Creating School Finance Policies That Facilitate New Goals

In this policy brief, Allan Odden argues that it may be time to redesign state and district school finance systems to align them more closely to the standards-based education reform movement and the national goal of teaching all students to rigorous performance standards. Historically, a major focus of the school finance policy debate was the fiscal disparities across school districts within states. These disparities in per-pupil spending were inversely linked to tax efforts and strongly linked to the size of the local property tax base per pupil. Although the strength of the connection between spending and education quality was debated, most policymakers admitted some connection and viewed the overall structure as unfair. Low-property wealth districts were doubly disadvantaged—they not only had high tax rates but also had low education expenditures and a lower quality education program. On the other hand, high-property wealth districts were doubly advantaged—they had both low tax rates and high education expenditures and, in most cases, higher quality education programs. But most efforts to offset these disparities with state aid were only modestly successful over time. It became apparent that additional strategies were necessary to reduce spending differences. As research by Evans, Murray, and Schwab (1997) shows, many states have undergone court-ordered school finance reform in the past 30 years, which has had limited success in reducing fiscal inequality. Indeed, whether or not the reform was court-ordered, policymakers in most states developed strategies that attempted to reduce spending differences across districts, including flat grants, minimum foundation programs, guaranteed tax base and percentage equalizing formulas, and full state funding. But for the most part, these formulas have fallen far short of reducing fiscal disparities. Although these reforms managed to reverse the trends in tax rates between high- and low-property wealth districts in many states (so low wealth districts tend to have low tax rates and high wealth districts tend to have high tax rates), they still left spending per pupil highly associated with property wealth. With the national emphasis on teaching students to higher standards, however, it is becoming clear that this question of fiscal fairness, while important, does not address the more fundamental question of what resources are necessary to reach those high standards. Therefore, the traditional focus on equitable distribution of resources is giving way or expanding to a new focus: ensuring that school finance policy can facilitate the goal of teaching students to higher standards. As Clune (1994a, 1994b) argues, this requires a shift in school finance thinking from equity to adequacy. Such a shift challenges policymakers to identify a new school finance structure that is more directly linked to strategies that raise levels of student achievement

Including School Finance in Systemic Reform Strategies: A Commentary

This 1994 CPRE Finance Brief takes a look at the school finance issue and proposes that education funding be tied more closely to systemic reform initiatives. It next describes past trends in school finance and current challenges to traditional education funding sources. Policy implications of these changes are presented, followed by a discussion of possible components of a finance system based on systemic reform

Getting the Best People Into the Toughest Jobs

It is indisputable that teachers and principals have the greatest impact on student learning. Unfortunately, the education system has hired and tenured thousands of ineffective teachers and principals, particularly in high-poverty urban and rural schools. As a consequence, these schools have low levels of student learning. To remedy this problem, the nation is engaged in multiple activities to get effective teachers into all classrooms and effective principals into all schools through more “strategic management” of education talent. Strategic talent management is an approach that manages all human resource programs—recruitment, selection, placement, development, evaluation, tenure, promotion, dismissal, and compensation—around a set of effectiveness metrics that capture instructional practice and student-learning growth. The theory is that effective principals should manage schools in ways that facilitate teachers’ acquiring the instructional expertise they need to make them and the school effective—that is to say, successful in dramatically boosting student learning. The issue of strategic talent management in education leapt onto the policy and practice agenda quite recently. Yet in a short time period, huge changes in policy and practice have occurred. From a set of disjointed policies and even-worse practices, a comprehensive and holistic view of strategic talent management in education is developing, supported by new and ambitious federal and state policies and rapidly changing local practices. Admittedly, policy design still needs significant calibration, and local implementation is far from complete. But the landscape of how teachers and principals—the education talent—are managed is dramatically changing. A once-haphazard mix of approaches is moving toward many more strategic systems that are designed to ensure that only effective teachers and principals are recruited, tenured, retained, and well-compensated—particularly in urban and poor rural communities. This paper examines the evolving landscape of talent management in education: Talent management, or lack thereof, in education at the close of the 20th century; educational change that began at the dawn of the 21st century; rumblings of change that evolved into comprehensive new federal and state human-capital management policies and local practices; rumblings of change that coalesced into a foundation of change across the country and the new world of talent management; why the focus on talent evolved and quickly assumed such a prominent role in the nation’s education policy and practice agendas

Committing to Class-Size Reduction and Fining the Resources to Implement It: A Case Study of Resource Reallocation

This article discusses how a medium-sized school district in Wisconsin was able to reallocate resources to reduce class sizes in grades K-5 without spending more money or increasing its tax rate. Previous research on resource reallocation found that the bulk of reallocated resources were those supporting categorical program services. This district was able to use a different strategy. As a growing district, its marginal costs of adding an extra class of students were much less than its average expenditures per pupil, which were reimbursed by the state school finance formula. As the district grew, therefore, it acquired excess revenues. Also, by implementing full-day kindergarten, the district acquired more excess revenues because this added (0.5 pupil) X (Number of kindergartners) to its current enrollment, and the cost of educating these students was less than the amount they received from the state funding formula. It then used these revenues to reduce class sizes to between 15 and 20 in all Kindergarten through grade 3 classrooms and to between 15 and 22 for grades 4-5

Reinventing Teacher Compensation Systems

In this issue of CPRE Finance Briefs, the authors argue that it is now time for education to join successful efforts and revise teacher pay systems. The brief provides a short history of changes in teacher compensation over the last century and a discussion of key organizational and educational changes today that could be reinforced by a new teacher compensation structure. It also suggests some new teacher pay elements and a set of principles states and districts could follow if they embark on the journey to redesign how teachers are paid. Examples of leading-edge compensation programs are included in sidebars on pages 2-5

Equity and Public Education Finance in Virginia

Until there is an equality of financing, there can be no equality of quality

Recruiting New Teachers to Urban School Districts: What Incentives Will Work

Explores the effectiveness of financial incentives in attracting qualified teachers to low-performing and hard-to-staff schools. Surveys teachers in training on factors in job choices and considers the size of an effective pay incentive and alternatives

Enhancing Teacher Quality Through Knowledge- and Skills-Based Pay

The 1989 Education Summit established the National Education Goals that spurred states to set standards and assess educational outcomes (Patton and Thompson, 1999). A decade into standards-based reform, the 1999 Education Summit identified two important policy areas that have emerged to carry out these goals: teacher quality and accountability (National Education Summit, 1999). Research supports the important relationship between teacher quality and student achievement (Darling-Hammond and Ball, 1998; Ferguson and Ladd, 1996; Sanders and Horn, 1994; Wright, Horn, and Sanders, 1997). Concerns about teacher quality led the National Commission on Teaching and America’s Future to recommend that states and districts consider better ways of linking pay to the development of teacher knowledge and skills (National Commission on Teaching and America’s Future, 1996). Exploring better ways of using pay to enhance teacher quality is also supported, to varying degrees, by teacher unions and associations. Knowledge- and skills-based pay systems are emerging as a potentially promising way of leveraging the investment in teacher pay to improve teacher quality and to provide clearer signals to teachers about how they should focus their professional energies. This CPRE Policy Brief reports on our experiences in working with policymakers and studying knowledge- and skills-based pay systems. We provide guidance on important design issues for these systems, and recommend ways state and district policymakers can strengthen the capacity for and pursue knowledge- and skills-based pay

The equity of school facilities funding: Examples from Kentucky.

While there is an extensive literature analyzing the relative equity of state funding systems for current operating revenues, there is a dearth of research on capital funding systems. This article presents an analysis of the school capital funding system in Kentucky since 1990, using the operating-revenue analysis concepts of horizontal equity, vertical equity, and fiscal neutrality. In general one could tentatively conclude that Kentucky’s capital-funding system was reasonably equitable until an expansion of district options in 2003–04 was followed by greater measures of inequity. This analysis points to specific methods for Kentucky to restore equity to its school capital funding structure as well as a model for analysis of other capital funding systems

The Motivational Effects of School-Based Performance Awards

From 1995-1998, CPRE teacher compensation researchers conducted extensive interviews and survey questionnaires of teachers and principals in three sites to measure the motivational effects of school-based performance award (SBPA) programs. When a school met preset educational objectives, usually related to increases in student achievement, the SBPA programs in Charlotte-Mecklenburg (North Carolina) and Kentucky provided salary bonuses to all the teachers in the school and the SBPA program in Maryland provided a monetary award to the school for school improvements. CPRE researchers found that the SBPA programs in two of the three sites helped teachers focus on student performance goals. However, the motivational power of the programs varied due to differences in teachers’ beliefs. For instance, it mattered whether teachers believed their individual effort would lead to increases in schoolwide student performance, the SBPA system was fair and the award amount was worth the extra effort and stress, and that they would be given the award if they could produce the improved performance results. The relationship between teachers who were motivated by school-based performance awards or sanctions and improvements in school performance also varied and may have been attributable to differences in the actual programs as well as the local context