Bruce Baker’s New Book on School Finance Develops a Scathing Critique of Charter School Expansion

Rutgers University school finance professor, Bruce Baker’s new book, Educational Inequality and School Finance: Why Money Matters for America’s Students, covers the basics—how school finance formulas are supposed to work to ensure that funding for schools is adequate, equitable, and stable.

Baker also carefully refutes some persistent myths—Eric Hanushek’s claim that money doesn’t really make a difference when it comes to raising student achievement, for example, and the contention that public schools’ expenditures have skyrocketed over the decades while achievement as measured by test scores has remained flat.

Baker does an excellent job of demonstrating that far more will be needed for our society appropriately to support school districts segregated not only by race, but also by poverty. The final sections of the book are a little technical. They explain the construction of a more equitable system that would drive enough funding to come closer to what is really needed in school districts serving concentrations of children in poverty.

Baker’s book is especially important for updating a discussion of basic school finance theory to account for today’s realities.  He shows, for example, how the Great Recession undermined adequate and equitable funding of public schools despite that states had formulas in place that were supposed to have protected children and their teachers: “The sharp economic downturn following the collapse of the housing market in 2007-08, and persisting through about 2011, provided state and federal elected officials a pulpit from which to argue that our public school systems must learn how to do more with less… Meanwhile, governors on both sides of the aisle, facing tight budgets and the end of federal aid that had been distributed to temporarily plug state budget holes, ramped up their rhetoric for even deeper cuts to education spending… Notably, the attack on public school funding was driven largely by preferences for conservative tax policies at a time when state budgets experienced unprecedented drops in income and sales tax revenue.” (p. 4)

And for the first time in a school finance book, Baker explores the impact of two decades of charter school expansion on the funding of public schools. Although the conventional wisdom promoted by the corporate reformers has said that competition from independent charter school operators would introduce innovation and thereby stimulate academic improvement in public schools, not enough people have seriously considered the fiscal implications of slicing a fixed school funding pie into more pieces.  Baker examines these fiscal implications of charter school expansion from many perspectives.

Charters are, first, one of those “false promises of cost-free solutions”: “The theory of action guiding these remedies and elixirs is that public, government-run schooling can be forced to operate more productively and efficiently if it can be reshaped and reformed to operate more like privately run, profit-driven corporations/businesses… Broadly, popular reforms have been built on the beliefs that the private sector is necessarily more efficient; that competition spurs innovation (and that there may be technological solutions to human capital costs); that data driven human capital policies can increase efficiency/productivity by improving the overall quality of the teacher workforce. One core element of such reform posits that US schools need market competition to spur innovation and that market competition should include government-operated schools, government-sanctioned (charter) privately operated schools, and private schools…. (T)here is little reason to believe that these magic elixirs will significantly change the productivity/efficiency equation or address issues of equity, adequacy, and equal opportunity.” (pp. 6-7)

Baker also speaks to the philosophical justification frequently offered to justify the rapid expansion of school choice—that justice can be defined by offering more choices for those who have few: “Liberty and equality are desirable policy outcomes. Thus, it would be convenient if policies simultaneously advanced both.  But it’s never that simple.  A large body of literature on political theory explains that liberty and equality are preferences that most often operate in tension with one another. While not mutually exclusive, they are certainly not one and the same. Preferences for and expansion of liberties often lead to greater inequality and division among members of society, whereas preferences for equality moderate those divisions. The only way expanded liberty can lead to greater equality is if available choices are substantively equal, conforming to a common set of societal standards. But if available choices are substantively equal, then why choose one over another.  Systems of choice and competition rely on differentiation, inequality, and both winners and losers.” (p. 28)

Baker addresses Betsy DeVos’s contention that, “Choice in education is good politics because it’s good policy. It’s good policy because it comes from good parents who want better for their children. Families are on the front lines of this fight; let’s stand with them…This isn’t about school ‘systems.’  This is about individual students, parents, and families. Schools are at the service of students. Not the other way around.”  Here is Baker’s answer: “The ‘money belongs to the child’ claim also falsely assumes that the only expenses associated with each individual’s education choices are the current annual expenses of educating that individual…. It ignores entirely marginal costs and economies of scale, foundational elements of origins of public institutions.  We collect tax dollars and provide public goods and services because it allows us to do so at an efficient scale of operations… Public spending does not matter only to those using it here and now. These dollars don’t just belong to parents of children presently attending the schools, and the assets acquired with public funding… do not belong exclusively to those parents.” (p. 30)

Are charter schools more efficient at improving school achievement measured by test scores and are they fiscally efficient?  “(A) close look at high-profile charters in New York City indicates that their success reflects their access to additional resources and a fairly traditional approach to leveraging them… For each of these major operators… the share of low-income (those who qualified for free or reduced-price lunch ), English language learners, and children with disabilities is lower than for district schools, in some cases quite substantially.  On average, these schools are serving far less needy and thus less costly student populations than are the district schools.”  Baker provides details of major New York City charter networks’ expenditure patterns; what he finds is that the best-funded allocate their instructional expenses in a similar way to traditional public schools: “Collectively, these figures tell a story of high-profile, well-funded CMOs in New York City leveraging their additional resources in three logical and rather traditional ways by hiring more staff per pupil… by paying their teachers more at any given level of experience and degree; and… by paying them more to work longer school hours, days, and years.  In other words, they pay more people for more time.” He concludes: “Researchers, policy makers, pundits, pontificators, and even self-proclaimed thought leaders have yet to conjure some new ‘secret sauce’ or technological innovation that will greatly improve equity, adequacy, and efficiency.  Human resources matter, and equitable and adequate financial resources are necessary for hiring and retaining the teachers and other school staff necessary to achieve equal educational opportunity for all children.”  (pp. 68-79)

Charter schools were originally promised as an incubator for innovation. Are they really innovative?  “While modern charter schooling was conceived by some as a way to spur innovation—try new things, evaluate them, and inform the larger system—studies of the structures and practices of charter schooling find the sector as a whole not to be particularly ‘innovative.’  Analyses by charter advocates at the American Enterprise Institute have found that the dominant form of specialized charter school is the ‘no-excuses model,’ which combines traditional curriculum and direct instruction with strict disciplinary policies and school uniforms, and in some cases extended school days and years.” (p. 68)

Expansion of charter schools undermines equity in a school district: “Expanding the mix of providers and provider types in a common space is more likely to result in increased variations in quality and spending than in convergence toward equity. Private providers have widely varied access to outside resources and thus highly unequal opportunities for ‘revenue enhancement.’ The incentive for school operators is to pursue whatever means necessary to be the preferred school of choice (for the preferred students)—not to spend only what is needed to provide equal opportunity to achieve common outcomes… Much of the expansion of charter schooling occurred during the recession. States added schools while reducing overall funding, making inequitable choices on top of already unequal and inadequate systems… Cursory descriptive analyses, as well as more complex longitudinal models, suggest that states which most expanded their charter sectors are also the states which most reduced their overall effort toward financing public education. This is a disturbing finding in part because charter schools also rely on public financing. So reducing public financing affects negatively both district and charter schools. Also increasing the number of schools, holding enrollment constant, or shifting students from one sector to another creates additional costs….” (pp 157-158) (emphasis in the original)

How has the expansion of school choice undermined traditional public schooling? Here is the myth: “Everyone receives adequate schooling equitably by way of access to great choices,” writes Baker. “But it doesn’t work that way. The ‘best’ choices are often those that can garner additional resources. And the ‘best’ choices will always have limited availability due to numerous constraints on scaling up, including access to supplemental resources. Yet the myth that it might work has arguably fueled even greater systemwide resource deprivation in states that have most expanded choice.  The creation of dual systems of education serving common geographic spaces is further eroding equity and, to an extent, efficiency. Specifically, charter school expansion and citywide choice models, lacking advanced planning and sufficient regulation, complicate equitable resource distribution across schools and children, including access to space and transportation.  Managing equity in a competitive system using alternative models of governance and operations for both day-to-day activities of schooling and for access to and maintenance of capital assets (land, buildings, equipment) is complex, to say the least. Policy makers have managed those complexities poorly and have allowed the dual systems to exacerbate rather than ameliorate inequality.” (p. 136)

Bruce Baker’s critique of the expansion of publicly funded but privately managed charter schools deserves attention from policy makers. Advocates need to study and internalize the details of the argument Baker develops against marketplace school choice in Educational Inequality and School Finance: Why Money Matters for America’s Students.

National School Funding Expert Shreds Far-Right Rationale for Portable School Funding

Betsy DeVos, the U.S. Secretary of Education, has gone around relentlessly announcing her philosophy of education, even in places where the message might not be age-appropriate. For example, last fall to celebrate the beginning of the school year, DeVos visited a K-8 school in Casper, Wyoming, where she told the children: “Today, there is a whole industry of naysayers who loudly defend something they like to call the education ‘system.’ What’s an education ‘system’?  There is no such thing!  Are you a system?  No, you’re individual students, parents and teachers. Here in Casper, and even within your individual families, the unique needs of one student aren’t the same as the next, which is why no school… is a perfect fit for every student.  Schools must be organized around the needs of students, not the other way around…”  Earlier in the summer, she had said the same thing to a more comprehending and likely audience at the annual meeting of the American Legislative Exchange Council: “There are individual men and women and there are families… and no government can do anything except through people and people look to themselves first. This isn’t about school ‘systems.’ This is about individual students, parents, and families. Schools are at the service of students. Not the other way around.”

DeVos’s words have been consistent, despite that to me they sound like gobbledygook. How do we separate the needs of the individual children being educated from the system of schools our society has set up for that purpose? Is DeVos’s message really just an empty, educational-libertarian linguistic construction to convey the message she stated bluntly in another 2015 speech, when she declared, “Government really sucks.”?

Jeb Bush’s Foundation for Excellence in Education, now renamed as ExcelinEd, recently released a brief to help us understand what DeVos means when she says, “This isn’t about school ‘systems.’ This is about individual students, parents, and families.”  The new brief, Student-Centered State Funding: A How-to Guide for State Policymakers, purports to tell states how to remake their school funding distribution formulas in order to make each child’s school funding fully portable—a little backpack full of cash that the student can carry with her as her parents choose the school they believe will perfectly meet her needs. The brief seems to emphasize public school choice across school districts, but the implication is that the state/local public funding would be fully portable to whatever school, public or private, the parent might choose.

ExcelinEd’s brief says there are five simple steps for remaking a state’s school finance: “(1) Establish a base funding amount that every district receives for each student served… (2) Require local funding for a district on a per student basis…. (3) Structure all funding for students with special needs or disadvantages as a weight…. (4) Adjust funding for districts each year based on the number and characteristics of students they are serving. (5) Remove restrictions on how districts spend money….”  ExcelinEd defends its new strategy as more transparent, more empowering of districts and parents, and fairer.

The National Education Policy Center (NEPC) at the University of Colorado asked Bruce Baker, the school finance expert at Rutgers University, to evaluate ExcelinEd’s new plan.  NEPC just published Baker’s review.

Baker is not impressed: “First, the brief advances the false dichotomy that state and district school finance systems should focus on funding the child, not funding the (bureaucratic, adult-centered) institutions that serve those children. This false dichotomy wrongly asserts there is no benefit to children of equitably and adequately financing educational institutions, and ignores the fact that it ultimately takes institutions, institutional structures and governance to deliver the relevant and appropriate programs and services… Second, the brief is based on overly simplistic, frequently misrepresented, and often outright incorrect versions of the status quo.  This includes overbroad mischaracterizations of how schools are currently financed…  Third, the details of the brief’s proposals and espoused benefits are entirely speculative and unsubstantiated….”

In its brief, ExcelinEd describes its theory about how states currently operate public schools: (1) that, “states fund specific staffing positions, services, programs or schools rather than students,” (2) that “states have hold harmless provisions such that districts get the same funding even if they lose students,” (3) that “states allow local funding of districts that is not dependent on the number of students,” and (4) that “states provide additional funding to districts that have a relatively small number of students.”  Baker  demonstrates the flaws in ExcelinEd’s argument: “The authors appear to be unaware or simply ignore the vast body of peer reviewed literature for guiding a) the setting of foundation levels, based on ‘costs’ of providing children with equal opportunities to achieve common outcome goals, b) the determination of additional costs associated with variation in individual student needs and in collective student population needs, c) the additional costs associated with differences in economies of scale and population sparsity, and d) the differences in costs associated with geographic differences in competitive wages for teachers and other school staff.  Additionally, literature dating back nearly 100 years addresses methods for determining equitable local contribution toward foundation spending levels.”

Baker condemns ExcelinEd’s brief for ignoring that school funding inequity is universally connected to disparities in the local property taxing capacity of local school districts. He explains that a primary purpose of state aid formulas is to equalize—to compensate for unequal local capacity—“to… keep in check per-pupil inequity resulting from local property tax revenues.”  “But the obsession in the ExcelinEd policy brief seems to be primarily on the fact that available funding for school districts is not 100% linked to the coming and going of individual students… ExcelinEd offers a bizarre illustration of how districts could increase or decrease their property taxes as enrollment shifts occur, with no consideration whatsoever of the primary basis by which local contributions are determined…. That is, to ensure that local jurisdictions, regardless of their wealth, can attain adequate and equitable per-pupil resources… The authors do not address the property wealth equalization goals of state school finance formulas….”

Baker further condemns ExcelinEd’s failure to acknowledge the role of concentrated student poverty across a local district’s student population, and failure to distinguish concentrated poverty from any individual student’s personal lack of resources. While it would be relatively easy to compensate for a child’s personal poverty with weighted additional funding the child would carry in his personal backpack full of cash, concentrated poverty is a more serious challenge that is glossed over in ExcelinEd’s brief.  Here is Baker: “Student demographic factors that affect the institutional costs of achieving common outcomes come in two parts—individual factors related to specific-student needs (language proficiency, disability) and collective population factors, including poverty, the concentration of poverty, and interaction of poverty with population density.  These ‘social context’ factors do not simply move with the child. A specific child’s marginal cost in one social context setting might be quite different than in another.” “Here the authors choose to outright deny that the marginal costs of an additional low-income student in a predominantly low-income setting might be different from the marginal costs of that same student in a higher income setting, and that accommodating those costs might improve equity…. (T)his means simply ignoring a legitimate driver of the cost of providing equal opportunity and thus knowingly disadvantaging students in schools with higher concentrations of poverty, merely to preserve their dogmatic view that all funding can and should be ‘student centered.’ That is, the authors are rationalizing the maintenance of inequality, because it’s just too hard to accommodate in their pro-choice framework.”

Baker notes that ExcelinEd’s brief denies the existence of stranded costs when children leave a school district for school choice: “(T)he authors’ treatment of funding related to declining enrollment fails to comprehend institutional cost structures…. Rather, in their view, any dollar that does not travel immediately with the child is a dollar spent inequitably and/or inefficiently…. (I)nstitutions providing services to the state’s children must manage fixed costs (institutional overhead, including capital stock), step costs (classroom/level site expenses, which do not vary by student), and costs which vary at the level of the individual student. All costs do not, nor can they, nor have they ever, regardless of institutional type, vary at the level of each individual student.”

Baker condemns ExcelinEd’s promise that school choice and portable funding will contribute to equity: “The brief’s central premise is that adopting ‘student-centered’ funding to enable parental choice of schools necessarily leads to a fairer and more transparent system for financing children’s schooling…. (T)he brief is predicated on the wrong assumption that most if not all state school finance systems and district budgeting models… operate in a way that favors institutions (and adult interests) over children.”

“Finally, to the extent that the end goal is to increase choice, it should be noted that increasing choices among different types of operators, with different financial and student service incentives, and different institutional cost structures and resource access, tends to erode, not enhance equity.  That is, increased choice in common spaces often leads to increasingly unequal choices.”

Kansas Supreme Court Rejects Education on the Cheap; Affirms Equity and Adequacy

I have been reading the introduction and many of the short essays that make up David Berliner and Gene Glass’s new book, 50 Myths & Lies that Threaten America’s Public Schools.  Many of the myths Berliner and Glass explore are about educating on the cheap.  The book has driven me to reflect on why we are so eager to go for the “low taxes” argument these days.

Have we lost our sense of common purpose and public obligation?  Have we retreated so far into our gated communities, become so blinded by privilege and inequality that we’ve forgotten the needs of other people’s children?  Or maybe it’s because we see the children in public schools as other people’s children.  Or we believe the myth that money really doesn’t affect school achievement. Do we think breaking the unions or going for two-year teachers trained in five-week crash courses will suffice, because schools will be less expensive if the teachers are cheaper?  Maybe we are in awe of technology and believe those who tell us we can save money by cutting the number of teachers in half if we double the number of computers or tablets.  Or maybe in a consumer society that worships celebrity and glitterati, we’d just rather spend taxes on sports stadiums.  And anyway, children are resilient.

Such thoughts were my personal context for receiving the good news about Friday’s very important Kansas Supreme Court decision on school funding.  At issue in Gannon v. State of Kansas was a 16.5 percent cut in Kansas education funding since 2008, “accelerated” according to a recent op ed in the NY Times, “by a $1.1 billion tax break, which benefited mostly upper-income Kansans, proposed by Governor Brownback and enacted in 2012.”  Just over a year ago, a trial court found for the parent-plaintiffs, declaring that cuts to school funding reduced per-pupil expenditures far below a level suitable to educate children under the requirements of the state constitution of Kansas.  The case was appealed by the state, and the Kansas Supreme Court released its finding last Friday, March 7.

The Education Law Center explains the significance of Friday’s decision by which the Kansas Supreme Court “upheld the right of Kansas students to educational opportunity and reaffirmed the court’s… pivotal role in upholding the Kansas Constitution.” The NY Times elaborates: “The court rejected the contention that it lacked the authority to make decisions on school funding, saying that it has the duty to determine whether legislative acts comply with the Kansas Constitution. ‘The judiciary is not at liberty to surrender, ignore or waive this duty,’ the decision said.”

The Education Law Center explains that the court upheld the principal of equity by reiterating “the Kansas requirement that all ‘school districts must have reasonably equal access to substantially similar educational opportunity through similar tax effort.'”   According to the NY Times, in its decision last Friday, the Court ordered the legislature by July 1 to, “appropriate tens of millions of dollars in payments to poorer districts to make the school system more equitable.”

Also at issue in this case was the definition of adequate state school funding.  The Court reiterated the need for the state to raise the level of school funding to provide a quality education for the children of Kansas, but it sent this part of the case back to the lower court to reconsider how much is enough and to give plaintiffs the opportunity to present more evidence.  There is considerable speculation that Kansas will need to raise taxes to meet the requirement for equity and eventually to bring school funding to a level deemed adequate.

A publication called The Wire comments on how the decision conflicts with Governor Brownback’s agenda:  “The decision is probably not so great news for Kansas Gov. Sam Brownback’s ambitions to lead an ‘American Renaissance’ by making his state a model for lowering taxes and reducing government.  Brownback outlined his vision in January during his State of the State speech, where the conservative added that he believed Kansas’s governing strategy would allow people to ‘realize their God-given potential’ and that ‘our dependence is not on Big Government but on a Big God that loves us and lives within us.'”

Of course Kansas’s school funding decision will affect only Kansas.  It would be nice to think that its subject—education on the cheap—is a problem only for Kansas, but that’s just not true.  Cuts to education funding in Kansas are a lot like what’s been happening in my state, Ohio, where two weeks ago the Plain Dealer published a 30-year history of Ohio tax cutting:  “In 1985, legislators…  cut the income tax by 15 percent over three years.  Effective in 1987, they cut the income tax again.  In 1996, they created a mechanism to cut the income tax when Ohio runs a surplus.  In 1997, they indexed the personal exemption to inflation; and in 2005, they cut the income tax by 21 percent over five years.  What’s more, Ohio’s current budget, signed by Kasich last June, cuts the income tax by 10 percent over three years.”  It should not be surprising that Ohio school districts are more and more dependent on their capacity to raise local revenue and that tuition has risen steadily at all of our state universities.

Paying for education is also a hot topic in New York, where Governor Andrew Cuomo refuses even to let New York City Mayor Bill deBlasio move forward with his plan to tax people in the city with incomes over $500,000 annually to pay for universal pre-kindergarten and after-school programs for students in middle school. Governor Cuomo is running for re-election, and a statewide tax cut is to be the centerpiece of his campaign.

Expert Documents Diminishing Commitment to School Funding Equity

By definition, justice must be systemic. In public education our society will be just when our laws distribute opportunity equally to all children whatever their school and wherever their school district.

In a blog post to mark the transition to a new year, Rutgers University school finance expert Bruce Baker reflects on a primary injustice in our society’s provision of public education: “The bottom line is that providing for a high quality, equitably distributed system of public schooling in the United States requires equitable, adequate and stable and sustainable public financing. There’s no way around that. It’s a necessary underlying condition.”  Baker worries that we are in the midst of a “post-equity era in school finance.”

Baker writes: “I too often hear pundits spew the vacuous mantra – it doesn’t matter how much money  you have – it matters more how you spend it. But if you don’t have it you can’t spend it. And, if everyone around you has far more than you, their spending behavior may just price you out of the market for the goods and services you need to provide (quality teachers being critically important, and locally competitive wages being necessary to recruit and retain quality teachers).  How much money you have matters. How much money you have relative to others matters in the fluid, dynamic and very much relative world of school finance (and economics more broadly). Equitable and adequate funding matters.”

While the details of Baker’s fairness ratio—by which he evaluates the fairness over time of a number of state school finance systems—can get a little complicated for the general reader, the trends he traces between 1993 and 2012 in New Jersey, Massachusetts, Ohio, Connecticut, Kansas, New York, Massachusetts, Pennsylvania, and Illinois are crystal clear.  All of these funding systems have become less eqitable since the 2008 recession.

Baker concludes: “And yet we wonder why our lower income children’s educational outcomes continue to suffer? We pretend that if only our higher poverty districts would fire that bottom 5% of teachers who produce bad test scores (gains), they’d do better (because of course, they can hire a new crop of better teachers even if they can’t pay a competitive wage?). We pretend that expanding charter schooling, to siphon off the less needy among the needy into privately subsidized (soft money) schools (and diminished legal protections) that somehow we’ll achieve a desirable systemwide effect?”  “Meanwhile, the damage that’s been done to our public education systems by outright and at times belligerent neglect of state school finance systems has, in the past 3 years alone set us back in many cases 20 years.”