Will 2013 School Finance Legislation "Usher in A New Era of Excellence"

This is the third in a series on the 2013 K-12 education finance legislation.   In their book on "Doubling Student Performance"  Odden and Archibald warn that providing significant new funding to public education will not necessarily foster significant educational improvement.  They write:

"from assessing the research on the education system's use of new resources over time, Odden and Picus concluded that the education system, has used the bulk of new resources for programs outside the core instructional program -- not the best strategy if the goal is to dramatically improve student performance in core subjects.   .... From recent studies of use of funds after an adequacy-oriented school finance reform....it also seems schools and districts do not use new resources for strategies that we have concluded will have the largest impact on improvement in student learning, such as ongoing professional development with instructional coaches, tutoring for struggling students, and extended learning time"  Odden and Archibald, Doubling Student Performance.  

In the first two posts, I tried to put the funding this legislative session in perspective.   The basic formula increases are average.   The special education increases are modest, but welcome.  Districts will receive significant increases in the second year of the biennium, and for that, all of us are grateful.  In this third post, I want to begin to ask the question whether Minnesota will realize the promises offered by the authors of the 2013 legislation.   In a close-of-session press release,  the House K-12 Policy chair explained:

 "This is going to usher in a new era of educational excellence. Thanks to this bill, Minnesota is poised to reclaim our role as a national leader in education.” In addition to providing badly needed new dollars for schools, the budget includes reforms to student assessments and diagnostics, teacher licensure, and integration initiatives to make sure taxpayer dollars are spent as effectively as possible."   .

In her close of session comments, Education Commissioner Casellius asserted:

This bill is one of the most comprehensive bills in a decade, directing nearly a half billion dollars towards early learning, all day kindergarten, special education and other critical needs.  Those investments, coupled with smart policy reforms, will help us close achievement gaps.....and better meet the neds of students in ways that will improve the quality of education in Minnesota for decades to come."

      Which of these visions will be realized in the next two years.   Will the modest additional increases in funding result in "a new era of educational excellence" as Representative Mariana predicted, or will the funds primarily be used for purposes which have marginal impacts on student achievement?  Now that the legislative session is over, school districts will begin their bi-annual collective bargaining sessions with teachers and with other bargaining groups.   In past bargaining rounds, many school districts have negotiated contracts which consume all of the funding increases provided by the state, and many have provided increases in excess of the state provided funding increments.  When that happens, the primary impact of legislative increases is to provide fairer compensation for education professionals -- a worthy objective, of course -- while ushering in significant cuts in our ability to meet student educational needs.

    The decision whether this year's school funding legislation will be historic, or an abject failure, depends upon decisions about to be made when school districts make decisions about how these new resources will be used.     Those of us who are committed to using that money to "usher in a new era of educational excellence" must maintain a public dialog on how the increases provided by the legislature will achieve that objective.  In addition, we must reexamine the use of our entire education budgets, to make sure that we are using those funds consistent with best practices.  We may disagree with some of Odden's strategies, but we must have a strategic dialog now to make sure that decisions are driven by an appropriate strategy.  You can link to Odden's positions on how school districts can use resources to improve acheivement by Here Clickng Here.    Other strategies may be appropriate in particular communities, but what will not work is the old paradigm.  The old paradigm begins with setting the school budget at the bargaining table, allocating most increased resources to pay and benefits increases, and cutting programs to bridge the gap between labor and management.  If we follow that course again this year, this year's education bill will not lead to historic improvements, but instead will result in historic failures.

Minnesota's 2013 Ed Finance Law, Part II-Special Education

This is the second in a series on the 2013 K-12 education finance legislation.  In the last post, I pointed out that the authors and governor have described the legislation as historic.  The House K-12 Policy chair explained: "This is going to usher in a new era of educational excellence. Thanks to this bill, Minnesota is poised to reclaim our role as a national leader in education.... In addition to providing badly needed new dollars for schools, the budget includes reforms to student assessments and diagnostics, teacher licensure, and integration initiatives to make sure taxpayer dollars are spent as effectively as possible."   In that first post, I  provided a table showing the history of our basic K-12 finance formula.   I showed that the basic funding formula was increased this session at almost exactly the average percentage rate of increase that has occurred over the past 20 years.    The increase in the formula is neither historically high, nor is it by any means the worst. 

In this second post, we'll take a look at the funding for special education again in the context of one of the major challenges in Minnesota's school finance system--the ever rising special education cross subsidy.

Perhaps the best summary of this year's session on special education would be the following:

• Legislative appropriations for special education are increasing during the next biennium, but not as fast as state and federal mandatory costs.  The effective increase in state funding in other areas will be blunted by increases in their unfunded special education costs.    
• The State continues its practice of mandating significantly more special education services, delivered in a more costly way, than required by federal special education law, even as school district special education costs rise faster than their revenues
• Recommendations from the Office of Legislative Auditor in a comprehensive report to the legislature so far go largely unheeded.   
• There appears to be no present prospect that either Governor or legislature has any intent to take the kind of courageous action that would be required to address the rising special education deficit, either on the revenue or cost side of the equation.   Next year is a policy year at the legislature.   It would take farsighted, deeply thoughtful, leadership to make significant inroads in Minnesota's dysfunctional special education finance system.  

In short, this year's K-12 legislation does not in any respect represent an historic attempt to attack the problems in special education.   It is by no means the worst special education bill, in recent years, that would be the 2005-2006 biennium, nor is it the best...that would be the 2007 legislation.    The K-12 finance legislation provides increases in special education funding, but Minnesota school districts are still left with gigantic unfunded special education deficits, "cross subsidy" deficits which are likely to grow even larger in the next two years. 

The total shortfall in special education funding, called the "cross subsidy" has grown markedly over the years.  The following table provides the history of the cross subsidy since 2002, and the percentage increase or decrease in the cross subsidy each year.  The last two years represent advance estimates.  We won't know the actual cross subsidy until after each of these years data is compiled.

	Cross Subsidy	Increase %
2002	$367,000,000
2003	$397,000,000	8.17%
2004	$426,000,000	7.30%
2005	$462,000,000	8.45%
2006	$520,000,000	12.55%
2007	$598,000,000	15.00%
2008	$507,000,000	-15.22%
2009	$553,300,000	9.13%
2010	$539,950,000	-2.41%
2011	$546,200,000	1.16%
2012	$595,400,000	9.01%
2013	$613,900,000	3.11%
2114	$632,900,000	3.09%
2115	$653,500,000	3.25%

A couple of features from this history are worth mentioning.  First, the special education cross subsidy reflects the difference between total special education costs and the combination of state and federal special education revenues.   Second, the large special education cross subsidy increases experienced in 2006-2007 coincide with 4% formula increases passed by the legislature and signed by Governor Pawlenty for those years.   These larger than average basic  formula increases were thus partially financed by holding down special education revenues, while state and federal mandated special education costs continued to rise.  Third, during the 2007 legislative session, the DFL legislature --especially the Senate --rebelled against this trend and insisted on attempting to reverse the trend of ever rising special education cross subsidies. A stalemate over special education relief was broken with a compromise that reduced general fund formula relief in exchange for larger special education funding.   However, despite the effort in that one session, the special education cross subsidy has continued to rise.  

No Governor, nor either DFL or GOP caucus, however, has ever proposed to come even close to fully funding the state's mandatory special education district costs.   The shortfall derives from the longstanding practice of both parties and both branches of government to add new responsibilities to local school districts before fully funding existing responsibilities.  

The next table displays state special education revenues provided to local school districts in the two major funding categories, Regular Aid and Excess Cost Aid.  This year, the Office of Legislative Auditor presented the legislature with comprehensive data and a number of recommendations on special education finance.   Neither the Dayton administration and the legislature has not yet suggested that either intend to address the problems identified in a particularly courageous way.

Looking at these figures in isolation, it is impossible to make judgments about the special education funding component of the 2013 finance law.  That's because in Minnesota, we legislate without considering the cost of the services we fund.  Instead, we focus on the increase in revenues provided, not whether the revenues we provided are enough to do the job. 

Special Education Regular and Excess Cost Revenues 2002-20115

	Regular Aid	Excess Cost	Total
2002	$507,000,000	$91,900,000	$598,900,000
2003	$490,000,000	$59,600,000	$549,600,000
2004	$513,000,000	$92,600,000	$605,600,000
2005	$552,000,000	$95,900,000	$647,900,000
2006	$559,000,000	$106,400,000	$665,400,000
2007	$528,000,000	$104,300,000	$632,300,000
2008	$667,000,000	$109,000,000	$776,000,000
2009	$717,000,000	$111,000,000	$828,000,000
2010	$609,000,000	$97,000,000	$706,000,000
2011	$749,000,000	$109,000,000	$858,000,000
2012	$768,000,000	$108,000,000	$876,000,000
2013	$856,000,000	$115,000,000	$971,000,000
2114	$916,000,000	$120,000,000	$1,036,000,000
2115	$965,698,000	$123,104,000	$1,088,802,000

What's in the 2013 Education Finance Bill--Part I

Jvonkorff on Education has been on vacation, but now we're back.     This week, we begin a detailed discussion of the recently passed education budget.   What's in the budget?   Do the facts sustain the high hopes of its sponsors?    Shortly after the House passed the final version of the budget, the House DFL caucus posted the following description of the budget:

“The investments are strongly tied to meeting ambitious goals called for in the bill that include closing the achievement gap, raising high school graduation rates, achieving literacy for all students by third grade, and having all students acquire career and college readiness by graduation.......This is a historic bill that will open the doors of opportunity for countless Minnesota students,” ....“It invests in the kinds of proven tools like early childhood education that we need to close our achievement gap and build the world’s best workforce. This is going to usher in a new era of educational excellence. Thanks to this bill, Minnesota is poised to reclaim our role as a national leader in education.” In addition to providing badly needed new dollars for schools, the budget includes reforms to student assessments and diagnostics, teacher licensure, and integration initiatives to make sure taxpayer dollars are spent as effectively as possible."

After signing the bill, Governor Dayton's blog described the bill as follows:

A Historic Investment in Education:  For the first time in its history, Minnesota will offer All-Day Kindergarten to every child in Minnesota.  We are giving thousands of children access to high-quality preschool and child care.  And we are freezing tuition for the next two years at the University of Minnesota and all MnSCU campuses and increasing student financial aid to make higher education more affordable for middle class families. With nearly a billion dollars in new money for education, this budget invests in every learner in Minnesota – from early education through higher education.  This new funding will help give our kids access to a world-class education and train the best-educated workforce in the world. This budget will also eliminate the school shift by the end of the next biennium.

Lets begin our review of the budget by looking at the history of Minnesota's general education basic formula in the K-12 budgets over the past years and comparing it to the basic formula in the new legislation .  The general education "basic" formula is provided to all school districts to spend largely as they wish on regular operations.  To calculate district revenues you take the number of students (weighted) and multiply by the formula allowance.   The basic formula is weighted based on the grade level of the students, so that the actual formula varies, and the total amount of revenue received by a district depends upon whether the district has more students in high school or elementary school.   School districts with smaller special populations (special education, poverty, English language learners, for example) push for budgetary increases to concentrate on the basic formula; school districts with larger special populations push for more of the money to focus on categorical aids, because typically the programs run significant deficits.  

Lets look today at the history of basic formula increases  and compare it to what the legislature has done this last session.

Here are the new formula increases for this session and the percentage rate of increase.  Keep in mind that over the years there have been some changes in the content of the formula, and so when we do comparisons, adjustments have to be made to attempt to report comparable numbers.   The reported percentages for this biennium don't track completely with the calculation of precentages for prior years.    A $76 increase in the formula, in prior years would have been reported as a 1.5% increase.   Presumably the elevated reported percentage comes from a change in the pupil weights which apparently produces more revenue for the same general formula dollars.

Basic Formula Increases (Dollar Increases and percentages)

	New
2013-14	$76	1.75%
2014-15	$78	1.75%

Here are the historic formula increases and percentages.  Keep in mind also that it takes a smaller increase to provide a 1 percent increase in the earlier years than later.  

School Year	Dollar Amount	Percent
1992-93	0	0.00%
1993-94	0	0.00%
1994-95	0	0.00%
1995-96	55	1.80%
1996-97	0	0.00%
1997-98	76	2.45%
1998-99	79	2.48%
1999-2000	167	5.12%
2000-01	157	4.58%
2001-02	104	2.90%
2002-03	104	2.82%
2003-04	0	0.00%
2004-05	0	0.00%
2005-06	182	4.80%
2006-07	191	4.81%
2007-08	100	2.40%
2008-09	50	1.17%
2009-10	0	0.00%
2010-11	0	0.00%
2011-12	50	0.98%
2012-13	50	0.98%
Average	65	1.78%