Sunday, March 18, 2012

McCleary v State Requires Legislature to Base Funding on Actual Cost

In yesterday's post, I began a discussion of the recently issued Washington State Supreme Court decision in McCleary v. State regarding funding of public education.  Today, I want to carry forward that discussion by focusing on the part of the decision that discusses the legislature's obligation to base the funding formula upon the true cost of the educational program mandated by the legislature.  The case is instructive, because the issues facing the State of Washington bear a striking resemblance to the circumstances here in Minnesota in many respects.   Both states, Washington and Minnesota, transitioned from what the McCleary Court describes as a seat-based education system  to a performance-based system. And both states have failed to adjust their funding approach the significant change in costs that results from that transition.

 In a seat-based system,  the state mandates that each school district supply a certain amount of total "seat-time"  for all students, and it mandates as well, a certain amount of seat time in particular subjects, such as math, social studies, science, reading, the arts and so on.  

In a seat-based paradigm, public education sold time in a chair, with a teacher at the front of the classroom.  The quality of the teaching and the curriculum was locally determined and locally adjusted.  If local schools were confronted with less prepared students, they could spend more to make up the shortfall, or they could adjust their graduation expectations downward accordingly.   Under the seat-based education system,  Minnesota lacked any state mandate regarding the degree of difficulty of the subjects taught to the students occupying those seats, nor any state mandate as to the level of educational proficiency that students must attain in order to be issued a high school diploma.   Under the seat based paradigm, costing public education was much simpler, because you can produce an hour of seat time for any student at the same price, regardless of the student's particular educational challenge. If the funding were reduced, you could increase class size, cut textbooks, and even lower the rigor of a school district's educational expectations.

But once you change to the proficiency paradigm, as both Washington and Minnesota have done,  it becomes necessary to project the actual cost of getting different students to the mandated level of proficiency.   This change, from measuring time in chairs to measuring proficiency occurred in Minnesota the early 1990's.  But Minnesota's legislative and executive branches never adjusted the funding of education to reflect that change, indeed, never developed and implemented methods to cost the new state mandates.  McCleary v State holds that the State does not meet its constitutional obligation to public education, when it sets funding based on politics rather than a data based costing system.  Unless the state legislature bases funding on credible efforts to determine the cost of required programs, it is acting irrationally and irresponsibly.

It stands to reason, certainly, that the cost of delivering students to a pre-set level of proficiency is going to be significantly greater (inflation adjusted), than the cost of simply putting them in classrooms and hoping that they take advantage of  the standard curriculum delivered by the teacher.   Its like the difference between going to the car-dealer and saying, give me all the car you can give me for $20,000, or going to the car dealer and saying, I need a car with 4 wheel drive, exceptional power and handling, and sports-car looks.   Once you specifiy the end result, the cost is likely to rise significantly.

But in both Washington and Minnesota, and in many other states, the legislatures generally focused not on the cost of the newly specified educational result, but instead focused on how much money has historically been provided to public education, and then sought to adjust the level of funding based on existing revenues, tax policy, and the political philosophy of the legislators.

This issue is perhaps the most important issue in school finance.   It permeates the problems we face here in Minnesota, and it was a central focus of the McCleary decision.   The Washington Supreme Court pointed out that State of Washington had actually completed a study by nationally recognized experts Picus and Odden  the results of which led to an estimate that education was underfunded by about $2 billion.  The Supreme Court's opinion details in pages and pages, other studies and reports showing that the current funding system in Washington did not rationally connect to the State legislature's legislative package of basic educational programs. Slip opinion pages 19-35.  The Court explained:

“the funding model for K-12 education has not been updated to reflect the new expectations and has not addressed the question of how to use resources most effectively in order to improve student outcomes.” The report further surmised that “[s]table and significantly increased funding is required to support the evolving needs of our education.  Opinion, pages 23-24.
 The Supreme Court found that the State could not meet its obligation without connecting actual cost to actual revenues:
The evidence at trial showed that the State’s now-abandoned basic education funding formulas did not correlate to the real cost of amply providing students with the constitutionally required “education.” As a result, the State has consistently failed to provide adequate funding for the program of basic education, including funding for essential operational costs such as utilities and transportation. To fill this gap in funding, local districts have been forced to turn increasingly to excess levies, placing them on [an] unstable financial foundation......The basic education funding formulas examined by the trial court did not correlate to the level of resources needed to provide all students with an opportunity to meet the State’s education standards. This disconnect had its genesis in the legislature’s failure to update the funding formulas after the State transitioned from a seat-based education system to a performance-based system in 1992. The legislature continued to fund schools using the formulas adopted in the Basic Education Act—formulas that were based on a snapshot of actual staffing levels and school district expenditures in the mid-1970s, not the level of resources needed to allow students to meet the new performance-based standards.  Because the State’s funding formulas did not correlate to the actual cost of maintaining its basic education program, state funding for “basic education” consistently fell below the mark.  
Whether you think that we have enough school funding, too much, or too little, surely we can all agree that it makes sense that when the legislature determines school funding, it should start by determining how much it should cost to deliver the education that the legislature wants to accomplish.   In my next post, I'll discuss the implications of this important concept:  that the legislature must engage in an effort to connect actual cost of mandated programs to the revenues provided.

McCleary v State, Washington's Groundbreaking School Finance Decision
 McCleary v. State, Part I  
McCleary v State Requires Legislature to Base Funding on Actual Cost
Jvonkorff on Education McCleary v. State, Part II
McCleary v State and Determining the Cost of Education
Jvonkorff on Education McCleary v. State, Part III
 McCleary v. State: what level of scrutiny is appropriate for legislative funding decisions
Jvonkorff on Education McCleary v. State, Part IV
Correlating the cost of education: fund the child.
Jvonkorff on Education  McCleary V. State Part V
Summary of Decision Network for Excellence
Washington Supreme Court Blog  
JvonKorff on Education, The Rose Decision 
Minnesota's School Finance System is Unconstitutional, Part I
Minnesota's School Finance System is Unconstitutional, Part II
Minnesota's School Finance System is Unconstitutional, Part III
Minnesota's School Finance System is Unconstitutional, Part IV

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