American Public School Finance [3 ed.] 1138499943, 9781138499942

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American Public School Finance

In an era of dwindling fiscal support for public schools, increasing federal mandates, and additional local budget requirements, educational leaders must be able to articulate sound finance theory and application. Designed for aspiring school leaders, this text presents the realities of school finance policy and issues, as well as the tools for formulating and managing school budgets. The authors move beyond coverage found in other texts by providing critical analysis and unique chapters on misconceptions about school finance; fiscal capacity, fiscal effort, adequacy, and efficiency; demographic issues; and spending and student achievement. Examining local, state, and federal education spending, this text gives readers the foundation to understand school finance and knowledgeably educate colleagues, parents, and other stakeholders about its big-picture issues, facts, and trends. The new edition of American Public School Finance will help educational leaders at all stages of their careers become informed advocates for education finance practice and reform. New in this edition: • • • •

Expanded coverage on school choice Discussion of new standards and law Updated exploration of student demographics and its impact on learning Advanced pedagogical features such as connections to the latest Professional Standards for Educational Leaders (PSEL), Focus Questions, Case Studies, and Chapter Questions/Assignments • Complementary electronic resources designed to deepen and extend the topics in each chapter and to provide instructors with lecture slides and other teaching strategies. William A. Owings has been a teacher, principal, assistant superintendent, and superintendent of schools. He serves on the editorial advisory board of the Journal of Education Finance and is Professor of Educational Leadership at Old Dominion University, USA. Leslie S. Kaplan has been a teacher, school counselor, and is now a retired school and district-level administrator and full-time education writer. She also serves on the editorial board of the National Association for Secondary School Principals Bulletin.

American Public School Finance Third Edition William A. Owings and Leslie S. Kaplan

Third edition published 2020 by Routledge 52 Vanderbilt Avenue, New York, NY 10017 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business  2020 Taylor & Francis The right of William A. Owings and Leslie S. Kaplan to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. [First edition published by Wadsworth Publishing 2005] [Second edition published by Cengage Learning 2013] Library of Congress Cataloging-in-Publication Data Names: Owings, William A., 1952- author. | Kaplan, Leslie S., co-author. Title: American public school finance / by William A. Owings and Leslie S. Kaplan. Description: Third Edition. | New York : Routledge, 2019. | “First edition published by Wadsworth Publishing 2005”—T.p. verso. | “Second edition published by Cengage Learning 2013”—T.p. verso. Identifiers: LCCN 2019008816 | ISBN 9781138499942 (Hardback) | ISBN 9781138499966 (Paperback) | ISBN 9781351013796 (eBook) Subjects: LCSH: Education—United States—Finance. | Public schools— United States—Finance. Classification: LCC LB2825 .O95 2019 | DDC 379.1/10973—dc23 LC record available at https://lccn.loc.gov/2019008816 ISBN: 978-1-138-49994-2 (hbk) ISBN: 978-1-138-49996-6 (pbk) ISBN: 978-1-351-01379-6 (ebk) Typeset in Sabon by Swales & Willis Ltd, Exeter, Devon, UK Visit the companion website: www.routledge.com/cw/owingskaplan

Dedication

We, Bill and Leslie, dedicate this book to each other, our writing and life partners; and to those who will use its perspectives and data to improve public education funding as an investment in our nation’s human capital.

Contents

Preface viii Acknowledgments xii

  1 Misconceptions about School Finance

1

  2 History of School Finance in the United States

32

  3 Legal Framework for Financing Public Education

52

  4 Education as an Investment in Human Capital

81

  5 Taxation Issues

104

  6 Fiscal Capacity and Fiscal Effort

131

  7 Equity, Adequacy, and Efficiency

161

  8 Structure of School Finance Systems

189

  9 Demographics and School Finance

205

10 Budgeting: Applying Policy Values

244

11 Spending and Student Achievement

269

12 Critical and Emerging School Finance Issues

295

Index 325

Preface

As the saying goes, if you want to know the real story, “follow the money.” One can easily see what people value by where they spend their resources. This is especially true for local, state, and federal government spending. This is the essence of school finance. Most graduate students anticipate school finance to be a rather boring topic. They expect the class will consist of accounting practices and Excel spreadsheets, stressing credits, debits, and maintaining ledgers. Nothing could be further from the truth. As we examine local, state, and federal education spending, you will come to understand the “big picture” of school finance, deepen your appreciation for public education’s contributions to our communities and nation, become competent players in the state and local finance issues arena, and develop into proactive supporters for education finance reform. The book’s essential content is easily accessible to master’s level school leadership or public administration students. At the same time, doctoral students will find its thoughtful discussions and up-to-date citations useful for further study.

A WALK THROUGH THE THIRD EDITION Each chapter begins with two pedagogical features: PSEL Standards and Focus Questions. Appearing immediately after the chapter title, Professional Standards for Educational Leaders1 (PSEL, formerly known as Interstate School Leaders Licensure Consortium, ISLLC, Standards), identify those standards addressed in that chapter. Anchored in current research and educational leaders’ real-life experiences, PSEL Standards outline the studentcentric, foundational leadership principles to guide professional practice. They help school leaders create the conditions that support each student’s learning, development, well-being, and more equitable outcomes. The Focus Questions, appearing next, orient professors and readers to the chapter’s topics, priming their attention for the issues ahead. Likewise, each chapter ends with two pedagogical features to increase content retention, relevance, and personal meaning: a case study and chapter questions/assignments. The case study offers an activity in which readers apply the chapter contents to solve a realworld school finance problem. The chapter questions/assignments ask readers to infuse the chapter contents to their own work setting. Actively using the content helps readers develop the professional expertise needed to educate their publics and advocate for school finance reform. Professors can use these tools as individual or small group activities.

PREFACE

Although the Table of Contents for this third edition may look familiar to professors who taught from older versions, the content is overwhelmingly new. Not only is the content updated, it also discusses topics not fully explored in prior editions: Does taxpayer funding for school choice violate states’ constitutional language? In what ways are charter schools public and not public? How well are charter schools improving student achievement? Are public schools “inefficient”? Why are teachers’ health benefits and pension programs in crisis? What are the latest trends in teacher compensation? We explore these relevant school funding issues—and others—in ways meaningful to future and practicing educators. The chapters’ thoughtful and researchinformed discussions will help readers answer these provocative questions. Chapter 1 deals with common misconceptions about school finance. For example, politicians and media often assert, “throwing money at public schools does not improve student achievement.” They see little or no connection between money spent on public education and high-quality student outcomes. Much of the general public has embraced this view (while assigning their own local schools high grades). In truth, money does impact student achievement. With facts you can use, Chapter 1 debunks this and other popular myths about increasing education costs with flat or falling achievement test results, educators’ “high” salaries as compared with similarly educated professionals, and international student achievement comparisons that make American schools appear to be “failing.” Chapter 2 discusses the history of school finance in the United States. Our nation’s founders correctly believed that the success of this new democratic republic depended on an educated populace. To that end, federal funding for education began before this country was even the United States! This chapter traces the history of school finance in American public schools from the early Massachusetts laws to the 1995 Elementary and Secondary Education Act (ESEA) to ESEA’s current reauthorization known as the Every Student Succeeds Act (ESSA). School finance operates within a legal framework that began before ratification of the Constitution (1788). Chapter 3 provides an overview of education legislation, including school segregation, increased state responsibilities for funding, and the legal context for charter schools and vouchers. The evolution of legal thinking about school finance from the 1960s to the present receives particular emphasis. You will learn how and why we arrived at today’s mindset for funding education based on studentoutcome accountability measures (such as annual achievement testing) rather than on school inputs (such as the number of books in the school’s library). Chapter 4 investigates education funding as an investment in human capital. From a business perspective, we all know it is vital to invest continually in upgrading employees’ skills and capital equipment if the business is to meet current and future challenges. Adam Smith’s The Wealth of Nations (1776) first conceived of education and its investment in people—human capital—as the foundation for economic prosperity. Investing in education makes the community and the nation economically stronger and better poised for growth. In this chapter, we discuss the various ways public education improves everyone’s quality of life, increases tax revenues, and decreases crime and social safety net costs. Chapter 5 provides an overview of taxation issues. Paying taxes, for most people, is about as rewarding as enduring a root canal procedure. Indeed, some would prefer

ix

x

PREFACE

the latter. Nonetheless, taxes play an important role in a democracy. They provide for the general welfare and redistribute wealth, spreading the cost of providing services over the greatest number of people possible. Without this redistribution, the wealth gaps and the achievement gaps would widen. The chapter examines types of taxes and benefits, their various limitations, and challenges our continued reliance on local property taxes as the primary means of supporting education. We also consider why tax burdens are shifting to the local level—over the smallest group of people possible— instead of remaining at the state level where the legal responsibility for education rests. Chapter 6 looks at fiscal capacity and fiscal effort—how localities, states, and nations use their resources to fund education. Capacity is a measure of wealth, the ability to pay. Fiscal effort is a measure of how a locality, state, or nation spends their resources in relation to their fiscal capacity. Localities and states may have great affluence yet not exert great levels of effort for education, roads, or other budget categories. Or, those with little fiscal capacity may exert high levels of effort to spend on what they deem important. On the book’s companion website, we have posted an Excel spreadsheet listing all the political subdivisions in Texas with measures of wealth, spending, the number of schools, and much more. Use this spreadsheet to delve into actual issues of capacity and effort. You can access the companion website at, www. routledge.com/cw/owingskaplan. A note of caution: this chapter may change the way you think and feel about measurements of wealth! Chapter 7 addresses the fiscal issues of equity, adequacy, and efficiency—all important concepts for school leaders to understand and communicate to the public. We ask questions such as—do we want equity or equality in education? What does it mean to have an adequate education? How does one measure adequacy, and how much education spending is enough (adequate) to bring every student to 21st-century competence? Is our education system efficient (by free market criteria)—and how is that determined? Is that even the right question? Through informed discussion, we help you find answers. Chapter 8, which examines the structure of school finance systems, brings together the issues mentioned in previous chapters. The Tenth Amendment makes education a state responsibility. Therefore, states have an obligation to equalize local funding based on capacity. The federal government also has an obligation to fund what it has legislated. This chapter reviews and clarifies the political and financial relationships among the federal, state, and local governments for funding public education. Chapter 9 focuses on demographics and changing student populations. Today, we have the greatest number and most diverse students in U.S. history. For example, in a five-year period, some school districts have seen more than a 300% increase in students who speak English as a second language. Student risk factors associated with education—including poverty, chronic health concerns, transience, fragile families, and toddlers and television—are also discussed. A look at teacher and principal demographics and turnover rates, and teacher and principal quality concludes the chapter. Chapter 10 examines the maxim that where you put your money reflects what you value—even if you don’t realize it! Studying budgets highlights spending patterns and illustrates our underlying values. In its simplest form, a budget is a snapshot of what it costs to operate an organization (home or school or large corporation) at a given time. This chapter outlines how all 50 states spend their budgeted monies and includes an overview of the various types of budgets. We also suggest a budget process for effective

PREFACE

school leaders to consider—the “Double Loop” budget process.2 The chapter closes with a discussion on budgeting and accountability in difficult economic times. Chapter 11 brings finance to the real “bottom line”—spending and student achievement. When all is said and done, educators exist primarily to promote student learning, develop and master essential content and skills, and become responsible citizens. Academic achievement, the easiest metric available in the here and now, serves as a proxy for other desired education outcomes. Contemporary research strongly affirms the links between school funding and student achievement. This is especially true when schools direct funding toward teacher quality, professional development, class and school size, salaries, and school facilities. Chapter 12 identifies and analyzes critical and emerging issues in school finance. Critical issues include the teacher health benefits crisis and the teacher pension crisis. The burgeoning health care costs for current teachers and retirees are leaving states with large unfunded liabilities. What can states and educators do to ensure the health care and pension promises are met? Emerging issues include school choice and accountability and teacher compensation. Are the pay supplements for earning master’s degrees and for years of teaching experience on the way out? Are differentiated salary schedules and career pathways on the way in? If we as authors have done our job well, this book will give you the foundation to understand school finance and knowledgeably and effectively educate your colleagues, parents, and other stakeholders about its issues, facts, and trends. Ideally, we would like every educational leader to become an informed advocate for education finance reform.

ANCILLARY MATERIALS American Public School Finance’s companion website, accessed through www. routledge.com/cw/owingskaplan, includes an array of resources to deepen and extend the topics in each chapter. Multimedia resources organized by chapter include readings and videos tied to each chapter’s contents. These resources include related pedagogy to help professors and readers think deeply about the issues considered. The companion website also includes the Texas State data spreadsheet in an Excel document to enable students to manipulate the data. Instructor resources available on the instructor website include preassembled Microsoft PowerPoint lecture slides, project ideas, as well as a sample syllabus to help you design your course. Instructors can go to www.routledge.com/cw/owingskaplan to request an account.

NOTES 1 National Policy Board for Educational Administration (2015). Professional standards for educational leaders 2015. Reston, VA: Author. Retrieved from http://npbea.org/wp-content/ uploads/2017/06/Professional-Standards-for-Educational-Leaders_2015.pdf 2 In honor of Chris Argyris who conceived of Double Loop learning as occurring when errors are corrected by changing the governing values and then the actions rather than simply placing a “Band-Aid” on a problem and calling it fixed.

xi

Acknowledgments

Our sincere “Thank You” to Heather Jarrow, our Routledge Senior Editor, for her insightful help and thoughtful comments. This is our third collaboration, and we value our working relationship and friendship. Special “Thank Yous” go to Rebecca Collazo, Senior Editorial Assistant, Education for her attention to detail and to Elizabeth Kent, Senior Production Editor at Swales & Willis, our conscientious partner during the publication process. We would like to thank Dr. Mark Loiterman for putting the Texas data in the format you can use and “experiment” with. We also would like to thank you readers in advance for the work that you do and will do to advance our profession in promoting student achievement. We trust that you will become knowledgeable and persuasive advocates for education finance reform. May you intelligently lead various learning communities to see our country’s need for investing in human capital and the powerful relationship of public education to our nation’s current and future economic and political stability and growth. American public school finance reform is in our economic and political self-interest, from your own locality to the national and global arenas.

CHAPTER

1

Misconceptions about School Finance PSEL STANDARDS: 1, 2, 3, 5, 8, 9

FOCUS QUESTIONS 1 Explain public education’s importance to our national economic agenda. 2 Compare the United States’ spending on public education per student relative to the rest of the world’s education spending per student—and relative to our national wealth. 3 Summarize the reasons for the increased costs of public education since 1970. 4 Defend the assertion that despite increased diversity, American students’ achievement test scores are not declining, and the achievement gap is narrowing. 5 Compare educators’ salaries with those professionals with similar years of formal education. 6 Discuss how international assessments give the misleading impression that American public schools are “failing.”

2

MISCONCEPTIONS ABOUT SCHOOL FINANCE

Since virtually everyone has been a student, everyone feels comfortable talking about education. As a result, people often make forceful assertions that are widely believed but factually incorrect. In this chapter, we discuss four common misconceptions about education and its funding. More importantly, we provide you with the data to refute these misconceptions and respond knowledgably in support of public education. For instance, educational leaders will face criticism about how much education costs. Responding factually, politely, and convincingly is essential if community members are to value maintaining (or increasing) the resources needed to prepare the next generation to compete in an increasingly information-dense global economy. At the same time, education leaders must thoughtfully consider public school critics’ arguments and carefully evaluate them based on real data, historical accuracy, and their own experiences. Our founding mothers and fathers knew that an educated citizenry provided the essential underpinnings for their new experiment in our democratic republic governance. The 2017 Phi Delta Kappan “Poll of the Public’s Attitudes Toward the Public Schools” continues to indicate that Americans support public schools, and the lack of adequate funding is their number one concern.1 To garner funding support for our schools, we as educators need to know the facts and debunk misconceptions. As Joshua Starr, CEO of PDK International concluded, “Education leaders play a crucial role by bringing a listening ear plus expertise to the table when policy makers are at work.”2 Remember that as educators, we all are teachers to everyone in our communities—not just our students. Let’s get that dialogue going!

A BACKGROUND VIEW ON EDUCATION TODAY Let’s face it. American public education has never been a prestigious or highly paid profession. Washington Irving’s The Legend of Sleepy Hollow, published in 1820 but set in 1790, portrays school teacher Ichabod Crane as a gangly, gullible fool. (Incidentally, in Hebrew Ichabod means “the glory is gone.”) Other media have been equally unkind to educators. Think of the movies Ferris Bueller’s Day Off, The Breakfast Club, Bad Teacher, and Fist Fight to name a few. However, our founders knew that an educated citizenry provided the essential underpinning for their new experiment in a democratic republic (see Chapter 2, History of School Finance in the United States). Today, an educated citizenry has never been more important. Contemporary education critics are disappointed with public education. They say schools are not like they used to be. To that we say a hearty, “Amen!” In fact, today’s public schools are more successful than they have ever been, educating a more diverse student population to higher standards and keeping more students in formal learning programs through high school graduation than ever before. This is not opinion; data support this view. Consider public schools over the past 70 years—as far back as any seasoned educators experienced firsthand. In 1950, 34.3% of the population graduated from high school; the graduation rate for black males was 12.6% and for black females 14.7%;3 Brown v. Board of Education (1954) had not been adjudicated, leaving many minority students to attend lower quality and deliberately segregated schools. Today, 92% of 25- to 29-year-olds have completed high school.4 Today, we educate all students with an ethnic, socioeconomic, and disability diversity unmatched in other countries—or at

MISCONCEPTIONS ABOUT SCHOOL FINANCE

least we try our best. Admittedly, not all are educated to the highest standards, and the challenge remains to increase all students’ learning and achievement. Even though the number of students graduating has increased since the 1950s, the general public continues to hear that public schools are failing. What keeps perpetuating this misconception? When we consider education funding and compare it with what other countries spend as a percentage of their wealth (see Table 1.1) and with what we used to spend in the “good old days,” it is amazing how well our teachers and students perform today. Federal involvement with education finance had mostly been supportive until the 1980s. Jimmy Carter’s 1976 presidency reinstated education as a cabinet-level position in the federal government, boosting its status. By comparison, the Reagan White House asserted substantial and often false claims about public school students’ behavior and achievements and recommended reduced education funding. Taking it a step further, the No Child Left Behind Act (2001), Race to the Top (2010), and Every Student Succeeds Act (2015) placed federal mandates and high-stakes public accountability into every school house in exchange for federal dollars (we address these issues throughout the book). Public education’s importance to our national economic agenda makes our profession a logical political focus. Controversy exists about the effectiveness of our education system. Some sincerely believe that our schools are not working and call for charter schools and vouchers as alternatives to give parents a choice of where to send their children using taxpayer dollars. Others have believed for a long time that “organized malevolence might actually be under way”5 to undermine this valuable democratic institution. Regardless of your viewpoint, data show that U.S. public schools have never been asked to do more with fewer resources under a higher level of scrutiny— with higher expectations for principal leadership, teacher effectiveness, and student achievement—at any other time in our history.6 Education places fiscal demands on the U.S. economy. Big budgets make for big targets, and public education is a bigger business with a larger budget than most graduate students think. For school year 2017–18, total expenditures for public elementary and secondary schools were projected at $634 billion ($12,559 per pupil) not including capital outlay expenditures7 for the 50.48 million public school students,8 the 3.141 million public school teachers,9 and the more than 3,074,136 other staff.10 It is interesting to note that in fall 2017 projections, public schools had almost 700,000 more students than in fall 2009; and yet they are working with 100,000 fewer teachers.11 Using these staffing figures, more than 6.2 million individuals work with public school students. If public education were an international company, its workforce would be almost half a million more employees than the combined number of individuals who work for Berkshire Hathaway (331,000), FedEx (323,035), McDonalds (420,000), IBM (411,798), Target (341,000), Home Depot (385,000), UPS (341,240), Walmart (2,300,000), Toyota (348,877), General Electric (333,000).12 Clearly, public education is a bigger business than most realize and certainly larger than our own small local school systems. In 2014 (latest data available), PK–12 public school education comprised about 3.5% of our country’s Gross Domestic Product (GDP),13 down from 3.9% in 2010.14 In other words, we are educating more children today with fewer teachers and using a smaller percentage of our national wealth as measured by GDP.

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MISCONCEPTIONS ABOUT SCHOOL FINANCE

Perhaps because of public education’s size and the large sums of money involved, misconceptions concerning school finance abound. Since the publication of A Nation at Risk15 in 1983, education bashing has become fashionable. In fact, since the mid1980s, no national political candidate has been elected without an education platform that promises to fix a “broken” education system. With this background, we begin this judicious study of American school finance by presenting—and challenging—four popular misconceptions about our public schools. First, we question whether our country actually spends more on education than any other country. Second, we explore whether education costs really have recently “skyrocketed” while test scores have declined. Third, we assess the fiction that education salaries are high in relation to other similarly trained professions. Fourth, we discuss how comparing our students’ achievement on international tests gives a misleading picture that allows some to characterize American schools as “failing” and from which children need to be “saved” (a situation that school choice advocates use as rationale to give taxpayer dollars as vouchers to parents). We present both sides of the issue so you will be aware of what critics may say and how an education leader can effectively respond. Armed with this information, you should be able to dispel many of the education misconceptions heard in your community and garner support for our schools— especially when it is time to adopt state and local education budgets.

MISCONCEPTION 1 Misconception 1—The United States spends more on education than any other country In a nutshell: This is not true for PK–12 public education, even if dollars for higher education are included.

What Is Being Said Each semester, I ask my graduate students in school finance if they believe the United States spends more on public education than any other country. Overwhelmingly, students believe this to be true. It is not. If public school teachers in graduate educational leadership programs believe this to be the case, what must the general public believe? As educational leaders, we need to be able to promote each student’s academic success and well-being by engaging in regular and open two-way communication with families and the community; advocate for and about the school, students, needs, problems, and accomplishments; and know, comply with, and help the school community understand local, state, and federal laws, rights, policies, and regulations in ways that promote student success.16 Since the Reagan administration (1981–89), the public has heard that we spend more on education than any other country. In 1990, John Hood of the libertarian CATO Institute, opined that “in the prior three decades, spending on education has risen steadily to a level unsurpassed in U.S. history and, indeed, to one of the highest in the world,” further arguing that no link existed between money and academic achievement.17 In 2011, the New York Times Op Ed pages debated whether Americans were “spending too much time and money on education.”18 And in 2014, a conservative

MISCONCEPTIONS ABOUT SCHOOL FINANCE

writer offered that “school reformers should try to make public schools cheaper, not just better.”19 Let us show you how inaccurate this misconception is.

What Should Be Said The United States does not spend more on its PK–12 public education than does any other country. Obtaining international comparisons of education expenditures and other education-related data provides more meaning and context for understanding our own school finances. Subtle but distinct indicators show that such spending comparisons are false. First, comparing total dollars spent on education without equalizing dollars for cost of living is not comparing “apples to apples.” Comparing U.S. dollars to the equivalent currency in Mexico, Poland, Hungary, or the Czech Republic is inaccurate and inappropriate. We might say that the leather coat we bought in New York City was overpriced because we could have bought it in India for one-tenth of the cost. But would we want to live in India at the relative standard of living of those who make those leather coats? We think not! To make accurate cost of living comparisons, the Organisation for Economic Cooperation and Development (OECD)20 converts U.S. dollars to other countries’ currency in purchasing power parity (PPP). In this way, the exchange rates in various countries’ currencies are in equilibrium—comparing “apples to apples.”

1.1  Public Expenditure on Primary, Secondary, and Tertiary Education per Student

FIGURE

Note: PPP and USD stand for purchasing power parity and United States dollars respectively. 1. Public institutions only (for Italy, for primary and secondary education; for Canada and Luxembourg, for tertiary education and from primary to tertiary; for the Slovak Republic, for bachelor’s, master’s and doctoral degrees). 2.  Some levels of education are included with others. Refer to “x” code in Table B1.1 for details. 3.  Year of reference 2015. Countries are ranked in descending order of total expenditure per student by educational institutions. Source: OECD/UIS/Eurostat (2017), Table B1.2. See Source section for more information and Annex 3 for notes (www.oecd.org/education/education-at-a-glance-19991487.htm).

5

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MISCONCEPTIONS ABOUT SCHOOL FINANCE

Figure 1.1 shows the amount of money different countries spend for their primary, secondary, and postsecondary education. As you can see from Figure 1.1, in total dollars, the United States does not spend more than any other country on public education even if you include grades PK through 12 and all higher education (which includes undergraduate and graduate education—called tertiary). Luxembourg and Switzerland outspend the U.S. The argument that the U.S. is the “world’s highest” spending country is inaccurate and misleading. Figure 1.2 shows cumulative education spending covering primary through secondary education levels. Here, U.S. spending ranks 10th among OECD countries—not the highest level of spending and very close to the average OECD countries’ spending. The deep gray color shows the level of primary spending, the light gray shows the level of lower secondary spending (equivalent to our middle schools), and the top medium gray represents upper secondary spending. It is important to remember that virtually no other country provides a free and appropriate education to all of its children, PK through grade 12, and from ages 2 to 22 for students with special needs. That alone greatly increases the U.S. spending per student in comparison with other countries— even if we equalize for cost of living comparisons. Another method to weigh international education expenditures is to visualize education spending as a part of each country’s total wealth—or Gross Domestic

1.2  Cumulative Expenditure per Student by Primary, Lower Secondary, and Upper Secondary Levels Over the Expected Duration of Schooling

FIGURE

Note: Cumulative expenditure per student by educational institution is calculated using expected years in education. PPP and USD stand for purchasing power parity and United States dollars, respectively. 1. Public institutions only. 2. Some levels of education are included with others. Refer to “x” code in Table B1.1 for details. 3. Year of reference 2015. Countries are ranked in descending order of the total expenditure on educational institutions per student over the theoretical duration of primary and secondary studies. Source: OECD/UIS/Eurostat (2017), Table B1.4, available online. See Source section for more information and Annex 3 for notes (www.oecd.org/education/education-at-a-glance-19991487.htm).

MISCONCEPTIONS ABOUT SCHOOL FINANCE

Product (GDP).21 On the surface, that would seem a fair basis for comparison. Consider a budget for a family of four with an income of $100,000 per year. If the family has car payments of $1,250 per month ($15,000 per year), we could infer that the family places a high priority on luxury transportation, because cars take a large percentage of their income. If another family with an income of $500,000 per year has a car payment of $500 per month ($6,000 per year), we could conclude that they do not place as high a priority on cars as the family earning $100,000 annually. Table 1.1 shows per capita GDP for selected OECD Countries and the OECD average. Using per capita GDP as a proxy for national wealth, the United States has the fifth highest GDP at $57,591 (goods and services produced for every man, woman, and child in the U.S.). That is $15,430 higher than the OECD average and more than 4.3 times greater than that in South Africa. This indicates that our national wealth and standard of living is high in relation to other OECD countries. The next logical question would be, is the U.S. education spending commensurate with our relative wealth?

1.1  Per Capita Gross Domestic Product for Selected OECD Countries and Partners in US Dollars at Current Prices and PPP (2016)

TABLE

Rank

Country

GDP per Capita ($)

 1

Luxembourg

102,019

 2

Ireland

72,485

 3

Switzerland

63,889

 4

Norway

58,792

 5

United States

57,591

 6

Saudi Arabia

54,431

 7

Netherlands

50,551

 8

Austria

50,503

 9

Iceland

50,110

10

Denmark

49,021

OECD Average

42,161

19

Italy

38,370

23

Israel

37,270

24

Korea

36,532

33

Poland

27,058

40

Romania

22,982

43

Bulgaria

19,243 continued . . .

7

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MISCONCEPTIONS ABOUT SCHOOL FINANCE TABLE

1.1  continued

44

Mexico

18,535

45

Brazil

15,243

46

Columbia

14,130

47

South Africa

13,301

Source: OECD (2018), Gross domestic product (GDP). OECD Data. Paris, FR: Author. Retrieved from https://data. oecd.org/gdp/gross-domestic-product-gdp.htm

We can examine education in the same light; some countries are wealthier than other countries. We can determine not only the actual per pupil dollar amounts spent for education but also the percentage those dollars represent as a portion of the entire country’s measure of wealth—or GDP. This method examines relative spending for education against one measure of the overall national wealth—GDP. Figure 1.3 shows the GDP on a per capita basis for the OECD countries. Figure 1.3 shows where the U.S. falls in the percentage of GDP spent on public education by the OECD countries.22 Here, the United States falls below the OECD average, just above Slovenia. The U.S. ranks 20th out of 37 countries. Clearly, the U.S. spends a lower percentage of its wealth on education than 19 other OECD countries. One way to view these patterns is to conclude that, in an international context, the United States makes an “average effort” to finance education. Because our overall national wealth (capacity) for funding education is high, however, an “average” effort may appear insufficient. The United States holds very high academic expectations for all students—as witnessed by the No Child Left Behind (NCLB, 2001) and the Every Student Succeeds (ESSA, 2015) Acts. In addition, our nation also devotes substantial

FIGURE

1.3  Expenditures on Education as a Percentage of GDP

Source: OECD (2017). Education at a glance 2017: OECD indicators. Paris: OECD Publishing, Figure B2.2, p. 183. Retrieved from www.keepeek.com/Digital-Asset-Management/oecd/education/education-at-a-glance-2017_eag2017-en#.WpBWlYJOnUI#page2.

MISCONCEPTIONS ABOUT SCHOOL FINANCE

1.4  Index of Change in Public Expenditure on Educational Institutions and in GDP (2008 to 2014)

FIGURE

Source: OECD (2017). Education at a glance 2017: OECD indicators. Paris, FR: OECD Publishing, Figure B2.3, p. 185. Retrieved from www.keepeek.com/Digital-Asset-Management/oecd/education/education-at-a-glance-2017_eag2017-en#.WpBWlYJOnUI#page2.

resources to other public areas, including Social Security, transportation, health care, and especially national defense. Figure 1.4 shows the trends in expenditures on educational institutions as a percentage of GDP for OECD countries between 2008 and 2014, the Great Recession years. The darker gray line shows the change in expenditures on education. The lighter gray line shows the change in GDP and the black diamond shows the change in education spending as a percentage of GDP. As the U.S. GDP increased, its spending on education decreased. At the same time, the OECD average increased by 10%. The drop in our education spending as a percentage of GDP ranked us third from the bottom of all countries in the chart. Plainly, U.S. spending on PK–12 education is not higher than that of any other country. In fact, some evidence shows that U.S. spending on PK–12 education as a percentage of our wealth (as measured by GDP) places us 20th in the OECD Nations’ rankings of countries. When we consider that our relative wealth places us near the top of the scale, but our relative spending to our level of wealth places us much lower in the rankings, comparatively speaking, we could have a Cadillac education system although we are funding one more like a used Yugo. In other words, our relative capacity to fund PK–12 education is high; our relative effort in terms of funding is low and not commensurate with our level of national wealth.

MISCONCEPTION 2 Misconception 2—Education costs have skyrocketed in the last few years while test scores have declined

9

10

MISCONCEPTIONS ABOUT SCHOOL FINANCE

In a nutshell: Using the word “skyrocketed” in connection with education costs is demagoguery trying to provoke an emotional reaction. True, costs have increased, but not to the level education critics would have the public believe. The number of students has increased: we have more students in public schools today than at any other time in our history. In constant dollars, expenses for teachers’ salaries remain almost flat. Special education expenses, increased teachers’ salaries in real dollars, and smaller class sizes have been the primary reasons for increased costs since the early 1970s and 1980s. Meanwhile, Scholastic Achievement Test (SAT) scores, National Assessment of Educational Progress (NAEP) scores, and state test scores are on the rise—not falling!

What Is Being Said When we look at what we spend and what we produce, we learn that our “output”— international achievement test scores—is low compared with that of other industrialized nations. More discouraging, New Zealand students are top performers on PISA (Program for International Student Assessment) and the country spends a lower-than-average amount per student from ages 6 to 15.23 Politicians, businesspeople, commentators, and the general public make similar negative comments about school spending and student achievement. They confidently assert, “We are spending too much on education and our students are still scoring below their international peers.” Because influential people repeatedly decry this situation publicly on television, radio, newspapers, and blogs, the community at large comes to believe it. The taxpaying public is receptive to the viewpoint that spending does not necessarily lead to increased achievement. Since the misunderstood 1966 Coleman Report—which declared that students’ family backgrounds play a greater role than do schools in raising achievement—the belief that Americans are spending too much on public education has become a solid part of popular culture.

What Should Be Said Education costs are up because enrollments are up! As seen in Figure 1.5, U.S. education costs in real and constant dollars have increased, but so have student enrollments. Wanting to increase student learning and achievement, we also have decreased class sizes, resulting in more teachers, classrooms, supplies—costs. When one of the authors began teaching in an affluent school division in the early 1970s, he had five eighthgrade English classes with no fewer than 40 students in each section. Today, many states mandate much lower numbers. Examining school enrollment, teachers, and expenditures in billions of dollars along the vertical axis and expenses by year along the horizontal axis in Figure 1.5, you can see that the slope of each chart’s lines match. In other words, the increases in student enrollment, number of teachers, and total costs all move together. Teachers’ salaries are often cited as a significant reason for increased education expenses. The data, as shown in Figure 1.6, refute this allegation. Teacher salaries between 1996 and 2016—in constant and current dollars—are shown along

Fall enrollment, in millions 60 50

Total

40 Elementary

30 20

Secondary

10 0 1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2014

School year beginning Teachers, in millions

Pupil/teacher ratio 35

3.5 3.0

30

Number of teachers

2.5

25

2.0

20

1.5

15

Pupil/teacher ratio

1.0

10

0.5

5

0

0 1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2014

1995

2000

2005

2010

2014

School year beginning Current expenditures, in billions $600 500 400 In constant 2015–16 dollars

300 200

In current dollars

100 0 1960

1965

1970

1975

1980

1985

1990

School year beginning

1.5  Enrollment, Number of Teachers, Pupil–Teacher Ratios, and Expenditures in Public Schools, 1960–61 to 2014–15

FIGURE

Source: Snyder, T.D., de Brey, C., & Dillow, S.A. Digest of education statistics 2016. 52nd Edition. (NCES 2017-094). Washington, DC: National Center for Eductaion Statistics, U.S. Department of Education, Figure 7, p. 79. Retrieved from https://nces.ed.gov/pubs2017/2017094.pdf.

MISCONCEPTIONS ABOUT SCHOOL FINANCE 60 55 50 45 Dollars ('000)

12

40 35 30 25 20 15 10 5 0 1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Year Current dollars FIGURE

2006 dollars

1.6  Average Classroom Teacher Salary, 1996–2016

Source: National Center for Education Statistics (2013). The nation’s report card: Trends in academic progress 2012 (NCES 2013-456). (Figure A, p. 1). Washington, DC: Institute for Education Statistics, Institute for Education Sciences, U.S. Department of Education. Retrieved from https://nces.ed.gov/nationsreportcard/subject/ publications/main2012/pdf/2013456.pdf.

the vertical axis and the school year along the horizontal axis. It is obvious that teacher salaries in current dollars (the black line) have increased over the last 20 years. Paycheck numbers are higher as salary scales tend to pay teachers for years of service and for earning advanced degrees. Many teachers have both maturity and more academic credentials. In constant 2006 dollars (the gray line), however, teachers’ purchasing power has remained virtually flat. In other words, teachers may have larger paychecks, but they can buy no more with it than they did in 1996. Sadly, this trend goes back to at least 1970.24 Because the number of teachers has increased (to meet increased enrollment and class size reductions) along with the additional instructional supplies, classrooms, utilities, transportation costs, and other items needed to make education happen, logically, total expenditures must increase. But even this does not explain the whole story. Changing student demographics also affects the larger context for increased educational expenses. Education Costs Are Up Due to Greater Variance in Students’ Needs We pay more money overall for teachers’ salaries, in part, because we have more students and, subsequently, more teachers. At the same time, we also have a greater variance in the population we serve. In 1975, Congress enacted Public Law 94-142, the Education for All Handicapped Children Act, to ensure that all children with disabilities have the right to a free and appropriate public school education. Public schools

MISCONCEPTIONS ABOUT SCHOOL FINANCE TABLE

1.2  Special Education Enrollments 1976–2014 1976–77

1980–81

1990–91

2000–01

2010–11

2013–14

Numbers served

3,694,000

4,144,000

4,710,000

6,296,000

6,436,000

6,464,000

Percentage of total enrollment

8.3

10.1

11.4

13.3

13.0

12.9

Source: Snyder, T.D., de Brey, C., and Dillow, S.A. (2016). Digest of education statistics 2015, 51st edition. (NCES 2016-014), Table 204.30, p. 119. National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education: Washington, DC. Retrieved from https://nces.ed.gov/pubs2016/2016014.pdf.

began to enroll and serve millions of students with disabilities who were formerly educated elsewhere (if at all). To be sure, court cases at the state and federal levels advanced these students’ educational interests before this—most notably the Mills decision.25 But before 1975 and PL 94-142, per pupil school expenditures were lower. From 1976 until 2014, public schools enrolled and served an additional 2.77 million students with special needs (see Table 1.2). Interestingly, the percentage of students with disabilities decreased 0.4% between 2000–01 and 2013–14, and the number of students with disabilities public schools served increased by 168,000. The lower student–teacher ratio and additional resources required to appropriately educate these exceptional students necessarily requires larger expenditures. William Duncombe and John Yinger, Syracuse University professors, estimated an average additional cost weighting of at least 185% for a student in special education programs.26 With almost 13% of all U.S. students enrolled in special education programs, the reasons huge sums have been spent in this arena since 1975 are clear.27 Moreover, between 2000 and 2014, students identified with autism increased from 93,000 to 538,000; OHI (Other Health Impaired) eligible students increased from 303,000 to 817,000; Developmental Delay identification increased from 213,000 to 410,000; and TBI (Traumatic Brain Injury) increased from 16,000 to 26,000 identifications.28 Our public schools are serving a larger and more diverse population than ever before, and the costs come with them. Test Scores Are Not Declining The most frequently cited misconception is that public school costs are increasing while test scores are falling. First, consider the argument that SAT scores have declined during a period of increased expenditures. Several decades ago, observing that the states spending the least on education had the highest SAT scores and vice versa (an argument that some were using to cut school spending), American education policy researcher, Gerald Bracey pointed out that the states scoring high but spending less had “virtually no one” taking the SAT. In the year of the study, the percentage of high school seniors taking the SAT was 5% in Iowa, 6% in North Dakota, 5% in South Dakota, 4% in Utah, and 10% in Minnesota. The rest of the college-bound seniors in these states were not dumb. They took the other college entrance examination battery, the ACT. Those taking the SAT

13

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MISCONCEPTIONS ABOUT SCHOOL FINANCE

were those interested in attending such institutions as Stanford and the Ivy League and Seven Sisters colleges, which required the SAT. In New Jersey, on the other hand, fully 76% of the senior class huddled in angst on Saturday mornings to bubble in answer sheets on the SAT. We could applaud New Jersey for encouraging three-quarters of its senior class to apply to schools that require the SAT. But, of course, when a team composed of 75% of the class goes up against a team made up of a 5% elite, the elite will always win the day.29 In short, looking at educational expenditures based on SAT scores in these states and making judgments about the inverse relationship between money input and student achievement output is invalid. Because of the vastly different student populations taking (or not taking) this particular college admissions test, we do not have a level playing field. We are not comparing “apples to apples.” To draw conclusions from these data as some critics have done is misleading at best. In addition, the SAT’s history helps explain the change in scores over time. The SAT first appeared in 1926 as a way to differentiate among applicants for selective colleges. Test makers established norms on 8,040 students entering private colleges, mostly in the Northeast; students were 98% white, 60% male, and 40% attended private high schools.30 This original student norming group is somewhat different from today’s SATtaking college-going demographic. By comparison, in 2016, SAT test takers were 45% white, 47% male, 85% attended public high schools, 67% came from families with yearly incomes less than $100,000, and 35% had parental education levels of a high school education or less. Hispanic, Latino, or Latin Americans accounted for 22% of the test takers, black or African Americans (12%) and Asian/Asian Americans (12%).31 Table 1.3 illustrates this increasingly diverse student demographic in SAT takers between 1998 and 2017. The percentage of black/African American and Hispanic

1.3  Percentage of Students Taking the 12th Grade SAT by Race/Ethnicity, 1998–2017

TABLE

Race/Ethnicity

1998

2000

2005

2008

2017∗

Total

100.0

100.0

100.0

100.0

100.0

White

67.1

66.4

62.3

59.8

44.0

Black or African American

10.9

11.1

11.6

12.1

13.0

Hispanic

8.6

9.1

10.9

13.2

24.0

Asian/Pacific Islander

9.0

9.0

10.2

10.5

9.0

Native American/Alaska Native

1.0

0.7

0.7

0.7

0.0

∗  2017 figures represent all students taking 2017 SAT, not only 12th graders. Source: [for 1998–2008] Aud, S. & Fox, M.A. (2010, July). Status and trends in the education of racial and ethnic groups. (NCES 2010-015). Percentage distribution of the 12th grade SAT test-taking population, by race/ethnicity: 1998–2008 (Table 15.1a, p. 80). Washington, DC: National Center for Education Statistics, Institute for Education Sciences, U.S. Department of Education. Retrieved from https://nces.ed.gov/pubs2010/2010015.pdf; and [for 2017] The College Board (2018). SAT suite program results: 2017. Class of 2017 SAT results. New York, NY: Author. Retrieved from https://reports.collegeboard.org/sat-suite-program-results/class-2017-results.

MISCONCEPTIONS ABOUT SCHOOL FINANCE

students taking the SAT increased whereas the percentage of white test takers decreased. Moreover, the demographic shift brings another meaningful implication. Whenever a broader group of individuals takes a test (comparing the small, elite 1926 SAT norm group with the large 2017 group of 1.7 million students SAT takers),32 the average score will tend to decrease, in part, reflecting the student test takers’ wider differences in academic preparation. Moreover, we need to examine the premise that SAT scores are decreasing. The College Board keeps statistics on average SAT scores by a myriad of demographics. As shown in Table 1.4, Reading scores are relatively flat. Mathematics scores have been increasing somewhat. The new Writing score, established in 2006, has shown a minor decrease. Further, the SAT’s raw scores are converted to scaled scores with a range of 200 to 800. Converting to scaled scores can confuse the general public. For example, one incorrect answer can account for about 10 points on the test. David Berliner and Bruce Biddle (1995) pointed out an even more significant oddity: the relation of correct to incorrect answers impacts the scaled score. By their reckoning, “the very talented student who correctly answers all but one of the questions on the verbal part of the SAT loses 50 scale points for that one error, earning a score of 750 rather than 800.”33 To complain about the SAT decline in scale score points when gauging the value of 12 years of schooling, and when one wrong answer can account for a 10- to 50-point difference, seems a bit ridiculous—especially when a larger and more diverse group of students is taking the test! Given these data, it is unreasonable to believe scores are

TABLE

1.4  SAT Average Scores by Year and Category

Year

Math

Critical Reading

Writing

Year

Math

Critical Reading

Writing

1972

509

530

–

1995

506

504

–

1973

506

523

–

1996

508

505

–

1974

505

521

–

1997

511

505

–

1975

498

512

–

1998

512

505

–

1976

497

509

–

1999

511

505

–

1977

496

507

–

2000

514

505

–

1978

494

507

–

2001

514

506

–

1979

493

505

–

2002

516

504

–

1980

492

502

–

2003

519

507

–

1981

492

502

–

2004

518

508

–

1982

493

504

–

2005

520

508

– continued . . .

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MISCONCEPTIONS ABOUT SCHOOL FINANCE TABLE

1.4  continued

1983

494

503

–

2006

518

503

497

1984

497

504

–

2007

514

501

493

1985

500

509

–

2008

514

500

493

1986

500

509

–

2009

514

499

492

1987

501

507

–

2010

515

500

491

1988

501

505

–

2011

514

497

489

1989

502

504

–

2012

514

496

488

1990

501

500

–

2013

514

496

488

1991

500

499

–

2014

513

497

487

1992

501

500

–

2015

511

495

484

1993

503

500

–

2016

508

494

482

1994

504

499

–

2017*

527

533

∗The Reading and Writing sections were combined in spring 2016 and 2017 is a rescored combination of the two previous sections. Source: The College Board (2016). 2016 College-bound seniors: Total group profile. New York, NY: Author.

decreasing or that schools all over the country are doing a poor job meeting students’ academic needs. Likewise, the National Assessment of Educational Progress (NAEP, “The Nation’s Report Card”) scores from 1971 to 2012, given every four years, show that student reading scores have not fallen. They are rising for 9- and 13-year-olds but remain relatively stable at age 17 (see Figure 1.7). Math scores on the NAEP, in Figure 1.8, show more encouraging news. The trend for 17-year-olds remains relatively flat. Scores for 9- and 13-year-olds show a slightly upward trend. The average NAEP mathematics scores, like reading scores, show improvement at ages 9, 13, and 17 over time—with increases between 1973 and 2012 for 9-year-olds and 13-yearolds up 25 and 19 points respectively. White, black, and Hispanic scores all increased over the time frame. Changes between 2008 and 2012, however, were not noteworthy. Evidence suggests that the achievement gap is also narrowing among white, black, and Hispanic students. Test data from the earliest testing compared with the latest testing (2012) show greater increases for black and Hispanic students than for white students. While reading scores for white students increased between 4 and 15 points in reading, the average NAEP reading scores for black students increased between 30 and 36 points and for Hispanic students between 17 and 22

MISCONCEPTIONS ABOUT SCHOOL FINANCE

Scale score 500 350 290

300

285

* *

208

*

* 255 250 * 200

*

Years: 1973 FIGURE

257 212 1988

288

* * *

259

287 * 263 *

* 221

Age 17 Age 13 Age 9

212 1999

2012

1.7  Trend in NAEP Average Reading Scores, by Age, 1973–2012

points (see Table 1.5). Reading scores between 2008 and 2012 increased for white students for 9- and 13-year-olds, increased for black students for 9- and 17-yearolds, and increased for Hispanic students for 9-, 13-, and 17-year-olds. There was not an increase in other groups, but the scores did not decrease! Education’s goal is to promote student achievement, and the school finance candidate’s primary concern should be how schools can maximize learning with the resources available. Also keep in mind that although test scores are only one indicator of student learning, because they are an easily attained and quantifiable metric for accountability, they tend to get more attention than they merit.

Scale score 500 350 300 250 200

304

* * 269

* 219

*

Years: 1973 FIGURE

302

* * 266

222 1986

308

* * 276 * 232 1999

306 * 285

* * 244

Age 17 Age 13 Age 9

2012

1.8  Trend in NAEP Average Mathematics Scores, by Age, 1973–2012

Source: Adapted from National Center for Education Statistics (2013). The nation’s report card: Trends in academic progress 2012 (NCES 2013-456). (Figure A, p. 1). Washington, DC: Institute for Education Sciences, U.S. Department of Education. Retrieved from https://nces.ed.gov/nationsreportcard/subject/publications/ main2012/pdf/2013456.pdf.

17

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MISCONCEPTIONS ABOUT SCHOOL FINANCE

1.5  Changes in NAEP Reading and Mathematics Scores by Age and Ethnicity, 2012

TABLE

Reading

Changes from 1971

Math

Changes from 1973

Age

White

Black

Hispanic

Age

White

Black

Hispanic

 9

+15

+36

+17

 9

+27

+36

+32

13

+9

+25

+17

13

+19

+36

+32

17

+4

+30

+22

17

+4

+18

+17

Age

Changes from 2008

Age

Changes from 2008

 9

+1

+2

+1

 9

+2

+2

+0

13

+2

+0

+7

13

+3

+2

+3

17

+0

+3

+5

17

+0

+1

+1

Note: Reading tests for 1971 did not tabulate test scores for Hispanics separately. They are included with White and Black test scores. Source: Adapted from Snyder, T.D., de Brey, C., & Dillow, S.A. (2016). Digest of education statistics 2015 (NCES 2016-014), Table 221.85, p. 278 and Table 222.85, p. 291. Washington, DC: National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education; and National Center for Education Statistics (2013). NAEP 2012. Trends in academic progress. Reading 1971–2012 and Mathematics 1973–2012. (NCES 2013-456). Washington, DC: Institute of Education Sciences, U.S. Department of Education. Retrieved from https://nces.ed.gov/nationsreportcard/subject/publications/main2012/pdf/2013456.pdf (p. 2).

Differences in National Education Spending Portray Misleading Sums! Education costs across the United States are highly variable. Some may be so low as to insufficiently support many of the neediest students, leaving them less prepared to perform well on rigorous tests. Table 1.6 shows fall 2017 state average per pupil PK–12 education expenditures. The variance ranges from a high of almost $24,421 per pupil in Vermont to a low of $6,515 in Idaho—a range of over $17,000! In other words, the per pupil spending in Vermont is more than 2.6 times greater than in Idaho. Comparisons within states frequently show even greater variance than among states. All states attempt to compensate for the impact of local wealth and education spending (much more will be explained later in the book), but wealthier school districts usually outspend poorer school districts by a wide margin. The poorer school districts tend to be urban poor and isolated rural districts which have great demands and few available resources. These “savage inequalities”34 tend to significantly impact the neediest students. A range of local per pupil spending within many states reflects at least a factor of 4 (lowest to highest spending local education agencies) while some can be much higher. In 2017 New York, the average per pupil expenditure is around $22,659 while the per pupil expenditure in Fire Island Union Free School District with 31 students was $183,456.35

TABLE

1.6  Average Per Pupil Expenditure by State (in dollars), Fall 2017

State (Rank)

Expenditure in Dollars

State (Rank)

Expenditure in Dollars

United States

11,984

Missouri (29)

10,828

Alabama (38)

9,255

Montana (24)

11,195

Alaska (3)

21,261

Nebraska (31)

10,367

Arizona (48)

7,501

Nevada (45)

Arkansas (35)

9,749

New Hampshire (10)

16,200

California (21)

11,743

New Jersey (6)

20,556

Colorado (25)

11,169

New Mexico (30)

10,785

Connecticut (4)

20,861

New York (2)

22,659

Delaware (14)

14,462

North Carolina (43)

8,940

District of Columbia (5)

20,640

North Dakota (47)

8,077

Florida (37)

9,277

Ohio (32)

Georgia (40)

9,013

Oklahoma (46)

Hawaii (20)

11,964

Oregon (18)

12,161

Idaho (51)

6,515

Pennsylvania (12)

15,149

Illinois (15)

13,875

Rhode Island (9)

16,401

Indiana (49)

7,267

South Carolina (27)

11,039

Iowa (28)

10,891

South Dakota (41)

8,961

Kansas (33)

10,204

Tennessee (39)

9,148

Kentucky (17)

12,257

Texas (36)

9,336

Louisiana (23)

11,495

Utah (50)

6,906

Maine (42)

8,956

Vermont (1)

24,421

Maryland (13)

14,768

Virginia (26)

11,141

Massachusetts (7)

18,072

Washington (34)

10,119

Michigan (11)

15,981

West Virginia (19)

12,127

Minnesota (16)

12,522

Wisconsin (22)

11,533

Mississippi (44)

8,361

Wyoming (8)

17,052

8,165

10,333 8,164

Source: National Education Association [NEA] (2017, May). Rankings of the states 2016 and estimates of school statistics 2017. NEA Research. Table J10. Expenditures per Student in Fall Enrollment. Washington, DC: Author. Retrieved from www.nea.org/assets/docs/2017_Rankings_and_Estimates_Report-FINAL-SECURED.pdf

20

MISCONCEPTIONS ABOUT SCHOOL FINANCE

Education costs in real dollars have increased over the past several decades, but contrary to popular argument, many state and national test scores have risen. These increased costs are associated with increased enrollments, lowered student–teacher ratios, higher teacher salaries in current dollars (but virtually flat over time), a greater variance in the student populations served, and the extra learning needs that many students bring to school. This has all been accomplished with teacher salaries remaining relatively flat—a testimony to U.S. educators’ commitment to children and their effectiveness in the classroom.

MISCONCEPTION 3 Misconception 3—Educator salaries are high in comparison with other professions with similar years of formal education In a nutshell: Educator salaries are low in comparison with other professionals with the same level of professional preparation and responsibility.

What Is Being Said We have all heard it said before. Teachers only work 9 months a year, and then only from 9 AM to 3 PM. For these 6 hours, they earn a full-time salary that is higher than most other people make in our community.

What Should Be Said Educators’ salaries are low compared to similarly prepared occupations. First, the facts. In 1960, female teachers enjoyed a “wage premium,” paid more than comparably educated and experienced workers. By contrast, in 2017, female teachers were earning 15.6% less in salaries than comparable female workers. And by the 2000s and 2010s, male and female teachers were experiencing an accelerating “pay penalty” as compared with similarly educated peers. No state pays teachers more than other college graduates.36 The Economic Policy Institute, a nonpartisan think tank, found that in 2018, public school teachers earned 21.4% lower salaries than other college-educated professionals compared with only 5.5% lower salaries in 1979. Adjusted for inflation, public school teachers’ average weekly wages decreased $21 from 1996 to 2018, from $1,216 to $1,195 (in 2018 dollars) as compared with other college graduates’ weekly wages that rose from $1,454 to $1,777 during this time. And teachers’ “compensation penalty” grew by 15.1% for women and 31.5% less for men from 1994 to 2018.37 Next, let’s address one issue at a time. First, teachers do not only work 9 months out of the year. For the most part, teachers in the United States work a 200-day

MISCONCEPTIONS ABOUT SCHOOL FINANCE

contract—or 10 months. They work the same months—plus a week or so on each end—that students attend schools. Second, teacher work hours include more than the time spent actually teaching in their classrooms. The National Center for Education Statistics reports that on average, the length of an American school day is just over 6.5 hours,38 but this only represents “face time” that teachers have with students. Teacher work hours also involve preparing lessons, setting up laboratory or other learning activities, grading students’ papers, working after school tutoring students, talking with parents about their child’s progress, and supervising extracurricular programs. Then teachers spend several hours at home preparing lessons plans, grading papers, and advancing their own professional learning on weekdays and weekends. Accordingly, Stanford education professor Linda Darling-Hammond asserts that teachers work 10 to 12 hours per day39—typically adding up to 50 or more hours during a work week. In fact, more than 3.5 million fulltime teachers are required to work 38.2 hours a week, on average.40 By comparison, the Bureau of Labor Statistics reports that a typical full-time American work week in 2018 was 34.5 hours;41 and the 2014 Gallup Poll reports a 46-hour work week, on average, for full-time American employees.42 Let’s say that the average teacher workday is 2.25 hours longer than the average 8-hour workday for most office professionals. By itself, 2 hours and 15 minutes may not sound like much. However, if we add those extra hours to the 40-week contract, it becomes an extra 500 hours. That figure divided by 40 (a regular work week), is equal to 12.5 weeks of work. The 40-week contract plus the 12.5 weeks’ worth of “unpaid overtime” equals a work year of 52.5 weeks! The Bureau of Labor Statistics (BLS) reports the mean annual wages for occupations. Table 1.7 compares the mean salary of all teacher categories with mean wages from other occupations requiring a bachelor’s degree.43 The 2016 teacher mean salary is only $260 higher than the teacher salary mean in 2010 as noted in our 2013 edition of this text.44 All the jobs in Table 1.7 require a bachelor’s degree; some, like teachers, require a license or certification. Taking into account the shorter school year, but the longer work days, it may appear that teachers’ salaries appear low in comparison with other occupations that require similar educational qualifications. From another perspective, Figure 1.9 shows teacher salaries, adjusted for inflation, have

TABLE

1.7  Mean Wages for Teachers and Other Occupations, May 2016

Education Accountants Human Computer First Line RNs Teachers Resource System Supervisor of Specialists Analysts Law Enforcement Workers $54,520

$76,730

$64,890

$91,620

$81,380

Environmental Engineers

$72,180 $88,530

Source: Bureau of Labor Statistics (2016, May). May 2016 wage estimates. Occupational Employment Statistics, Washington, DC: Author. Retrieved from www.bls.gov/oes/current/oes_nat.htm#00-0000

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65,000 60,000 55,000 50,000 45,000 1970

1980

1990

2000

2010

2015

School Year

FIGURE

1.9  Mean Teacher Salary Controlled for Inflation 1970–2015

Source: Snyder, T.D., de Brey, C., & Dillow, S.A. (2016). Digest of education statistics 2015 (NCES 2016-014), Table 211.50, p. 169. National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education: Washington, DC.

had a relatively flat purchasing power since 1970. This cannot be said for most other professions. Even the conservative Heritage Foundation reports in Assessing the Compensation of Public-School Teachers that “the effect on wages of teaching in public school, all else being equal, . . . public school teachers receive salaries that are 19.3% lower than non-teachers who have the same observable skills.”45 Third, teachers do not have paid summer vacations. They only receive salary for the days in their work contract, usually 190 days. Some systems allow teachers to prorate their salary, withholding a portion of their paychecks during the school year so they can keep receiving an income during the summer. This means spreading 9 months of salary into 12-month allotments.

MISCONCEPTION 4 Misconception 4—We must “save” children from “failing” public schools In a nutshell: Public schools are not “failing” to educate our children sufficiently. Test scores have increased for American public school students. Other countries have realized the economic value in an educated population and increased their education efforts.

What Is Being Said Since Sputnik orbited Earth in 1957, policy makers have worried that American schools were not keeping up with the rest of the world, thereby harming our students. After 1983’s A Nation at Risk, the call for school reform became more shrill. And, it continues to this day as policy makers and parents bemoan America’s modest showing on international achievement tests. If our public school children are not achieving as

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well as their international peers, some conclude, our students—and our nation—will be losers in the global economy. School choice advocate Betsy DeVos, the Trump administration’s Secretary of Education, references U.S. students’ modest showing on the 2015 PISA to argue that the federal government should expand school choice (and taxpayer-funded vouchers) to give parents and their children “Freedom from ‘the [educational] system’” that leaves them “unprepared” to lead successful lives.46

What Should Be Said International student assessments have value but generate highly misleading (and inaccurate) inferences about American education. After discussing the previous three misconceptions, it is easy to understand why individuals without the facts can conclude that American public schools are “failing” and America needs radical school reform. Because no one wants their child to attend a “failing” school, policy makers and regular folks become open to school choice assertions that parents could make better decisions about their children’s education if the government returned their tax dollars to spend on the type and location of schooling they saw fit. The nexus between publicly funded education and school choice is a complex topic that will be more fully addressed in later chapters. Here, we will consider (briefly) the problems with using international tests as a metric by which to assess American public schools. First, international tests—such as PISA and Trends in International Mathematics and Science Study (TIMSS)—are a misleading way to judge the success of a nation’s educational system. Second, each of our 50 states and the District of Columbia has its own school system with its unique set of expectations, standards, practices, and resources. Understanding these two arguments can help educational leaders effectively refute those who use American students’ performance on international tests as evidence of “America’s failing public schools” and a rationale for more radical education restructuring. International Assessments Are Misleading and Inaccurate Measures International assessment results have become like educational Olympics, a source of national pride or embarrassment. While these assessments have some merit, many American educators and economists ask if it is relevant to compare U.S. students with those in other developed countries47 since conclusions drawn from these findings are “oversimplified, exaggerated, and misleading.”48 Specific critiques include: •

•

Student diversity. The student samples in different countries reflect varying levels of family academic resources (such as the number of books at home and the mother’s level of education), and different social, political, and educational histories that powerfully influence a student’s educational quality. As of 2017 in the U.S., a high proportion of at-risk student population attended U.S. schools (52% qualified for free or reduced-price lunch).49 Test content validity. Students score at differing achievement levels on separate tests, raising concerns about whether one test or the other is a more valid measure of student knowledge.

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•

•

Statistical issues. The statistical error on these tests is larger than the testing agencies want to admit, making countries’ rankings fluctuate greatly based on minor differences in achievement scores. Also, using average national scores on mathematics tests is a serious misuse of correlational analysis. Misrepresentation. The testing agencies can misrepresent a single city, Shanghai, as representative of China. But the student sample represents neither China nor Shanghai, an education system that methodically excludes migrant youth from testing. This selective student test taking invalidates Shanghai as a basis for any national comparisons.

Scholars also challenge the value of using international test comparisons for making educational policy; and some criticize the testing agencies’ conflicts of interest when they serve as testing agency, data analysis, and interpreter of results for policy purposes. The United States Has 51 Separate Sets of Expectations In addition, critics question the relevance of comparing national level student outcomes between countries with a single national educational system and those countries with multiple education systems. For example, Finland has one national education ministry. The United States, however, due to our Constitution making education a state function, has 51 separate, highly autonomous education systems, each with its own view of what an educated child should learn and what resources the state is willing to provide. Looking at the U.S. more closely, some states have robust education systems that prepare their students with the content proficiencies to perform at least as high as students in high-scoring countries; and in several states, students have made larger TIMSS gains than in other countries. Massachusetts and Connecticut students score about the same as the world leaders on 2015 PISA Science, Reading, and Math tests. And, on the 2011 TIMSS, economically advantaged students in Connecticut, Massachusetts, Minnesota, North Carolina, Indiana, and Colorado performed at least as well in mathematics as their peers in high-scoring countries or provinces.50 Combining and averaging the scores from all states makes it difficult to identify the high performers from the low; all that remains is a misleading middleof-the-pack average. States hold a continuum of education expectations, including: differences in preschool availability, ages for enrollment, and participation; years required for compulsory attendance; and courses required for high school graduation. Depending on the state, the required number of high school English/Language Arts classes varies from 3 to 4.5, from 2 to 4 in science and mathematics, and credits required to graduate from high school range from 13 to 26.51 A national 2015 study of 2014 high school graduates found that 20 states did not offer a diploma that requires students to complete college and career-ready requirements (i.e., 4 years of rigorous grade-level English and at least 3 years of mathematics through Algebra II).52 Similarly, in 2016, The Education Trust noted that only 8% of high school graduates complete a curriculum that prepares them well for college and the workplace.53 Moreover, the content of these international tests may not match closely what most students learn in U.S. classrooms. Each U.S. state has its own curriculum while

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many other countries have a national curriculum. Consequently, our state-by-state curricula and assessments offer a narrower universe from which to draw test questions that students can answer correctly. This places many U.S. students at an academic disadvantage because not all have had the opportunity to learn the material on which they will be tested. Although these details do not excuse U.S. students’ poorer performance in international comparisons, it does place these results in a more accurate context. Funding for education between states also varies greatly. Apart from Hawaii and the District of Columbia (that have unique school system organizations), the range in federal revenue sources runs from a high of 22.4% in Mississippi to a low of 5.3% in New Jersey. State revenue sources range from a high of 81.7% in Vermont to a low of 29.1% in South Dakota. Local revenue sources vary from Illinois’ 57.8% to Vermont’s 7.6%.54 Differences in state and local wealth account for much of these revenue disparities. Making the resource situation more confounding, within 27 states, school districts serving the largest populations of low-income families, the U.S. spends about 7%—or $1,000—less per pupil on students educated in the nation’s highest poverty districts than those educated in the most affluent. For a 5,000 student school district, this totals to $5 million fewer resources for students who need additional learning supports the most.55 Of course, a nation’s students need to demonstrate a certain level of educational attainment as a foundation for economic and civic success; but beyond that, other factors become more important than test score gains. And, no association exists between test scores and national success.56 In short, international assessments ignore test complexity, student test takers’ socioeconomic differences, and the countries’ social, political, and educational histories that diverge from the American experience and that shape how populations view, value, and practice education. International assessments include arbitrary decisions about test content, and show inconsistent test trends. Ignoring the complexity of the international test results “may lead policymakers to pursue inappropriate and even harmful reforms that change aspects of the U.S. education system that may be working well and neglect aspects that may be working poorly.”57 In the authors’ view, if American schools are “failing,” it is the failure of most states to provide the necessary resources—of early access to preschool and sufficient time, rigorous curriculum, highly effective teachers and principals, and adequate and equitable funding throughout the grades—that ensure every child has equal access to a high-quality education.

CONCLUSION People hold many incorrect ideas about public schools, which lead them to resent and resist funding education to the levels needed. Educational leaders need to understand these mistaken beliefs and know the evidence to effectively challenge them if we are to gain meaningful community support as advocates for school finance reform.

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CASE STUDY You are the retiring principal of a 75-year-old high school. Your career has spanned 25 years in that position. The school board has hired a new principal for the recently completed 2,000-student high school in Suburbia County School District, a once-rural school system that has become a bedroom community for the large Urbana City School District. Student enrollment in the district has increased from 2,500 students 10 years ago to 6,500 students today. Several new elementary schools have been built, and other remodeling has taken place to accommodate middle school students. As a life-long resident, you have seen much change in Suburbia County. Over the past decade, many of the more affluent citizens have moved from Urbana to Suburbia because of Urbana’s increasing crime, higher tax rates, and their schools’ declining test scores. The residents are evenly divided between the newer residents with younger families and the native, empty nesters who have either retired or will retire in the next 10 years. The county’s growth has caused real estate values to rise and strains the municipality for water, sewer, and road maintenance as well as for schools and social services. Voters passed the bond referendum for the next high school by a rather slim margin: 51% to 49%. The younger parents, ages 24 to 40, voted strongly in favor whereas the remaining demographic voted strongly against the new school and the associated debt payments. Almost no one was neutral on this issue. The vote caused much controversy in the county and left many bitter feelings. The school board soundly favored the proposed school, and the nine-member board of supervisors passed the motion to fund the school by only one vote. In 2 months, an election will determine the seats of two supervisors whose terms expire. They both voted for the school construction and are seen as strong supporters for education. A taxpayers association has recently started meeting in Suburbia County in reaction to what some see as the beginning of higher taxes to fund public schools—which they say is a bottomless pit. The association’s members say that Suburbia’s schools were fine before the influx of current students, and the per pupil spending levels then are adequate for the students now. The school board is presenting its coming year’s budget, which includes a spending increase from $9,000 to $9,700 per pupil—still $400 less than the state average. The rise will cover salary increases to attract high-quality new teachers to the district, hire additional special education and gifted education teachers, and increase curricular offerings at the middle and high school levels. Since the existing salary schedule places Suburbia teachers below the state average, the school board wants to raise salaries to the state average. Currently, the high school offers only one foreign language, Spanish. The school board has placed two additional foreign languages, Latin and Chinese, in the budget. There is also an increase in middle school teachers to implement interdisciplinary teaming. The taxpayers association strongly opposes the school budget, putting forward two fresh candidates who oppose any increase in per pupil funding for the board of supervisors. In fact, the new candidates want a full investigation into possible areas that might be cut from the school board budget.

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The two board of supervisors members whose terms expire and are running to keep their seats face very strong opposition. Polls indicate that they are already 20 percentage points behind the taxpayers-association candidates. The taxpayer candidates are running on a platform of no new taxes, especially for the schools. They cite new parents demanding new programs for their children that were not needed in the past. Test scores have increased only slightly in spite of increased funding. The taxpayer candidates want to freeze property taxes at the current rate and require a three-quarters majority approval of a referendum if taxes are to be raised. In 2 weeks, the candidates will debate in the old high school auditorium. The superintendent and the school board have called you in, quietly, to provide advice on how to get the school board’s budget passed. The superintendent and school board were shrewd enough not to ask you to serve as the education adviser to the incumbent supervisors’ campaigns, but they left you knowing what they wanted and needed you to do for the students’ sake. Because they may have to work with the candidate they did not endorse, the current board could not publicly take a position in the election, making a difficult situation worse. Your job is to advise the incumbents on these issues: • • • • •

Why the public needs to support the education budget. How spending on education provides a return to the community. Why cutting spending will harm the long-term health of the community. Why it is difficult to increase test scores when enrollment is increasing and the community is changing. Why it is important for the community’s long-term health to vote for candidates who have pro-education platforms.

Additionally, you will propose to the incumbents a plan for communicating education’s importance to the community members who are life-long residents. How will you proceed, and what facts and figures will you provide for the incumbents?

CHAPTER QUESTIONS/ASSIGNMENTS 1. State three reasons why it is inappropriate to say that the United States spends more on PK–12 education than any other country. Provide factual explanations to back up your reasoning. 2. Explain in a letter to the editor of your local paper why national education costs have increased out of necessity (within the 250-word limit imposed by the editor of the paper). 3. Locate a website showing per pupil expenditures in your state and note the five lowest socioeconomic status (SES) school districts and the five highest SES districts. Determine the mean per pupil expenditure for these two groups and whether the lower SES students receive spending comparable with the higher SES group.

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4. Explain the factors associated with an increase in education spending and show that teacher salaries in constant dollars have remained relatively flat over time. 5. Administrative salaries in your school district have lagged behind teacher salaries for the last few years. In fact, teacher salaries have had an annual 5% increase in the last 4 years, but administrators have had only a 3% salary increase in that same time period. Prepare a written statement to the school board advocating a larger percentage salary increase for administrators than for teachers this year. 6. State education websites usually list expenditures per locality. Obtain the figures for your state and discuss ideas such as local wealth and average per pupil expenditure. Which localities spend the most per child? Which school districts have the greatest need? Do the neediest school districts have the greatest funding on a perpupil basis? Should they?

NOTES 1 PDK (2017). The 49th annual PDK poll of the public’s attitudes toward the public schools. Kappan, 99 (1), K1–32. 2 Starr, J.P. (2017). Translate the public’s desires into policy. Kappan, 99 (1), K8. 3 Snyder, T.D. & Dillow, S.A. (2012). Digest of education statistics 2011 (NCES 2012-001). Washington, DC: National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education, Table 8, p. 26. 4 McFarland, J., Hussar, B., de Brey, C., Snyder, T., Wang, X., Wilkinson-Flicker, S., Gebrekristos, S., Zhang, J., Rathbun, A., Barmer, A., Bullock Mann, F., and Hinz, S. (2017). Condition of education 2017 (NCES 2017-144). U.S. Department of Education. Washington, DC: National Center for Education Statistics. Retrieved from https://nces.ed.gov/pubsearch/pubsinfo. asp?pubid=2017144 5 Bracey, G. (1997). Setting the record straight. Alexandria, VA: ASCD; and Berliner, D. & Biddle, B. (1995). The manufactured crisis: Myths, fraud, and the attack on America’s public schools, p. xi. New York: Perseus Books. 6 Singer, S. (2017, February 3). U.S. public schools are not failing. They’re among the best in the world. The Huffington Post. Retrieved from www.huffingtonpost.com/entry/us-publicschools-are-not-failing-theyre-among_us_5894e819e4b061551b3dfe51 7 Snyder, T.D., de Brey, C., & Dillow, S.A. (2016). Digest of education statistics 2015 (NCES 2016-014), Table 236.15, p. 416. Washington, DC: National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education. 8 Snyder, de Brey, & Dillow (2016), Table 203.10, p. 96. 9 Snyder, de Brey, & Dillow (2016), Table 208.20, p. 149. 10 Snyder, de Brey, & Dillow (2016), Table 213.10, p. 176. NOTE: These figures are for the FY 2014 (latest data available). The other positions include central office staff and instructional coordinators—139,667; principals and assistant principals—168,101; instructional aides—738,226; librarians—45,106; school counselors—101,920; and support staff— 1,881,116. 11 Snyder, de Brey, & Dillow (2016), p. 24 and 2012, Tables 8 and 9. Calculations by authors. 12 Statistica.com (2018). The world’s 50 largest companies based on number of employees in 2016. Boston, MA: Author. Retrieved from www.statista.com/statistics/264671/top20-companies-based-on-number-of-employees/ 13 Organisation for Economic Co-operation and Development [OECD] (2017). Education at a glance 2017. OECD indicators, Table B2.1, p. 187. OECD: Paris, Author. Retrieved from

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4 1 15 16 17 18 19 20 21

22 23

24 5 2 26 27

8 2 29 30 31

www.keepeek.com/Digital-Asset-Management/oecd/education/education-at-a-glance-2017_ eag-2017-en#.WpgdkmaZPUI#page185 OECD (2017), Table B2.2, p. 188. National Commission on Excellence in Education (1983). A nation at risk. Washington, DC: U.S. Government Printing Office. National Policy Board for Educational Administration (2015). Professional standard for educational leaders [PSEL] 2015. Reston, VA: Author, pp. 8, 17. Hood, J. (1990, February 18). Education: Is America spending too much? Policy Analysis No. 126. Washington, DC: The CATO Institute. Retrieved from www.cato.org/publications/ policy-analysis/education-is-america-spending-too-much Thiel, P. and others (2011, August 23). Spending too much time and money on education? Room for Debate. The Opinion Pages. The New York Times. Retrieved from www.nytimes. com/roomfordebate/2011/08/23/spending-too-much-time-and-money-on-education Salam, R. (2014, May 21). $26,000 per student? Politics. Slate.com. Retrieved from www. slate.com/articles/news_and_politics/politics/2014/05/public_schools_and_reform_u_s_ schools_cost_way_too_much_and_should_be_cheaper.html OECD is the intergovernmental economic organization based in Paris with 35 member countries that promotes economic growth, prosperity, and sustainable development. International spending comparisons can be studied by looking at a country’s Gross Domestic Product (GDP) or Gross National Product (GNP). GDP measures all production within a country by whoever happens to be working there; GNP measures the production of all citizens of that country, wherever they happen to be working. (Maybe you can remember the “N” in GNP stands for “anywhere.”) GNP and GDP tend to be used as synonyms, but GDP is the preferred measure among economists and is gaining popularity in general conversation as well; the two measures are fairly close numerically. Comparing expenditures by GDP has advantages over GNP. GDP comparisons allow us to factor in expenditures relative to various nations’ ability to finance education. Both measures place dollar amounts within a cultural context, but GDP is more narrowly focused on the goods and services produced inside the country. These figures include postsecondary education non-tertiary education costs. OECD defines postsecondary, non-tertiary education as a broadening of postsecondary (usually vocational) but not higher education. Program for International Student Assessment [PISA] (2012, February). Does money buy strong performance in PISA? PISA in Focus. Paris, FR: OECD. Retrieved from www. oecd.org/pisa/pisaproducts/pisainfocus/49685503.pdf; and OECD (2017). Education at a glance, 2017. Figure B1.2, p. 171. Paris, FR: Author. Retrieved from www.keepeek.com/ Digital-Asset-Management/oecd/education/education-at-a-glance-2017_eag-2017-en#. WpBfoIJOnUI#page173; PISA assesses science literacy using reading, mathematics, and cooperative problem solving as minor areas of assessment. National Education Association (2004). Rankings and estimates: Rankings of the states and estimates of school statistics 2004 (Figure 3.1, p. 77). Washington, DC: Author. Mills v. Board of Education of District of Columbia, 348 F. Supp. 866 (D.D.C. 1972). Duncombe, W. & Yinger, J. (2005). How much more does a disadvantaged student cost? Economics of Education Review, 24 (5), 513–532. The Condition of Education (2017, May). Children and youth with disabilities. Washington, DC: National Center for Education Statistics, Institute for Education Sciences, U.S. Department of Education. Retrieved from https://nces.ed.gov/programs/coe/indicator_cgg. asp Snyder, de Brey, & Dillow (2016), Table 204.30, p. 119. Bracey (1997), pp. 21–22. The College Board (2016). 2016 College-bound seniors: Total group profile. Tables 6, 7, 10, pp. 2–4. New York: Author. Retrieved from https://reports.collegeboard.org/pdf/totalgroup-2016.pdf College Board (2016).

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MISCONCEPTIONS ABOUT SCHOOL FINANCE 32 The College Board (2018). SAT suite program results: 2017. Class of 2017 SAT results. New York: Author. Retrieved from https://reports.collegeboard.org/sat-suite-program-results/ class-2017-results 33 Berliner & Biddle (1995), p. iii. 34 With all due apologies for the pun to Jonathan Kozol’s Savage inequalities: Children in America’s schools (New York: Crown, 1991). 35 Moses, S. (2017, May 17). NYS school votes 2017: Compare how much your district wants to spend vs. others. Syracuse.com. Retrieved from www.syracuse.com/schools/index. ssf/2017/05/nys_school_budet_votes_2017_does_your_district_want_to_spend_more_or_ less_than_o.html 36 Allegretto, S. & Mishel, L. (2018, September 5). The teacher pay penalty has hit a new high: Trends in the teacher wage and comnpensation gaps through 2017. Washington, DC: Economic Policy Institute, p. 2. Retrieved from www.epi.org/files/pdf/153196.pdf 37 Allegretto, S. & Mishel, L. (2019, April 24). The teacher weekly wage penalty hit 21.4 percent in 2018, a record high. Washington, DC: Economic Policy Institute. Retrieved from www.epi.org/files/pdf/165729.pdf 38 National Center for Education Statistics (2009). Average number of hours in the school day and average number of days in the school year for public schools, by state. Washington, DC: U.S. Department of Education, Schools and Staffing Survey (SASS), “Public School Data File,” 2007–08. Retrieved from https://nces.ed.gov/surveys/sass/tables/sass0708_035_s1s.asp 39 Darling-Hammond, L. (n.d.). Interview with Linda Darling-Hammond. Teachers Today. Retrieved from http://pbs.org/onlyateacher/today2.html 40 National Center for Education Statistics (2017). Table 5. Number and percentage of public school teachers who are regular full-time teachers and average number of hours per week that regular full-time teachers spent on selected activities during a typical full week, by selected school characteristics: 2015–16. Washington, DC: U.S. Department of Education, National Center for Education Statistics. Retrieved from https://nces.ed.gov/surveys/ntps/ tables/ntps_5t_051617.asp 41 Bureau of Labor Statistics (2018, April 6). The employment situation—March 2018. News Release (USDL-18-0508). Washington, DC: Author, U.S. Department of Labor. Retrieved from www.bls.gov/news.release/pdf/empsit.pdf 42 Saad, L. (2014, August 29). The “40-hour” workweek is actually longer—by seven hours. Gallup News. Economy. Retrieved from http://news.gallup.com/poll/175286/hour-workweek-actually-longer-seven-hours.aspx 43 Bureau of Labor Statistics (2017). May 2016 national occupations employment and wage estimates United States. Occupations Employment Statistics. Washington, DC: Author, U.S. Department of Labor. Retrieved from www.bls.gov/oes/current/oes_nat.htm#00-0000 44 Bureau of Labor Statistics (2017, March 31). Occupational employment and wages news release. Economic News Release. Washington, DC: Author, U.S. Department of Labor. Retrieved from www.bls.gov/news.release/ocwage.htm 45 Richwine, J. & Biggs, A.G. (2011, November 1). Assessing the compensation of public-school teachers. CDA-11-03. A Report of the Heritage Center for Data Analysis. Washington, DC: The Heritage Foundation. Retrieved from www.heritage.org/education/ report/assessing-the-compensation-public-school-teachers 46 DeVos, B. (2018, January 16). Prepared remarks by U.S. Education Secretary Betsy DeVos to the American Enterprise Institute. Washington, DC: U.S. Department of Education. Retrieved from www.ed.gov/news/speeches/prepared-remarks-us-education-secretary-betsy-devos-amer ican-enterprise-institute; Klein, A. (2017, November 30). Betsy DeVos links nation’s stagnant test scores to lack of parental choice. Politics K-12 Blog. Education Week. Retrieved from http://blogs.edweek.org/edweek/campaign-k-12/2017/11/betsy_devos_test_scores_stagnant_ parental_choice.html 47 Baker, K. (2007). Are international tests worth anything? Phi Delta Kappan, 89 (2), 101– 104; Carnoy, M. (2015, October). International tests core comparisons and educational policy. A review of the critiques. Boulder, CO: National Education Policy Center. Retrieved from www.google.com/?gws_rd=ssl#q=Carnoy+2015+international+assessments;

MISCONCEPTIONS ABOUT SCHOOL FINANCE Carnoy, M., Garcia, E., & Khavenson, T. (2015, October 30). Bringing it back home. Why state comparisons are more useful than international comparisons for improving U.S. education policy. EPI Briefing Paper #410. Washington, DC: Economic Policy Institute. Retrieved from www.epi.org/publication/bringing-it-back-home-why-state-comparisons-are-more-usefulthan-international-comparisons-for-improving-u-s-education-policy/ 48 Carnoy, M. & Rothstein, R. (2013, January 28). What do international tests really how about U.S. student performance? Washington, DC: Economic Policy Institute. Retrieved from www.epi.org/files/2013/EPI-What-do-international-tests-really-show-aboutUS-student-performance.pdf 49 Snyder, de Brey, & Dillow (2016). See Table 204.10, p. 115. 50 Carnoy, Garcia, & Khavenson (2015, October 30). 51 Owings, W.A., Kaplan, L.S., Myran, S., & Doyle, P. (2017). Improving U.S. schools one state at a time: What principals and professors need to know about state standards for student achievement. National Association of Secondary School Principals Bulletin, 101 (4), 299–314. 52 Achieve (2015). How the states got their rates: 2014 graduates. Washington, DC: Author. Retrieved from www.achieve.org/files/15-366%20Achieve_StateGradRate2014_1215.pdf 53 Bromberg, M. & Theokas, C. (2016). Meandering toward graduation: Transcript outcomes of high school graduates. Washington, DC: The Education Trust. Retrieved from https://edtrust.org/wp-content/uploads/2014/09/MeanderingTowardGraduation_EdTrust_ April2016.pdf 54 Snyder, T.D. & Dillow, S.A. (2015). Digest of education statistics 2013 (NCES 2015-011), Table 235.20, p. 353. Washington, DC: National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education. 55 Morgan, I. & Amerikaner, A. (2018, February 27). Funding gaps. An analysis of school funding equity across the U.S. and within each state. 2018. Washington, DC: Education Trust. Retrieved from https://1k9gl1yevnfp2lpq1dhrqe17-wpengine.netdna-ssl.com/wp-content/ uploads/2014/09/FundingGapReport_2018_FINAL.pdf 56 Baker (2007). 57 Carnoy & Rothstein (2013), p. 7.

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History of School Finance in the United States PSEL STANDARDS: NONE

FOCUS QUESTIONS 1 Describe the beliefs underlying the American colonists’ views on education. 2 Identify the roots of public education financing. 3 Explain how regional differences in approach and philosophy in financing public education occurred. 4 Trace the historical impact of federal financing in education. 5 Describe how World Wars I and II influenced education finance. 6 Discuss the importance of the 1965 Elementary and Secondary Education Act (ESEA). 7

Describe the philosophy underlying school choice/education privatization and education finance.

8

Summarize the key aspects of Goals 2000; No Child Left Behind; Race to the Top; and Every Student Succeeds Act.

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This chapter traces the history of American education finance from colonial settlement to the present. Across the country, regional differences in philosophy and approach to funding schools led to varying educational expectations. The strong federal role and historical impetus for education funding have been foundational to maintaining our democratic republican form of government.

WHERE AND HOW AMERICAN PUBLIC EDUCATION STARTED Sixteenth-century European religious and humanistic thinkers influenced American colonists’ view of education. The day’s religious conflicts made salvation an individual— not a specific church’s—responsibility. Thus, education became a practical and spiritual necessity. To enact this, colonial leaders believed in educating all children to a basic level taught in the native tongue. Intellectuals such as Desiderius Erasmus, Sir Thomas Elyot, and John Locke saw education as essential to develop a competent ruler who uses power to advance the people’s welfare (rather than simply fill his own or his allies’ pockets). Notably, these thinkers extended a good education’s value to common-born administrators who would govern. British philosopher John Locke took these ideas a step further, advancing the idea that the people, not their kings, had civil and political rights.1 In his view, education had useful purposes for the business of living and advancing progress, not simply as preparation for university.2 As education historian Lawrence Cremin observed, “it is but a short step from an education that confirms status to an education that confers status.”3 Education could qualify men to rule, regardless of the circumstances of birth. “Education would make meritocracy possible.”4 These cultural influences made education of the masses a priority for early American colonists. From the start, the American colonists valued education enough to pay for it. The first American school finance law, the Massachusetts Act of 1642, required parents and masters to attend to the educational duties of the colony’s sons and servants. Cogently summing up the rationale for public schools, George Martin, historian of the Massachusetts school system, concluded, “The child is to be educated, not to advance his personal interest, but because the state will suffer if he is not educated.”5 According to Ellwood Cubberley, American educator, author, and pioneer in the field of educational administration, the General Court (the colonial legislature) empowered “certain chosen men”6 of each town to ascertain, from time to time, if parents and masters were attending to their educational duties; if children were being trained “in learning and labor and other employments . . . profitable to the Commonwealth.”7 “Profitable” meant that sons and male servants learned to read and understand religious principles while they received training in “learning and labor.” Children so educated would be able to uphold their religious, economic, and civic responsibilities. In those days, girls (and women) stayed at home and learned household tasks and embroidery—an obvious Title IX violation. The law also authorized the Selectmen to impose fines on those who were not educating their children. If that were not enough, the General Court ordered that all youth between the ages of 10 and 16 would also be schooled in “ye exercise of arms, as

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small guns, halfe pikes, bowes & arrows and the like.”8 Colonial education was both idealistic and pragmatic. Within 5 years, the 1642 law failed, and the Massachusetts colony legislators enacted the famous “Ye Olde Deluder Satan” law in 1647. Religiously motivated, the law presumed that those who could read and understand the Bible couldn’t be tempted to follow Satan’s wiles (and possibly offend God or harm their neighbors). Education requirements varied depending on each settlement’s size. For every community of 50 or more households, the law required that towns appoint a reading and writing teacher and pay him (only men need apply), what compensation the citizens deemed appropriate. For settlements of 100 or more households, the community taxed property owners to provide a grammar school that prepared students for eventual university attendance. Towns not meeting this educational requirement faced a financial penalty of 5 pounds, later increased to 20 pounds (probably out of necessity); and those who violated the ordinance endured public humiliation in the stockade. Local government taxed property because they considered land a valid measure of wealth. The well-to-do owned property and made money from that land through farming, manufacturing, selling goods, or other means. From the earliest days, therefore, the nation’s founders saw property as a proxy for wealth and decided that taxes on property, as a measure of one’s wealth, should fund education. The 1647 law represented a distinct and unprecedented step forward in public education. Not only was a school system ordered established—elementary for all towns and children, and secondary for youths in the larger towns—but for the first time among English-speaking people, there was an assertion of the right of the State to require communities to establish and maintain schools, under penalty if they refused to do so. It can be safely asserted in light of later developments, that the two laws of 1642 and 1647 represent the foundations upon which our American state public school systems have been built.9 Massachusetts’ precedent—establishing property taxes as the basis for funding public schools—quickly caught on in other New England colonies. In 1650, Connecticut enacted school laws similar to those of Massachusetts but gave the law greater strength. The Connecticut legislature included provisions to remove children and servants from families who did not comply with the act and place them with masters who would “more strictly look unto and force them to submit unto government, according to the rules of this order if by fair means and former instructions they will not be drawn unto it.”10 Taxing property to fund education remains a tradition to this day. Property taxes still pay the greatest percentage of local school board budgets. Taxing property evolved somewhat differently in various regions of the country, however. The middle and southern colonies subsidized very basic public schools (small facilities, limited curriculum, and few students attending), and parents and churches primarily financed further education. A century later, the U.S. Constitution’s framers seriously debated education’s importance to their new nation’s future. They believed public education essential to maintaining a republican form of government. In 1758, Jean-Jacques Rousseau, the

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Swiss philosopher, noted that “public education . . . is one of the fundamental rules of popular or legitimate government.”11 In other words, this American people’s government, very different from anything in Europe, required an educated general populace for its survival as a democratic republic. Following the Declaration of Independence in 1776, the Articles of Confederation, and other nation-building documents, attention turned from federal law to state constitutions. Leaders vigorously debated whether to control the United States at the national or the state level. After all, the new country was called the United States of America. Politics, at its best, is the art of the possible. Accordingly, representatives compromised to appease both state’s rights advocates and federalists. Since issues such as education did not appear in the first ten Amendments to the U.S. Constitution, they fell under the state’s purview. By default, education became a state function. Both sides could live with this trade-off. This compromise has far-reaching legal and financial effects today; states’ rights issues continue to be a thorny national concern with sharp impact on education policy and practice.

REGIONAL EVOLUTION OF SCHOOLS AND SCHOOL FINANCING Schools in the new republic evolved differently, depending on their region’s geography, economy, religion, and particular pioneers. The New England settlers had fled religious persecution in England where laws barred them from reading and interpreting the Bible for themselves.12 In their new land, colonists established a schooling system unlike anything they had left behind. Uniquely, their colony became the first Englishspeaking settlement requiring children to learn how to read.13 New England’s geography lent itself to establish small farms and trades in small villages and towns. Although religious in inspiration and scope (students would be able to interpret the Bible for themselves and save their immortal souls), knowing how to read and comprehend also enabled individuals to think for themselves about many practical and civic issues and to act without offense or injury to others. By contrast, the Virginia settlement contained settlers who, although from the same class as those inhabiting New England, were not religious dissenters. Adherents to the national English church, Virginian colonists had come to America to make their fortunes. The regional differences in crops and plantation economics led to the introduction of indentured servants and slaves, prompting distinct social classes to develop. This social and economic environment was very different from the small New England town with democratic town meetings. New England was developing a new society whereas Virginia remained similar to England in spirit and practice.14 Cubberley described the developing country’s four basic schooling practices: good school conditions, mixed conditions, pauper and parochial schools, and the “no action” group.15 Under good school conditions, citizens generally valued education and saw its worth for the “entire” populace (if you happened to be a white male). States in this category included Maine, Vermont, New Hampshire, Massachusetts, Connecticut, New York, and Ohio. These states developed rather high-quality and relatively progressive education programs in comparison with the rest of the country.

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Mixed conditions described diverse settlements where people held conflicting ideas about what public education should be and what it should provide for children. Settlers’ views about schooling often reflected those of the communities from which they emigrated. As a result, these regions showed wide variance in education quality. Indiana and Illinois were such mixed condition states. The pauper and parochial school conditions existed mostly in the middle and southern colonies. Emigrants in these regions, mostly, did not flee England’s religious persecution. Rather, they left their homelands on good terms. Many arrived in the colonies with or seeking their fortunes and enhanced or found them. As a result, these newcomers did not abandon their traditional English ideas about education: high-quality schooling was for the elite. Therefore, the privileged sent their children to church-sponsored (parochial) schools in England or to those newly established in America. Similarly, in these “pauper and parochial” states, community leaders believed that the poor, the paupers, deserved a minimal level of education lasting only a few years. States in this category included Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Georgia, South Carolina, and Louisiana. Finally, Cubberley characterized the no action group as the religious freedom and antigovernment states. Philosophically, these colonists believed that “government” should play little role in citizens’ or community affairs. Individuals were responsible for their own actions and well-being, including providing for their children’s education. In their early days, these regions took little or no action to establish public education. Rhode Island, Kentucky, Tennessee, North Carolina, Mississippi, and Alabama were no action states. Not all states appear in Cubberley’s listing, and several states reflect an amalgam of people and ideas, not fitting one distinct pattern. Regardless of how a state began its public education evolution, the good school conditions model offered its eligible children the best learning opportunities. As discussed in Chapter 1 and again in Chapters 4 and 11, education has a positive economic impact on the individual and society. States must invest as heavily in education as their capacity allows if they want future economic prosperity for all their citizens.

THE HISTORY OF FEDERAL EDUCATION FUNDING The roots of the federal role in education predate the U.S. Constitution. And even though the U.S. Constitution made education a state responsibility, the federal government did not abandon involvement with public schools or leave their financing solely to the states. After all, the nation’s founders deemed universal schooling for an educated populace a matter of good government and national security. Although federal financial involvement in education is somewhat complex, certain themes emerge.16 In 1778, shortly after the Revolution and before ratifying the Constitution, Congress eagerly sought ways to generate revenues to pay for governing, improve the new country, and discharge its war debts. One method involved selling claims to the western territories. After much debate in the Continental Congress, federal legislators enacted the Land Ordinance of 1785, deciding that new Congressional townships in the western territories (today, these states include Ohio, Illinois, Michigan, Indiana,

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and Wisconsin) should be 6 miles square (or 36 square miles). The law reserved four of these 1-square mile lots for future sale. The proceeds from lot number 16—the “sixteenth section”—were used to fund public schools. The Northwest Ordinance of 1787, the second land ordinance, authorized land grants to establish education. It contained rhetorical flourishes but little guidance about how to enact it. This ordinance included the rather famous provision, “Religion, morality, and knowledge being necessary to good government and the happiness of mankind, schools and the means of education shall be forever encouraged.” The Northwest Ordinance also required that territories desiring to become states include a provision for education within its basic laws. Also in 1787, the third land ordinance conveyed approximately 5 million acres to land speculators. Later, in 1802, the fourth “wave” of federal policy governing granting lands clarified the “sixteenth section’s” intent in Ohio, requiring monies from this section’s sales be spent for public schools. Additionally, in 1802, when Ohio became a state, a debate arose as to whether or not states could tax federal properties within the state’s borders. In a compromise, parties agreed that states would receive “a 5 percent” portion of public land sales, and federal lands within states would be exempt from state taxes. These revenues added to monies available to set up and maintain public schools. By now, the federal and state roles in establishing education had been somewhat clarified. States then developed their public education structures at varying rates of speed and effectiveness. Andrew Jackson’s presidency initiated a move to decentralize the federal government. With decentralization, Congress did not need as much money as it had collected whereas the states needed more revenues. Recognizing this funding discrepancy, in 1836, the Surplus Revenue Deposit Act gave $28 million in federal funds to the states. Much of this windfall went to build, staff, supply, and maintain public schools. Looking beyond basic literacy and numeracy to its own national survival, in 1802, Congress enacted federal legislation establishing the U.S. Military Academy. Fortythree years later, in 1845, Congress established the Naval Academy, and in 1876, it founded the Coast Guard Academy. The Merchant Marine Academy began in 1936, and the U.S. Air Force Academy opened its doors in 1954.

WAR YEARS’ LEGISLATION After the Civil War, controversy grew around the federal government’s role in public education. Debate centered around three issues: whether schooling should be universal for children of all social and economic classes; how to ensure the growing public education system’s financial security; and whether education should be secular, nonsectarian, or more religious.17 Although the federal government required new states admitted into the Union provide free, nonsectarian public schools, the debate about the federal role continued on and off for the next 50 years.18 During the war, in 1862, Congress passed the Morrill Act authorizing the states to use public land grants to establish and maintain agricultural and mechanical colleges—called land grant colleges. This federal investment in college education assured the country’s

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economic growth and security by producing knowledgeable planners and managers. Twenty-eight years later, in 1890, Congress passed the second Morrill Act, authorizing funds to support teaching in the colleges that the first Morrill Act set up. In 1867, two years after the Civil War, Congress enacted legislation to establish the U.S. Department of Education to collect information and data about the nation’s schools. This advanced public education to a leadership and policy positon in the federal government. But a year later, in 1868, the department was “downgraded” to the Office of Education amid concern about control of local schools.19 In 1953, the Office of Education became part of the Department of Health, Education, and Welfare (HEW), where it remained until re-established as a cabinet-level department in October 1979. Wars bring changes to any society, and education did not escape this dynamic. During World War I, necessity forced rapid adjustments in the United States. The military faced war on a scale and horror not seen before—including chemical weapons. The “War to End All Wars” began with horses and wagons and ended with industrial weapons including air warfare, armored tanks, submachine guns, and automatic rifles. Across the globe, nations recognized the United States as a world power. America had entered the technology and information age, and workers needed different skill sets as the agrarian lifestyle gave way to urbanization and manufacturing. Facing large numbers of returning soldiers who needed specific workplace skills, in 1917, Congress took a significant step toward a more activist role in education and passed the Smith–Hughes Act. The law provided the first categorical federal aid program, providing states with grants to support vocational education programs. The national government directed the state’s role in administering this program according to federal standards and funds—creating a model for later federal grants. It would be decades before Congress would approve anything else like it. At the same time, Congress also confronted the problem of what to do with returning injured solders who required further workplace training. In 1918, Congress passed the Vocational Rehabilitation Act, providing funds to rehabilitate World War I veterans. In 1919, to assist states and schools’ programs, Congress passed the Act to Provide for Further Educational Facilities, which authorized the federal government to sell surplus machine tools to schools for 15% of their original purchase price—enabling schools to acquire the equipment needed for “real world” vocational training. In 1920, the Smith–Bankhead Act authorized federal grants for the states to provide vocational rehabilitation programs. Following World War I until October 1929, life progressed agreeably for most middle-class families. Upper-class families fared especially well. But after 1932, with the Great Depression in full bore, Congress and the executive branch desperately sought a quick fix to save the crashing economy. Elected officials faced sizeable social and political consequences. Millions of families waited for food in bread lines and soup kitchens. Elementary-aged children dropped out of school and went to work solely to help put meals on their family tables. Aware of their constituents’ suffering, in 1935, Congress passed the Agricultural Adjustment Act, setting up what we know today as the School Lunch Act—providing a non-profit lunch program of adequate, healthy, and nutritious food and facilities to schools to feed their

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hungry students. In 1946, the National School Lunch Act further expanded and enhanced this assistance to schools. With World War II, Congress recognized the need for students to have access to workforce technology and learn technology skills to an even greater extent than following World War I. Again, public schools played a key role in filling the need. In 1941, Congress passed the Amendment to the Lanham Act of 1940, providing federal aid for the construction, maintenance, and operation of schools located in federally impacted areas (where U.S. military families lived and worked on federally owned land and facilities that paid no state or local property taxes). Congress has continued this financial support under various Public Law statutes. In 1943, disabled veterans began returning home, and political pressure resulted in another Vocational Rehabilitation Act. Like the one after World War I, this act assisted disabled veterans. In 1944, the federal government enacted legislation for returning military service workers with the Servicemen’s Readjustment Act. Known as the G.I. Bill,20 this act provided education benefits to military returnees as they reentered civilian life and delayed those returning from the war entering the workforce which would jeopardize the country’s economic recovery from the Great Depression. The G.I. Bill effectively supplied a massive education infusion to citizens, raising the education bar, and expanding learning horizons, careers, and lifestyle opportunities for veterans and future generations. Millions of returning service men and women availing themselves of the G.I. Bill’s educational benefits overwhelmed schools and colleges, straining their resources. In 1949, Congress passed the Federal Property and Administrative Services Act, allowing the national government to donate surplus federal property to educational institutions. Congress effectively recognized the fiscal load facing states and localities and spread the financial burden over the entire country by taking equipment bought with taxpayer dollars and donating them to schools.

POST WORLD-WAR II LEGISLATION After World War II, the national economy thrived. Colleges and universities bustled with activity. Levittowns and other planned suburban communities sprang up, offering home ownership to thousands of families. Americans felt pride that they were the world’s most powerful military and economic nation. Following Sputnik in 1957, however, the country confronted a wrenching reality check. The Russians’ incredible feat of technological superiority threatened to shift the international balance of power. Later, in 1961, as Russia became the first country to send a person into outer space and return him safely to Earth, existential national questions arose: Did American public schools have enough direction and resources to keep our global superiority? In 1958, as a result of this Sputnik wake-up call, public education received a massive infusion of federal dollars with the National Defense Education Act (NDEA).21 Viewing math and science education as essential to protect our national security, NDEA provided economic assistance to states and individual school systems to “beef up” curriculum and instruction in science and math, modern foreign languages, other

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critical subjects, and college preparation. NDEA also supplied states with resources including assistance to improve guidance and counseling programs, testing, and statistical reporting as well as substantial funding for vocational and technical programs deemed necessary to America’s defense and continued superiority. It also provided higher education with student loans and fellowships to prepare those interested in becoming PK–12 teachers and to those showing promise in mathematics, science, engineering, and modern foreign languages to become college professors. For the first time, the national government looked at ways to enhance teaching and learning with research and experimentation in using television, radio, motion pictures, and related media for educational purposes. Also passed in 1958, the Education of Mentally Retarded Children Act offered ground-breaking legislation for students with disabilities.22 Earlier federal legislation for the disabled focused on injured veterans returning from World Wars I and II. Recognizing a severe national need, Congress passed this bill to prepare teachers to work successfully with students with disabilities. Before this time, only a few states distributed funds to localities to supplement programs for these students. Most families with children with disabilities had to find and pay for their own help. Not until the 1971 Pennsylvania Association for Retarded Citizens case in federal district courts did real change begin.23 In 1965, under President Lyndon Johnson’s leadership, Congress passed Public Law 89-10, the Elementary and Secondary Education Act (ESEA), the parent of 2001’s No Child Left Behind (NCLB) and 2015’s Every Student Succeeds Act (ESSA). Johnson’s “Great Society” legislation was arguably the most important Congressional action to fund education programs up to that time. An offshoot of the Civil Rights Act of 1964, ESEA contained five title categorical aid programs specifically designated to finance education for certain student populations. Title I. Briefly, Title I intends to improve minority students’ academic achievement. It provides supplemental school program grants to help economically disadvantaged students succeed in the regular school program by improving their basic and advanced skills and attain grade-level proficiencies. This includes distributing and targeting resources sufficiently to make a difference to local educational agencies and schools where needs are greatest. The government distributes these funds in two ways—through basic grants and concentration grants. Most Title I funds are basic grants that flow through the State Education Agency (SEA) to localities based on a formula involving the school district’s percentage of eligible students and the average state per pupil expenditure. Concentration grants represent a smaller percentage of the overall funding. Concentration grants are designed for localities with a high number of eligible students—more than 6,500 students or more than 15% of all students eligible for Title I funding. This is particularly useful for school districts containing a high percentage of low-achieving and disadvantaged students, including children from low-income families, migratory children, English language learners, and young children needing reading assistance. As both economic and cultural factors affect students’ learning, localities face daunting challenges in addressing children’s educational needs. The annual amount of funds allocated for Title I varies from year to year, depending on

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political and fiscal decisions. A critical provision requires school divisions to receive not less than 85% of its previous year’s funding share, however. Title II. Over the years, Title II has had several different purposes; it consolidated 29 original federal categorical programs. Originally, Title II of ESEA provided grant monies for school library resources, textbooks, and other instructional materials. Called the Dwight D. Eisenhower Mathematics and Science Education Act,24 it resembled the 1958 NDEA and was intended to strengthen the country’s economic competitiveness and national security. Today, Title II mainly provides funding to prepare and recruit high-quality teachers and principals and provide them with professional development to increase their effectiveness. Title III. When first initiated, Title III provided funds for supplementary education centers and services to public and private schools. This block grant has changed over the years to include a variety of special needs programs. Today, Title III is mainly known for English Learner (EL) programs. Title IV. As first designed, Title IV allocated funds for regional educational research and training laboratories. The ten labs, including Mid-Continent Research for Education and Learning (MCREL), Appalachian Education Laboratory, the Far West Lab, and others provided valuable resources for the operation of public schools including “what works” to increase student learning and achievement. Today, Title IV is known for providing federal student aid for higher education. Title V. Title V initially provided funds for strengthening state departments of education (otherwise known as State Education Agencies—SEAs). Prior to this legislation, as many as 15,000 school districts reported directly to the federal Department of Education. Title V supplied funds for states to establish one reporting agency per state, the SEA, potentially streamlining efficiency for the federal education department. Most states refer to this consolidated reporting, advising, and compliance organization as their State Department of Education. Today, Title V has changed substantially. Part 1 now allows transfer of funds within Title programs. Part 2 deals with rural and lowincome schools funding.

MORE LEGISLATION The following brief overview of legislation passed from the 1960s to the present is not comprehensive. It does represent some of the major school finance legislation and the thinking behind them. In 1967, Congress passed the Public Broadcasting Act, creating the Corporation for Public Broadcasting (CPB) which assumed a major role in routing federal monies to noncommercial radio and television stations. The CPB began program production groups and started Educational Television (ETV) networks. CPB programs including Sesame Street, The Electric Company, and others have played important roles in preparing children for school success. Additionally, the CPB was responsible for awarding construction grants for educational radio and television facilities. In 1968, the Handicapped Children’s Early Education Assistance Act authorized states to provide preschools and early education programs for children with disabilities.

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In 1972, moving forward with the special education initiative, the Mills case in the District of Columbia25 (where plaintiffs estimated that 18,000 students in that jurisdiction did not receive educational services) resulted in the 1975 Education for All Handicapped Children Act (EAHCA). EAHCA, Public Law 94-142, directed that all children with disabilities have a free, appropriate public education to meet their learning needs. This legislation originally intended the federal government to pay 40% of the funding necessary for special education services, with the states and localities paying the remaining portion.26 In 1970, many Congressional actions reflected the era’s social changes. The 15-member National Commission on School Finance, established under the Elementary and Secondary Education Assistance Programs Extension, was the U.S. government’s first attempt to make “a full and complete investigation and study” of how the nation was financing its public schools. The National Commission’s charge was to identify the “serious inequities” within and among the states’ financial support for PK–12 education, consider the taxpayer resistance to the existing tax structure supporting public schools, and make recommendations for improvement.27 Also in this year, the U.S. Supreme Court mandated school desegregation under Brown v. Board of Education II be implemented, prompting the Office of Education Appropriation Act providing emergency school assistance to desegregate local school districts and schools. Also in 1970, the Environmental Education Act established an Environmental Education Office to develop curriculum and start PK–12 environmental education, help distribute information about environmental education, and provide training for teachers to address the environment and ecology. The Drug Abuse Education Act of 1970 gave funding to develop, demonstrate, and evaluate materials dealing with aspects of drug abuse. In 1974, the Education Amendments consolidated several programs and established the National Center for Education Statistics. Additionally, the Juvenile Justice and Delinquency Prevention Act authorized technical assistance, research, resources, and training to develop and implement programs to keep elementary and secondary students in school. In 1975, the Education for All Handicapped Children Act (Public Law 94-142) was enacted, mandating what has evolved into our current special education program. The law required special safeguards, the least restrictive environment, and management and auditing requirements. In 1977, the Career Education Implementation Incentive Act established a federal career education program for elementary and secondary schools. It emphasized the infusion of functional career education and life skills into general education classes. In 1979, President Jimmy Carter separated the Office of Education from HEW and re-established it as a department with cabinet rank, increasing education’s importance and visibility. Its increased political profile may have signaled to insiders that federal education spending would decrease over the next few years, and a seat at the cabinet table might help influence education spending decisions with the executive branch and Congress.28 In 1981, the Education Consolidation and Improvement Act combined 42 different programs into seven that were funded under block grants. The reshuffling and combining programs enabled federal funding for education to fall more than 20%

HISTORY OF SCHOOL FINANCE IN THE U.S.

between 1980 and 1985. Grant consolidation made the funding reductions more politically invisible. In 1984, after the Reagan administration’s publication of A Nation at Risk (1983), the Education for Economic Security Act provided monies for the addition of new elementary and secondary schools’ science, math, and excellence in education programs.29 These new programs included magnet schools, equal access opportunities, and recognitions for “excellence in education.” The reauthorized Carl Perkins Vocational Education Act continued federal financial help for work-related education programs. States receive funding to make occupational programs available to all persons, including individuals with disabilities and those from financially disadvantaged backgrounds. In 1986, the Handicapped Children’s Protection Act became law. This enabled parents of students with disabilities to collect the attorney fees in cases brought under the Education of the Handicapped Act, making redress a reality for parents of special needs children. In 1988, the Augustus F. Hawkins-Robert T. Stafford Elementary and Secondary School Improvement Amendments, reauthorized many major programs through 1993, including: •• ••

Chapter 1 (financial assistance to meet special educational needs of low-income children). Chapter 2 (federal, state, and local partnership for educational improvement, bilingual education, math-science education, magnet schools, impact aid, and other smaller programs).

In 1990, the Americans with Disabilities Act, also known as ADA, prohibited varied types of discrimination against persons with disabilities. Unlike the Rehabilitation Act of 1973, Section 504, the ADA covers all employees in public or private companies who employ 15 or more people. The act protects disabled persons in most areas of employment and treatment in society, including transportation, communications, accommodations, and more. This far-reaching act brought important classroom and school safeguards for students with special physical or learning needs not met through special education. Also in 1990, the School Dropout Prevention and Basic Skills Improvement Act passed Congress. This act continued funding for dropout prevention programs and provided funding for improvement of secondary school programs related to basic skill development. The following year, 1991, saw the creation of the National Institute for Literacy, the National Institute Board, and the Interagency Task Force on Literacy. These organizations were formed as the result of the National Literacy Act of 1991. In 1993, the National Assessment of Educational Progress (NAEP), otherwise known as the “Nation’s Report Card,” came into law with the NAEP Assessment Authorization. NAEP results enable comparisons of randomly sampled student academic performance across the United States. Country-by-country comparisons were already in the public arena.

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In 1994, the Goals 2000: Educate America Act, established a federal partnership through a system of grants to states and local communities—authorized at $400 million a year—to reform education systems to set high standards, ensure equitable educational opportunities, and promote high achievement for all students. Goals 2000 formalized the national education goals, established a National Education Goals Panel to report on progress toward meeting these outcomes, and provided a mechanism for voluntary national certification of high-quality academic and occupational state skill standards and assessments. Also that year, the Safe Schools Act of 1994 authorized awarding competitive grants to local education agencies with serious school crime, violence, and discipline problems or an area with high rates of youth-committed crimes. The grants were to help the school districts implement violence prevention strategies including conflict resolution and peer mediation training and practices. Likewise, in 1994, the Improving America’s Schools Act reauthorized ESEA. The act added Impact Aid as a new ESEA title and funded professional development, technology education, safe and drug free schools, school equity, and the Public Charter Schools program. In 1996, states and localities frustrated with “unfunded mandates”—federal legislation requiring them to take certain actions that required money without providing the financial resources to cover the costs—pressured Congress. Lawmakers passed The Contract with America in an attempt to curb this practice. In 1997, the Individuals with Disabilities Act Amendments went into effect. Originally known as the Education for All Handicapped Children Act (EAHCA) and renamed in 1990 as the Individuals with Disabilities Act (IDEA), this act revised IDEA provisions, extended the authorization through 2002, and provided additional protections to special needs students and their parents. In 2002, a new program, the Consolidated Appropriations Act 2001, created assistance for school repair and renovation, addressing the needs for capital improvements to facilities. The act also reauthorized ESEA of 1965, providing credit enhancement initiatives to help charter schools with facilities construction and repair. It also reauthorized the Even Start program and legislated the Children’s Internet Protection Act.

EDUCATIONAL LEGISLATION AFTER 2000 No Child Left Behind (NCLB), the 2001 reauthorization of ESEA, arguably the biggest expansion of the federal role in public PK–12 in history, increased accountability for states and local school districts in exchange for continued federal financial support. Significantly, NCLB tried to ensure that students from demographic subgroups— particularly, minorities, English language learners, special education students, and students receiving free and reduced-price lunches—achieved grade-level proficiency in reading and mathematics by the 2013–14 school year. To accomplish this, NCLB required every state to develop a comprehensive system of standards and assessments in language arts, math, and science and conduct annual achievement testing in grades

HISTORY OF SCHOOL FINANCE IN THE U.S.

3–8 and once in high school to demonstrate student mastery and school accountability. The law attached escalating consequences to schools that did not show annual student subgroup achievement increases. Further, all schools had to employ “highly qualified” teachers (with a college major and bachelor’s degree in the core subject they were teaching and state certification) in place for core area subjects by the end of the 2005–06 school year. In 2009, the American Recovery and Reinvestment Act (ARRA) created the Race to the Top Assessment Program (RTTT), providing states with $4 billion in competitive grants to develop valid assessments that “support and inform instruction, provide accurate information about what students know and can do, and measure student achievements against standards designed to ensure all students gain the knowledge and skills needed to succeed in college and the workplace.”30 Similarly, 2009’s Race to the Top (RTTT) provided $4.35 billion in competitive grants to states for large-scale educational reforms that resulted in improved student achievement, narrowed achievement gaps, and increased graduation and college enrollment rates. In a deliberate move to incentivize states to initiate educational reform in the Obama administration’s preferred direction, grant applications required states to accept common core statewide standards, incorporate student achievement data into teacher and principal evaluations, increase the availability of charter schools, and obligate states to ensure that high-poverty and/or high-minority schools received an equitable part of the funds. All but ten states applied for grants during the first round. Most recently, the Every Student Succeeds Act (ESSA) 2015 reauthorized ESEA, replacing NCLB. ESSA gives states significant flexibility in a wide range of areas. States still have to submit accountability plans to the federal Education Department, but they can pick their own goals, large and small, and long-term and smaller, interim targets. Goals must set an expectation that all groups that are furthest behind academically close achievement gaps and graduation rates. ESSA requires all states to incorporate test-based proficiency, English-language proficiency, and graduation rates into their accountability systems plus an additional academic factor that can be disaggregated into student subgroups. States must also add at least one additional indicator of a different kind, such as student or educator engagement, school climate, or school safety. For low-performing schools, states must identify and intervene in those performing in the bottom 5% of achievement, including high schools with a graduation rate of 67% or less, at least once every 3 years. Consequences to schools that do not show improvement using an evidencebased plan will face possible state takeover, a dismissed principal, or conversion into a charter school.

EDUCATION PRIVATIZATION IN FEDERAL LEGISLATION The federal investment in public education and public schools has not gone unchallenged, however. Since the 1950s, numbers of education and economic policy makers

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have advanced ideas to undermine federal influence in public education. These ideas are evident in the federal legislation described above, and their influence continues to shape education policy and legislation. A more complete account of education privatization is discussed elsewhere.31 Briefly, since the 1950s, many policy makers from both sides of the political aisle wanted to allow private entities using public funds to deliver education. Influenced by conservative economist Milton Friedman, some believe in the free market’s power to solve societal problems and prefer having for-profit operators run public schools. Or, they see government as a “public monopoly” and champion giving taxpayer dollars to parents to choose where and how to spend their education dollars as vouchers in a competitive education marketplace32 and as a way to “downsize” government.33 From a differing vantage, social justice advocates suggest vouchers as a potential remedy for inequitably funded public schools. They support parental choice and vouchers as ways to improve schools and increase equity and social mobility.34 The outcome of this loose consensus is occasional agreement on the merits of free market principles to improve public education. Since the 1980s, the U.S. Congress has enacted free market principles by designating funds to develop content and performance standards (Goals 2000), measure students against these standards using strict timelines (NCLB), encourage school choice, vouchers, and charter schools (NCLB; RTTT); incentivize states to use student achievement test results as part of teacher evaluation (RTTT); and require public accountability systems that hold schools and school systems responsible for all students’ achievement (NCLB; RTTT; ESSA).35 Clearly, the education policy environment regarding federal funding for public schools continues to be fluid, diverse, and complex.

FEDERAL FUNDING OF PUBLIC EDUCATION TODAY Today, the federal government funds approximately $649 billion for public elementary and secondary schools or about $12,903 per public school student.36 In Fiscal Year 2015, federal dollars accounted for $55.0 billion, 8.5% of all revenues, while state and local governments provided $593.6 billion, or 91.5% of all school funding.37 Table 2.1 illustrates the federal education spending 1900–2020 as it relates to the U.S. Gross Domestic Product (GDP). In the 20th century, the federal government’s investment in education grew, significantly increasing in the 1930s from less than 0.05% of GDP to over 0.3% of GDP. Although education spending dropped during World War II, it rose to 1.97% of GDP in 1950 as it funded the G.I. Bill. Spending also increased in the mid-1960s as school facilities and staffing increased to educate the Baby Boomers, reaching a peak of 3.75% GDP in 1970. In the 1990s, federal education spending remained steady at about 3.5% of GDP but continued its growth in the 2000s. Federal education spending reached a high of 4.32% GDP in 2010. Federal education spending is predicted to be lower, at 3.33% GDP in 2020.38 Table 2.2 provides a concise timeline of major federal involvement in financing American public schools, 1642–2015. Our republic’s founders strongly believed

2.1  PK–12 and Higher Education Spending in United States as Percentage of GDP, 1900–2020

TABLE

Year

Percentage of GDP

Year

Percentage of GDP

1900

1.03

1970

3.75

1910

1.24

1980

3.49

1920

1.36

1990

3.54

1930

2.20

2000

3.75

1940

2.23

2010

4.32

1950

1.97

2020

3.33

1960

2.79

Source: Based on Chantrill, C. (2018, January 18). PK thru 12 and further education. Washington, DC: usgovernmentspending.com. Retrieved from www.usgovernmentspending.com/ spending_chart_1900_2020USp_XXs2li011tcn_21t24t_K_thru12_and_Further_Education.

TABLE

2.2  Timeline of Federal Involvement in American Public School Finance

Date

Event/Legislation

1642

Massachusetts Act requires parents/masters to attend to education of the colony’s sons and servants to protect the state’s interests.

1647

Massachusetts enacts financial penalty for towns not providing (and paying) a teacher; assigns public humiliation for individuals not paying taxes for educational purposes.

1787

Northwest Ordinance authorizes land grants to establish education facilities and requires new states to include provision for education within its basic laws.

1836

Surplus Revenue Deposit Act gives $28 million in federal funds to the states, most of which is used for public education.

1862

Morrill Act authorizes states to use public land grants to establish and maintain agricultural and mechanical (vocational) colleges.

1867

U.S. Department of Education established.

1918

Vocational Rehabilitation Act provides funds to rehabilitate WWI veterans.

1935

Agricultural Adjustment Act provides funding for non-profit, adequate, nutritious school lunch programs.

1944

G.I. Bill provides education benefits to military veterans returning from war and reentering civilian life.

1958

National Defense Education Act provides money for enhanced math, science, and foreign language instruction. continued . . .

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HISTORY OF SCHOOL FINANCE IN THE U.S. TABLE

2.2  continued

1965

Elementary and Secondary Education Act, Title I—Supplemental school program grants for children of low-income families Title II—Funding to prepare, recruit, and develop teachers and principals Title III—Funding to support higher education Title IV—Regional educational research, training laboratories Title V—Strengthened state departments of education.

1967

Public Broadcasting Act routes federal monies to noncommercial radio and television stations to begin Educational Television Networks (ETV).

1975

Education for All Handicapped Children Act (EAHCA) requires federal government to fund 40% of costs associated with special education (today, the federal government pays only 16% of costs).

1994

Goals 2000: Educate America Act establishes federal partnerships thorough grants to states and local agencies for education reform.

2001

No Child Left Behind Act (NCLB) increases accountability for states and local school districts in the form of criterion-based assessments in return for continued federal funding support.

2009

American Recovery and Reinvestment Act creates Race to the Top Assessment Program based on growth-modeled assessments funded through federal grants to State Education Agencies.

2015

Every Student Succeeds Act (ESSA) continues state accountability with more state flexibility to identify goals and assessments.

Source: Authors (Owings & Kaplan—original table).

that public education was essential to maintaining a representative form of government. This new concept of education for everyone would require the government to collect and spend public monies to reach and teach the widest range of students. Even though the Constitution made education a state responsibility, the federal government heavily promoted and financed education while recognizing the states’ (or territories’) control.

CONCLUSION Since colonial times, Americans have seen education as a public good, and financing public schools has been a state and local responsibility. Likewise, the federal government has always seen investment in public education as in the national interest and has required localities to educate their children. Today, the federal government continues to contribute significant funds to implement its vision for America as a democratic republic and to pay for its children’s education so they may be informed voters and responsible taxpayers.

HISTORY OF SCHOOL FINANCE IN THE U.S.

CASE STUDY An anecdote about Benjamin Franklin responding to an inquisitive woman at the close of the Constitutional Convention of 1787 goes like this: Woman: “Well, Dr. Franklin, what have we got—a Republic or a Monarchy?” Franklin: “A Republic, if you can keep it.”39 The evolution of American public education began in the Massachusetts Bay Colony. Other colonies followed their example. The nation’s founders discussed education’s importance to sustain the new country’s democratic republic form of government. The Northwest Ordinances required territories wanting to join the Union to provide public education for its settlers. Nonetheless, delivering education largely remained a local responsibility. The 20th century saw compulsory attendance laws enacted. Recently, certain views do not espouse compulsory education and challenge the direction education has taken for more than 200 years. For example, Milton Friedman, a Nobelwinning economist has said, “Like most laws, compulsory attendance laws have costs as well as benefits. We no longer believe the benefits justify the costs.”40 Likewise, education privatizers/school choice advocates criticize “big government,” see public schools as a “government monopoly,” and want to redirect taxpayer funds away from public schools and to parents to use to send their children to private and religious schools. Has the cost of education exceeded its benefits? On which side of this issue do you stand? Defend that position.

CHAPTER QUESTIONS/ASSIGNMENTS 1. Not all states appear in Cubberley’s original listing of school conditions. Several states reflect an amalgam of people and ideas, not fitting one distinct pattern. Make a case for the school conditions under which your state was established and discuss whether your state still fits in this category. If it has changed, under what school conditions do you believe your state operates now? Why do you think this is true? 2. Rank the five most influential federal acts affecting education prior to 1870 and explain your reasons for placing these acts in the order you did. 3. Rank the five most influential federal acts affecting education after 1870, and explain your reasons for placing these acts in the order you did. 4. Take a position as to whether the federal role in education has changed for the better or worse in the last 20 years and defend this position. 5. How has the Great Recession and recent widespread tax cuts changed financial allocations in your school district? What challenges still lie ahead for your school district?

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NOTES 1 Barzun, J. (2000). From dawn to decadence: 1500 to the present. New York: HarperCollins. 2 Locke, J. (1693). Some thoughts concerning education. As cited in Modern history sourcebook: John Locke (1632–1704). New York: Fordham University. Retrieved from https://sourcebooks.fordham.edu/mod/1692locke-education.asp#Some%20Thoughts%20 Concerning%20Education 3 Cremin, L.A. (1970). American education: The colonial experience 1607–1783. New York: Harper & Row, p. 67. 4 Kaplan, L.S. & Owings, W.A. (2015). Educational foundations, 2nd ed. Stamford, CT: Cengage Learning, p. 102. 5 As cited in Cubberley, E. (1920). The history of education. Boston, MA: Houghton Mifflin, p. 366. Retrieved from https://archive.org/stream/historyofeducati011713mbp#page/n409/mode/2up/ search/The+child+is+to+be+educated%2C+not+to+advance+his+personal+interests 6 Also known as Selectmen or Councilmen. 7 Cubberley (1920), p. 364. 8 Cubberley (1920). 9 Cubberley (1920), p. 366. 10 Cubberley, E. (1934). Readings in public education in the United States. Boston, MA: Houghton Mifflin, pp. 19–20. 11 Rousseau, J.J. (1758). A discourse of political economy. In The social contract and discourses, translation and introduction by G.D.H. Cole. London: J.M. Dent & Sons, 1973, p. 149. 12 Cubberley wrote what is arguably the best history of education in our country up to 1920. For a detailed reading, see Cubberley, The history of education (1920). 13 Cubberley (1920), p. 364. 14 Cubberley (1920), pp. 371–372. 15 Cubberley, E. (1947). Public education in the United States: A study and interpretation of American educational history. Cambridge, MA: Houghton Mifflin, pp. 97–105. This, along with Cubberley, The history of education, provides an excellent overview of the development of schools in the United States. 16 For a chronological listing of federal legislation, see: Snyder, T.D., de Brey, C., & Dillow, S.A. (2016). Digest of education statistics 2015, 51st ed. [NCES 2016-014]. Washington, DC: National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education, pp. 755–763. Retrieved from https://nces.ed.gov/pubs2016/2016014.pdf 17 Green, S.K. & Mishkin, D.B. (2016, July 5). Brief of Amici Curiae to Trinity Lutheran v. Pauley. Retrieved from www.scotusblog.com/wp-content/uploads/2016/07/15577_amicus_ resp_legal_and_religious_historians.authcheckdam.pdf 18 Boston, R. (2002, September). The Blaine game. Supporters of government aid to religious schools are trying to eliminate state constitutional provisions that stand in their way. Church & State. Retrieved from www.au.org/church-state/september-2002-church-state/featured/ the-blaine-game 19 U.S. Department of Education website. Retrieved from www2.ed.gov/about/overview/focus/ what.html 20 G.I. is a popular nickname for any-and-all things Army-related. In the early 20th century, “G.I.” was the two-letter abbreviation for “galvanized iron” stamped on military trash cans. During World War I, the definition of G.I. broadened and was reinterpreted as “government issue” or “general issue.” In World War II, soldiers mockingly began referring to themselves as “GIs”—humble mass-produced government products. See: Nix, E. (2015). Why are American solders called GIs? History stories. History.com. Retrieved from www.history. com/news/ask-history/why-are-american-soldiers-called-gis 21 If this had happened recently, one imagines whether today’s politicians might have chosen to scrap public schools rather than provide the massive capital infusion as they did with NDEA. 22 For an excellent historical and legal overview of the rights of people with disabilities, see Alexander, K. and Alexander, M. David (2012). American public school law, 8th ed. Belmont, CA: Wadsworth, Cengage Learning.

HISTORY OF SCHOOL FINANCE IN THE U.S. 23 Pennsylvania Association for Retarded Citizens v. Commonwealth, 334 F. Supp., 1257 (E.D. Pa. 1971), 343 F. Supp. 279 (E.D. Pa. 1972). 24 20 U.S.C. 2981. 25 Mills v. Board of Education of the District of Columbia, 348 F. Supp. 866 (D.D.C. 1972). 26 Unfortunately, federal government funding has never reached this goal. According to the National Education Association, funding remains at about 16%. See Litvinov, A. (2015, May 19). How Congress’ underfunding of special education shortchanges us all. National Education Association. Retrieved from http://educationvotes.nea.org/2015/05/19/howcongress-underfunding-of-special-education-shortchanges-us-all/ 27 See Sec. 809, pp. 193–194, Public Law 91-230, April 13, 1970. Retrieved from www.gpo. gov/fdsys/pkg/STATUTE-84/pdf/STATUTE-84-Pg121.pdf 28 Federal spending for elementary and secondary education actually decreased 21% between 1980 and 1985. See Reich, R. (1991). What is a nation? Political Science Quarterly, 106 (2), 193–209. 29 The Act also included funding for postsecondary math and science programs. 30 U.S. Department of Education Race to the Top Program. Retrieved from www2.ed.gov/ programs/racetothetop-assessment/index.html?exp=0 31 Abrams, S.E. (2016). Education and the commercial mindset. Cambridge, MA: Harvard University Press; Burch, P. (2009). Hidden markets: The new education privatization. New York: Routledge; Debray-Pelot, E. H. & McGuinn, P. (2009). The new politics of education: Analyzing the federal education policy landscape in the post-NCLB Era. Educational Policy, 23 (1), 15–42. 32 Friedman, M. (1962). Capitalism and freedom. Chicago, IL: University of Chicago Press; Friedman, M. (1955). The role of government in education. In R.A. Solo (Ed.), Economics and the public interest (pp. 123–144). New Brunswick, NY: Rutgers University Press. Retrieved from http://la.utexas.edu/users/hcleaver/330T/350kPEEFriedmanRoleOfGovtta ble.pdf 33 Cohen, D. (2016). The history of privatization. Talking Points Memo Features. Retrieved from http://talkingpointsmemo.com/features/privatization/one/ 34 Coons, J.E. (1992). School choice as simple justice. First Things. Retrieved from www.firstth ings.com/article/1992/04/001-school-choice-as-simple-justice; Coons, J.E., Sugarman, W.H., & Clune III, S.D. (1970). Private wealth and public education. Cambridge, MA: Harvard University Press; Jencks, C. (1970). Education vouchers: A preliminary report on financing education by payments to parents. Cambridge, MA: Harvard University, The Center for the Study of Public Policy. 35 Heinrich, C.J. (2010). Third-party governance under No Child Left Behind: Accountability and performance management challenges. The State of Agents: A Special Issue. Journal of Public Administration Research and Theory, 20, 59–89; U.S. Department of Education (2004). NCLB executive summary. Washington, DC: Author. Retrieved from www2.ed.gov/ nclb/overview/intro/execsumm.html; U.S. Department of Education (2009, November). Race to the Top program: Executive summary. Washington, DC: Author. Retrieved from www2.ed.gov/programs/racetothetop/executive-summary.pdf 36 Cornman, S.Q., Zhou, I., Howell, M.R., & Young, J. (2018, January). Revenues and expenditures for public elementary and secondary education: School year 2014–2015 (Fiscal Year 2015). FirstLook. (NCES 2018-301). Washington, DC: National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education. Retrieved from https://nces.ed.gov/pubs2018/2018301.pdf 37 Cornman, Zhou, Howell, & Young (2018). Op. cit., p. 2. 38 Chantrill, C. (2018, January 18). K thru 12 and further education. Washington, DC: usgovernmentspending.com. Retrieved from www.usgovernmentspending.com/spending_ chart_1900_2020USp_XXs2li011tcn_21t24t_K_thru12_and_Further_Education 39 McHenry, J. (1787). Notes. Benjamin Franklin Collection. Bartleby.com. As cited in (1906). The American Historical Review, 11, 618. Retrieved from www.bartleby.com/73/1593.html 40 Friedman, M. & Friedman, R. (1980). Free to choose. New York: Harcourt Brace Jovanovich, pp. 161–163.

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CHAPTER

3

Legal Framework for Financing Public Education PSEL STANDARDS: 1, 2, 3, 4, 5, 8, 9

FOCUS QUESTIONS 1 Explain the federal reasoning concerning which government level ultimately should be responsible for education. 2 Identify the first education laws enacted in North America. 3 Discuss the authority by which the federal government becomes involved in states’ education policy, projects, and funding with taxpayer dollars. 4 Explain why the United States relies primarily on property taxes to fund education and why this may not be the schools’ best revenue source. 5

Clarify how the Equal Protection clause of the U.S. Constitution influences the practice of education.

6 Discuss how state constitutional language influences school finance. 7 Summarize the history of states’ “no funding” amendments to their constitutions and explain how it impacts current legal rulings. 8 Describe the rationales underlying court decisions about the constitutionality of vouchers, tuition tax credits, education savings accounts, and 529 accounts. 9 Explain the legal issues about whether or not charter schools are “public” schools, their eligibility to receive taxpayer funding, and their accountability for public funds.

FRAMEWORK FOR FINANCING PUBLIC EDUCATION

This chapter traces the legal framework for financing public education in the United States from the early colonial days to the present.1 Topics include the federal and state constitutional provisions for education; federal fiscal contributions to education; property taxes and education; the standards of Equal Protection and taxation; and state constitutional language and school finance litigation. School choice and related court rulings on vouchers, tuition tax credits, education savings accounts, and financing charter schools also receive attention. Chapter 2 explains how the nation’s founders valued education as an essential footing upon which to build and sustain our democratic republic government. Evidence of commitment to public education is evident in the early federal funding initiatives including the various land ordinances, the sixteenth section, and numerous Congressional acts and appropriations. Chapter 3 addresses the legal framework underpinning the operation of school finance. Although education is a state responsibility, the federal government has a lengthy precedent of providing the states with education policies, programs, and funds.2 Without this federal intervention, many education initiatives might not have been undertaken, and many injustices would have continued longer. Consider Brown v. Board of Education of Topeka (desegregation), Brown II (more desegregation), the Elementary and Secondary Education Act (finance equity), Title IX (gender discrimination), Public Law 94-142 (special education), and many others. Each reflects federal initiatives to improve access to high-quality educational opportunities for all citizens. If the federal government is directing more education practice, as the No Child Left Behind Act, Race to the Top grants, and Every Student Succeeds Act demonstrate, and if federal involvement in education has positively influenced education in general, some may wonder why we do not have a national education system similar to the one in Germany or the United Kingdom. The answer is simple, and it lies in our Constitution.

EDUCATION AND THE CONSTITUTION The first ten amendments to the U.S. Constitution are known as the Bill of Rights. The Tenth Amendment states that the powers that the Constitution does not delegate to the federal government or prohibit altogether are reserved for the states. Education is not mentioned in the first nine amendments. Therefore, the Tenth Amendment makes education a state function by default. The framers secured this compromise to balance the passionate interests of those who wanted a strong federal government (Federalists— Alexander Hamilton’s followers) and those who wanted to preserve states’ rights (Republicans—Thomas Jefferson’s and James Madison’s followers). Today, that dynamic tension still exists: states are not willing to surrender their control of education, and the federal government wants greater accountability for its dollars in the form of student achievement but cannot afford to pay its promised share.3 The Tenth Amendment’s compromise gives each of the 50 states plenary power over education.4 That is, each state is responsible for setting up an educational system and may pass laws it considers desirable toward that end as long as those laws do not conflict with their state or federal constitutions. The courts can only intervene if a

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FRAMEWORK FOR FINANCING PUBLIC EDUCATION

party with legal standing5 raises a challenge based on a legitimate controversy concerning the constitutionality of a state’s or locality’s policy or practice. Over the past decades, federal powers have somewhat reduced the plenary nature of the states’ control of education by using federal taxing power to influence education policy. Each state’s constitution has language that forms the legal framework for organizing the state’s education function.6 All states except Hawaii (and the District of Columbia) delegate much of the responsibility and authority for education to local school boards, coordinated through the State Department of Education, also known as the State Education Agency (SEA). Hawaii operates as a single school district, and education in the District of Columbia is a function of the Mayor’s office (currently 115 schools) and the D.C. Public Charter School Board (currently 120 schools).7 All other states have local school districts or school divisions, also known as the Local Education Agency (LEA). Each state’s constitution’s language about education and each state’s Department of Education policies and regulations control the parameters under which each local school district operates. Arguably, financing education is the most critical issue facing states and the federal government. Table 3.1 provides summary findings of school funding court cases, 1973 to 2017. Until recently, federal courts had been ruling against states in cases involving

TABLE

3.1  Summary of School Funding Court Cases (1973–2017)

Plaintiff Victory

State Defendant Victory

No Cases Filed

Alaska

Alabama

Hawaii

Arizona

Arizona

Mississippi

Arkansas

California

Nevada

California

Colorado

Utah

Connecticut

Connecticut

Idaho

Florida

Kansas

Georgia

Kentucky

Illinois

Louisiana

Indiana

Arkansas

Maryland

Louisiana

Connecticut

Massachusetts

Maine

Delaware

Montana

Michigan

Florida

New Hampshire

Minnesota

Iowa

New Jersey

Missouri

Kansas

New Mexico

Nebraska

New Mexico

Pending*

continued . . .

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New York

Oklahoma

New York

North Carolina

Oregon

Pennsylvania

North Dakota

Rhode Island

South Carolina

Ohio

South Dakota

Tennessee

Pennsylvania

Texas

Washington

South Carolina

Virginia

Tennessee

Wisconsin

Texas Vermont Washington West Virginia Wyoming ∗Pending cases generally involve follow-up compliance decisions or proceedings in states where courts have ruled that a constitutional right to an adequate education exists and that the state’s current education finance system is violating that right. Source: SchoolFunding.Info (2018). Overview of litigation history. New York: Center for Educational Equity at Teachers College, Columbia University. Retrieved from http://schoolfunding.info/litigation-map/. Click on the link for issues and cases.

their education funding formulae, challenging equity and adequacy, a topic discussed fully in Chapter 7. Increasingly, state courts and the U.S. Supreme Court have ruled on cases using public funding to pay for private or religious schools. Court cases on education finance apply guiding legal principles regarding taxation, equal protection, and state constitutional language.

EDUCATION AND TAXATION School revenue from federal, state, and local governments comes from our taxes. As discussed in Chapter 2, the U.S. has a long history of federal taxing and spending to pay for education services. Colonists enacted the first public school laws well before the Revolutionary War, taxing the Massachusetts Bay Colony’s citizens to raise the necessary funds for education services, Ye Olde Deluder Satan laws of 1647. Moving ahead more than 125 years, Section 8 of Article 1 of the U.S. Constitution gives Congress the authority to tax and spend. In part, the article reads, “The Congress shall have Power to lay and collect Taxes, Duties, and Imports and Excises, to pay the Debts and provide for the common Defense and General Welfare of the United States.”8 At the time, a rather substantial constitutional debate ensued about what the General Welfare clause actually meant.

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Some, like James Madison, held a narrow interpretation. He believed that “general welfare” referred only to those powers mentioned in the same section (Section 8) of the Constitution. In contrast, Alexander Hamilton and others believed the clause gave Congress broad and substantial power to tax and spend for purposes that would enhance the new nation’s general welfare. The Supreme Court finally sided with Alexander Hamilton’s broader idea, giving Congress wide-ranging powers to tax and spend for the general welfare of the United States.9 That interpretation seems rather simple now, but it was a contentious issue for the new government. At the state level, the Supreme Court has ruled that states have taxing power “to resort to all reasonable forms of taxation in order to defray government expenses.”10 Further, the Court said, “Unless restrained by provisions of the Federal Constitution, the power of the state as to the mode, form, and extent of taxation is unlimited.”11

Federal Control of the State’s Education Function Many ask how the federal government can intrude into education policy when it is clearly a state function. The federal government derives its authority to enter the states’ education purview from three sources: (1) the states’ agreement in accepting federal grants provided under the authority that the General Welfare clause gives the Congress; (2) Congressionally authorized standards and regulations within the Commerce clause; and (3) court-constrained actions enforcing federal constitutional provisions protecting individual rights and freedoms.12 In other words, the federal government can become involved with the states’ education policies and programs only under certain constitutional conditions. The provisions cannot be coercive, and the legislation has to specifically say what the state is agreeing to by accepting the money. First, the federal government has legal standing when the state has accepted a federal grant (e.g., Drug-Free Schools), and the grant’s provisions require the state to comply with certain federal guidelines if it accepts the grant monies. Should states and localities not comply, the federal government can become involved and force compliance, withdraw grant monies, or require repayment of funds. Second, federal involvement with local school issues could occur if states take action that affects the Commerce clause as in the case of United States v. Lopez (1995).13 In this case, the U.S. Congress made it a federal crime to have a gun within a defined geographic area known as a school zone. A Texas high school student brought a loaded pistol to school and was charged under state law with possessing a firearm on school property. The next day, the state dismissed the charges after federal authorities charged the student with violating the federal Gun-Free School Zone Act of 1990.14 Initially the student was found guilty, but the Fifth Circuit Court of Appeals reversed the lower court decision, agreeing with the appellant’s argument that the law was unconstitutional. On further appeal, the U.S. Supreme Court affirmed the Fifth Circuit’s ruling, explaining that Congress had exceeded its authority by using the Commerce clause to control gun possession around school zones.15 Third, federal involvement can occur if an action restricts rights or freedoms guaranteed in the U.S. Constitution as in Tinker v. Des Moines Independent Community School District (1969).16 In this case, the school administration heard that a group of

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students was planning to wear black armbands to school to protest the Vietnam War. The administrators hastily wrote a policy that wearing black armbands was a suspendable offense. When the transgressing students wearing black armbands appeared at school, they were suspended. Eventually, the suit reached the Supreme Court which ruled that a school policy cannot outweigh a fundamental right, such as the freedom of expression (speech), without reasonable knowledge that such an act of expression would have foreseeably caused a substantial disruption to the school process. Obviously, fundamental rights such as those in the Bill of Rights apply in all 50 states. Other provisions apply in states only when grant funds are accepted, and the terms of the grant include accepting certain provisions.

Federal Contribution to Education How much money does the federal government contribute to state and local education agencies in education grants to gain some degree of control over the state function? Historically, the federal government contributes, on average, about 10% of total education spending. Figure 3.1 shows the revenue figures from federal, state, and local sources from 2003–04 to 2013–14. Since the Great Recession of 2009, states have tended to reduce education spending, leaving localities with the choice of reducing services or increasing local taxes for education. According to The Condition of Education 2017 (Figure 3.1), federal sources contributed 9% of PK–12 public school revenues (approximately $55 billion), states Revenues (in billions) $700 Tota l 600

500

400 State 300 Local 200 Federal 100

0 2003–04

2005–06

2007–08

2009–10

2011–12

2013–14

School year

FIGURE

3.1  Sources of Education Revenue, 2003–14

Note: Revenues are in constant 2015–16 dollars, adjusted using the Consumer Price Index (CPI). See Digest of Education Statistics 2016, Table 106.70. Source: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD). National Public Education Financial Survey 2003–04 through 2013–14. See Digest of Education Statistics 2016, Table 235.10.

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contributed 46% (approximately $292 billion) and local sources provided 45% (approximately $284 billion).17 The federal government’s 9% figure includes educational spending not only from the Department of Education (DOE) but also from other federal agencies, such as the Department of Health and Human Services for the Head Start program and the Department of Agriculture for the School Lunch program. Notably, federal revenues were 56% higher in 2009–10, the first school year after passing the American Recovery and Reinvestment Act of 2009, than in 2003–04 ($84 billion versus $54 billion), peaking at $84 billion in 2009–10. Federal revenues then decreased each year, falling by 34% to $55 billion from 2009–10 through 2013–14. Overall, between school years 2003–04 and 2013–14, the percentage of total revenues coming from federal sources fluctuated between 8 and 13%, averaging 9% of total school revenues.18 Even at approximately 9%, the federal portion of revenue to public schools provides sizeable assets to the overall education function. By accepting these federal funds, states and localities surrender some of their power to operate the schools in their state or locality as they want. As the federal government places restrictions on funding, states lose some of their plenary power over education and adopt more of a federal policy perspective and practices.

State Prerogatives and Education States may tax what they wish as long as it does not conflict with federal law or with the state’s constitution. School districts have no inherent capacity to tax unless the state’s constitutional language specifically permits such taxing authority. Robust legal precedent exists for state constitutional language to be strong and clear about when a state, through legislative action, delegates the taxing authority to school boards.19 Some states have enacted legislation that gives school districts the legal authority to levy taxes for school budgets. Such districts are called fiscally autonomous. Other states do not provide school districts with the authority to levy taxes for schools. They are categorized as fiscally dependent. In these latter states, the districts must wait for a governing body to approve a school budget as one part of a city or county budget. The governing body must then set the tax rate, levy taxes, and apportion those funds to the local school district. This issue has been contested as recently as 1993 in Florida.20 In this case, the Florida Supreme Court ruled that the School Board of Sarasota County required legal authorization by the state legislature to levy school taxes. Absent the specific authorization, the school board could not direct the county tax collector to collect and remit school taxes. Not all states tax to support public schools in the same manner. To complicate matters, some states’ constitutional language prohibits taxing certain items. For example, certain states do not have a state income tax. Others do not have a state sales tax. Some states tax all purchases, and others exempt food and medicines from taxes. Pennsylvania has a unique legislative provision called the “Tax Anything Act” that provided local governments with greater tax collection equity by moving beyond property taxes as government’s primary revenue source.21 The “Tax Anything Act” takes the idea of state prerogatives to an unsurpassed level. Nonetheless, virtually all states

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traditionally rely on one primary revenue source to finance public school operations— property taxes—dating back in our country to the Massachusetts law of 1647.

Property Taxes and Education Taxing property to support education has precedent that goes back much further than Massachusetts’s’ Ye Olde Deluder Satan Act; it dates back to ancient Greece. In Athens, the Greeks taxed land and houses. Later, the Roman government taxed people and property. Early Europeans taxed land, homes, and livestock. Therefore, taxing property owners for education in the Massachusetts Bay Colony was not a new idea but rather an extension of prior practice.22 In the 1800s, taxing property became the established means for funding schools in the United States. In the early 19th century, governing bodies imposed property taxes differently than is common practice today. Then, localities taxed land at varying rates if it were cleared, uncleared, or cultivated. As the century continued, taxing agencies saw livestock and equipment as additional sources of taxable property. Taxing property and equipment at different rates became increasingly complex for localities. For example, Farmer Brown and Farmer Jones both own 40 cleared acres for planting. Farmer Brown’s land produces 100 bushels of wheat per acre, but Farmer Jones’s land only produces 50 bushels per acre. Should both parcels be taxed at the same rate just because they are both cleared? What if hard-working Farmer Brown is a better farmer than lazy Farmer Jones who knows little about agriculture or 12-hour workdays? Taxing both 40-acre parcels at the same rate would seem to penalize one farmer for being a knowledgeable, hard-working farmer and reward the other for being lazy. Would income produced from the property be a more appropriate vehicle for taxation? Extending this example, both farmers bought their plows and disc blades at the same time. Farmer Brown keeps his equipment in good working order, but Farmer Jones never maintains his equipment. Should Farmer Jones pay lower taxes on his equipment because it is in poor condition? Does that practice reward Farmer Jones for being a poor caretaker of his machinery? Should the equipment be taxed on its value or just on a flat fee? This complexity led to a uniform general property tax based on a percentage of the land’s worth. This provided for taxation based on the property’s value, not on whether the land was cleared or wooded, well or poorly managed. In this case, the government assesses and taxes land and property at a set rate according to its fair market value. If Farmer Brown’s land were worth more than Farmer Jones’s land, Farmer Brown would pay more property taxes on that land. The tax rate would be uniform throughout the state or locality, however. Personal work habits would not factor into the land’s worth.

EQUAL PROTECTION AND TAXATION Once governing bodies establish a revenue source, for instance, taxing property at a uniform rate and under strict state constitution language, they must decide how to

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distribute that revenue to school districts. The Fourteenth Amendment offers guidance in how to apply these laws and regulations. Ratified in 1868, the Fourteenth Amendment reads: Section 1. All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article. The Civil War had ended three years earlier, and the country was trying to decide how to legally and respectfully accommodate the newly freed slaves. The Fourteenth Amendment tried to legislate civil rights by defining national citizenship and forbidding states from restricting basic rights of citizens or other persons. The Fourteenth Amendment’s ramifications were very far reaching and affect the legal framework of education to this day. The Supreme Court took a leading role in defining “equal protection” of state taxation issues. In 1890, the Supreme Court described the Equal Protection clause as a limitation on state revenue. Here, the Court determined that the Equal Protection clause established a minimum standard of uniformity to which state legislation must adhere and devised a “test” to determine the constitutionality of state taxation.23 As stated by Justice Jackson, Equal protection does not require identity of treatment. It only requires that classification rest on real and not feigned differences, that the distinction have some relevance to the purpose for which the classification is made, and the different treatment be not so disparate, relative to the difference in classification, as to be wholly arbitrary.24 The Court ruled that states required a credible rationale for spending collected tax dollars differently for different groups of people. In other words, once a state has collected taxes, if it spends the monies differently for school districts serving children from affluent families as compared with school districts serving children from low-income families, the state must make a good faith effort to link those spending differences to a legitimate purpose for which they were raised. After this ruling, most states provided language in their state constitutions regarding equal protection provisions for their citizens. Fast forward, the Civil Rights Act of 1964 contained ground-breaking language regarding race and discrimination under equal protection auspices.25 Now, the law linked the Equal Protection clause to federal spending. In 1965, Congress wrote that education was a constitutionally protected right of all citizens that should be provided to all citizens on equal terms. Following that logic, if a state gave fewer dollars to poor

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school districts than to wealthy ones, the state denied poorer children equal protection under the law.26 Because the Supreme Court had already ruled that it was unreasonable to classify people on the basis of poverty, occupation, or home site, it held that a state could not base educational quality on a state or local taxing system where a locality’s wealth determined the education level.27 Following this logic and legislation, plaintiffs litigated two court cases under the Fourteenth Amendment’s Equal Protection clause and education spending: Mclnnis v. Shapiro (1968) in Illinois and Burruss v. Wilkerson (1969) in Virginia.28 Both cases argued that education was a fundamental right and a state responsibility. Both cases used the Equal Protection clause to challenge the constitutionality of state education spending across the various school districts, citing large disparities in the districts’ ability to fund education within their respective states. Both cases contended that spending was based on local wealth and not on educational need. This funding disparity resulted in wealthy school districts spending more to meet student needs than did poorer districts whose students had greater educational need than those in the affluent districts. Nonetheless, in both instances, the federal district courts ruled against the parents and for the existing funding practices in Illinois and Virginia, saying that the Fourteenth Amendment did not require equal expenditures. Moreover, the plaintiffs could not define a court-requested reasonable standard to assess and measure educational need. At that time, little consensus or research existed to answer the court’s questions about measuring need. Because the court could not address these ideas concerning educational need, it refused to declare the states’ finance systems to be unconstitutional. In Mclnnis, the federal district court stated that there were “no discoverable and manageable standards by which a court can determine when the Constitution is satisfied and when it is violated.”29 The U.S. Supreme Court affirmed both cases without offering an opinion or statement. This vagueness left many legal and finance scholars unclear about the Court’s rationale in the decisions. Soon after these two cases, a California Supreme Court case challenged the California school funding formula in Serrano v. Priest (1971).30 Here, the court first determined that education was a fundamental interest. Second, it determined that the California funding model’s basic state aid did tend to equalize among the disparate school districts. Third, the court determined that the state funding model generated combined state and local funds in such a manner that it created substantial disparities in school revenue—proportional to the property wealth of the individual school. The court found property wealth to be a suspect classification. A suspect classification denotes a group of people who have been historically subject to discrimination—based on race, ethnicity, religion, national origin, or other factor—and treated unequally without a compelling reason. Although the law had remained mostly silent on the issue of race until the Brown v. Board of Education of Topeka, Kansas decision in 1954,31 the Brown decision shifted the legal perspective by making race a suspect classification. Accordingly, in Serrano v. Priest (1971), when the California Supreme Court ruled that the California funding model gave a greater share of funding to the wealthier school districts and less money to the poorer districts, it discriminated against people with lower property values. Property wealth was now a suspect classification. After careful deliberation, the

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court declared the California funding model to be unconstitutional under the Equal Protection clause and the California constitution. However, this was to be a short-lived victory for poor communities and their schools. Following the logic and ruling of Serrano, a federal district court in Texas concluded that the Texas finance model denied equal protection of the law to the plaintiffs. Several Mexican American parents from the Edgewood Independent School District sued regarding the Texas education funding system. The plaintiffs argued that the Texas education funding model made educational quality a function of the local property tax base and that state funding was insufficient to correct the inherent inequalities. The three-judge federal court panel declared that education is a state function and that the quality of education should not be determined by the locality’s wealth but by the state’s overall wealth. The panel of judges concluded that the Texas funding model assumed incorrectly that property wealth in the school districts was sufficiently equal to allow for comparable spending throughout the state. The panel’s ruling meant that the locality’s quality of education should be based on the state’s— not the district’s—wealth. The U.S. Supreme Court did not see the case the same way, however. It accepted the school district’s appeal in San Antonio Independent School District v. Rodriguez (1973) in what was to become a federal landmark decision in school finance litigation.32 The Court overturned the three-judge panel’s ruling, deciding that the Texas funding formula’s wide disparities did not violate the Fourteenth Amendment’s Equal Protection clause. Justice Lewis Powell wrote that education could not be considered a fundamental right as had been assumed from the Brown v. Board of Education case because education was not among the rights guaranteed by the federal constitution.33 For that reason, the case did not warrant “strict scrutiny” in its review. Instead, the Court would defer to the legislatures’ wisdom in such matters. For all intents and purposes, litigation for school finance reform under the federal Equal Protection clause umbrella ended with Rodriguez. Future school funding litigation would be restricted to state courts and state equal protection provisions in state constitutions.

Standards of Equal Protection How do courts rule whether a government’s differential treatment of individuals is constitutional? How do courts decide whether government actions that treat individuals differently for any reason violate the Equal Protection clause? Clearly, people can be treated differently under the law. Over time, judicial reasoning has developed a rationale for litigating cases under the Equal Protection clause. This rationale includes three conditions.34 First, the action must affect a suspect discrete class of deprived persons. Second, the actions must deny benefits to these deprived individuals that are available to others. Third, the act of denial must adversely affect a fundamental right. The U.S. Supreme Court concluded that these three conditions were not present in Rodriguez, allowing the Court to rule that the Texas funding system was constitutional. In other words, in Rodriguez, the Court reversed California’s declaration that wealth was a suspect class. Using this

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definition, the Court opined that poor districts did not only have poor residents and wealthy districts did not have only wealthy residents. In the justices’ view, there was nothing distinctive and uniform about districts based on property wealth and, therefore, property wealth could not be a suspect class. Plainly, the government can act in ways that treat people differently. What metrics do the courts use to determine the constitutionality of the government’s action that treats individuals differently? Three judicial tests answer this question: the rational relationship test, the intermediate test, and the strict scrutiny test. The Rational Relationship Test This test asks whether the government had a rational reason for treating individuals differently that does not violate the U.S. Constitution. Is the law rationally related to a legitimate government interest? For instance, is it rational for a state to require those wishing to practice medicine within their jurisdiction to hold a valid medical license? Using this test, the court recognizes that it has no greater institutional capability to assess the different treatment’s “reasonableness” than the legislative body that wrote the law authorizing it. The court asks only whether a reasonable basis for the differential treatment exists and if it bears a sensible relationship to why people are receiving different treatment. With the rational relationship test, the court usually upholds the state’s action. The court is not looking for scientific data to substantiate the claim. Rather, they are looking only for a reasonable connection between the state’s action and the purpose for taking it. Here, the court always presumes that the government’s action is constitutional, and the burden to demonstrate otherwise falls on the plaintiffs. For example, under increasing pressure to provide more state funds to highpoverty school districts, a state adopts a new equalization funding formula for distributing monies to the various school districts so that the poorer districts get more state monies than they had in the past. The new action also provides for fewer state dollars to the richer school districts than they had received previously. Plaintiffs, dissatisfied that the legislation doesn’t go far enough, challenge the state’s new funding formula in court as unconstitutional under the Equal Protection clause. They argue that the funding model continues to allow for an excessive disparity in perpupil spending for education. Moreover, they maintain that the funding model does not equalize spending sufficiently to provide enough funding for the state’s poorest school districts. If the plaintiffs meet their burden of demonstrating that there are significant disparities and under the rational relationship test, the court then would ask the state to explain its rationale for establishing the funding formula in the manner it did. Using the rational relationship test, the court accepts that the judicial body does not have the knowledge, the means, or the authority to understand or develop a superior funding model as long as the state has a rational explanation for taking the action it did.35 As long as the state has a logical reason or explanation for its actions, the court would find the funding formula constitutional because the state had a sensible justification for its action.

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The Intermediate Scrutiny Test The second test “ratchets up” the government’s reasoning for treating individuals differently. This test does not presume constitutionality. Instead of requiring the state’s treatment to be based solely on a rational relationship or explanation, the court asks for (1) evidence of some substantial government interest for taking the action, and (2) the action must be substantially related to that important interest. Courts have applied this test in equal protection challenges to gender classifications (e.g., in sex discrimination cases and to overturn many policies that treated women differently from men).36 The intermediate test has also been used in First Amendment cases. Applying the intermediate test, the court would review the state’s rationale for the action, for example, in implementing the new funding formula described in the rational relationship test. The court would ask more questions about whether or not the state’s action advances a substantial government interest and whether the means of accomplishing this is substantially related to this interest. If the funding formula shows a large portion of monies flowing from wealthy school districts to poorer ones, the state will have to prove that this new funding formula and how it is being done is meeting an important state interest. Using the intermediate test, courts examine the state’s action more closely than in the rational relationship test. If the courts are to uphold it, the state must give evidence of a greater level of government interest in taking a particular action that treats individuals differently. The intermediate test is not as stringent as the third test, strict scrutiny. The Strict Scrutiny Test Using the strict scrutiny test, the government assumes the greatest burden for justifying why it treats individuals differently. At this highest level of judicial analysis, the government must show a “compelling” or overriding state interest in treating individuals differently, and the government must prove that no less discriminatory manner exists to accomplish this prevailing interest. Constitutionality of the legislation in question is not presumed. Courts invoke strict scrutiny in two circumstances only: (1) when it affects a fundamental right and (2) when the plaintiff is a member of a suspect class of individuals. In strict scrutiny, unlike the rational relationship test, the court will not defer to the legislative body’s ability or justification for taking the action. The Rodriguez case from Texas referred to these terms. In that case, the Supreme Court determined that education was not a fundamental right under the federal constitution and, therefore, the state’s action did not warrant a strict scrutiny review. Because the courts invoke strict scrutiny when cases affect fundamental rights or when the government creates a suspect classification of individuals, understanding these terms will be helpful. Fundamental Rights The first instance invoking strict scrutiny involves fundamental rights—or fundamentality. Fundamental rights are those civil liberties that the U.S. Constitution guarantees under the Equal Protection clause and that merit a high degree of protection from government encroachment. Briefly, these include life, liberty, and

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property and those rights contained in the Bill of Rights: freedom of speech, press, religion, assembly, the right to substantive and procedural due process, and others. Denying fundamental rights requires a higher and stricter level of judicial examination. Many of these rights and others may be guaranteed under state constitutions, as well. For instance, most state constitutions, like Virginia, guarantee religious freedom, equal protection, and due process. State courts will use the strict scrutiny analysis in the same way as federal courts if the same conditions are met. Suspect Classification The second case involving strict scrutiny is when a government’s action creates a suspect classification of individuals. The Constitution prohibits unequal treatment of individuals under the law based on different classifications. Religion is one of these classifications. The Constitution is silent on some other classifications. Nonetheless, the U.S. Supreme Court has carved out suspect classifications through case law. For example, the 1954 U.S. Supreme Court decision, Brown v. Board of Education, made race a suspect classification. The Brown ruling on school segregation found that state laws denied equal protection under the law to a group of people. The laws, known as “separate but equal” provisions, created by the U.S. Supreme Court in Plessy v. Ferguson,37 were inherently unequal. With the Brown decision, unequal protection under the law based on race as a suspect classification became illegal. The Civil Rights Act of 1964 added other suspect classifications. In another strict scrutiny example, if a state’s current school funding formula did not provide sufficient money for the poorest school districts, the government would have to withstand strict scrutiny by the courts to allow the funding formula to stand. Not deferring to any other branch of government’s decision, the court would examine the formula and require the government to plainly demonstrate that keeping the old formula achieves a compelling state interest to such a degree that doing so justifies the limitation of fundamental rights to certain citizens.

Judicial Standards in Practice Application of these three judicial standards (rational relationship, intermediate scrutiny, and strict scrutiny) appears in two cases previously reviewed—Serrano and Rodriguez. In Serrano v. Priest, the California Supreme Court examined the school finance issue carefully. They applied the strict scrutiny standard in evaluating the situation for two reasons. First, the state Supreme Court determined that education was a fundamental right based on judicial language in the 1954 Brown v. Board of Education case. Second, the California Supreme Court also decided that property wealth created a suspect classification of individuals. Applying the strict scrutiny standard, the Court found the California finance model to be unconstitutional. In San Antonio Independent School District v. Rodriguez, the Texas court arrived at the same conclusion. Nonetheless, when this issue came to the U.S. Supreme Court by way of the Rodriguez case, the highest court did not see the issues in this light. The U.S. Supreme Court reversed the Rodriguez decision, which also required the California Supreme Court to revisit its ruling. Justice Powell, writing for the Court majority, maintained that education was not a fundamental right afforded by the Constitution under the

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Equal Protection clause as the Texas Supreme Court presumed from Brown. Powell further observed that “within the limits of rationality the legislature’s efforts to tackle the problems should be entitled to respect.”38 This perspective forced the Court to revert to a lower standard for examining the case—the rational relationship test instead of strict scrutiny.

STATE CONSTITUTIONAL LANGUAGE AND SCHOOL FINANCE Each state constitution has language that frames how it will treat education. This language is generally known as the state’s education clause. In such a clause, wording is important not only philosophically but legally. In fact, state education clauses have been the basis for many legal challenges to state school finance models. In many cases, the constitutional wording has been responsible for an entire state’s redesigning how its schools operate and receive funding. State constitutional wording is extremely important. Historically, many New England states used the word “cherish” in their education clauses. By referencing this as the “cherish clause,” legislators affirmed education’s value to society and to those who govern them. By historical precedent and legal wording, education contributes greatly to the civic good. Likewise, states use various adjectives in their constitutions’ education clauses that suggest the framers’ intentions and may impact how courts respond to legal challenges. Some states describe education as a “system.” Other states use words such as “effective,” “thorough,” or “uniform” to describe their education organization. Virginia uses the term “efficient.” In 1989, the Kentucky Supreme Court referenced the words “efficient system of common schools” in its state constitution’s education clause as a basis to invalidate the entire public school structure in Rose v. The Council for Better Education.39 In the Rose case, Chief Justice Robert F. Stephens asserted that the Kentucky General Assembly had fallen short of its responsibility to provide for an “efficient” system of common schools. He wrote that the common school system in Kentucky was constitutionally deficient, and the General Assembly was required to re-create and re-establish a system of common schools in conjunction with the parameters the Court outlined.40 In this instance, the word “efficient” in the state constitution affected a legal decision and an entire state’s education system. The resulting legislation is known as the Kentucky Education Reform Act, or KERA. In defining “efficient,” Chief Justice Stephens noted that the basis for “efficient” in this context meant “a substantial uniform system” of “nonpartisan and non-sectarian” public schools with “equal facilities without discrimination between different sections of a district or county.”41 Justice Stephens’s discussion about efficient and equality addresses a concept called equity. Education does not strive for equality. As educators, we do not treat all of our students in the same manner but instead provide the services students need. For instance, no effective fourth-grade teacher would teach the basic unit on “Skin, Muscles, and Bones” if all the students already knew all the material. That would be a

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waste of time. Similarly, not every student needs one hour of reading instruction daily; some may require more, and others may need less. Equity addresses the means to bring all students to high achievement levels by meeting different learning needs in ways that promote each student’s success. We will discuss equity, adequacy, and fiscal efficiency in Chapter 7.

Funding for Vouchers, States’ Constitutional Language, and the Courts School choice, sometimes called education privatization, has been a contentious issue in American education since before nationhood. Although early New England colonists started and funded public schools for both religious and practical ends, by 1750, the culture had become more secular; and communities wanted their schools to be more secular, too. By 1820, the public schools’ mission had become an issue of heated debate among those not wanting to pay taxes for public schools, conservative Protestant ministers arguing for religious schools to maintain church influence, and those wanting children to have a more practical, worldly education.42 By 1850, conservative thought contended that if taxpayers were not pleased with their public schools, they should be allowed to have that portion of school taxes returned so those funds could be applied to providing an education more closely aligned with the parents’ wishes.43 Taking their portion of public funds and using the monies to attend schools more to their liking is essentially what contemporary vouchers, tax credit scholarships, education savings accounts, expanded 529 plans, and charter schools advocates try to do. We’ll define these terms, show how they may conflict with state constitutional language, and see how they fare in court. Vouchers, sometimes called “funded scholarships,” are certificates for a fixed amount of public subsidy that parents can use to enroll their child in any school the parents choose that accepts vouchers, including private and religious schools. Typically, the state issuing the voucher caps the amounts at a particular dollar threshold that may or may not cover tuition costs at private schools. In 2002, in Zelman v. SimmonsHarris, the U.S. Supreme Court ruled that vouchers could be used to pay for tuition at private religious schools as long as it is the parents’ choice to do so.44 As of this writing, 15 states and the District of Columbia operate one or more voucher programs45 with over 153,000 students attending school on state-sponsored vouchers during the 2015–16 school year.46 Tax credit scholarships (TCS) or tuition tax credits, allow individuals or corporations (or both) to receive state income tax credits or deductions for “donations” to non-profit organizations that issue scholarships to PK–12 students to attend private schools. Students use the “scholarships” to pay tuition, fees, and related expenses from a list of “approved” private schools, including religion-affiliated schools and, in some states, public schools outside their home district. Meanwhile, “donors” can deduct these dollars as charitable contributions from their state and federal income taxes, reducing their tax liability.47 Twenty states have established TCS programs, diverting a total of over $1 billion per year away from state treasuries and toward private schools.48

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In Mueller v. Allen (1983), the U.S. Supreme Court ruled that state tax deductions (tuition tax credits) allowed to the parents of parochial school children for expenses incurred in education did not violate the First Amendment’s Establishment clause.49 The court reasoned that the tax benefit was neutrally available because parents of both public and parochial school children could receive the tax deduction—even though religious institutions received the primary benefits. Further, the deduction involved a state tax—not federal taxes. Education savings accounts (ESA) are fiscal programs into which the state sets aside money, usually based on a per pupil funding formula, into individual (bank) accounts for participating PK–12 students. Parents or guardians can manage and withdraw those dollars to spend on approved educational expenses, including private school tuition, home schooling, tutoring, curriculum materials, online courses, contracted public school courses, standardized test fees, transportation, or types of educational therapy, such as speech therapy. Parents also can save unused ESA funds for future PK–12 and higher education expenses. At present, six states have enacted ESA programs.50 529 Plans, formerly tax-advantaged college investment (savings) accounts, allowed parents and grandparents to contribute to their child’s college savings and deduct their annual contributions for “qualifying expenses” (including tuition, books, fees, supplies, and some room and board) from their income taxes. Since December 2017, the Tax Cuts and Jobs Act expands 529 accounts to include private and religious PK–12 schooling.51 The new law allows parents to deduct up to $10,000 a year from personal state and local taxes for PK–12 tuition and other school expenses. More than 30 states allow some kind of tax deduction or credit contributions into 529 accounts.52

“No-Funding” (Blaine) Amendments in State Constitutions Often, state constitutional language prohibits sending public funds to support private religious schools. In fact, these “no-funding” amendments have been used 11 times from 2006 to 2016 to exclude religious schools from school choice voucher programs in courtroom arguments both for and against school choice financing plans.53 At least 37 states have constitutional provisions prohibiting public aid for religious schools.54 States’ “no-aid” provisions vary in their restrictiveness. Some forbid funding of religious education whereas others more broadly bar funding of all religious organizations. Some ban only direct funding; others prohibit both direct and indirect funding to any religious organization. Sometimes (often mistakenly) called Blaine Amendments, these “no-aid” or “nofunding” clauses were assumed to be named after an unsuccessful 1876 effort by U.S. Congressman James G. Blaine to amend the U.S. Constitution to prohibit public funding of religious schools and bar states from establishing an official religion. School choice advocates tend to depict all “no-aid” provisions as “Blaine Amendments” to highlight their anti-Catholic or antireligious origins and thereby affirm their unworthiness of judicial support today. But since disputes exist about these “no-funding” provisions’ actual origins in state constitutions, painting all “no-funding” clauses as Blaine Amendments with a broad brush is misleading.

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History of “No-Funding” Clauses Some assert that the “no-funding” clauses arose as early 19th-century thought leaders tried to define the federal government’s role in public education, a controversy occurring in many locales.55 This larger “School Question” debate included three issues: (1) whether schooling should be universal for children of all social and economic classes; (2) how to ensure the growing public education system’s financial security; and (3) whether education should be secular, nonsectarian, or more religious. This debate continued onand-off for the next 50 years.56 In 1835, Michigan became the first state to explicitly adopt a “no-funding” provision, despite its lack of large numbers of Catholic immigrants or Catholic parochial schools.57 It became a model for “no-funding” constitutional provisions in many other states that lacked significant conflicts over parochial school aid.58 By the 1870s, many proposals for education-related constitutional amendments arose, most of which sprang from causes other than anti-Catholic bias and any of which may have influenced later proposals. Many states simply “borrowed” language from other states’ constitutions when drafting their own, unaware of their possibly tainted origins.59 During the same mid-19th-century period, popular support for the separation of church and state become a secular “American” principle. This widespread sentiment swayed mid-century legislators to resist Catholic bishops’ demands either to remove nonsectarian Protestant prayers from public schools or give public monies to support their own parochial schools.60 As a result of these varied views, many inaccurately credit the unsuccessful 1876 Blaine Amendment as the model for 33 states that later included similar “no-funding” language in their constitutions, either voluntarily or as a condition of entering the union.61 In most likelihood, all these themes—and others—contributed to states placing “no-funding” clauses into their constitutions. Historical scholarship offers little help in determining the original intent of each “nofunding” amendment. No one recorded state constitution convention debates verbatim; few records exist. Scholars even disagree about the definition of Blaine Amendments and how many currently exist in state constitutions.62 One contemporary study of the language involving funding to religious institutions in all 50 state constitutions concludes that the federal Blaine Amendment’s influence “is indirect and difficult to trace.”63 Therefore, it is impossible to know with certainty whether states adopted “no-funding” provisions for secular or anti-Catholic reasons or a combination of motives. Notable “No-Funding” (Blaine) Court Cases Voucher advocates have often faced court challenges by plaintiffs citing their state’s “no-funding” clauses. Some have even reached the U.S. Supreme Court. In 1995, the Ohio state legislature enacted two educational assistance programs for parents of children in the struggling Cleveland Public Schools—tuition scholarships and tuition assistance grants. These voucher funds could be used to pay for tuition at eligible private schools in the Cleveland Public School District area or at participating public schools in adjacent districts. In 1999, the Ohio State Supreme Court overturned the program on a technicality. An injunction stopped the overturn ruling. The case,

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Zelman v. Simmons-Harris (1999) was appealed to the federal court, which ruled the program unconstitutional.64 The case eventually reached the U.S. Supreme Court. In 2002, the U.S. Supreme Court ruled in Zelman v. Simmons-Harris that Ohio’s pilot program giving state-funded vouchers to parents in the Cleveland City School District to pay for their children’s tuition in private religious schools was constitutional; it did not violate the Establishment Clause of the U.S. Constitution.65 Justices reasoned that since parents could freely choose among participating schools—religious schools, private secular schools, and public schools—the state remained religiously neutral. They held this conclusion despite the fact that 82% of Cleveland’s participating schools were religious schools, and 96% of the students participating in the scholarship program were enrolled in religiously affiliated schools. Nonetheless, justices noted the “consistent distinction” between government programs that provide direct aid to religious schools and programs of “true private choice” in which government aid indirectly reaches religious schools. Any perceived endorsement of religion, therefore, came from individuals, not the government. With this decision, the Supreme Court affirmed that states may create voucher programs under certain conditions, essentially moving the issue from the federal courts to state courts and legislatures. In response to Zelman’s favorable ruling, voucher advocates in several states filed lawsuits seeking to remove state constitutional roadblocks to school choice programs with their ultimate goal of returning to the U.S. Supreme Court. They argued that parents’ First Amendment guarantees of free speech and free exercise of religion and the Fourteenth Amendment right to equal protection under the law were grounds to support their claims.66 Another U.S. Supreme Court case involving vouchers occurred two years later. In 1999, the Washington state legislature created the Promise Scholarship to assist low-income, academically gifted students with postsecondary education expenses. Washington’s state constitution bars funding religious instruction. In a bit of legal jujitsu, the U.S. Supreme Court held in Locke v. Davey (2004) that Washington State could deny a Washington State Promise Scholarship to a student who wanted to pursue a degree in “devotional theology” (to become a pastor) without violating the student’s First Amendment free exercise rights. Although the scholarship program could pay for students to attend a religious school and take religion courses, the Court found that the state’s “substantial” interest in not funding the clergy, an act that would constitute a “hallmark of an ‘established religion,’” justified the program’s exclusion in this circumstance. Justices affirmed that this interest was not the same as hostility toward religion. The Court also held that state constitutions may extend greater religion–state separation and greater guarantees of religious liberty to state citizens beyond those enshrined in the federal constitution. Notably, in a footnote, the Court stated that the provision in dispute here was not a Blaine Amendment.67 After Zelman and Davey, it remains unclear about whether state or federal free exercise clauses would allow a state to exclude religious schools from participating in a school choice voucher program. Circuit courts have ruled differently on cases with nearly identical facts.68 Both school choice opponents and advocates have used socalled “Blaine Amendments” to argue contesting sides of the argument. Several state

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supreme courts have upheld school choice programs by reinterpreting their no-funding language or evading their implications.69 Court rulings concerning vouchers also vary depending on the route, direct or indirect, by which taxpayer dollars become public subsidies to attend private schools. In 1999, the Florida legislature passed the nation’s first statewide voucher program. The Opportunity Scholarship Program (OSP) allowed students at schools labeled “failing” for two out of four years to receive a voucher permitting them to attend a participating private or neighboring public school. The transfer of appropriated funds from the student’s former school district financed the voucher. Public school parents and several interest organizations filed suit. In 2006, in Bush v. Holmes, the Florida Supreme Court ruled the voucher program as unconstitutional, violating the state’s educational clause that affirmed the state’s duty to provide a high-quality system of education through a system of free public schools that may not be delegated to private providers.70 In 2012, in an unsuccessful effort to overturn this ruling, Florida voters rejected a constitutional repeal of its “no-funding” amendment prohibiting funding religious schools. But without missing a beat, a Florida school choice tax credit program intended to work alongside its older voucher cousin became its successor. In 2001, the Florida legislature enacted the Tax Credit Scholarship Program (TCSP), funded by private contributions rather than by legislative appropriations, to accompany the OSP. Corporations finance the entire Tax Credit Scholarship Program by “donating” would-be income tax dollars and insurance premium taxes to non-profit scholarship-funding organizations. In return, corporations receive a dollar-for-dollar tax break for their participation.71 Given the 2006 Holmes ruling, TCSP became OSP’s replacement. In 2014, TCSP also faced a court challenge to its constitutionality. But in a win for school choice advocates, the Florida Supreme Court in McCall v. Scott (2016) decided not to receive the circuit court appeal that ruled the petitioners lacked standing as taxpayers because no public funds had been used.72 The scholarship provides private school tuition vouchers to low-income and foster care students, affecting 97,000 Florida students in the 2016–17 school year.73 As with McCall v. Scott, school funding programs in which monies not derived from public funds go to parents and not to schools have largely withstood judicial scrutiny in Arizona: Arizona Christian School Tuition Organization v. Winn (2011) and Niehaus v. Huppenthal (2013).74 Since parents choose how to spend the funds, private schools avoid the need for government regulation. In Arizona Christian School v. Winn (2011), the U.S. Supreme Court dismissed the lawsuit, finding that the plaintiffs (teacher education associations and other school choice opponents) lacked standing to bring the suit. Because the scholarships use no public funds, state dollars do not flow directly to private schools. Therefore, a tax credit is not a government expenditure. Accordingly, legal challenges of tax credit scholarship programs around the country tend to be unsuccessful.75 Some believe that the Court’s ruling in Winn (2011) “clears a constitutional path for a dramatic expansion in school choice in the United States”76 and may be the “most likely and most viable” option to advance this agenda.77 Using this reasoning, challenges to expanded 529 accounts to pay tuition and other expenses for PK–12 private religious schools are also likely to be unsuccessful.

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Education savings account programs have also found themselves in court. In Niehaus v. Huppenthal (2013), the Arizona courts ruled that ESAs did not violate the state’s constitution. Similarly, in 2016, the Nevada Supreme Court ruled in two separate cases that the state’s education savings account law—open to all students who attended a public school for at least 100 days in the prior academic year and would be eligible for $5,100 a year (plus an extra $600 for low-income students or students with special needs)—was constitutional. But according to the court, the state’s funding mechanism was not constitutional (because the state did not limit the number of accounts available) and issued a permanent injunction.78 More recently, in Trinity Lutheran Church of Columbia, Inc. v. Comer (2017), the U.S. Supreme Court ruled that Missouri could not deny a religious school the opportunity to receive a state grant (public funds) to resurface its pea gravel playground with recycled rubber tires. The Missouri state constitution contains a “no-aid” provision. Justices found that Missouri wrongly excluded Trinity Lutheran Church from participating in a generally available, non-religious public safety service—such as police or fire protection—solely because of its status as a church.79 Some judicial watchers say the Court’s reasoning and ruling in this case has no applicability to voucher programs, and state constitutions remain independent safeguards against the use of public funds to religious schools.80 Others suggest that it opens a “wide new legal avenue” for religious groups to demand a portion of taxpayer dollars.81 At the same time, the U.S. Supreme Court remanded a Douglas County, Colorado voucher case, asking the state court to reconsider its decision to rule the voucher program unconstitutional in light of the Trinity Lutheran decision.82

Charter Schools and State Statutory Law Charter schools are publicly funded schools run independently by school districts or by non-profit or for-profit companies. They claim to offer students more innovation and higher performance than available in traditional public schools in exchange for taxpayer dollars, greater flexibility, and less oversight. The charter, or contract with the state, stipulates how the school will operate and what accountability measures will gauge student achievement. If the charter fails to fulfill the contract, the state may revoke the charter. The U.S. has over 6,500 charter schools83 in 44 states,84 and over 7% of PK–12 students are enrolled in one, a number that has more than doubled since 2003.85 State legislatures determine whether charter schools can legally operate in their state, how they will be funded, how they may operate, how they will be held accountable, and the state rules for public schools that do or don’t apply. Primarily, charter schools receive public funds from state and local taxes based on the number of students they enroll. The amount is usually a portion of the state’s per pupil revenues and follows the student from his or her resident public school to the charter school. The amount of per pupil funding can vary significantly within and across states. Although the U.S. Department of Education treats charters as public schools, their actual status as public or private remains a matter of debate. Critics contend that charter schools’ hybrid nature allows them to receive public funding’s benefits while they avoid state and federal rights and protections for employees and students that would

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be theirs in traditional public schools. In this view, charter schools stress either their “public” or “private” nature opportunistically to take the most advantageous position in any situation—seeming to “have it both ways.”86 Charter schools have survived legal challenges that would make them ineligible for state funding under state constitutions by convincing courts that they are “sufficiently public” to receive taxpayer dollars. Charters have prevailed in court under two types of constitutional conditions based on their private features: (1) state constitutional language that bars taxpayer funding to these types of schools, and (2) state constitutional provisos that require the state to deliver a “uniform” or “efficient” system of public schools.87 Legal contests also address the extent to which charter schools are accountable to the public for their taxpayer dollars and student achievement. Are Charter Schools Eligible for Taxpayer Funding? Courts in Michigan and California have considered whether charter schools’ private characteristics make them private schools and ineligible for public funding. This has wider implications because 16 charter school states have similar constitutional language.88 In findings that support charter schools’ eligibility to receive public funding, judges in both cases, Council of Organizations & Others for Education About Parochiaid v. Engler (1997)89 and Wilson v. State Board of Education (1999)90 the Michigan Supreme Court and the California Appellate Court, respectively, agreed on three conclusions: (1) charter school statutes did not violate the state constitution’s “no-funding” clause; (2) charter schools have “sufficient constitutional control” because they were under the “ultimate and immediate control” of the state legislature and its agents (who had the ability to approve and revoke charters if they failed to meet the charter’s terms or all applicable laws); and (3) charter schools were part of the uniform, statewide public school system. In Wilson, the California court added that charter schools had the same requirements for credentialed teachers, pupil assessments, and subject to state and local supervision as other public schools. Do Charter Schools’ Private Characteristics Make Them Not “Public” Schools? Courts in California, Colorado, and Ohio have studied claims that charter schools are so much like private schools that they fall outside of an “efficient” or “uniform” system of public schools. These cases are meaningful because 13 charter school states have constitutional language that imposes a duty to provide an “efficient” or “uniform” system of public schools.91 In findings that support charter schools’ eligibility to be considered “public” schools, the Colorado Court of Appeals in Boulder Valley School District RE-2 v. Colorado State Board of Education (2009),92 and the Ohio Supreme Court in Ohio Congress of Parents & Teachers v. State Board of Education (2006),93 concluded that (1) charter schools were not outside the “thorough and uniform system of public schools” (Colorado) or the “thorough and efficient system of common schools throughout the state” (Ohio); and (2) the statute did not prohibit the state from creating a school system with different types of schools, some controlled by school districts and others not, as long as these were available statewide. The Colorado court also

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contended that the “thorough and uniform” clause did not require identical expenditures and identical types of schools in each district.94 The Ohio court supported its case, as did California’s Wilson (1999), by arguing that charter school students had the same graduation requirements and take the same proficiency and achievement tests as peers in traditional public schools (TPS); charters had to comply with many of the same school code provisions as TPS; and any charter school exceptions from state rules and regulations were “picayune in nature.” Are Charter Schools Accountable to the Public? Constitutional concerns aside, questions still arise about charter schools’ lack of accountability for their stewardship of public monies. For example, the Detroit Free Press claimed that Michigan spent $1 billion on charter schools without sufficient oversight about how students were educated or taxpayer dollars were spent.95 Reports from the Center for Popular Democracy and Education Trust-Midwest contend that charter school officials in Pennsylvania and Michigan, respectively, have lacked sufficient or effective accountability for managing taxpayer dollars that “defrauded at least $30 million intended for Pennsylvania school children since 1997” and while Michigan charters received “more than $1 billion taxpayer dollars annually.”96 Likewise, the U.S. Department of Education found charter management organizations posed “significant risks” of financial waste, fraud, and abuse and lack of accountability that jeopardized compliance with federal requirements and program fidelity.97 And in 2014, the Annenberg Institute at Brown University issued a report asking whether “rapid expansion has replaced innovation and excellence as goals” and calling for charter schools to be subject to the same processes and transparency rules as traditional public schools.98 Briefly, case law on charter schools and public accountability statutes addresses ethics laws,99 freedom of information laws,100 and accountability for public funds and property.101 Generally, courtroom verdicts are mixed. Because charter laws vary stateto-state and courts rule based on the relevant statutory language, sometimes interpreting the legislative intent, different state courts may have similar cases but produce different rulings. It would be reasonable, therefore, for legislators desiring a fiscally responsible charter sector to carefully write their charter school laws: clearly explain their public financing, clarify their status (or not) as public entities, explicitly define their charter and EMO fiduciary responsibilities for using taxpayer dollars efficiently, and identify the accountability measures and budgeted resources to be used to ensure the appropriate expenditure of taxpayer dollars.

CONCLUSION School finance’s legal aspects are complicated. A wide array of legal issues concerning charter schools are more fully addressed elsewhere.102 National legislation and judicial proceedings have created school funding’s legal foundations and given the federal government entrée into the states’ education arena. Federal initiatives in public education have also protected citizens against constitutional violations that undermine their civil

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rights. This chapter’s introduction to the complex legal history of school finance serves as an orientation to the direction in which school funding issues may be headed.

CASE STUDY You are the education consultant on the legal team that has successfully argued and won the Serrano v. Priest California court case. You are now working with the same legal team in the San Antonio ISD v. Rodriguez court case in Texas. You believe that the U.S. Supreme Court will overturn the Texas Supreme Court’s decision that declared the Texas model of education funding unconstitutional under the Equal Protection clause unless you can make a more compelling case. If the U.S. Supreme Court overturns the state Supreme Court, this means that the quality of education should not be based on a state’s wealth. Instead, education funding should be based on the locality’s wealth. Give a strong legal argument that you will make to persuade the court that education should be based on the state’s overall wealth capacity rather than the localities’ disparate wealth.

CHAPTER QUESTIONS/ASSIGNMENTS 1. What exactly does the education clause say in your state constitution? Do you believe that the intent of the clause is in effect in your state’s public school system? Explain your answer. 2. If your state has seen court cases dealing with finance over the last 10 years, explain what they were about and what their final impact was on schools. 3. Explain your state’s position on vouchers, charter schools, and tuition tax credits. If they exist in your state, explain how they are being implemented. Has there been resistance or support for these concepts? Explain your answer. 4. How has your state changed its funding of public education over the last 20 years? How would you design a better system of funding public schools for your state? Defend your answer. 5. Why do you think Delaware, Hawaii, Mississippi, Nevada, and Utah are the only states never to have had a lawsuit challenging the constitutionality of their funding? 6. Have charter schools been started in your school system? Your state? What has been the financial impact to that system or state as a result of opening charter schools?

NOTES 1 For the most thorough and scholarly examination of this topic, see: Alexander, K. & Alexander, M. D. (2019). American public school law, 9th ed. St. Paul, MN: West Academics. 2 Technically, the United States actually has 46 states and 4 commonwealths: Kentucky, Massachusetts, Pennsylvania, and Virginia. 3 For example, the federal government intended to pay 40% of special education costs with Public Law 94-142. But Congress has never met even half of that targeted percentage.

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FRAMEWORK FOR FINANCING PUBLIC EDUCATION 4 Many years ago, after a graduate class in school law, our then-6-year-old daughter overheard a conversation about plenary power and asked what it meant. She summarized my lengthy answer by saying it meant “plenty of power”—a good paraphrase. 5 Legal standing is a party’s ability to demonstrate to the court sufficient connection to and harm from the law or action challenged to support the party’s participation in the case. 6 This may be a good opportunity to examine the education language in your own state’s constitution. 7 District of Columbia Public Schools (2018). Find a school. Washington, DC: Author. Retrieved from http://profiles.dcps.dc.gov/; and (2017). The facts. The truth about charters. Washington, DC: DC Public Charter School Board. Retrieved from https://data.dcpcsb.org/ stories/s/g9zq-zkq5 8 Article 1, Section 8, cl. 1. 9 United States v. Butler, 297 U.S. 37 (1936). 10 Shaffer v. Carter, 252, U.S. 37 (1970). 11 Shaffer v. Carter (1970). 12 Alexander, K. & Alexander, M. D. (2012), American public school law, 8th ed. Belmont, CA: Wadsworth, Cengege Learning, p. 83. 13 United States v. Lopez, 131 L.Ed. 2d 626, 115 S. Ct. 1624 (1995). This case should not be confused with Goss v. Lopez which required procedural due process for temporary suspensions of students from school. 14 18 U.S.C. Section 992 (q) (A) (1988 ed., Supp. V). 15 Congress passed the Gun-Free School Zone law under the Commerce clause, which gives Congress the authority to regulate and protect interstate commerce and those activities that substantially affect interstate commerce. Congress argued that commerce would be adversely affected if schools were not safe and students did not feel comfortable and safe in their learning environments. Having guns in and near schools would make them less safe and subsequently, schools would be less effective in producing good citizens. The Supreme Court ruled that Congress went too far with this act as it essentially regulated schools, which the Commerce clause did not intend to do. 16 Tinker v. Des Moines Independent Community School District, 393 U.S. 503, 89 S. Ct. 733 (1969). 17 McFarland, J., Hussar, B., de Brey, C., Snyder, T., Wang, X, Wilkinson-Flicker, S., and others (2017, May). The condition of education 2017 (NCES 2017-144). Indicator 3.5. Public school revenue sources. Figure 1. Revenues for public elementary and secondary schools, by revenue source: School years 2003 through 2013–14. Washington, DC: National Center for Education Statistics, Institute for Education Sciences, U.S. Department of Education, p. xxxvi. Retrieved from https://nces.ed.gov/pubs2017/2017144.pdf 18 McFarland et al. (2017), pp. 144–145. 19 In Marion and McPherson Railway Co. v. Alexander, 64 p. 978 (Kan. 1901), the Kansas Supreme Court ruled that the authority to levy taxes is an extraordinary one and should never be left to implication. Further, the court ruled that taxing authority must be clearly found by a legislative act. 20 Florida Department of Education v. Glasser, 622 So. 2d. 944 (Florida, 1993). 21 Roberts, A. H. (1947, June 29). Home tax powers won’t make a hit with local officials seeking re-election. Philadelphia Bulletin. As cited in (1999, March). The Sterling Act: A brief history. Pennsylvania Economy League, p. 5. Retrieved from http://economyleague. org/uploads/files/783716581668902685-the-sterling-act-a-brief-history.pdf 22 See Cubberley, E. (1920). History of education. Boston, MA: Houghton Mifflin. 23 Bell’s Gap Railroad Co. v. Pennsylvania, 134 U.S. 232, 10 S.Ct. 533 (1890). 24 Bell’s Gap Railroad v. Pennsylvania (1890). 25 Notice that the Civil Rights Act of 1964 was 10 years after Brown v. Board of Education. 26 See Wise, A. (1965, February). Is denial of equal educational opportunity constitutional? Administrator’s Notebook, 13 (6), 1–4. 27 See Griffin v. Illinois, 351 U.S. 12, 76 S.Ct. 585 (1956); and Baker v. Carr, 369 U.S. 186, 82 S. Ct. 691 (1962). 28 See McInnis v. Shapiro, 293 F. Supp. 327 (N.D. Ill 1968) affirmed sub nom; McInnis v. Ogilvie, 394 U.S., 89 S. Ct. 1197 (1969); and Burruss v. Wilkerson, 310 F. Supp. 572 (W.D. Va. 1969), affirmed 397 U.S. 44, 90 S. Ct., 812 (1970).

FRAMEWORK FOR FINANCING PUBLIC EDUCATION 29 McInnis v. Shapiro (1968). 30 Serrano v. Priest, 5 Cal. 3d 584, 96 Cal.Rptr. 601, 487 P.2d 1241 (1971), appeal after remand, 18 Cal. 3d 728, 135 CalRptr. 345, 557 P.2d 929 (1976), cert. denied, 432 U.S. 907, 97 S. Ct. 2951 (1977). 31 Brown v. Board of Education of Topeka, 347 U.S. 483, 74 S. Ct. 686 (1954). 32 San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, rehearing denied, 411 U.S. 959, 93 S.Ct. 1919 (1973). 33 San Antonio Independent School District v. Rodriguez (1973). 34 Alexander, K. & Salmon, R. (1995). Public school finance. Needham Heights, MA: Allyn & Bacon, p. 31. 35 McInnis v. Shapiro, 310 F. Supp. 572 (W.D. Va. 1969), affirmed, 397 U.S. 44, 90 S.Ct. 812 (1970). 36 Odden, A. & Picus, L. (2004). School finance: A policy perspective, 3rd ed. Boston, MA: McGraw-Hill, p. 30. 37 Plessy v. Ferguson, 163 U.S. 537 (1896). This case ruled that “separate but equal” facilities in transportation was constitutional (and assumed to apply in other accommodations such as restaurants, theatres, and schools). Homer Ferguson, a Louisiana native of mixed racial descent (seven-eighths Caucasian and one-eighth African American) filed suit because he refused to occupy a seat in the colored section of the railroad coach in which he was riding. 38 San Antonio Independent School District v. Rodriguez (1973). 39 Rose v. Council for Better Education, Inc., 790 S.W. 2d 186 (1989). 40 For more on this, research various state constitutional language provisions and relevant fiscal state effort to determine whether stronger constitutional language is associated with increased fiscal effort for schools. 41 Cited in Alexander, K. & Alexander, D. (2005). American public school law, 6th ed. Belmont, CA: Wadsworth, p. 953. 42 Cubberley, E. (1934). Public education in the United States. Boston, MA: Houghton Mifflin, pp. 59–63. 43 Cubberley (1934), p. 235, note 1. 44 Zelman v. Simmons-Harris, 536 U.S. 639 (2002). 45 EdChoice (2017). School choice in America. Indianapolis, IN: Author. Retrieved from www.edchoice.org/resource-hub/fast-facts/#taxcredit-scholarship-fast-facts 46 Trilling, D. (2016, September 14). School vouchers and student achievement: Reviewing the research. Cambridge, MA: Journalist’s Resource. Harvard Kennedy School, Shorenstein Center on Media, Politics and Public Policy. Retrieved from https://journalistsresource.org/ studies/society/education/school-vouchers-choice-student-achievement 47 Since 2011, the Internal Revenue Service (IRS) allows federal taxpayers to claim a charitable deduction for private school contributions, even if their state provides tax credits for those same contributions, giving “donors” a double benefit. Some “donors’ can make a 35% profit on their TCS contribution depending on their federal tax bracket. See: Internal Revenue Service (2011, February 4). Transferable state tax credits. Memorandum Number 2011105010. Washington, DC: Author, Office of Chief Counsel. Retrieved from www.irs. gov/pub/irs-wd/1105010.pdf; Johnson, S. K. (2014, August 25). Making a profit from charitable donations in South Carolina. State Tax Notes. Retrieved from www.taxhistory.org/ www/features.nsf/Articles/4DEDCC0086226CF085257E1C004B1591?OpenDocument; Kamenetz, A. (2017, March 7). “Tax credit scholarships,” praised by Trump, turn profits for some donors. nprEd. Retrieved from www.npr.org/sections/ed/2017/03/07/518352548/ trump-s-favorite-school-choice-program-allows-wealthy-donors-to-turn-a-profit 48 Davis, C. (2017, May). State tax subsidies for private K-12 education. Durham, NC: Institute on Taxation & Economic Policy. Retrieved from https://itep.org/wp-content/ uploads/k12taxsubsidies-1.pdf 49 Mueller v. Allen, 463 U.S. 103 S. Ct. 3062 (1983). 50 States with ESA programs: Arizona, Florida, Mississippi, Tennessee, Nevada, and North Carolina. 51 Tax Cuts and Jobs Act of 2017. H.R. 1, 115th Congress of the United States, Part IV— Education, Sec. 110312. 529 Account Funding for Elementary and Secondary Education, (a) (1) (2017). Retrieved from www.congress.gov/115/bills/hr1/BILLS-115hr1enr.pdf

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FRAMEWORK FOR FINANCING PUBLIC EDUCATION 52 Flynn, K. (2017, December 22). New tax law brings big changes to 529 plans. Savingforcollege.com. Retrieved from www.savingforcollege.com/articles/coming-soonbig-changes-to-529-plans 53 Smith, E. (2016, December 19). Blaine Amendments and the unconstitutionality of excluding religious options from school choice programs. Federalist Society Review, 18. Retrieved from www.fed-soc.org/publications/detail/blaine-amendments-and-the-unconstitutionalityof-excluding-religious-options-from-school-choice-programs 54 Prothero, A. (2015, December 3). School voucher advocates push Supreme Court to hear case on Blaine Amendments. Charters & Choice blog. Education Week. Retrieved from http://blogs.edweek.org/edweek/charterschoice/2015/12/heres_one_way_to_make school_ vouchers_legal_in_every_state.html; Smith (2016). op. cit. 55 Green, S.K. & Mishkin, D.B. (2016, July 5). Brief of Amici Curiae to Trinity Lutheran v. Pauley. SCOTUSblog. Washington, DC. American Bar Association. Retrieved from www. scotusblog.com/wp-content/uploads/2016/07/15-577_amicus_resp_legal_and_religious_ historians.authcheckdam.pdf; Hamburger, P. (2002). Separation of church and state: A theologically liberal, anti-Catholic, and American principle. Chicago, IL: University of Chicago Law School. Retrieved from https://chicagounbound.uchicago.edu/cgi/viewcon tent.cgi?referer=https://www.google.com/&httpsredir=1&article=1022&context=occasi onal_papers 56 Boston, R. (2002, September). The Blaine game. Supporters of government aid to religious schools are trying to eliminate state constitutional provisions that stand in their way. Church & State. Retrieved from www.au.org/church-state/september-2002-church-state/ featured/the-blaine-game 57 Cooley, T.M. (1897). Michigan: A history of governments, 8th ed., pp. 306–329. Boston, MA: Houghton Mifflin as cited in Green & Mishkin (2016, July 5). 58 Green & Mishkin (2016); Jorgenson, L.P. (1956). The founding of public education in Wisconsin. Madison, WI: State Historical Society of Wisconsin, pp. 68–93. 59 Goldenziel, J. (2005). Blaine’s name in vain? State constitutions, school choice, and charitable choice. Denver University Law Review, 83 (1), 57–100. 60 Hamburger (2002); Smith (2016). 61 Viteritti, J.P. (1998). Blaine’s wake: School choice, the First Amendment, and state constitutional law. Harvard Law Journal and Public Policy, 21, 657–718. 62 Heytens, T.G. (2000). School vouchers and state constitutions. Virginia Law Review, 86, 117–162; Goldenziel (2005); Kotterman v. Killian 972 P. 2d 606 (Arizona, 1999). 63 Goldenziel (2005), p. 16. 64 Zelman v. Simmons-Harris, 54 F. Supp. 2d 725 (N,D. Ohio 1999). 65 Zelman v. Simmons-Harris (2002). 66 Walsh, M. (2002, October 16). Voucher advocates plan a multistate legal battle. Education Week, 22 (7), 17, 19. 67 Goldenziel (2005); Locke v. Davey, 540 U.S. 712 (2004), p. 1314, note 7. 68 Goldenziel (2005); KDM ex rel. WJM v. Reedsport School District, 196 F 3d 1046 (9th Cir. 1999), cert. denied, 531 U.S. 1010 (2000); Peter v. Wedl, 155 F 3d 992 (8th Cir. 1998). 69 Goldenziel (2005). 70 Bush v. Holmes, 919 So. 2d 392 (Fla, 2006). 71 Nielsen, A. (2016, September 14). FEA appeals tax credit scholarship lawsuit to Florida Supreme Court. Sunshine State News. Retrieved from www.sunshinestatenews.com/story/ fea-appeals-tax-credit-scholarship-lawsuit-florida-supreme-court 72 McCall v. Scott, 199 So. 3d 359 (2016). 73 Postal, L. (2017, January 18). State’s top court turns down voucher case, a win for school choice advocates. Orlando Sentinel. Retrieved from www.orlandosentinel.com/features/ education/os-vouchers-florida-schools-tax-credits-20170118-story.html 74 Arizona Christian School Tuition Organization v. Winn, 131 S. Ct. 1436 (2011); Niehaus v Huppenthal, 1 CA-CV 12-0242 (2013). 75 Postal (2017); Rau, A. B. (2017, April 28). Trump may take Arizona’s school tax credit program national. USA Today. Retrieved from www.usatoday.com/story/news/politics/2017/04/28/ trump-may-take-arizonas-school-tax-credit-program-national/307759001/

FRAMEWORK FOR FINANCING PUBLIC EDUCATION 76 Garnett, N. S. (2011). A Winn for educational pluralism. Notre Dame Law School. Legal Studies Research Paper No. 11-25, p. 34. Retrieved from https://poseidon01.ssr n . c o m / d e l i v e r y. p h p ? I D = 7 2 4 0 1 7 0 6 6 1 0 3 1 2 0 0 8 1 1 1 2 0 2 7 0 3 1 0 9 8 0 9 0 0 2 2026080077013030029112113026026093031106082080073011056033056027005 1071270871160280650700090460720560610770891261250861051160980890280 580870831071120810900230810800940011010180790270731220991200740150 08113089098097093&EXT=pdf 77 Rau (2017). 78 Pak-Harvey, A. (2016, November 22). Judge finalizes Nevada Supreme Court’s ruling striking down school choice funding method. Las Vegas Review-Journal. Retrieved from www. reviewjournal.com/news/education/judge-finalizes-nevada-supreme-courts-ruling-strikingdown-school-choice-funding-method/ 79 Trinity Lutheran Church of Columbus v. Comer, No. 15-577, S. Ct (2017). 80 O’Brien, A. (2017, June 28). Symposium: Playground resurfacing case provides soft landing for state “no aid” provisions. SCOTUSblog. Washington, DC: Supreme Court of the United States. Retrieved from www.scotusblog.com/2017/06/symposium-playgroundresurfacing-case-provides-soft-landing-state-no-aid-provisions/; Yarger, F. (2017, June 27). The justices reach broad agreement, but on a narrow question. SCOTUSblog. Washington, DC: Supreme Court of the United States. Retrieved from www.scotusblog.com/2017/06/ symposium-justices-reach-broad-agreement-narrow-question/ 81 Byrnes, H. (2017, June 27). Symposium: The constitution provides a level playing field for people of faith. Supreme Court of the United States blog [SCOTUSblog]. Washington, DC: Supreme Court of the United States. Retrieved from www.scotus blog.com/2017/06/symposium-constitution-provides-level-playing-field-people-faith/; Subberwal, K. (2017, June 28). Why both advocates and opponents of school choice are celebrating SCOTUS. Politics. Huffington Post. Retrieved from www.huffingtonpost.com/entry/school-choice-supreme-court_us_5953ce59e4b05c37bb7b364a?ncid=e dlinkushpmg00000313 82 Douglas County School District v. Taxpayers for Public Education, No. 15-557 (S. Ct. July 31, 2017). Retrieved from www.scotusblog.com/case-files/cases/douglas-cnty-school-dist-vtaxpayers-for-public-education/ 83 Digest of Education Statistics (2017, March). Public charter school enrollment. The Condition of Education. Washington, DC: National Center for Education Statistics, U.S. Department of Education. Retrieved from https://nces.ed.gov/programs/digest/d16/tables/ dt16_216.30.asp 84 Burnette, D. (2017, May 10). Legislatures tackled ESSA fiscal issues. Education Week, 6 (30), 1, 23. 85 National Center for Education Statistics (2016, April). Chapter 2: Elementary and secondary education. Washington, DC: Digest of Education Statistics: 2014, Institute for Education Sciences. Retrieved from https://nces.ed.gov/programs/digest/d14/ch_2.asp 86 Green III, P.C., Baker, B.D., & Oluwole, J.O. (2016). Having it both ways: How charter schools try to obtain funding of public schools and the autonomy of private schools. Emory Law Journal, 63 (2). Retrieved from http://law.emory.edu/elj/content/volume-63/ issue-2/articles/charter-schools-public-funding.html 87 Green, Baker, & Oluwole (2016). 88 These 16 states are: Alaska, Arizona, California, Connecticut, Georgia, Hawaii, Massachusetts, Michigan, Missouri, New Jersey, New Mexico, Rhode Island, South Carolina, Texas, Washington, and Wyoming. For more details on how each state’s statutes read, see: Green, Baker, & Oluwole (2016). 89 Council of Organizations & Others for Education About Parochiaid v. Engler, 566 N.W.2d 208 (Mich. 1997). 90 Wilson v. State Bd. of Educ., 89 Cal. Rptr. 2d 745, 752–53 (Ct. App. 1999). 91 Green, Baker, & Oluwole (2016). These states are: Colorado, Florida, Idaho, Indiana, Minnesota, Nevada, New Mexico, North Carolina, Ohio, Oregon, Washington, Wisconsin, and Wyoming. 92 Boulder Valley School District RE-2 v. Colorado State Board of Education, 217 P.3d 918, 925 (Colo. App. 2009) (quoting Colo. Const. art. IX, § 2).

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FRAMEWORK FOR FINANCING PUBLIC EDUCATION 93 State ex rel. Ohio Congress of Parents & Teachers v. State Board of Education, 111 Ohio St.3d 568, 2006-Ohio-5512. 94 Lujan v. Colo. State Bd. of Educ., 649 P.2d 1005, 1010–11 (Colo. 1982). 95 Dixon, J. (2014, June 22). Michigan spends $1 billion on charter schools but fails to hold them accountable. Detroit Free Press. Retrieved from www.freep.com/story/news/local/ michigan/2014/06/22/michigan-spends-1b-on-charter-schools-but-fails-to-hold/77155074/ 96 Center for Popular Democracy and others (2014, September). Fraud and financial mismanagement in Pennsylvania’s charter schools. Retrieved from https://populardemocracy.org/ sites/default/files/charter-schools-PA-Fraud.pdf; Joy, S. & Arellano, A. (2016, February). Accountability for all: 2016. The broken promise of Michigan’s charter sector. Royal Oak, MI: The Education Trust-Midwest. Retrieved from http://midwest.edtrust.org/ wp-content/uploads/sites/2/2013/10/The-Education-Trust-Midwest_Accountability-forAll-2016_February-11-2016.pdf 97 U.S. Department of Education (2016, September). Nationwide assessment of charter and education management organizations. Final audit report. ED-OIG/A02M0012. Washington, DC: Author. Retrieved from www2.ed.gov/about/offices/list/oig/auditreports/ fy2016/a02m0012.pdf 98 Annenberg Institute for School Reform (2014, October 5). Public accountability for charter schools: Standards and policy recommendations for effective oversight. Providence, RI: Author. Retrieved from www.annenberginstitute.org/sites/default/files/ CharterAccountabilityStds.pdf 99 New Hope Academy Charter School v. School District of York, 89 A.3d 731, 741 (Pa. Commw. Ct, 2014). 100 Zager v. Chester Community Charter Schools, 934 A.2d 1227 (Pa. 2007); Chester County Charter School v. Hardy 38 A.3d 1079, 1085 (Pa. Commw. Ct. 2012). 101 Cordray v. International Preparatory School, 941 N.El.2d 1170, 1171 (Ohio 2010). 102 Brown, E. (2016, August 30). National Labor Relations Board decides charter schools are private corporations, not public schools. The Washington Post. Retrieved from www. washingtonpost.com/news/education/wp/2016/08/30/national-labor-relations-boarddecides-charter-schools-are-private-corporations-not-public-schools/?utm_term=. d2d82d5d2dfc; Green, Baker, & Oluwole (2016); Higgins, J. (2015, September 4). State supreme court: Charter schools are unconstitutional. Education. The Seattle Times. Retrieved from www.seattletimes.com/seattle-news/education/state-supreme-court-char ter-schools-are-unconstitutional/; New York City Charter School Center (2017, January). Jurisdiction and applicable law over employee/employer labor relations. Charter School Legal Brief. Retrieved from www.nyccharterschools.org/sites/default/files/email-legalbulletin-january2017.pdf

CHAPTER

4

Education as an Investment in Human Capital PSEL STANDARDS: 2, 8, 9

FOCUS QUESTIONS 1

Explain how Adam Smith’s idea about human capital in the Wealth of Nations affects the practice of education.

2 Explain how an increased level of education among people in general contributes to the overall United States’ economy, civic responsibility, health, and quality of life. 3 Identify ways in which low levels of education hurt the U.S. economy and individual citizens. 4 Summarize how increased levels of education decrease expenditures for social service programs, incarceration, and crime. 5 Discuss the reasons why taxpayers should view investment in public education as a good investment in America.

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Education is a significant investment in human capital—the skills, knowledge, and experience the individual (or populace) has that increase his/her productive capacities—and brings clear benefits to the individual, the economy, and society at large. Increased levels of education result in increased earning potential and higher incomes, increased tax revenues, increased voter participation, increased charitable contributions, increased leisure and cultural activity participation, decreased social service costs, lower incarceration rates, and decreased levels of childbirth complications. Instead of thinking of education as a cost to taxpayers, we should think of education as a strategic long-term investment that pays significant dividends to individuals, their communities, and the nation.

EDUCATION AS AN INVESTMENT IN HUMAN CAPITAL For much of our history, the notion that educating everyone to his or her potential could enhance community well-being represented thinking “outside the box.” To be sure, the founding fathers and mothers saw education as an essential component of their new form of government. Few beyond those initial patriots, however, had the vision to believe that educating all citizens would benefit the society’s overall economy, safety, and quality of life. Classical economists considered labor as one of three factors of production—in addition to land and capital—but they viewed workers as a constant, essential but less important, an interchangeable cog in the machine rather than the machine’s designer and operator. For the most part, local and state government limited advanced education to the elite. Labor, the working classes and the poor, remained largely under- and uneducated. Early civilizations valued sheer numbers of people for protection, hunting, and gathering. Developing societies prized individuals for what and how well—and later for how much—they could produce. Brick masons and arrow smiths, carpenters and wheat grinders earned community respect for the usefulness, quality, and quantity of their goods. Later, investing in the fixed capital of making bricks, arrows, and gristmills became a primary economic concern. Until Theodore W. Schultz’s 1960s work on investment in human capital gained popular acceptance, society had valued labor primarily for its physical rather than its intellectual attributes.1 With ground-breaking insight, Scottish philosopher Adam Smith’s The Wealth of Nations (1776) is arguably the most influential book ever written on market economics. Notably, Smith included human capital—the labor force’s acquisition of useful abilities and talents during education, study, or apprenticeships that make them productive—as predetermined resources in the fixed capital equipment of manufacturing goods.2 A revolutionary concept at the time, this belief followed naturally from the founders’ discussions about a literate society’s importance to sustaining a democratic republic government. Smith may have been influenced by the same Renaissance thinkers who championed education’s value to everyday people that shaped the nation’s founders’ vision for an educated general public. Given his era, however, Smith viewed this investment in human capital in a limited way, only as providing workers with vocational training related to production. Nonetheless, his original concept provided

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

an early first step toward the larger context of educated workers’ contributions to the economy and to society as a whole. It took almost 200 years to advance the human capital concept to its present maturity. Addressing the broader intellectual and social perspective, Theodore Schultz’s 20th-century work articulated the belief that investing in the minds of goodsand-services producers held economic worth for the larger community. His theory of investing in human capital won the 1979 Nobel Prize for Economic Science and became the basis for considering investment in education as a significant contributor to a society’s economic development. Using this premise, the Organisation for Economic Co-operation and Development (OECD) and the World Bank have quantified the predominant impact of investing in human capital.3 These and other findings clearly show that public investment in education—delivered well in ways that facilitate learning and acquiring skills to build human capital—explains the sustained development of many countries and the lack of economic, political, and social progress in others.4 Today, workforce managers realize that an educated populace adds value to employees and to the organization. Likewise, an educated citizenry has a substantial positive impact on society. More than any other social investment, education raises the standard of living by increasing employability and disposable income and reducing community social service costs, thereby increasing revenue to support even more education—creating a dynamic synergy. A good public education system and the human capital it generates is a major drawing card for local business development and expansion. Education enhances the quality of life, not just for the educated individuals but for the entire community as well. This chapter presents convincing data to support the belief that public education increases a community’s economic well-being, safety, and overall quality of life as expressed by the following factors: • Earning potential • Employability • Voting rates • Percentage of individuals with health insurance • Charitable contributions • Leisure and cultural activity participation • Childbirth and prenatal issues • Incarceration rates • Crime rates. Education is a community’s investment in its own best interest. Although taxes fund education as a public service, not every educational leader or taxpayer sees the “big picture.” Generally, most people view education favorably, but they regard taxes somewhat less favorably. Educational leaders must be able to clearly and persuasively articulate to all stakeholders—teachers and staff, parents, grandparents, and non-parents, business, and the community—that education’s investment in human capital provides substantial paybacks for the individual, the locality, the state, and the nation. Using the following data, an educational leader can assure stakeholders

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of the importance of investing in education and promote the success of all students. The question then becomes, “How do we pay for this human capital investment and increased living standard?”

EDUCATION CONTRIBUTES TO EARNING POTENTIAL Education is a major contributor to our economy’s financial health. As a rule, citizens with higher levels of educational achievement earn more money, give more tax dollars to support government services (including funding schools), add more to the general consumer economy to enhance their lifestyles, and draw fewer safety net resources from society than do those with less education. Education, therefore, directly affects our personal living standard by influencing how much people earn. Table 4.1 displays earnings by educational attainment for individuals 25 years old and over by mean income and gender. These are individuals who have likely completed their formal schooling and have spent several years in the workforce. As a basis for comparison, as of January 30, 2018, the average public school teacher’s annual median salary is $55,072 with a range usually between $48,080 and $63,581.5 Figure 4.1 shows a graphic comparative representation of those relative earnings. Higher levels of education are associated with greater individual workers’ incomes for all demographic groups. Let’s see how that pans out over lifetime earnings.

4.1  Educational Attainment—People 25 Years Old and Over by Mean Income and Sex, 2016.

TABLE

Educational Attainment

Men ($)

Women ($)

Mean Earning for All Groups

62,325

38,896

Less than 9th Grade

29,045

16,307

9th–12th Grade—No Diploma

31,301

17,995

High School Graduate*

43,037

25,222

Associate’s Degree

54,834

35,304

Bachelor’s Degree

83,633

50,598

Master’s Degree

100,535

65,391

Doctoral Degree

142,725

88,826

Professional Degree

155,989

96,923

∗ Includes equivalency. Source: U.S. Census Bureau (2017). Historical income tables: People. Table P-18. Educational Attainment— People 25 Years Old and Over by Mean Income and Sex: 1991 to 2016. Washington, DC: Author. Retrieved from www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-people.html.

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

When these earning differences compound over a working lifetime, the effects of education become even more pronounced. Assume that these dollar figures remain constant and that two 25-year-olds work for 40 years before retiring. A male high school dropout, earning approximately $31,301 per year, will make $1,252,040 over his working life. If he pays a federal tax rate of 10% of those funds, he will have contributed $125,204 in federal taxes.6 This leaves him with an income minus federal taxes of $1,126,836 over his working lifetime. Compare that with the male college graduate who earns approximately $83,633 per year for the 40 years of his working life and will make $3,345,320. If the college graduate pays a federal tax rate of 20% of those funds in our progressive tax system (see Chapter 5), he will have contributed $669,064 in federal taxes.7 This will leave him with income (minus federal taxes) of $2,676,256 over his lifetime. Obviously, the $3.34 million lifetime earner will not only pay more in taxes to support our government and the social safety net programs they provide, this college graduate will also invest more, spend more, and probably donate more to charities than will the $1,252,040 lifetime earner. The highly educated earner spends and contributes significantly more to the economy than does the less-educated earner. To extend this argument further, if a male with a master’s degree earns $100,535 per year over the 40 years of working life, he will earn $4,021,400.8 If he pays a federal tax rate of 25%, he will have contributed $1,005,350 in federal taxes. This leaves him with income (minus federal taxes) of $3,016,050 over his lifetime. Such individuals have even more discretionary income available to stimulate the economy and further contribute to the tax base. Over their lifetime, individuals with a master’s degree will pay in federal taxes almost the equivalent of the high school dropout’s lifetime gross earnings. Examined in this light, education dividends become even more evident.

$180,000

M: $142,725 F: $ 88,826

$160,000 $140,000 $120,000 $100,000 $80,000

M:$62,325 F: $38,896

$60,000

M: $83,633 F: $50,598 M: $43,037 F: $25,222

$40,000 $20,000 $0 Mean

Less than 9th grade

9-12 No Diploma

HS Graduate

Associate Bachelor's Master's Degree Degree Degree Male

Doctorate Professional Degree Degree

Female

4.1  Educational Attainment: People 25 Years Old and Over by Mean Income and Sex, 2017

FIGURE

Source: U.S. Census Bureau (2017). Table P-18. Educational Attainment—People 25 Years Old and Over by Mean Income and Sex. Retrieved from www.census.gov/data/tables/time-series/demo/income-poverty/historicalincome-people.html.

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Figure 4.1 shows the differences in mean income by educational attainment. Consistently, as individuals complete more levels of education, their mean income also rises. Notably, women earn less than men at every educational level. These disparities in income between women and men tend to reflect discrimination, societal norms, and other forces that affect women’s occupational choices.9 Education acts as an economic stimulus. With increased earnings, wealthier individuals pay increased taxes. The enlarged tax revenues then fund increased education, civic and business infrastructure, and related services that, in turn, further fuel economic growth. Moreover, when people can support themselves with their own labor, they are less likely to depend on public assistance or to steal from their neighbors. As a result, education reduces the need for expensive safety-net social programs, law enforcement services, and jails that can strain economic resources. This reality illustrates an even greater return on the education investment.

EDUCATION INCREASES EMPLOYABILITY Education also increases employability. Individuals with lower education levels are more likely to be unemployed and underemployed than those with higher educational attainment. The unemployment rate in 2017 for those who had not completed high school was 6.5% versus 2.5% for those with a bachelor’s degree.10 Moreover, the unemployment rate for a high school dropout is almost three times higher than that of a college graduate, and the college graduate’s median weekly earnings are more than 2.25 times greater than the high school dropout’s. Table 4.2 combines unemployment rates and median weekly earnings by educational attainment to illustrate these relationships.

TABLE

4.2  Earnings and Unemployment Annual Averages for Persons 25 and Older, 2017

Degree

Unemployment Rate (%)

Median Usual Weekly Earnings ($)

Doctoral degree

1.5

1,743

Professional degree

1.5

1,836

Master’s degree

2.2

1,401

Bachelor’s degree

2.5

1,173

Associate’s degree

3.4

836

Some college, no degree

4.0

774

High school diploma

4.6

712

Less than a high school diploma

6.5

520

All workers

Total: 3.6%

$ 904

Source: Adapted from Bureau of Labor Statistics (2018, March 27). Unemployment rates and earnings by educational attainment, 2017. Washington, DC: U.S. Department of Labor, Current Population Survey. Retrieved from www.bls.gov/emp/chart-unemployment-earnings-education.htm

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

80

73.4% 66%

70

57.5%

60

44.8%

50 40 30 20 10 0

High School Dropout

High School Graduate

Some college or Associate's degree

Bachelor's Degree or Higher

Percentage of Labor Force Participation

4.2  Participation Rate of Adults in Labor Force by Educational Attainment, January 2018

FIGURE

Source: Household data. Table A-4. Employment status of the civilian population 25 years and over by educational attainment. Economic News Release. Washington, DC: Bureau of Labor Statistics, United States Department of Labor. Retrieved from www.bls.gov/news.release/empsit.t04.htm.

In addition, individuals with higher educational levels are more likely to remain employed. Figure 4.2 shows the labor participation of adults 25 years old and older by educational attainment as of January, 2018 (seasonally adjusted). The more formal education an individual receives, the more likely the person is to continue working. In today’s high-tech and information-rich economy, the undereducated find themselves at a greater disadvantage than they may have been several generations ago. Too often, they lack the knowledge, intellectual skills, and work habits to keep a steady job, adapt successfully, or learn new skills. Clearly this lack of employability has a serious impact on social service agencies, tax revenues, and overall economic spending—locally and nationally. While we have shown both unemployment rates and labor force participation rates, the two indicators are not equivalent. Unemployment rate statistics are sometimes misleading: they include only those who work or are actively seeking employment. These figures do not count individuals who are able to work but who, after seeking employment unsuccessfully, no longer seek jobs and drop out of the potential workforce. Unemployment rate statistics, therefore, tend to make the labor market picture look rosier than it actually is whereas data for those participating in the workforce give a more accurate indicator. Working people contribute resources to society, locally and nationally. Unless they are independently wealthy, unemployed individuals draw resources from society. As we will discuss below, educated citizens provide widespread benefits for themselves and the larger community.

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EDUCATION INCREASES THE QUALITY OF LIFE FOR INDIVIDUALS AND THE COMMUNITY Education increases the quality of life for individuals and for society at large in a variety of ways: • Voting frequency • Health insurance coverage • Volunteerism • Charitable contributions • Leisure activity participation • Cultural activity participation • Childbirth in marriage versus out of wedlock • Prenatal care • Incarceration rates • Crime victimization rates. These factors deserve a closer look. As will become clear, increased education affects each of these issues and enriches our communities.

Voting Frequency Our democratic form of government depends on an educated citizenry voting wisely for those who will represent us. Many economists, political scientists, and educators from varying perspectives favor public support for education because they believe a more educated electorate strengthens democracy.11 Even advocates of a limited government such Adam Smith (who stressed the benefits of increased cognitive capacity among the “common people”)12 and Milton Friedman (who asserted “the education of my child contributes to other people’s welfare by promoting a stable and democratic society”)13 saw the benefits of educating citizens for the well-being of the larger society. Researchers find a strong and robust relationship between education and voting in U.S. elections.14 Education helps build the cognitive skills citizens need to be effective participants in a democratic republic, understand the issues upon which they will vote, and, hopefully, act as a check on government’s potential excesses. Figure 4.3 shows the voting record and educational level of those 18 and older who voted in presidential elections, 1988 to 2016 election. As Figure 4.3 indicates, voting rates consistently increase with education level. In 2016, the voting rates for individuals with some college to college degrees (68.6%) and post-graduate degrees (85.0%) is more than two times to almost three times higher, respectively, than those who dropped out of high school (30.7%). Almost without exception, the more education a person attains, the more likely that individual is to vote. These differences in voting rates might be attributed to the higher income that results from more education rather than solely to the direct result of education, however. Nonetheless, data like these reinforce the nation’s founders’ beliefs that educating everyone would help protect our nascent democratic republic.

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

100 90 80 70 60 50 40 30 20 10 0 1988

1992

Some High School

FIGURE

1996

2000

High School Grad

2004

2008

2012

Some College to College Grad

2016 Post-Graduate

4.3  Voting Behavior by Educational Attainment, 1988–2016

Source: Based on McDonald, M. (n.d.). United States Elections Project: Voter turnout demographics. Turnout rates: Education. Gainesville, FL: University of Florida. Data retrieved from https://docs.google.com/ spreadsheets/d/1l5fpK7ysQhQbZPv9hnZ_-PO1J1zBVPXSSQjNejTXecY/edit#gid=701789019.

Health Insurance Access to affordable health care is another important “quality of life” arena where having more education also makes a difference. Individuals with higher education levels tend to have health insurance at much higher rates compared with those with lower education levels. Policy changes affect the rate of health insurance coverage. In 2014, the Patient Protection and Affordable Care Act enabled more people to gain access to health care. Nationwide, one in seven (14%) of American adults ages 18 or older report being without health insurance.15 Table 4.3 shows that in 2016, high school dropouts were more than four times less likely to have health insurance than those with a college degree or higher. Assessing the impact of insurance coverage on health is complex. The effect of coverage varies among people, types of plans, and settings. Nonetheless, the past decade has seen high-quality studies find that health insurance coverage helps improve individuals’ financial security (reducing risk of large unpredictable medical costs and related consequences); and enables more access and use of medical care, preventive services, better management of chronic conditions, and taking prescribed medications. Data also show mixed results for health outcomes; more patients’ say they are feeling better; and fewer deaths resulting from medical issues.16 In addition, medical research is finding an association between education and “cognitive life expectancy”—how long older adults live with good versus declining brain health. In 2018, University of Southern California and University of Texas researchers

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EDUCATION AS INVESTMENT IN HUMAN CAPITAL TABLE

4.3  People without Health Insurance for the Entire Year by Education: 2016

Education Level

Without Health Insurance (%)

No High School Diploma

27.3

High School Graduate

15.2

Some College, No Degree

11.6

Associate’s Degree

9.3

Bachelor’s Degree

6.8

Graduate or Professional Degree

4.8

Source: Barnett, J.S. & Berchick, E.R. (2017, September). Health insurance coverage in the United States: 2016. Current Population Reports. P60-260. Table 3. Percentage of People by Type of Health Insurance Coverage for Working-Age Adults 19–64: 2015–16, p. 10. Washington, DC: U.S. Census Bureau, U.S. Department of Commerce. Retrieved from www.census.gov/content/dam/Census/library/publications/2017/demo/p60-260.pdf.

found the more years of advanced education (college and beyond) appeared to keep cognitive decline and dementia at bay. Well-educated individuals maintained healthy cognition into their late 80s as compared with individuals who did not complete high school maintaining good cognition up until their 70s. In short, less-educated individuals “are more likely to develop dementia and live longer with it.” Improvements in the persons’ education and nutrition, better monitoring and control of hypertension and cholesterol, engaging in cognitively challenging occupations during mid-life and social engagement in later life may all add to these extended years of good brain health.17 This supports earlier studies in 1994 and 2008 suggesting that education (and other factors) contribute a reserve against dementia by increasing the brain’s neocortical synaptic density. This enables individuals to maintain a set of skills or repertoires that allow them to function longer before clinical signs of Alzheimer’s Disease show, reducing the harmful effects of brain abnormalities on mental function in later life.18 Accordingly, evidence is mounting that increased levels of education may help reduce physical and cognitive decline.

Volunteerism Volunteers bring extra resources to a community, helping those in need and contributing to the local quality of life. In 2017, 63 million Americans volunteered about 8 billion hours of their time, talent, and effort to improve lives of others in their communities.19 Most volunteer hours go to religious organizations (34%) followed by educational or youth service (26%) and social or community service organizations (15%).20 The dashed line in Figure 4.4 shows the percentage of individuals doing volunteer work by level of education. The dotted and solid lines show the distribution type of volunteer activities. Of the 8.1% of those with less than a high school diploma, 19.9% volunteered in educational or youth service activities and 52.7% volunteered in religious activities. Figure 4.4 shows that individuals with higher levels of education were

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

60

50

38.8%

40

30

20

26.5%

10

0

15.6% 8.1% Less than high school

High school, no college

% of population volunteering

Some college, Associate's degree Religious Activities

Bachelor's degree or higher Education/Youth

4.4  Percentage of Adult Population Doing Volunteer Work by Education Level and Activity, 2015

FIGURE

Source: Bureau of Labor Statistics (2016, February 26). Volunteering in the United States, 2015. Table A. Volunteers by annual hours of volunteer activities and selected characteristics, September, 2015 and Table 4. Volunteers by type of main organization for which volunteer activities were performed and selected characteristics, September 2015. Economic News Release. Washington, DC: Author. Retrieved from www.bls. gov/news.release/volun.nr0.htm.

more likely to volunteer than were those with less education. Among persons age 25 and over, 38.8% of college graduates with a bachelor’s degree and higher volunteered compared with 26.5% of persons with some college or an associate’s degree, 15.6% of high school graduates, and 8.1% of those with less than a high school diploma (dashed line).21 Across all levels of educational attainment, volunteers were most likely to volunteer for religious organizations, followed by education or youth service organizations. Volunteers provide important services to neighbors and their children that would otherwise either go undone or would have to be paid for through increased taxes or fees. Independent Sector, a national organization of diverse non-profits, foundations, and corporations to advance the common good, states that the 2016 national value of volunteer time was $24.14 per hour, meaning that Americans contribute $193 billion in time to our communities.22 Obviously, volunteer work within a community has many benefits that are difficult to quantify and compile. Many would argue that volunteering enhances the individual giver’s life as well.

Charitable Contributions As with volunteering, giving money and materials through charitable contributions also increases a community’s quality of life and reduces tax dollars needed to support

91

92

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

$25,000

$22,854

$20,000

$12,584

$15,000

$9,620 $10,000

$7,488

$5,000 $0 High School Graduate FIGURE

Some College

Associate Degree

Bachelor's Degree

4.5  Discretionary Income by Educational Attainment, 2012

Source: Dann, C.S. (2014, March). The role of discretionary income in charitable giving. New York, NY: Next Generation Fundraising, p. 4. Retrieved from https://nextgenfr.com/wp-content/uploads/2014/10/DiscretionaryGiving-Final.pdf

social safety net services. Although many households across the education spectrum donate money to help the less fortunate, charitable contributions and higher education levels are related. Sixty-eight percent of households with less than a high school diploma gave to charity whereas 95% of the households with a college degree gave to charity.23 For one thing, those with higher levels of education tend to have higher incomes with more of it available for discretionary spending. Extra dollars are available for contributions to charitable causes. Figure 4.5 shows discretionary income by highest educational attainment of any householder in 2012. With discretionary money available, education increases charitable giving in three ways: boosting participation in charitable giving, enlarging the average contribution, and growing the average percentage of income contributed.24 Along with age, education plays a major role in people’s inclination to give, broadening their awareness and deepening their social engagement. Even controlling for income, education has “an independent, positive effect on how much a person gives to charitable causes.”25 Figure 4.6 shows the percentage of dollars allocated to the various charitable categories—religion, the arts, education, health, helping people meet basic needs, and combined categories—by income level. For example, for those households earning less than $100,000 per year, 66.7% of charitable contributions went to religion while only 3% went to education. For those in the $200,000 to $1 million group 31.9% of the charitable contributions went to education and only 23% to religion. Donors channel monies toward programs and organizations that reinforce their values, that they believe deserve and need external funding. At the same time, many charitable contributions are tax deductible, reducing tax dollars that might be used for various community needs.

Percentage to Charitable Causes

EDUCATION AS INVESTMENT IN HUMAN CAPITAL

60 50 40 30 20 10 0