonstrated how to build substantive relationships between the public and private sectors by combining money and leadership; and (6) launched new ongoing community-based decision-making structures for addressing youth problems beyond the initial five-year period. The independent evaluators noted that "these accomplishments can be viewed as precursors to any sustained numerical outcome improvements" (Center for the Study of Social Policy, 1995:xi).

These findings about New Futures mirror other conclusions about community and youth initiatives. The difficulties should not be underestimated. More evidence of this fact comes from the experience of the Pew Charitable Trusts, which decided in 1992 to undertake an 11-year, $56 million effort to work with five states to overhaul their social, education, and health services for children through creating family centers near schools to provide social, psychological, and medical services to children. Two years later, and after spending $5 million, Pew announced that it was abandoning the Children's Initiative because it no longer felt that the program's goals were feasible within the time and resources anticipated (Sommerfeld, 1994).

Despite the challenges, sponsors continue to believe that comprehensive reform initiatives remain, in the words of the Casey Foundation "the only plausible way to address the multiple needs of at-risk children and families. We remain convinced that fundamental changes in the systems serving children and families are absolutely essential to creating more effective interventions, supports, and frontline practices capable of producing measurable better outcomes for disadvantaged kids" (Annie E. Casey Foundation, 1995:vii).

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
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Two finance issues are intimately intertwined with the future of these programs. The first has to do with overall resources. Reviews of school-community initiatives (e.g., Blank and Steinbach, 1998; Melaville, 1998) stress the importance of stable, permanent, and sufficient funding to sustaining these efforts. In addition, the way in which funds are made available matters. Most importantly, the categorical system, though which most federal and state funds flow to specific agencies within communities, reinforces rather than helps break down regulatory and cultural barriers to cross-agency cooperation and the development of optimum service strategies that serve community rather than agency needs (Blank and Steinbach, 1998; Orland et al., 1995). Higher and more reliable funding flowing through less categorical channels therefore appears to be a necessary if not sufficient condition for enabling communities to advance in efforts to address the multiple needs of disadvantaged children and families in a comprehensive way.

Investments in the Capacity of Schools to Educate

That more investment is needed in the capacity of schools to educate concentrations of disadvantaged students would seem to be obvious given the poor academic performance of many of those students. The challenge, however, is to determine which types of investments are likely to be the most productive and how to structure such investments to make them effective. We do not have good answers to this challenge. From the discussion of productivity in Chapters 5 and 6, it should be clear that the quality of teachers is likely to be a key component, that reduced class size might help under certain conditions, and that whole-school restructuring may have significant potential. We discuss each of these potential investments in turn.

Enhancing Teacher Quality or Reducing Class Size

Despite the fact that it is often difficult to specify precisely the characteristics of high-quality teachers, research increasingly substantiates the fact that some teachers are more successful than others in fostering student learning. While scholars continue to disagree about the effects of particular teacher characteristics such as education level and experience on student achievement, several studies using large databases and sophisticated statistical methodologies (Ferguson, 1998; Ehrenberg and Brewer, 1994) have found that measures of teacher cognitive skills (such as certification test scores and the quality of the undergraduate institution the teacher attended) do appear to matter for student achievement. Furthermore, the research of Ferguson (1991) and Kain and Singleton (1996) in Texas and Ferguson and Ladd (1996) in Alabama documents that schools that serve concentrations of disadvantaged students typically are less successful than

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

others in attracting teachers with strong cognitive skills, so such students are likely to be at a significant disadvantage relative to other students.

A recent ongoing study based on an unusually rich Texas database, containing micro panel data on more than 1.8 million children in five student cohorts attending more than 4,500 elementary schools, provides compelling new evidence of the challenge such schools face with respect to teachers. Kain and Singleton (1996) document that teachers employed in schools with high fractions of disadvantaged minority students have lower ability (as measured by verbal and written test scores on a state teachers' exam), fewer years of education, less experience, and more students in their classes than do teachers in schools with larger percentages of higher-income and white students.

Ferguson's Texas study also points out that the effect of teacher quality is cumulative. Among Texas districts in which students performed poorly in the early years of elementary school, those districts employing teachers with unusually high test scores saw student performance levels in mathematics converging by 11th grade with the levels of districts whose students initially performed well. The scores of children whose teachers had low test scores also converged over the course of their education, but at a much lower level.

While Ferguson's findings are plausible, the issue of causality arises here, as it does in much other research on education. Perhaps there were distinctive characteristics of the districts that were able to retain teachers with high test scores (for example, unusually gifted school administrators or parents with a particularly high degree of commitment to educational quality). Those same factors may have also been responsible for the better performance of students in those districts. Thus, while Ferguson's results are plausible, there is a need for further research that addresses the causality issue.

So how does one promote greater investment in teacher quality in schools serving disadvantaged students? Clearly some special efforts will be needed. Any general policy, such as increasing teacher salaries across the board, may well exacerbate the problems of schools serving disadvantaged students, as the wealthier school districts are in a better position than the poor ones to pay the higher salaries. Moreover, other policies such as tough teacher testing could well decrease the supply of teachers available to teach in the schools with the harshest teaching environments, although Ferguson (1998) found in Alabama that testing new teachers narrowed the gap in basic skills between incoming black and white teachers, to the advantage of black students who are more often matched with black teachers. Ultimately, there seems to be no escaping the fact that schools with harsh environments will have to pay significantly higher salaries than other schools to attract their share of high-quality teachers, or will have to spend more money on professional development to upgrade the skills of the teachers they are able to attract and retain.

Improving the quality of teachers is one option for increasing the intensity of instruction offered to at-risk students; another is reducing class size. While these

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

two approaches could well be complementary, policy makers may face budgetary trade-offs in considering how far both can be simultaneously implemented. The question was raised in Chapter 5 concerning whether class size reduction, especially across-the-board reduction, is the more effective use of resources, given the greater impact of improved teacher quality. Reducing class sizes is expensive. A reduction from 25 to 15 students per class would require a 66 percent increase in the number of teachers. There are new capital costs as well, since the number of classrooms must be increased. The California class size initiative for kindergarten through third grade costs over $1.5 billion annually (CSR Research Consortium, 1999).

Nevertheless, reducing class size is often an attractive option for policy makers focusing on improving education for at-risk students. It is something they can legislate and implement relatively quickly, while methods of improving teacher quality are more indirect and uncertain. Evidence from the Tennessee STAR study and other research investigations on class size (summarized in Chapter 5) consistently shows that smaller class sizes result in larger achievement gains for poor, minority, and urban children than for other students. (This evidence stems from research on class size reductions in the early grades, where the most current and best studies have focused.) The key questions, we repeat, are likely to be ones of trade-offs: Are qualified teachers available for the additional classrooms, so that teacher quality will not be affected? Does a school or district have reason to conclude that other investments (to improve teacher quality or to provide one-on-one tutors or longer school days or years or summer school) align more closely with their overall programs for augmenting the intensity and duration of instruction provided to disadvantaged students?

The danger of imposing particular solutions on all schools and the importance of seeing school reform (at least within the current institutional structure) as requiring many interconnected strategies for change are illustrated by the results of a natural experiment that took place in Austin, Texas, beginning in 1989. As part of the settlement in a school desegregation court case, each of 15 elementary schools serving large numbers of disadvantaged students were given $300,000, above normal school spending each year for five years (Murnane and Levy, 1996). All 15 of the schools reduced class size. Only two of them, however, showed improvement in student academic achievement. These were the only two schools that accompanied the class size reductions with a host of other changes: placing children with special needs in regular classes; adopting for all students the reading and mathematics curriculum normally provided only to gifted children; bringing health services to the schools; and investing heavily in getting parents involved in their children's schooling, including having them participate in school governance, budgeting, and hiring. With educators around the country exploring a great variety of approaches to school reform in an effort to improve student learning, it is almost certainly the case that a particular policy change like class size reduction might sometimes enhance these efforts and sometimes come

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

at the expense of other approaches that better complement local reform initiatives.

Whole-School Reform Models

Chapter 5 described the growing interest in so-called whole-school redesign, a reform approach that explicitly addresses the need to change many aspects of schools simultaneously to bring about meaningful improvement. Whole-school restructuring has focused heavily on schools educating large numbers of disadvantaged students, where prior piecemeal reforms have generally failed to raise academic achievement from levels that begin distressingly low. While it is too early to have much evidence about whether whole-school restructuring will live up to its promise or about which whole-school designs will prove to be lastingly effective, the logic behind this approach to building school capacity is compelling. An important question, therefore, is what level of investment will be required to implement it.

Keltner (1998) examined actual first-year implementation costs at 58 schools using one of six of the New American Schools designs. He examined the resources for teacher time, personnel, design services, and materials and conferences that each school devoted to comprehensive reform. He found that schools committed on average $162,000 each to implement their chosen whole-school design in academic year 1996–97, which probably understates current resource requirements.6 Not all of this represented additional cost; about 38 percent or $62,000 came from reallocating existing resources and the remainder from sources outside a school's normal operating budget ($53,000 from Title I; $30,000 from district budgets; $11,000 from outside grants; and $6,000 from volunteer sources). Resource needs differed widely across schools depending on which design they choose, with designs ranging in cost from $100,000 to $300,000.

Keltner concluded that the Comprehensive School Reform Demonstration (CSRD) program, enacted by Congress in 1997 and described below in the section on Title I, would provide enough additional money to Title I schools (over and above their regular Title I allocations) to allow most of them to implement comprehensive reform. The program will not be sufficient to enable schools that do not receive regular Title I funds to adopt many whole-school designs. Districts or outside grants will have to provide the necessary funds, which may not be available in poorer districts. Odden and Busch (1998) also point out that resource allocation to implement whole-school designs may be restricted by local, state, or federal rules that may require waivers, changes in collective bargaining contracts, or regulatory reform.

6  

In 1996–97 design teams were still in the process of figuring out the true costs of providing team consulting services to schools and were in effect subsidizing schools by not charging full costs. Keltner estimates that current average first-year implementation costs would be more like $180,000.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

CHANGING INCENTIVES TO MAKE PERFORMANCE COUNT

Most federal and some state aid for elementary and secondary education is categorical in nature and is designed to provide specialized services to certain groups of students. Most K-12 aid allocated through the U.S. Department of Education flows from two such categorical programs: (1) Title I is aimed at low-achieving students living in areas with high concentrations of poverty and (2) assistance for students with disabilities (special education) is authorized by the Individuals with Disabilities Education Act. (Other, much smaller categorical programs recognize the educational needs of migrant and gifted children and children with limited proficiency in English.)

Questions have arisen about the extent to which the incentives deliberately or inadvertently created by categorical programs serve educationally desirable purposes and whether and to what extent it continues to be appropriate to treat children with special needs separately in an educational system increasingly oriented toward fostering higher levels of learning for all students. Our findings suggest that educational effectiveness has been compromised in the past by making sharp distinctions between students with special needs and other students and that current efforts to move toward more integrated school programs should be reinforced.

How categorical programs influence the way schools approach the educational task of serving at-risk children is a complicated issue, which differs somewhat from program to program. We cannot explore the issue in all its complexity here. We do want to comment, however, on current directions in Title I, because it is the nation's largest categorical education program. We also made a committee decision to devote particular attention during our study to special education for children with disabilities, a decision that is reflected in the extended discussion below. Special education warrants comparatively intensive review, in our view, because it is built on a policy framework of open-ended, mandated, individual student entitlements that is quite distinct from general school finance and important in its impacts on the budgets of many school districts.

Title I

The targeting of Title I funds (i.e., how highly they should be concentrated on the highest-poverty districts and schools) and the instructional effectiveness of Title I funds have been perennial challenges (Orland and Stullich, 1997). In 1993–94, 92 percent of all school districts, 62 percent of all public schools and 45 percent of all low-poverty schools (less than 20 percent poor) received Title I funds, while 19 percent of the highest-poverty schools (at least 75 percent poor) did not receive any Title I funds (U.S. Department of Education, 1996).

Chapter 3 described the 1994 debates over Title I funding formulas designed to increase the targeting of funds to poorer schools. While new funding formulas

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

for grants to local education agencies were never implemented, the 1994 legislation changed within-district allocation provisions, and Congress has increased the proportion of Title I funds being allocated through concentration grants, both changes designed to direct a greater share of funds of higher-poverty districts and schools. The recently released assessment of Title I since the 1994 reauthorization (U.S. Department of Education, 1999b) indicates that targeting has increased somewhat at the school (but not district) level, but that funds continue to be distributed widely. The percentage of districts receiving Title I funds (over 90 percent) is virtually unchanged since reauthorization. The percentage of funds going to the districts with highest and lowest poverty is also about the same. The highest-poverty schools are now more likely to receive Title I funds; 95 percent of such schools now participate in the program. The percentage of low-poverty schools (currently defined as schools with 35 percent poor) receiving Title I funds has dropped to 36 percent, and these schools receive only 18 percent of Title I funds. Overall, 58 percent of public schools receive Title I monies.

At the same time, evaluations of Title I going back to the early 1970s and as recent as 1997 question the instructional effectiveness of the program (Elmore and McLaughlin, 1988; Orland and Stullich, 1997; Puma et al., 1997). Orland and Stullich (1997:15) note that ''this consistent finding across national Title I assessments is especially significant because policy makers have made escalating attempts over the last two decades to amend Title I policy and administration in an effort to secure greater local attention to issues of instructional quality and effectiveness."

Title I has been characterized by a complaint common to categorical programs: that regulations governing financial accountability foster a compliance mentality, resulting in process considerations taking precedence over instructional concerns. Such regulations have grown out of legislative provisions intended to ensure that Title I funds were used only to supplement, not supplant, funds that would otherwise be made available from state and local sources for Title I-eligible children and were used for these and not other children.

Perhaps the most serious charge that has been leveled by critics against Title I from an instructional perspective is its fragmenting impact on school organization and practice. While not required to use "pull-out" services (removing Title I students from regular classrooms for part of each day), schools found this the easiest way to be sure they did not run afoul of procedural compliance requirements. While the shortcomings of pull-out services (particularly when they are disconnected from regular classroom instruction) were identified as long ago as the early 1980s (for example, see Peterson, 1983), such services persist. In 1991–92, 74 percent of Title I schools still used them (Millsap et al., 1993). The newest Title I evaluation (U.S. Department of Education, 1999b) indicates that 68 percent continue to employ the pull-out model, although many also use in-class forms of assistance as well.

The detrimental instructional consequences of Title I's legal and administra-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

tive framework have been widely recognized and increasingly addressed in both regulations and periodic legislative reauthorizations. The last reauthorization, in 1994, made a number of changes in response to the limited impact of earlier reforms. A larger percentage of schools was made eligible to use Title I funds in school-wide programs, Title I evaluation was linked to the regular local instructional program and academic standards that apply to non-Title I students, and new requirements were added to the use of local Title I funds for high-quality professional development. In 1997 Congress gave an additional boost to school-wide programs by enacting the Comprehensive School Reform Demonstration (CSRD) program, often referred to as Obey-Porter after its sponsors. The program makes $145 million available to states to assist up to 3,000 schools implementing comprehensive research-based designs with grants of $50,000 or more that are renewable for up to two years. The program allocates $120 million of this money to Title I schools.

Whether these changes will lead to greater instructional effectiveness is an open question. Orland and Stullich point out, however, that current financing arrangements continue to create significant barriers to the implementation of instructionally desirable reforms at the local level: "Funding practices in Title I restrict the adaption of "leading-edge" program design reforms in two important ways: (a) the generally low level of program funds in relation to local needs, and (b) the continued requirement to comply with basic fiscal accountability provisions. Put simply, a context of limited funds thinly spread for a carefully-designated target population is at serious odds with program design features expected to improve program effectiveness" (Orland and Stullich, 1997:17).

Preliminary evaluation of the effects of the 1994 reforms give some hope that previous shortcomings of Title I are being addressed: the recently released National Assessment of Title I (U.S. Department of Education, 1999b) describes a number of ways in which Title I is now working in sync with standards-driven reform. Nevertheless, it is too early to say whether the new law will have significantly greater impact on the achievement of at-risk children than earlier versions have had, for at least two reasons. First, Congress called for phasing in the 1994 reforms over a number of years, so it is as yet too early to say what their ultimate effects will be. Second, the independent review panel established to oversee the congressionally mandated assessment of the post-1994 Title I has stated that "financial support for evaluation at the federal level has been inadequate" (U.S. Department of Education, 1999b:n.p.). Congress in 1994 mandated two major studies of Title I effectiveness (a National Assessment of Title I and an Omnibus Longitudinal Evaluation of School Change and Performance) but failed to appropriate sufficient funds to include all the study topics and features mandated by the law. The national assessment, for example, had to rely primarily on other sources rather than its own surveys of policy implementation and student achievement. The longitudinal study (unlike prior Title I studies) has had to limit its coverage to 71 elementary schools in 18 moderate- to high-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

poverty school districts in 7 states. Evaluation funds for Title I have averaged only $5 million annually since reauthorization, 0.1 percent of Title I appropriations (Independent Review Panel on the Evaluation of Federal Education Legislation, 1999).

In the committee's view, the failure to devote sufficient resources for meaningful evaluation is unfortunate. Without reliable information on the effectiveness of the educational services being delivered to children targeted by Title I, it is impossible to say whether the federal government gets the largest possible bang for its buck by relying so heavily on the Title I format. On fairness grounds, however, we do want to emphasize the significance of Title I in reducing spending disparities. While not as highly targeted on areas with high concentrations of poor students as many evaluations have recommended (Commission on Chapter 1, 1992; Rotberg and Harvey, 1993; U.S. General Accounting Office, 1994; Independent Review Panel on the Evaluation of Federal Education Legislation, 1999), Title I allocations are still more highly targeted than most state education aid. Thus, as GAO recently concluded: "In this context, any proposal to consolidate federal education funding into grants that give more discretion to states would need to consider that the targeting of those federal funds might become more like that of the state funds. That is, the federal funds—and the combination of federal and state funds—might become less targeted to poor students" (U.S. General Accounting Office, 1998:22).

Special Education

As Chapter 2 noted, the costs associated with federal requirements that all children with disabilities be provided with a "free and appropriate education" have been rising rapidly and have become a major financial concern in many school districts. Special education for children with disabilities is now one of the largest programs in public schools, with estimated costs in 1995–96 between $32 and $36 billion.7 Unlike other categorical education programs, the size of which is constrained by the size of budget appropriations, special education is an entitlement program, guaranteeing the provision of "appropriate" and individually determined services to eligible students regardless of cost. These provisions, along

7  

 Exact current expenditures for special education are unknown because of data limitations that are described in this section. The estimate of $32 billion (Parrish and Chambers, 1996) in 1995–96 is based on a projection of $265 billion in current expenditures for K-12 public education for that year (Gerald and Hussar, 1995) and a 12 percent allocation to special education programs (Moore et al., 1988). The higher estimate of $36 billion, used by the U.S. Department of Education, is achieved by multiplying average per-pupil expenditure for all students ($5,640) by the number of students with disabilities on December 1, 1995 (5,619,000), and then multiplying this sum by the "special education to regular education marginal cost ratio" (1.14) obtained from a study by Kakalik et al. (1981) (U.S. Department of Education, 1997).

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

with the guarantee of procedural safeguards protecting the rights of children with disabilities and their families, are contained in P.L. 94–142, now known as the Individuals with Disabilities Education Act (IDEA), which was first passed in 1975.8

Although federal law creates the legal framework undergirding special education entitlements, state and local governments are responsible for most (an estimated 93 percent) of the costs (U.S. Department of Education, 1997). IDEA authorizes the federal government to pay 40 percent of the excess costs associated with educating children with disabilities; federal appropriations, however, have never exceeded 12.5 percent of excess costs and now cover only about 7 percent of estimated excess costs (National Research Council, 1997). Educational opportunities provided to students with disabilities vary from place to place, thanks to heavy reliance on state and local funding coupled with the responsibility given to state and local officials for determining (within the federal framework) the basic eligibility of students for special education, types and intensity of services to be provided, and the settings in which the services will be delivered. At the same time, legislative action and judicial opinions have resulted in special education services being viewed as a right by many advocates and families who receive the services. This rights framework affects how special education is funded.

Population Growth and Encroachment

The size of the student population eligible to receive special education services has grown steadily (from 3.7 to 5.9 million students in the 20 years since passage of P.L. 94–142 in 1975), and the scope and costs of services have also increased (e.g., costs grew 50 percent more rapidly for special education students than for students without disabilities in New York State between 1980 and 1993—Lankford and Wyckoff, 1996). The growth in the numbers of special education students has occurred largely among students with so-called mild or moderate

8  

 The civil rights of Americans with disabilities of all ages are also protected under two other pieces of federal legislation: Section 504 of the Vocational Rehabilitation Act of 1973 (P.L. 93–112) and the 1990 Americans with Disabilities Act (ADA) (P.L. 101–336). Section 504 applies to a broader range of institutions and individuals than does IDEA and requires that comparable educational benefits be provided to individuals with and without disabilities in the interest of nondiscrimination and equality of opportunity. It also requires the provision of reasonable accommodations of individuals with disabilities who are otherwise qualified to participate in an educational program or activity. ADA builds on these principles and includes a national mandate to provide reasonable accommodations in areas such as private-sector employment, all public services and public accommodations, transportation, and telecommunications. The primary impact of ADA has been to require a more comprehensive effort within the schools to prepare students for greater participation in community settings rather than relying on specialized facilities designed primarily for people with disabilities (National Research Council, 1997). As a result, Section 504 and ADA have become the main vehicles for litigation in special education during the past few years (Martin et al., 1996).

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

disabilities rather than severe ones. Four-fifths or more of students who are labeled as disabled are considered to have mild disabilities. 9

Rising concerns about meeting mandated special education costs, especially in already stressed urban school districts, and press reports about escalating expenditures (Shapiro et al., 1993; Dillon, 1994; Wall Street Journal, 1993) have given rise to widespread allegations that special education entitlements are encroaching on funding for so-called regular education. In some resource-strapped school districts, the use of the special education designation has been seen as an opportunity to obtain additional resources and has led to concerns about overidentification of special education students.

A key problem in all analyses of special education is the absence of comprehensive, current data on costs, making it impossible to support or refute contentions about the alleged uncontrollable nature of special education expenditures on a national basis. The most recent large-scale collection of data on state special education expenditures occurred during the 1985–86 school year (Moore et al., 1988) and still provides the basis for most program estimates. The federal government stopped routine administrative collection of data of special education expenditures after the 1987–88 school year because it was generally recognized that the state data reports were not reliable or useful. An effort by the Center for Special Education Finance to obtain more recent data for 1994–95 uncovered the fact that fully half of the states in the survey did not know the statewide cost of their special education programs. Only 24 states were able to report special education expenditure data at the federal, state, and local levels; and only 13 indicated that they could do so with a high degree of confidence (Wolman and Parrish, 1996). Two studies limited to a small number of districts (Rothstein and Miles, 1995) or a single state (Lankford and Wyckoff, 1996) document special education costs rising faster than average costs for students without disabilities.

Such findings do not definitively address issues of encroachment, however, since that concept assumes (1) that special and regular education are discrete activities instead of complements; (2) that education is a zero-sum game in which funds for expanding educational opportunities for students with disabilities have

9  

 IDEA recognizes 13 categories of disability. The degree of an individual's disability can range from mild to severe within a category. (For descriptions of mild, moderate, and severe disabilities, see National Research Council, 1997:75–77.) The largest categories of disability (specific learning disability and speech or language impairment) account for almost three-fourths of all school-age children with disabilities and are almost always mild. The level of disabilities in the categories of mental retardation and serious emotional disturbance (nearly 20 percent of disabled children) can range from mild to severe, but at least half of these students function at the mild level (National Research Council, 1997). Given the large numbers of children with disabilities in these four categories (over 90 percent: see National Research Council, 1997:87), it is worth noting that most of the children with moderate and severe disabilities will be in these categories, even though most of the children in the four categories are only mildly disabled.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
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come instead of rather than in addition to money society was prepared to spend on students without disabilities; and (3) that services for students with disabilities since IDEA are completely new, instead of partially replacing educational services that were provided without being labeled "special education" in the years before IDEA.

Addressing Student Needs

Instead of focusing on encroachment, we think it is more useful to consider whether the entitlement and categorical approach to educating children with disabilities best serves their learning needs.

Before 1975, students with disabilities were frequently excluded from public schools altogether. In the early 1970s, school districts in only 17 states were serving half of their known population of children with disabilities, and 26 states were serving less than a third of this group (Martin et al., 1996). IDEA ensured that public education would embrace all children, including those with disabilities, by creating a policy framework emphasizing individual rights and procedural requirements (National Research Council, 1997).

Special education has thus been dominated by an orientation toward supplemental services developed outside the mainstream of general education, which creates separate student populations based on specified eligibility requirements, encourages specialized assessment and diagnostic services to determine type of disability and functional status, creates legal protections for children who become part of the special education population, and subsidizes and monitors the additional costs of intensive and supportive interventions for children who are eligible for services. Proponents of this orientation argue that a categorical program designed for the specific population of students with disabilities is essential to improve their education and social development, especially since their educational needs may surpass what is or can be offered in general education classrooms (Fuchs and Fuchs, 1995; Council for Learning Disabilities, 1993; National Joint Committee on Learning Disabilities, 1993; Renick and Harter, 1989; Coleman, 1983). It is the memory of this history of exclusion and unmet needs that proponents refer to when they see threats to special education today.

We suggest, however, that the goal of raising achievement for all students requires the explicit and full participation of students with disabilities in school, district, and state accountability systems and consideration of their needs in all policies and practices involving curriculum, instruction, and finance. As with other populations with special needs, it is vital that educators view these students as part of their core responsibility and not just the responsibility of a specially designated subset of education professionals. IDEA calls for children with disabilities to be educated "to the maximum extent possible" with children who are not disabled and in regular educational environments whenever possible, and in fact the proportion of time children with disabilities spend in regular classrooms

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
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has been growing. There is still a separatist orientation about much of special education, however, despite concerns that special education placements have been educational dead ends for many students and that many special educators are ill informed about educational improvement efforts affecting general education (such as standards-based reform). The challenge is to address the special needs of students with disabilities while simultaneously improving educational outcomes for them.

Some students, especially those with the most severe disabling conditions, will always require some amount of specialized programs and services, as provided by the existing approach to special education. Nevertheless, the facts that over 70 percent of all students with disabilities now spend at least 40 percent of their day in a regular classroom and 45 percent attend regular classes for at least 80 percent of the day (U.S. Department of Education, 1998) suggest that a second scenario, with less of an emphasis on classification and categorization, may be feasible for many. This scenario involves a more comprehensive and integrated approach to providing resources and services for a broad spectrum of children, including those with mild to moderate learning disabilities as well as other children who require additional assistance in acquiring academic skills (such as children with limited English proficiency or vocabulary skills, children who experience excessive absences from school, or children from areas of concentrated poverty) who have not been classified within the special education system. Distinguishing between severe and other disabilities is useful in thinking through funding options. At the same time, the goal of an integrated services approach for students whose disabilities are not severe, with a unifying system of policies and procedures and a common set of measures and outcomes, is to move away from the fragmented and differentiated policy frameworks that have traditionally guided general education, special education, and other categorical programs.

Integrated Approach

In a more integrated educational system, the presumption would be that each child has a right to be included in the general classroom unless justification can be made to place him or her in a separate instructional setting because of special learning needs. Aides and specialists would be more firmly integrated into the general classroom program that they are now. The process of developing individual education plans would be retained only for those students whose disability requires that they spend more than half their day outside the general classroom. Based on the current population of students being served in special education, we estimate that about 20 percent of such students would require high-intensity services and supports that could not be provided within the classroom or the general school system without serious disruption.

Moving to a less categorical approach to educating children with disabilities could overcome a number of criticisms of past special education practices. State

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

formulas that tie funding to the number or characteristics of students identified as requiring, and who receive, special education services or to the costs incurred by local districts in serving these students are thought to encourage the overclassification of children as disabled, to be inflexible in terms of where children with disabilities can be served, and to encourage more restrictive and costly placements (i.e., in settings apart from regular classrooms) (Parrish, 1995; Verstegen et al., 1997). Incentives for separate treatment of children with disabilities may also reduce tolerance within the general education system for diversity and flexibility in learning styles and mitigate against strengthening remedial services within general education. The availability of a separate special education system to which children with learning or behavioral problems can be referred gives regular classroom teachers an excuse for handing off responsibility for such youngsters to others.

Concerns about the desirability of separate placements, especially for the very large majority of students whose disabilities are considered mild, are exacerbated by the fact that the criteria for classification are more ambiguous than the criteria for severe disabilities. The latter, especially those that involve physical or sensory impairments, are generally clear and universally shared. By contrast, there is mixed research on the extent to which students with mild forms of disability can be distinguished reliably from other students variously called "low-achieving" and "educationally disadvantaged" (Lyon, 1996; Kavale et al., 1994; National Research Council, 1997).10 Variability among educational agencies in interpreting and implementing federal guidelines within the context of their own traditions and resources means that some children who qualify for special education services in one school would not qualify elsewhere, creating discrepancies that raise concerns about fairness.

Questions about the separate treatment of students with mild disabilities are further bolstered by findings that the content and forms of remedial supports and services that are now commonly provided to children with mild disabilities do not differ significantly in form or content from those that are offered to other children who have learning difficulties or who are slow to achieve academic progress (National Research Council, 1997). A common curriculum is often involved in meeting the needs of a broad array of students with learning problems, but the degree and intensity of service may need to differ according to the specific needs of the individual child. In the area of reading, for example, another National

10  

 Again, we point out that not all children with moderate or severe disabilities are in the categories associated with clear physical or sensory disabilities. Although most children with learning disabilities, speech or language impairments, mental retardation, and serious emotional disturbance have mild disabilities, the size of these categories means that the minority of students in these categories with more disabling conditions still outnumber the students who are autistic, blind, deaf or hearing impaired, or who suffer from multiple disabilities, orthopedic impairment, other health impairment, traumatic brain injury, and visual impairment.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

Research Council committee has recently concluded that "children who are having difficulty learning to read do not, as a rule, require qualitatively different instruction from children who are 'getting it.' Instead, they more often need application of the same principles by someone who can apply them expertly to individual children who are having difficulty for one reason or another" (National Research Council, 1998:327).

Finally, like Title I, special education has been accused of emphasizing compliance over performance. Legal requirements relating to the rights of students with disabilities have resulted in a unique educational approach that begins with the child as the point of reference. The child must be evaluated before school personnel can begin special programming, the evaluation must involve all areas related to the suspected disability, and reevaluation must take place at least every three years. If the evaluation determines that the child has a disability under federal guidelines, the child is entitled to special services without regard to cost. No specific legal criteria exist to determine what educational programs or services constitute an appropriate education; instead, general standards have emerged from court cases and federal legislation and rest on three broad principles.11 The specific program and services to be made available to each child are determined by school and specialized personnel and codified in an individualized education program (IEP). Federal law provides procedural safeguards for parents, including requirements for notice about proposed actions that affect the placement of their child in the school system, the right to attend meetings concerning the child's placement or IEP, the right to appeal decisions to an impartial hearing officer, and the right to be reimbursed for legal fees that result from parental challenges to school system decisions.

The absence of professional standards of practice, the reliance on IEPs, and the extensive procedural safeguards provided to parents have negative as well as positive effects. In particular, critics deplore the emphasis on inputs or services rather than outputs or achievements, the fostering of adversarial relationships between parents and school officials, and the encouragement of a defensive approach to special education within the schools.

Our suggestion to move in the direction of integrating special education more fully into the regular education system is not an original idea and in fact is consistent with a number of reforms already taking place around the nation. It is also consistent with funding changes that rely more on census-based approaches for determining how much federal or state aid flows to the local level for educat-

11  

 The three principles are: (1) the educational program should be related to the child's learning capacity; (2) the program should be designed for the child's unique needs and not merely what is offered to others; and (3) the program should be reasonably calculated to confer educational benefit (Martin et al., 1996).

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

ing students with mild and moderate disabilities. Census-based funding assumes that some percentage of the district or school population has disabilities and provides funding on that basis rather than on actual counts; interest in such funding has developed as part of a broader reconsideration of federal and state funding in light of three goals: (1) to maximize flexibility in service deliver; (2) to be "identification neutral"—that is, the number of students identified as eligible for special education is not the only, or primary, basis for generating state special education aid, and students do not have to be labeled "disabled" in order to receive services; and (3) to be needs-generated, so that funding for special education is based on service needs rather than on the type of educational placement or disabling condition (Parrish, 1997).

The 1997 reauthorization of IDEA took a first step toward embracing census-based funding; once the appropriation for part B of IDEA exceeds $4.9 billion, distribution of the additional dollars will not depend on the number of students with disabilities identified and served but will shift to a census basis. Under census-based funding, a state's share of new IDEA money will depend on its total school-age population (weighted 85 percent) and its total school-age population in poverty (weighted 15 percent). The new IDEA also allows more flexibility in the use of special education funds (including allowing benefits to accrue "incidentally" to non-special education students as long as the IEPs are being fulfilled), strengthens provisions to ensure that state funding formulas do not encourage segregated placements, calls for IEPs to relate programming to achievement in the general education curriculum and calls on states to include children with disabilities in statewide assessments and alternative assessments, puts limits on the attorney's fees that parents of special education students can collect, and encourages the use of mediation rather than formal due process hearings to resolve disputes between parents and schools over IEPs.

At least six states (California, Massachusetts, Montana, North Dakota, Pennsylvania, and Vermont) have also adopted some form of census-based funding for their own state special education funds, and several also use some form of poverty adjustment or add "mainstream weights" to pay for the support services that special education students need when served in a general education classroom. Some states (e.g., Florida) are also piloting efforts to relate state aid to student learning characteristics and service needs, rather than placement or disability.

For students with mild and moderate disabilities, we are encouraged by the development of new approaches to special education finance like census-based funding that reinforce the move to accommodate students with disabilities as fully as possible within general education. Moving away from classification and categorization, however, requires that attention be paid to professional development (to prepare teachers to handle students with a diverse array of learning needs in the same classroom), to flexibility for schools in using special education funds, to accountability mechanisms, and to mechanisms for funding students

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

with severe disabilities (those who would continue to have IEPs) and for helping schools and districts meet the unusually high costs of these students or of exceptional concentrations of students with mild disabilities. The advantages of a more integrated approach notwithstanding, we acknowledge that the categorical treatment of students with disabilities has served as an important safeguard that their needs would be met. Neglect of these children by public schools is a recent and vivid enough memory for advocates to engender understandable suspicion of anything that undermines the individual educational entitlements these children have won. The existing program, which serves a diverse but identifiable population, is therefore unlikely to be replaced with a set of general services designed for a more complex and diffuse group of students unless careful attention is paid to both capacity and accountability issues.

Capacity and Accountability Issues

First, an integrated services approach requires that both personnel and facilities have the capacity to meet the needs of a diverse group of learners. Including students with disabilities in regular education requires extensive professional preparation at several levels: preservice teacher education for both general and special education personnel, in-service education within school systems, and ongoing technical assistance and support to ensure effectiveness of programming. IDEA recognized that the nation's schools were not prepared to provide an appropriate education to all students with disabilities and included requirements for states and local school districts to provide programs for personnel development (Turnbull, 1993). Funding to ensure adequate preparation for all educational personnel in school systems, however, has never been realized.

During the first decade of special education law, efforts focused on building a sufficient cadre of special education personnel to meet identified student needs. It is only in the last decade that the preparation of general educators to meet the needs of students with disabilities has begun to be emphasized. At the same time, many special education faculty have had only limited exposure to new curricular reforms and standards-based approaches; they will need development opportunities to prepare them to work in the general classroom and to help integrate their efforts into whole-school reform programs. States and school districts will also have to step up to new fiscal challenges in preparing their school buildings to accommodate the needs of diverse learners (U.S. General Accounting Office, 1995a).

Integrated services will also be encouraged by continuing efforts to increase flexibility in the use of categorical federal and state aid and to grant states waivers from federal requirements when appropriate. Steps in the direction of flexibility are evident in most recent federal legislation, including the 1994 reauthorization of Title I, the Goals 2000 law, and the 1997 IDEA amendments. Permitting flexibility raises fears that spending on populations previously targeted by cat-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

egorical programs might be lost, however, so it will be important that greater flexibility is accompanied by efforts to ensure that the needs of students with disabilities continue to be addressed in more integrated settings.

Accountability for the education of children with disabilities in integrated settings would be enhanced by both including these students in ongoing large-scale assessments as well as developing standards of practice. A 1997 report (National Research Council, 1997) extensively reviewed the issues involved in incorporating students with disabilities into standards-based curriculum and assessment reforms. At present, there are no generally recognized standards, linked to desired outcomes, providing benchmarks for determining what constitutes an appropriate education for students with various kinds of disabilities. The diversity of the characteristics of students with disabilities poses challenges to the development of professional standards, as does the fact that traditional categories of disability do not have a demonstrable relationship to specific outcomes or to prognoses (Epps and Tindal, 1987; Kavale, 1990; Kavale and Glass, 1982). Nevertheless, progress is being made. Efforts have begun to establish diagnostic constructs based on a child's placement along a number of continuous dimensions of disability, rather than an either-or dichotomy (National Research Council, 1997). At the same time, others (e.g., Reschly, 1996) are working on a service-based approach to identify outcomes that could be associated with certain levels of service investment for broad clusters of students with disabilities.

New approaches at the state and federal level to special education finance like census-based funding and less reliance on individual entitlement and classification pose potential risks to localities. Some of these risks will be magnified if school finance becomes more school-or pupil-based (rather than district-based) in the future. One risk is that local districts or schools may have unusual concentrations of students with disabilities, a fact that census-based funding would fail to address. We suggest that states that move to census-based funding ought to allow appeals when there is evidence of unusual concentrations of students with disabilities. A second risk is the financial drain that students with severe disabilities can pose for schools or small districts. These students with disabilities are, as we have noted, the easiest to identify. We suggest that states consider establishing risk pools to pay the ''excess costs" of such students.

A major question about special education finance is whether the federal government should in the future pick up a greater share of the unfunded mandate it has created for states and local districts. Not only is the federal share currently very low, but IDEA imposes a large regulatory overlay especially on districts and schools. At the same time, new approaches to special education at the state level pose both possibilities and challenges for federal officials. When states move to fund their special education responsibilities through census-based funding rather than individually identifying all students with disabilities, they lose out on federal aid under current arrangements. It is not clear that continued reliance on individual categorization is necessary at the federal level, though we recognize this is

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

a complicated question with many arguments on both sides (as described in Parrish and Chambers, 1996). If states adopt the suggestion to establish risk pools for covering the excess costs of educating students with severe disabilities, a new funding option for the federal government might be to fund these pools, in effect making it a national responsibility to meet the special programs and services such students require.

Reforming special education to emphasize a more integrated services approach for most students with disabilities will not necessarily be cheaper than the current categorical system. It does, however, hold out promise for improving the quality of education offered to students with disabilities and enabling them to reach their full potential by incorporating these children as fully as possible into the primary school mission of improving learning for all students.

EMPOWERING SCHOOLS OR PARENTS OR BOTH TO MAKE DECISIONS ABOUT THE USE OF PUBLIC FUNDS

Definitive evidence is not available about the effects of major changes in who has the power to determine how education dollars are spent. Such changes are highly controversial because they threaten existing authority relationships. In the face of uncertainty and controversy, the arguments for change are strongest in places where school performance under current governance arrangements has been hardest to improve. This suggests that urban areas with large concentrations of disadvantaged students are the most compelling targets for such reforms, especially reforms that give parents more choice over the schools their children attend.

There are several reasons why choice options may be both more feasible and effective in promoting educational fairness and productivity in urban areas than elsewhere.

First, the population is more concentrated. Therefore transportation cost issues loom less large than in less densely populated areas.

Second, urban dwellers currently have less school choice than other Americans. Many urban residents are black, and the residential segregation of blacks is still strong. This is true within school districts as well as across district lines. The effects on school segregation are illustrated by data from Chicago, where 37 of 63 high schools have more than 99 percent black enrollment, although only 63 percent of district students are black (Chicago Magazine, 1995). Also, in a neighborhood school system, the price of housing can ration access to neighborhoods with better schools (Black, 1998; Epple and Romano, 1996). This creates a link between income and education quality because higher-income households can more readily pay a premium for housing in neighborhoods with better schools. The structure of metropolitan areas in the United States (large central cities surrounded by suburbs) tends to result in a disproportionate number of low-income households concentrated in a large multischool district.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

Third, urban districts, more so than suburban or rural districts, resemble monopoly providers and so may suffer most from the inefficiencies that accompany monopoly supply. Again, Chicago provides an example: the city of Chicago has 63 high schools in one school district. Roughly 77 districts surrounding Chicago have a total of 95 high schools (Chicago Magazine, 1995).

In addition, the features of small neighborhood school systems that may be desirable from the perspective of school performance—households that are predominantly owner-occupants, where both parents and homeowners without children have incentives to care about school quality (Hoxby, 1996)—are less pronounced in large-central-city districts. In central cities, the majority of households are renters rather than owner-occupants; residents without children in school do not have the financial stake in the quality of neighborhood schools that owner-occupants do. The owners of rental housing have less political influence relative to owner-occupants, because the former are fewer in number and often reside elsewhere. This is likely to be exacerbated in large districts by the relatively greater difficulty that residents encounter in affecting district-level policy. Hence one would expect neighborhood school organization to be less effective in large city systems with predominantly renter-occupants than in small suburban districts with predominantly owner-occupants.

Finally, urban residents arguably have benefited least from prior school reforms: urban schools still produce the lowest academic achievement and suffer from high dropout rates. Research suggests that recent studies comparing Catholic school performance to public school performance show more positive effects for urban minority students than for others, though as also noted the problem of selection bias (while not as bad as in earlier research) still makes it difficult to draw firm conclusions about public-private school differences.

Both theory and experience suggest that different forms of choice would affect urban education in different ways.

Breaking up large city systems into small districts comparable in size to suburban districts (that is, mimicking neighborhood schools) would likely be a step in the right direction from an incentive standpoint, and this is one way to increase school choice. However, the incentives with renter-occupants would probably not be as strong as with owner-occupants. In addition, the tax base per student in such newly created small districts would necessarily vary a great deal, and some form of equalization would be essential for such restructuring to have desired outcomes.

Interdistrict and intradistrict choice options have limitations in urban settings. Parents in districts with good schools pay a housing price premium to reside in these districts and are unlikely to be receptive to enrolling students from poorer-performing districts. In fact, where interdistrict choice is now permitted, not much actually occurs. Intradistrict choice may be more viable, but still parents who have located in neighborhoods with good schools may resist student enrollments from outside the neighborhood. Districts can enforce open enroll-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

ment, but if there are significant differences in school quality, this is likely to lead wealthier households to leave for the suburbs or to enroll their children in private school. Moreover, intradistrict choice is not an effective mechanism for improving performance when problems exist at the district level.

Charter schools have incentives to attract and admit students; their survival depends on it. They also have incentives to serve students well in order to retain them. They are likely to introduce more competitive forces than traditional forms of public school choice because they can potentially supplant poor-performing schools. They may also be effective in disciplining inefficient management if the district does not have too much control over their operation. However, to the extent that charter schools remain an intradistrict mechanism, subject to the authority of existing district management, there may be limits to the extent to which they can bring about change where change is needed most.

Vouchers that enable students to use public funds to attend private schools may offer city residents the most effective enrollment vehicle for improving educational quality by rewarding schools that perform well and punishing schools that do not. Such rewards and punishments are key features of well-functioning private markets. Because private schools face this disciplining mechanism, voucher-supported private schools are likely to have the strongest impact in improving school performance. This is particularly the case if the program is funded at the state level, so that the voucher schools are not tied to a particular school district either in oversight or resources. Hence, on a priori grounds, such schools might be expected to be the most likely to succeed in increasing productivity and effectiveness of the educational system.

Despite these theoretical arguments in favor of vouchers, they are and have been one of the most controversial ideas in American education. They raise (if parochial schools are included) church-state issues that, while perhaps not as powerful politically as they once were, still arouse strong emotions, to say nothing of possible federal and state constitutional barriers.

The legality of religious-school vouchers is unclear, and advocacy groups on both sides of the issue are hoping to bring a case before the U.S. Supreme Court that would result in a definitive ruling. Meanwhile, courts in several states have rendered conflicting opinions. For example, the state supreme courts in Wisconsin and Ohio ruled that programs in Milwaukee and Cleveland that permit vouchers to be used at religious schools are legal under both federal and state constitutions (Jackson v. Benson, 710 N.E.2d 276, Wis. 1998. Simmons-Harris v. Goff, 710 N.E.2d 276, Ohio, 1999).12 In Maine, the state supreme judicial court

12  

 The Ohio Supreme Court at the same time struck down the Cleveland voucher program on technical grounds unrelated to the constitutional church-state issue. The Ohio legislature subsequently (June 1999) reinstated the Cleveland program in a manner that avoids the technical problem with the old law. However, at the beginning of the 1999 school year, a federal district judge issued an injunction halting the Cleveland voucher program on the grounds that it probably violates consti-

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
×

and the federal appeals court ruled that "tuitioning" programs (wherein towns without public high schools reimburse parents for sending their children to public or secular private schools in other communities) may not include religious schools. The courts based their rulings on both federal and state constitutional arguments (Bagley v. Raymond School Department, 728 A.2d 127, Me 1999, Strout v. Albanese, 1999 U.S. App. LEXIS 10932, 1st Cir. May 27, 1999). The Vermont Supreme Court relied solely on the state constitution in making a similar ruling on that state's tuitioning program (Chittenden Town School District v. Vermont Department of Education, No. 97–275, 1999 Vt. LEXIS 98, Sup. Ct. filed June 11, 1999). Related cases raise church-state issues in other (nonvoucher) contexts—e.g., state-authorized education tax credits that include religious schools in Arizona and Minnesota and cases related to technology and other kinds of aid in a number of states. When federal constitutional issues are invoked, grounds exist for appeals to the U.S. Supreme Court. Any of a number of current cases could ultimately provide the occasion for the court to settle the question of what public aid may or may not be used at religious schools. Perhaps Florida's new statewide school voucher law, the first statewide law in the country, will be the test case lawyers have been seeking. One day after the law was signed on June 21, 1999, the first lawsuit challenging it was filed.13

Legal issues apart, many opponents see private school vouchers as a threat to traditional American support for public schools. Some urban educators argue that they would remove much-needed funds from public education just as urban districts are engaging strenuously in efforts to improve their academic performance. Opponents fear that they would exacerbate the stratification of population by income, race, or other student characteristics, potentially making matters worse rather than better with respect to achieving goal 2. Experience with parental choice programs overseas lends some credence to concerns about increased stratification, although of course urban American schools are already stratified to a significant degree.

There is some theoretical research that addresses these concerns. For example, Epple and Romano (1998, 1999) find that flat-rate voucher systems tend to promote more stratification by ability than public neighborhood schools systems but less stratification by income. As Chapter 6 noted, there is very little

   

tutional mandates for the separation of church and state. As this volume goes to press, the federal judge partially reversed the injunction and decided to allow Cleveland children who were enrolled in the voucher program last year to continue attending private school for the first semester of this school year, while the full case is argued. In the meantime, no new students are being given vouchers.

13  

 In Florida, each public school has just been graded for the first time by the state on an A-to-F basis. The state will offer vouchers to students attending schools that receive Fs two times in four years, In fall 1999, only pupils in two elementary schools in Pensacola will be eligible for the vouchers, on the basis of previous poor ratings received by these schools.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
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empirical evidence with which to evaluate the theoretical claims made both for and against vouchers, and the evidence that does exist is often hotly contested. While limited data are available that can be used to test predictions about voucher programs directly, theoretical predictions can be tested by analysis of data for existing public and private schools. Epple et al. (1998) test the aforementioned predictions about stratification made by Epple and Romano and find that all predictions regarding stratification within and across the public and private school sectors are supported by the data.14

The foregoing suggests that charter schools and vouchers, rather than interdistrict and intradistrict choice programs, are the choice options most worthy of further exploration as vehicles for improving poor-performing city schools. Charter schools are in effect a naturally occurring experiment, although one that is not being as fully and systematically evaluated as it might be. Also, the fact that charter schools have unequal access to capital funding means that they do not face a level playing field with traditional public schools.

Existing voucher programs are so small that they are not ever likely to yield the kind of answers about the effects of vouchers and the most effective voucher designs that would be necessary to allay the concerns of those who question vouchers, not on legal grounds, but on the grounds of their unproven impacts on school performance and stratification. This raises the question of whether it is time for a large-scale experimental demonstration project with school vouchers. The committee wrestled long with this issue and discusses it further in Chapter 9.

14  

 This analysis uses a unique dataset (prepared by David Figlio and Joe Stone) that was generated from the National Education Longitudinal Survey, the Schools and Staffing Surveys, and data collected by Dun and Bradstreet.

Suggested Citation:"7 Achieving Goal 2: Breaking the Nexus." National Research Council. 1999. Making Money Matter: Financing America's Schools. Washington, DC: The National Academies Press. doi: 10.17226/9606.
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Next: 8 Achieving Goal 3: Raising Revenue Fairly and Efficiently »
Making Money Matter: Financing America's Schools Get This Book
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The United States annually spends over $300 billion on public elementary and secondary education. As the nation enters the 21st century, it faces a major challenge: how best to tie this financial investment to the goal of high levels of achievement for all students. In addition, policymakers want assurance that education dollars are being raised and used in the most efficient and effective possible ways. The book covers such topics as:

  • Legal and legislative efforts to reduce spending and achievement gaps.
  • The shift from "equity" to "adequacy" as a new standard for determining fairness in education spending.
  • The debate and the evidence over the productivity of American schools.
  • Strategies for using school finance in support of broader reforms aimed at raising student achievement.

This book contains a comprehensive review of the theory and practice of financing public schools by federal, state, and local governments in the United States. It distills the best available knowledge about the fairness and productivity of expenditures on education and assesses options for changing the finance system.

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