School Choice Plus Student Based Budgeting: Destroys Public Schools in Poor Neighborhoods

Those who favor school privatization and school choice through the expansion of charter schools and school voucher programs frame their advocacy by privileging individual choosers.  They assume that the mass of individual families’ choices in an educational marketplace will improve services for and protect the rights of a city’s children.  These assumptions are wrong.

In a major 2016 report for the Economic Policy Institute, Bruce Baker, the education finance expert at Rutgers University, rejected the contention that the expansion of school choice will improve educational opportunities overall. Baker argued that what matters is the balance of educational opportunity across the school district: “If we consider a specific geographic space, like a major urban center, operating under the reality of finite available resources (local, state, and federal revenues), the goal is to provide the best possible system for all children citywide… Chartering, school choice, or market competition are not policy objectives in-and-of-themselves. They are merely policy alternatives—courses of policy action—toward achieving these broader goals and must be evaluated in this light. To the extent that charter expansion or any policy alternative increases inequity, introduces inefficiencies and redundancies, compromises financial stability, or introduces other objectionable distortions to the system, those costs must be weighed against expected benefits.”

Washington, D.C. is the latest example of a place where it is becoming clear that school choice for some children is damaging the overall operation of public education. This is the conclusion of new research conducted by Johns Hopkins University for the Office of the D.C. Auditor.

The Washington Post’s Perry Stein explains: “When D.C. families choose a school that is not their assigned neighborhood campus, they tend to select schools that educate fewer students from low-income families, according to an 86-page study released… from the Office of the D.C. Auditor.  The result: Traditional neighborhood public schools, particularly in low-income neighborhoods, struggle with declining enrollment over the long term and have higher concentrations of students living in poverty. Smaller schools are more expensive to operate, leaving campuses with less money to hire staff.”

Stein examines high school enrollment to illustrate the problem: “For example, only 9.8 percent of students who live in the boundaries of Anacostia High—a neighborhood school in Southeast Washington—have elected to attend the school.  It has an at-risk population of 81 percent, and 35 percent of students require special education, according to city data.  By comparison, Thurgood Marshall Academy—a charter high school near Anacostia High—has an at-risk population of 54 percent.  Twenty percent of its students have special education needs.”

A primary problem is that the District of Columbia combines school choice with student based budgeting: “Campus budgets are based on enrollment, and the auditor sought to determine whether the city is accurately predicting enrollment for individual schools.”

The Johns Hopkins researchers define the problems very clearly: “Among students who did not attend their in-boundary schools, all student subgroups selected out-of-boundary or charter schools that served lower average percentages of at-risk students than their neighborhood schools.” “In most cases enrollments declined over time for schools serving very large percentages of at-risk students. Declining enrollments mean fewer resources each year for schools serving the largest percentages of at-risk students.” Finally: “Schools serving greater proportions of at-risk and black students experienced higher year-to-year student mobility than schools serving lower proportions of at-risk and black students…. Schools with highly mobile student populations may need more resources to support students, both academically and in terms of social-emotional development.”

The new study in Washington, D.C. is not the first by researchers who have demonstrated that the combination of widespread school choice and student based budgeting undermines equity in a school district. Last September, Stephanie Farmer, a sociologist at Chicago’s Roosevelt University, explained that in Chicago the same combination of school choice and student based budgeting means that Student Based Budgeting Concentrates Low Budget Schools in Chicago’s Black Neighborhoods: “In 2014, Chicago Public Schools (CPS) adopted a system-wide Student Based Budgeting model for determining individual school budgets… Our findings show that CPS’ putatively color-blind Student Based Budgeting reproduces racial inequality by concentrating low-budget public schools almost exclusively in Chicago’s Black neighborhoods…  Since the 1990s, the Chicago Board of Education (CBOE) has adopted various reforms to make Chicago Public Schools work more like a business than a public good.  CBOE’s school choice reform of the early 2000s created a marketplace of schools by closing neighborhood public schools to make way for new types of schools, many of which were privatized charter schools.”

Farmer continues: “Under its next business-mimicking reform, the Chicago Board of Education changed the way individual schools would be funded from an automatic allocation to a Student Based Budgeting… model in 2014. (Under the ) previous model of school funding… CPS central office provided each school an automatic allocation of teachers, school professionals, and staff positions.  The cost of these professionals was covered by the central office, and not individual school budgets.  This guaranteed that every school would have a baseline of education professionals needed to operate the school.  Under the new Student Based Budgeting model, the CBOE ended the automatic allocation. Instead schools would receive a stipend based on per student headcounts… Our research shows that Student Based Budgeting ignores the unevenness of neighborhood distress, which contributes to declining enrollments.  Declining school enrollments are not just a result of student-consumers choosing the best school-product.  Instead, neighborhood factors external to what happens inside schools can also lead to low enrollments that go on to impact school budgets.”

It is troubling, but not surprising, that the same combination of school choice and student based budgeting is operating in Washington, D.C. just as it has operated in Chicago to undermine the schools that anchor the poorest neighborhoods.

Chicago Public Schools Teeter on Fiscal Precipice

The Chicago Public Schools instituted a sudden, early February, unpaid four-day teacher furlough to save $35 million, along with a $46 million spending freeze on school discretionary funds that pay for textbook purchases, after-school programs, field trips, and hourly aides. But, at the end of last week after massive protests, the school district restored $15 million, when it became apparent that the city’s poorest schools had experienced the deepest cuts.

Lauren Fitzpatrick of the Sun-Times reports: “Money was given back to 434 schools that qualify for federal Title I money for low income children….”  “The Sun-Times found that schools where three of four children are low-income generally had their discretionary funds cut at twice the rate as schools where one in four children were low-income. The newspaper also found that majority Hispanic schools saw freezes that were twice as large as majority white schools.”

Juan Perez of the Chicago Tribune explains why schools serving the poorest Hispanic and African American students were unfairly penalized by the budget freeze: “CPS originally determined the amount of money schools had to cut in the spending freeze by looking at the money each building held in three accounts: funds received from the district on a per-pupil basis; supplemental state aid meant to help educate low-income students; and federal grant funds. These state and federal dollars aren’t meant to be used on general operating costs, but are intended to keep class sizes low and support learning programs in schools that have a higher number of low-income and minority students…  If poorer schools or buildings with large numbers of English-language learners had not yet spent their state and federal aid, those schools had more money to cut and were then in many cases hit hardest by the spending freeze.”

The problem is that nobody knows where the money to cover the restoration of the funds is going to come from. Restoring $15 million to the poorest schools will add to the district’s projected budget gap, bringing the total shortfall to $129 million. The school district will struggle to borrow because its credit rating has fallen to junk status. For all these reasons, earlier this month the Chicago Public Schools sued the state of Illinois, “accusing the state of employing ‘separate and unequal systems of funding for public education in Illinois.’ Chicago Public Schools officials describe the legal move as the ‘last stand’ for a cash strapped district that’s ‘on the brink.’”

Yesterday afternoon, Forrest Claypool, the school district’s Chief Executive Officer, announced that unless the state of Illinois supports the district with additional funding, the school year for students will end on June 1st— nearly three weeks early. DNA Info quotes Claypool:  “This is the worst-case scenario… We have very few good options left.”

A big part of the problem is Illinois’ school funding, and a years’ long pension crisis. Perez notes that this year’s CPS budget was based on a promised $215 million from the state for teacher pensions. However, Governor Bruce Rauner vetoed the pension deal.  And  negotiations continue in Springfield to  get a state budget passed and to fix the state’s school funding.  John O’Connor of the Associated Press reminds us that, “Illinois has been without a budget since July 2015, two months after Rauner took office, the nation’s longest state budget stalemate in nearly a century.”  O’Connor adds: “Even without an annual spending plan, state government continues to operate largely because of court orders and intermittent appropriations by lawmakers.  But the picture is bleak.  Without action, Illinois will have a $5.3 billion deficit when the current fiscal year ends June 30. There is a backlog of $11 billion in overdue bills. State pension programs are $130 billion short of what they need to pay promised benefits to retired and current employees.”

In a new report for the Education Law Center and Rutgers Graduate School of Education, America’s Most Fiscally Disadvantaged School Districts, school funding expert Bruce Baker highlights the funding crisis for Chicago’s schools: “This report identifies the most fiscally disadvantaged school districts in the country—those with higher than average student needs in their labor-market location and lower than average resources when state and local revenues are combined… The city of Chicago is, year after year, one of the most fiscally disadvantaged large urban districts in the nation.  Illinois has a highly regressive school funding system.”

Explosion of Private Contracting in Education Created Climate for Chicago Scandal

Sarah Karp, until recently a distinguished reporter for Catalyst Chicago, a publication whose logo says it’s mission is “independent reporting on urban schools,” originally broke the story on the role of Barbara Byrd-Bennett, Chicago’s schools CEO, in securing a huge no-bid contract for school leadership training for her former employer in Chicago, a private contractor, SUPES Academy.

Byrd-Bennett served as CEO of the Chicago Public Schools for thee years before she was accused of having illegally secured a lucrative contract for SUPES.  On Tuesday, as reported by the Chicago Tribune, Byrd-Bennett pleaded guilty “to a single felony count of wire fraud for steering multimillion-dollar, no-bid contracts to a former employer in exchange for the promise of up to $2.3 million in kickbacks.”  Byrd-Bennett never received the bulk of the kick-backs.  Money had been promised as a “signing-bonus” if she returned to SUPES after her tenure at the Chicago Public Schools ended.

Karp, the reporter who persistently investigated a story others ignored, has left Catalyst to join the investigative team at the Better Government Association, and this week she comments on what she believes is the serious issue in the Barbara Byrd-Bennett scandal: the danger posed by today’s vast expansion of private contracting in education.  Speaking of Byrd-Bennett’s fall, Karp writes: “The increasing presence of private money in public education—and the fierce competition to get at that money—made such a scenario almost inevitable.”

Has private contracting increased?  Here is how Karp describes the expansion of contracting in Chicago and across the nation:  “Public schools have long outsourced certain services, covering, for instance, transportation and meals. These days, however, numerous jobs are handled by companies, from custodians and nurses and recess monitors.  Even instruction is sometimes out-sourced, often through computers via education software.  Not to mention that currently more than a fifth of Chicago’s public schools are run entirely by private entities in the form of charter schools or contract schools. Under state law, schools can only be run by not-for-profits.  Yet under Byrd-Bennett, CPS officials devised a way to have for-profit companies run schools by technically making them contractors nestled in a CPS department. CPS isn’t alone. Private companies are all over education.”

Contracting was vastly expanded after 2009 by the U.S. Department of Education’s federal grant competitions, Race to the Top and School Improvement Grants.  Karp explains: “Under U.S. Education Secretary Arne Duncan’s ‘School Improvement Grants,’ the $3.5 billion initiative to improve the nation’s bottom 5 percent of schools, among the ways to qualify for funding: Work with outside companies or organizations.”  Another serious issue: When federal dollars are directed to schools through one-time grants, the funds are less likely to reach the classroom through such investments as reducing class size or adding counselors or social workers.  Because a grant is a one-time cash infusion, it cannot be spent for continuing operating expenses; hiring contractors to help with staff development becomes an appealing use for the money.

In Chicago the people who owned SUPES Academy—and sold what they called “leadership” training to the school district thanks to a no-bid contract—brought the following professional credentials, according to Karp: “One of the outgrowths of so much public education money available to private companies is that entrepreneurs whose expertise is more in sales or making money are getting in the business of education.  Solomon was a disgraced dean of students in a suburban high school district who had spent the last decade being a salesman.  Vranas previously started a wireless Internet company and a venture capital firm.” Gary Solomon and Tom Vranas have also been indicted as part of the investigation of SUPES in Chicago.

Chicago School District Financial Crisis: What Does It Mean?

Chicago Public Schools (CPS) is a district in serious financial crisis. Here is how Chicago Catalyst describes what happened last week: “Chicago Public Schools announced Wednesday that it would cut $200 million in spending for the coming school year by eliminating 1,400 positions, leaving special education vacancies open and cutting stipends for elementary school sports coaches, among other reductions.”

Here is some background.  The Chicago school district, where our current U.S. Secretary of Education Arne Duncan served as CEO from 2001 through 2008, is important for several reasons. Chicago is the nation’s third largest school district, a district coping with the issues that most seriously challenge urban schools these days—concentrated poverty, intensifying racial segregation, and inadequate state funding to address well-documented problems arising from widespread concentrated poverty.  In its new report that compares school funding across the states, the Education Law Center gives Illinois an “F” in the category of state school funding distribution: Illinois is described as “regressive”—providing less funding overall for its high-poverty school districts.  In its most recent report on overall school funding, the Center on Budget and Policy Priorities explains that Illinois is one of the states where state funding for schools remains below what it was in 2008, prior to the Great Recession—9.3 percent below its 2008 investment in inflation-adjusted dollars. And the Chicago schools have been the laboratory for “portfolio” school reform based on the expansion of school choice—closure of neighborhood schools, expansion of charter schools, and private contracting.

How did today’s financial crisis arise for Chicago’s schools?  Actually, it wasn’t sudden, explains Chris Fusco, reporter for the Sun Times:  “Over the past two decades, the nation’s third-largest school system has dug itself a massive financial hole by repeatedly borrowing money—from lines of credit to bonds to risky interest rate ‘swap’ deals—even as it skipped payments to the Chicago Teachers’ Pension Fund…. CPS still owes billions on borrowing deals dating to the mid-1990s, when then-Mayor Richard M. Daley took formal control of the school system, which then began renovating and building schools using borrowed money.  After Emanuel took office in 2011, the school board continued to borrow, including a bond deal of nearly a half-billion dollars this spring.  Those bond sales, in March and April, allowed CPS to refinance debt and repay a line of credit used to finance construction projects that brought air-conditioning, computer science labs and other improvements to schools the past two years… The more the district turns to the bond market, though, the more fees it must pay to banks, financial advisers and other borrowing professionals.”  The Sun Times reports that $18.1 million in fees has been paid to financial and legal firms since 2011.

The immediate crisis last week arose when the state refused to let CPS delay and renegotiate a payment that had come due to its teachers’ pension program.  The Chicago Tribune reports that the district made the payment it owed—$634 million—but will have to impose austerity measures as a first step to improving its overall finances: “CPS has yet to finalize a budget for the fiscal year that began Wednesday.  Last year’s operating budget totaled about $5.8 billion and the district in 2014 employed about 40,000 workers.”

Things won’t turn around immediately, however, despite cuts that will inevitably hurt the classroom. Although politicians in Illinois are blaming the pensions that have over the years been negotiated in good faith by the teachers’ union, the real problem has been politicians who have deferred required payments into the pension system and who have then borrowed from the pension fund to pay operating expenses while continuing to defer repayment of the loans. After making its payment of $634 million to the teachers’ pension fund last week, CPS turned around and requested a loan from the pension fund.  Crain’s Chicago Business explains: “In one bizarre note, officials confirmed that CPS has asked for what amounts to a $500 million loan from the Chicago Teachers’ Pension Plan—the agency that just got the $634 million that triggered the current crisis. The loan technically would be a deferral of additional payments required later this year, with CPS promising to pay it back with interest in fiscal 2017.”

As part of a solution, Mayor Rahm Emanuel has asked the state to pay a greater share of teachers’ pensions and tried to shift the blame to teachers by demanding that they substantially increase their own contributions to their pensions.  According to the Chicago Tribune, Mayor Emanuel has also pledged to restore a dedicated property tax levy for teacher pensions, a levy that would, according to Emanuel raise $175 million annually.  Such a tax existed before 1995, when it was eliminated by Mayor Richard M. Daley.

The Chicago Teachers Union has put together a thorough analysis that counters some of the rhetoric coming from the mayor and school administrators, who claim to have been saving money by reducing significantly the costs for school administration in recent years: “But we can see that despite its narrative of increasing supports and delegating control to the schools, CPS continues to invest in departments to implement its top down agenda.  The Office of Strategy Management was newly created in 2012, and was budgeted for just under $1 million this fiscal year.  Combined with other rearranged departments involved in standardized-testing (Department of Assessment), expanding school choice (Innovation and Incubation), and test-based management of schools (Accountability), CPS now budgets a total of $6.1 million just for the position salaries across these departments.  Departments with similar functions in 2011, including New School Development, the Office of Performance, Office of Student Assessment, and School Demographics and Planning, budgeted a total of $5.5 million for position salaries…  As they have rearranged network offices numerous times, a notable trend is that more of the salaried positions across those offices are for upper and middle management.”

The Chicago Teachers Union report scathingly criticizes the false economies of a vast increase in contracting-out of services once performed by school employees: “The $260 million three-year contract with Aramark for custodial services has already gone $22 million over budget in its first year,” leaving schools poorly served and even without adequate bathroom supplies for the children.  “The $20 million no-bid contract for SUPES was approved even though a principal training initiative was already in place through the Chicago Leadership Collaborative.”   CPS has increased the outsourcing of school nursing services, “reaching over $30 million in FY 2015.  CTU nurses have reported that nurses from the temporary staffing agencies have not shown up for work… (O)utsourced services only create another managerial obstacle for schools to navigate—instead of a dependable resource.”

According to the Sun Times, “CPS’ credit rating has plummeted to ‘junk’ status, forcing up interest rates on its most recent bond sale.”

Income Inequality, Educational Inequity, Privatization…  Pittsburgh to Chicago

Two blog posts arrived in my in-box today.  The first is from a young woman, Jessie Ramey, whose blog is called Yinzercation and whose recent post is titled Diane Ravitch Launched, Yinzer-Style.  This sent me, of course to Google and ultimately Wikipedia for a definition: “Yinzer is a 20th century term playing on the Pittsburgh, Pennsylvania second-person plural vernacular “yinz.”  This post is about Diane Ravitch’s book launch for Reign of Error on last Monday night at a synagogue in Pittsburgh.

The event drew a thousand people and involved presentations by several school music groups.  Writes Ms. Ramey, ” Several student leaders from the Westinghouse Bulldogs high-stepping marching band joined Dr. Ravitch on stage to explain what has happened to arts education, music, and band at their high school. Despite the proud Westinghouse legacy that includes many of this country’s jazz greats (think Billy Strayhorn, Al Aaron, Mary Lou Williams and a host of others), the ragtag band has almost no instruments, hasn’t had new uniforms in more than a dozen years, and can’t even afford drumsticks. Yet the students are passionate about holding their band together.”

The second blog post, The Myth of the Level Playing Field,  is from the Rev. John Thomas at Chicago Theological Seminary.  He too writes about public education, describing the scene as he rides his bike to work each morning down Stony Island Parkway, “past two schools within a quarter of a mile of each other.  On one stretch… sits the new Earl Shapiro Hall, a slick, multi-million dollar campus for the early childhood program of the University of Chicago Lab Schools.”  This is the school where President Obama sent his children when he lived in Chicago and where Mayor Rahm Emmanuel now sends his children.  According to Rev. Thomas, “Full day tuition for nursery through grade 5 at the Lab School is $25,300 a year.”

Rev. Thomas also rides his bike past Bret Harte Elementary School, a Chicago public math and science magnet school. Comparing the expenditure per pupil in the two schools, Rev. Thomas writes: “Per pupil spending in the Chicago Public Schools was about $12,000 per student in 2011 before this year’s round of large budget cuts.  While these numbers admittedly compare apples and oranges, the fruit is still rotten.”

Rev. Thomas examines updated research on income inequality recently released by University of California economist, Emmanuel Saez, research documenting that America’s growing inequality is unprecedented—with the top 1 percent controlling 95 percent of real income growth between 2009 and 2012.  “The children skipping to school on the sidewalks along Stony Island have not read Saez’s report,” writes Thomas. “They’re just living it.  The enormous imbalance of privilege will become more and more apparent to the children at Bret Harte while the children at the Lab School will move through lives often shielded from the tough south side neighborhoods where the pitiful scraps of America’s economy are tossed.”

The subject of Ravitch’s new book is the damage being done to public education by policies that encourage privatization and that punish rather than helping public schools in the poorest neighborhoods of our big cities.  Pittsburgh’s Jessie Ramey describes what she views as the kernel of Ravitch’s new book: “Our pubic schools are public goods, and we must treat them that way…. Public education is a community responsibility, but the driving ideals of privatization—competition, choice, measurement, rank sorting, punishment, efficiencies—undermine that shared obligation.”