McCleary v State: Embedding Cost Correlation in the Budgetary Process

This is the fifth in a series of posts on the recent Washington Supreme Court decision,  McCleary v. State, enforcing the State's constitutional requirement to assure appropriate funding for public education.  You can jump to prior posts in the series using links below.  McCleary v. State deals with a number of important issues in education finance jurisprudence.  But I've been posting on one aspect of the decision, the part that 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.

This common sense articulation of  one component of the constitutional test for education funding says that a legislature does not perform its constitutional duty unless education funding formulas "correlate to the real cost of amply providing students with the constitutionally required education.  The McCleary court explained:

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,

In the last post, I explained that courts usually take an extremely permissive, hands-off, approach to reviewing  state legislation when a constitutional right is not impaired.  When applying this relaxed hands-off standard, the Court simply asks if there is any possible rationale that could support the decision that the legislature made.  Under this relaxed standard, the legislature need not actually go through the motions of acquiring data to support its decision.  The defenders of the State law can actually supply a rationale that the legislature didn't even consider.   Courts like Minnesota (Skeen) and Washington (McCleary), however, have held that this hands-off review of education funding does not apply when the right to an adequate education are implicated.

How then should the Courts fashion a principled approach to judicial review of whether the education funding formulas "correlate to the real cost of amply providing students with the constitutionally required education?"   The purpose of this post is to begin an exploration of a couple of approaches to the correlation process. .

De Novo Costing Out Approach:    One approach to evaluating whether funding is correlated to the real cost of education would be to conduct a "de novo" trial in which the trial court takes testimony from superintendents, state officials, and professional education costing experts.   There are a number of such experts.   University of Wisconsin professors Odden and Picus,  Augenblich  Palaich and Associates often testify for the plaintiffs, and Eric Hanushek of Stanford often testifies for the State defendant.  The result is a lengthy and costly battle of experts resulting in a trial court decision as to what it really does cost.

Under this de novo costing out approach, the Court determines the amount of shortfall in legislative funding and then orders the legislature to come up with a solution to the funding shortfall in a reasonable time.   The resulting court order typically leads to a complex litany of subsequent litigation in which the parties contest whether legislative changes in funding do, or do not, comply with the letter and spirit of the Court's order, and we could easily spend ten blog posts on the complexities posed by the de novo costing out approach and still not cover the topic adequately.

Legislative and Executive Cost-Out Approach   Another alternative would be to require both the governor and the legislature to follow their own business like costing out approach as they prepare the biennial education budget.   Under this alternative, the courts would require both governor and legislature to engage in certain minimum good faith data-based efforts to correlate the real cost of the education required by state law.    How would that work?   What would prevent the legislature from double crossing the court's mandate by making up phony numbers.  What would prevent the Governor to present a bogus budget that dramatically understates the cost of education under current law?      If a legislature can pretend that science doesn't support climate change, then what is to stop the legislature from adopting a completely bogus correlation between its funding formula and the real cost of amply providing students with the constitutionally required education?  

Let us begin to answer this question by acknowledging that our current legislature and governor make absolutely no pretense of conducting this correlation process, and neither did Governor Pawlenty and the DFL legislature which proceeded the current incumbents.  A system under which the governor submitted a cost-correlated budget and the legislature adopted a cost-correlated budget would be vastly superior to the current system in which everyone involved proceeds on the common understanding that they will not even attempt to cover the true cost.   A requirement that the legislature and governor actually go through the motions of covering the full cost of state required education would force the State Department of Education to engage in a costing out approach using actual data, something that simply is not done today in the budgetary process.  How can we possibly solve a problem as weighty as education funding when we begin our work agreeing not to determine the true correlated cost?

Once the executive and legislature actually began to attempt to build an education budget based on the correlated cost of state mandated education, a number of positive changes might well result.  First, the legislature and governor would have to begin to develop a modicum of expertise in the actual cost of education, and that expertise would give new meaning to the legislative process.   Many of the key legislators in both parties show remarkable, even appalling, ignorance of even fundamental costing issues.   This ignorance results, I believe, from a process in which the actual cost of educational programs is deemed irrelevant to the ultimate result. Why learn something that doesn't matter?   In today's process, the key knowledge for legislators is to understand the "runs" produced at funding time that explain how much their own district is going to receive as compared to other legislator's districts, so that the legislator can explain to the home folks that our district is in just as bad financial shape as other legislators' districts.
  


Second, when mandates are imposed, the legislature's new-found interest in the actual cost of those mandates might create a far more cautious approach to imposing mandates in the first place.  The current practice which disregards cost correlation tends to breed irresponsibility in the legislative process. 

Once we actually began to use costing information in the budget building process, there are a variety of safeguards that could be imposed in the budget building process to assure a modicum of integrity in the process.  I'm trying to keep these posts to a manageable length.  In subsequent posts, I'll suggest some further approaches to the correlation process that might preserve a proper relationship between the legislature, executive, and judiciary.



Links
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

McCleary v State and Determining the Cost of Education

This is the third in a series of posts on the recent Washingto Supreme Court decision,  McCleary v. State, enforcing the State's constitutional requirement to assure appropriate funding for public education.  In  the first post, we introduced the Supreme Court's reaffirmation of the concept that State's constitutional Education Clause must be enforced by the judiciary.  In legal terms, we say that claims against the state challenging constitutionally inadequate funding are "justiciable."   The 79-page McCleary decision covers a lot of legal ground.  In the second post,  we began a discussion of just one of the principles propounded by McCleary, that  the basic education funding formulas did not correlate to the real cost of amply providing students with the constitutionally required education.  In my view, this is the central issue in constitutional funding jurisprudence today.

Minnesota's Constitution, Article XIII, section 1 states:

UNIFORM SYSTEM OF PUBLIC SCHOOLS. The stability of a republican form of government depending mainly upon the intelligence of the people, it is the duty of the legislature to establish a general and uniform system of public schools. The legislature shall make such provisions by taxation or otherwise as will secure a thorough and efficient system of public schools throughout the state.

I believe that if the Minnesota Constitution's requirement to secure a "thorough and efficient system of public schools throughout the state" means anything at all, that it means that the legislature and governor must fund the true cost of the education that they mandate, and that means to engage in a deliberate effort to determine costs.   How can it be "thorough and efficient" to demand that a product be produced for ten million dollars, providing only five? The "thorough and efficient" requirement, I believe, begins with actually making a credible effort to determine the cost of providing that mandated education within the framework established by Minnesota law.  

Any credible costing system must begin by costing the current system of education, based on the legislative requirements we face today.   For example, the current Minnesota law on special education, and the administration of that law, is costing about $1.4 billion per biennium more than the revenues provided.   Now there are experts somewhere who claim that if the laws were rewritten, and if various legal constraints were lifted, that we could deliver a creditable special education program for less that we do today.     But I believe that the Constitution does not allow the legislature to fund public education at a level that might work if all of those requirements were lifted, but then leave the requirements in place.    That is not a thorough and efficient system of public education.  If the legislature wants to fund special education at a lower price, then the constitution requires, I believe, that it implement reforms that are necessary to make it possible to deliver the lower cost services.  That's the lesson of McCleary v. State and cases like it.

The tragedy is that in Minnesota, the legislature never makes even the most minimal effort to determine what the average teaching cost should be, in order to maintain a highly qualified reliable teaching force.  Neither the legislature nor the governor make an honest effort to total up the cost of textbooks, teachers, transportation, and all the rest, and then fund it.   We use a funding system that merely provides revenue in the amount that the legislature wills, and mandates program that the legislature wills, without connecting actual cost to revenue.    Early in his term in office, Governor Pawlenty recognized the logic of this basic idea...that public school funding should be rationally based on data.    To this end, on June 14, 2003, Governor Pawlenty named a 19-member Task Force to focus on Minnesota's school finance system.  The first recommendation of that Panel, found in its Report "Investing in our Future", was that Minnesota’s 21st century educational funding formula should be a rationally determined, learning-linked, student-oriented and cost-based Instructional Services Allocation.  To begin that effort, the Task Force recommended that an Instructional Services Allocation funding approach should be developed for Minnesota schools building on a professional panel's research-based judgment.   Suggestions that the Task Force Study might result in a $2-billion increase in school funding essentially torpedoed that effort and the governor cancelled the task force's work.

A pioneer press article in 2004 explained:

The governor's task force is recommending a funding formula based on the actual cost of providing a student with an education sufficient to meet state standards. But the proposal stops short of setting that cost. Schools would still get additional funding help for certain challenges, such as poverty and students who are learning to speak English.  Similar panels have had limited results in recent years trying to improve and simplify the state's K-12 funding system.  Former state senator and task force member Duane Benson said legislators typically look only at how such changes would affect their local schools. Benson said he's optimistic lawmakers will look hard at this proposal and adopt most of it.  "When change comes, sometimes it's a little scary. This can be a little bit scary, but I think doing nothing can be more scary," Benson said.

As I explained in the prior post, the State of Washington engaged in a similar effort.  But in Minnesota, the effort to develop cost-based public school funding was derailed even more decisively than in Washington.   As the results began to materialize, the Governor cancelled the task force's work amidst partisan cross accusations.

How should the Governor and legislature go about accomplishing this objective, of funding education based upon valid data and non-partisan logic?   First and foremost, Governor Dayton should restart the costing out process that Governor Pawlenty abandoned.  The Governor had an opportunity to correct Governor Pawlenty's mistake, but instead, he created a task force designed to paper over the problem.  Its mission statement was not to make the true cost of education transparent, but rather to attempt to assure that current funding is distributed as fairly as possible without significantly rocking the boat?   During the next legislative session, the legislature should be setting school funding policy based on the true cost of mandated services.  If it does not, it is time to challenge that abdication of responsibility in court.

 Links
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