Publications - Adequacy

National Center on Education Finance

Adequacy and Education Finance

On November 21, 2002, the Arkansas Supreme Court found the state's education finance system unconstitutional. Specifically, the court found the system in violation of the education clause found in the state's constitution that mandates the state to provide "a general, suitable and efficient system of free public schools." These education clauses, which can be found in every state constitution, may also refer to a "thorough and efficient" or "uniform and appropriate" education system. "Adequacy" is the general term used for these education clauses, and over the past 15 years over 30 states have been involved in litigation over the adequacy of their education systems with plaintiffs winning two-thirds of the cases. In the Arkansas case the court stated:

We emphasize, once more, the dire need for changing the school-funding system forthwith to bring it into constitutional compliance. No longer can the State operate on a "hands off" basis regarding how state money is spent in local school districts and what the effect of that spending is. Nor can the State continue to leave adequacy and equality considerations regarding school expenditures solely to local decision-making (Lakeview School District et al. vs. Arkansas, 2002).

An adequate education system would provide all students in the state with an opportunity to meet education goals. Parts of an adequate education system would include education standards that would determine if education goals were being met, assessments to measure progress on meeting standards, teachers, supplies, curriculums etc. In addition, the funding level that would pay for the whole system would also have to be appropriate. Simply stated, there are two major components in adequacy, one being what an adequate education entails (standards, teachers, curriculums etc.), and the other being the appropriate funding level to provide such a system.

Over the past 15-20 years, states have been very active in determining what an adequate education entails by engaging in standards based reform and aligning assessments, teacher training and curriculums. However, states have not been as involved in determining what funding level is required to pay for such systems. This lack of "rational" for funding levels and the methodologies to align finance with standards based reform is why plaintiffs have been so successful in adequacy lawsuits. This paper examines the history of the adequacy movement and how states are now creating methodologies that will determine adequate education finance systems.

Adequacy in Education Finance

Many see the Kentucky Supreme Court decision in Rose vs. Council for Better Education, as the beginning of the modern adequacy movement. In finding the state entire education system unconstitutional, the Kentucky Supreme Court not only set the education goals that the system should strive toward, but also demanded that the legislature provide enough funding for students to be able to meet these goals. If there was a direct relationship between increases in education funding and increases in meeting education goals, determining adequate levels of funding would be relatively simple. Unfortunately, research is inconclusive on the relationship between funding and achievment, with numerous studies have bolstered the argument that "money doesn't matter". On the other hand, many people argue that money must play some factor (after all we could not educate a child for $500) and that any discussion over adequacy must consider funding levels.

In the middle of this argument are the state legislatures, which have been charged (often by the courts as previously mentioned) with creating an adequate education finance system but are limited in their ability to link spending to student performance. In recognition of this problem, several methods have been developed that attempt to relate education funding levels to student outcomes.

Methods for Determining Adequacy

Currently, four main models are used that have been developed to assign a cost to an adequate education. These three methods are 1) the professional judgement model, 2) the successful schools model, and 3) the advanced statistical model. The application of each methodology results in a cost figure that is said to be adequate. Once the cost figure is developed, further adjustments are made for students of differing characteristics, such as special needs and at-risk students.

To better understand the manner in which each model arrives at an "adequate" level of education funding, it is helpful to conceive of determining adequacy as a two-step process. The first step is to determine a rationally defensible base level of funding. This base funding level would be the amount of money needed to adequately fund a school that has average student characteristics. Once a base level of funding is established, the next step is to develop a way to make adjustments for different proportions of certain types of students. Currently, states make these adjustments through mechanisms such as student weights or through the use of categorical programs. Adequacy models vary in their ability to accurately determine the cost differentials that arise from varying student characteristics, and this is treated more extensively below.

This said, the following descriptions of approaches to adequacy show how each model arrives at a base cost and also how each methodology deals with the issue of making adjustments for special student populations.

The Professional Judgement Approach

The professional judgment approach represents one of the first attempts to link adequacy to a dollar amount. Originally devised to make district cost adjustments, this model uses the recommendations from a panel of experts to define the necessary components of an adequate education (Chambers and Parrish, 1994). The group of experts usually is comprised of education-related professionals (teachers, administrators and policymakers). The group decides what inputs are needed in terms of staff, equipment, programs and so forth to meet state educational standards. These inputs then are cost out to produce an "adequate" education funding level in a given state.

In terms of making adjustments for special student populations, this task can be performed using the professional judgement model with relative ease, since the panels are asked to specifically identify the resources needed to serve special populations. The recommendations for special populations are separated from the base level of funding and then are applied to particular schools or school districts.

Despite the fact that a state supreme court (Wyoming) has upheld the results of the professional judgement approach, some difficulties still remain with this methodology. The main problem results from possible inconsistencies arising between different expert panels (Duncombe and Yinger, 1999). In the same study, for instance, one group could arrive at a cost figure that is 20 percent higher than the figure determined by another group. This problem has been partially addressed by incorporating different levels of review into the process. There might be six groups that determine costs at the school level, and those recommendations are reviewed at the district level; another group then reviews the adjustments made by that panel.

The Advanced Statistical Approach

A second model used to determine adequacy is the advanced statistical model. This approach is the most technically complex attempt to define adequacy and, as a result, has been applied only in limited settings. The underlying philosophy of the advanced statistical model is that, with enough data about education expenditures and student characteristics, statistical techniques should be able to isolate the effects of different types of inputs and arrive at a base cost of adequacy education (Duncombe et al, 1996). This model can be adjusted to account for student characteristics, environmental factors and other variables of a locality that affect the cost. These variables then are reintroduced to arrive at the cost of an adequate education in a particular school.

In one study conducted using the advanced statistical model, researchers attempted to determine the cost of achieving certain performance outcomes in schools with different demographics and other characteristics. In a study conducted in 1996 in New York, researchers Duncombe and Yinger " relate student achievement to a variety of schooling and school district characteristics, including per-pupil spending levels. " (Guthrie and Rothstien, 1999) The study started by establishing a hypothetical school district based on average statewide characteristics. The hypothetical district then was compared to the characteristics of individual schools to determine the cost of providing different levels of education in different areas. Accordingly, costs are adjusted above or below the hypothetical district in relation to the characteristics of the individual district or school.

The main strength of the model is that it is better suited to making adjustments in school and student characteristics. The advanced statistical model actually draws conclusions about the differences in cost associated with special populations to arrive at a base level of funding. Adjusting for special populations then is simply applying the identified costs to a specific school that has certain proportions of special populations. This results in the ability to accurately estimate the differences in resource needs between different educational settings. The approach promises that, with increasingly comprehensive data being collected in educational settings and with more refined statistical techniques, it will be possible to define an accurate measure of the cost of educational adequacy. The main critique of the advanced statistical model is that the advanced techniques are simply not understandable to the average lawmaker. Experience shows that legislators are unwilling to act on a methodology that they do not understand (the "black box" problem) (Guthrie and Rothstein, 1999). Although this is a significant critique, statistical techniques are becoming a more common area of knowledge for many legislators, and the critique underestimates the ability of lawmakers to understand and deal with complex problems.

The Successful Schools Approach

The successful schools approach considers all schools or districts in the state, identifies the ones that are meeting state standards, and then treats the amount that those schools are spending as an adequate education funding level. John Augenblick, the developer of this method states, "The underlying assumption is that any district should be able to accomplish what some districts do accomplish." (Augenblick, 1997) The logic of this approach is simple and, with proper adjustments, proponents believe it is the best method for arriving at a cost of an adequate education.

One criticism of the successful schools model is that it bases its recommendations on a finite set of performance characteristics and does not account for the full scope of educational outcomes. Another problem with the method is that the proficiency data employed do not account for differences in student characteristics (Guthrie and Rothstein, 1999). For example, the approach assumes that schools or districts with very high percentages of at-risk students can, using the same level of basic resources, perform at the same level as schools with low proportions of at-risk students. This is a potentially more significant problem than the first, since there are serious difficulties associated with controlling for such characteristics.

This critique has been partially addressed by Augenblick, who suggests requiring that schools, to be considered successful, must either reach a performance standard, or be making adequate yearly progress (AYP) toward reaching that standard over a period of time (Augenblick, 1997). Under this philosophy, many more schools are identified as being successful than would be if absolute standards were the only measure. In addition, AYP provides very low-performing schools with an opportunity to be considered successful if they are able to make consistent improvement. No Child Left Behind uses a similar conception of adequate yearly progress in determining the degree to which schools are increasing performance.

Conclusions

All the models that are used to determine adequacy have difficulty in controlling for certain cost elements. Among these are student, teacher and school characteristics and geographic differences. One area that must be addressed is how to properly adjust for differing school and student characteristics. Although the professional judgment model is well-suited to making adjustments for certain student characteristics, the methodology suffers from its simplistic philosophy. The advanced statistical model can adjust for several of these variables, although the model may be difficult for some lawmakers to understand. Likewise, the successful schools model can rationally define a base student cost but does not sufficiently address differing needs and costs. A combination of these methodologies may be the best way to determine adequate education spending levels.

Conclusion

As evinced by the recent court decisions in Arkansas and Tennessee, states will continue to grapple with how to determine an adequate level of education spending. All three adequacy models discussed above suffer from deficiencies. Research will continue to refine methods and, with increasing amounts of data on school characteristics, adequacy models will continue to improve.

When Maryland implemented a new funding system in 2002, the successful schools model was used to create a base level of funding, and the results of the professional judgement model were used to adjust for special populations (Augenblick 2001). Although this combination of two models has been treated with skepticism by researchers, it was an understandable solution to lawmakers. From a research perspective, the advanced statistical model is probably the most sound, yet serious problems arise when trying to separate the effect of different characteristics. Adjustments made by the professional judgement model are easy to understand, yet they suffer from the overall critique of the model or, from the fact that different panels will arrive at different figures. The successful schools model could be modified to address different student characteristics by explicitly addressing the effects of different student characteristics on success and funding levels. The model eliminates failing schools from the regression equation and, as a result, comparisons between successful and failing schools cannot be made.

Some states go beyond the traditional adjustments for different populations by addressing the differences in cost that arise from geographic differences (Chambers, 1995). In simplest terms, these adjustments consider the cost of providing education in different locales, adjusting for variables in a manner similar to a cost of living adjustment. These indices usually are added to an existing funding formula, but it would be worthwhile to adjust for these differences in a manner similar to adjusting for student characteristics. (For more about this issue, please see the companion article to this that addresses cost adjustments in education.)

Adequacy is a relatively new field in public policy and, as suchsignificant improvement can be made on existing adequacy models. If these models are being used to determine the level of education spending in a state, they should be as accurate as possible to ensure that all students are receiving an adequate education. With new developments in statistical approaches, combined with better data on schools and school districts, it is reasonable to expect improvements in adequacy models. Researchers and legislators alike will recognize the importance of this type of research and make efforts to introduce new thinking into this issue.

References

Augenblick, J., Determining Base Cost for State School Funding Systems. Denver, CO: Education Commission of the States Issuegram, 1997.

Augenblick, John, "Calculation Of The Cost Of An Adequate Education In Maryland In 1999-2000 Using Two Different Analytic Approaches Prepared For Maryland Commission On Education Finance, Equity, And Excellence (Thornton Commission)," prepared by Augenblick & Myers, September 2001.

Augenblick, John, Recommendations for a Base Figure and Pupil Weighted Adjustments to the Base Figure for Use in a New School Finance System in Ohio, Report presented to the School Funding Task Force, Ohio Department of Education, 1997

Campbell County School District v. State, No. 94-136, No. 94-137, No. 94-138, No. 94-139, No. 94-140, Supreme Court Of Wyoming, 907 P.2d 1238; 1995 Wyo.

Chambers, J., and Thomas Parrish, "State Level Education Finance," Cost Analysis for Education Decisions: Methods and Examples. Advances in Educational Productivity, Volume 4, W.S. Barnett, ed. Greenwich, CT: JAI Press, 1994.

Chambers, Jay, Public School Teacher Cost Differences Across the United States, NCES Working Paper 95-758, Washington, D.C.: U.S. Department of Education, Office of Educational Research and Improvement, 1995.

Coleman, James S., Ernest Q. Campbell, Carol J. Hobson, James McPartland, Alexander M. Mood, Frederic D. Weinfield, and Robert L. York, Equality of Educational Opportunity, Washington, D.C.: U.S. Government Printing Office, 1966.

Duncombe, W., J. Ruggiero, and J. Yinger, "Alternative Approaches to Holding Schools Accountable," Holding Schools Accountable, H.F. Ladd ed. Washington, D.C.: The Brookings Institute, 1996, pp. 327-356.

Duncombe, William D., and John M. Yinger, "Performance Standards and Educational Cost Indexes: You Can't Have One Without the Other," Equity and Adequacy in Education Finance: Issues and Perspectives, Washington DC, National Academy Press, 1999, p. 271.

Duncombe, William, "Estimating the Cost of an Adequate Education in New York", Center for Policy Research Working Paper No. 44, The Maxwell School. Syracuse, NY: Syracuse University, February 2002.

Greenwald, Rob, L.V. Hedges, and R. Laine, "The Effect of School Resources on Student Achievement," Review of Educational Research, Vol. 66, No. 3, Fall 1996, pp. 361-396.

Guthrie, James W., and Richard Rothstien, "Enabling 'Adequacy' to Achieve Reality: Translating Adequacy into State School Finance Distribution Arrangements," Equity and Adequacy in Education Finance: Issues and Perspectives, Washington DC, National Academy Press, 1999, p. 215.

Guthrie, James, G.C. Hayward, J.R. Smith, R. Rothstien, R.W. Bennett, et all, A Proposed Cost-Based Block Grant Model for Wyoming School Finance, Sacramento, CA: Management Analyst & Planning Associates, L.L.C, 1997.

Hanushek, Eric A., "The Economics of Schooling: Production and Efficiency In Public Schools," Journal of Economic Literature, Vol. 24, 1986, pp. 1141-1146.

Lake View School District No. 25 Of Phillips County, Arkansas, Et Al., v. Arkansas, Supreme Court of Arkansas, No. 92-5318, 2002.

Meier, Kenneth J., and Lael R. Keiser, "Public Administration as a Science of the Artificial: A Methodology for Prescription," Public Administration Review, Volume 56, No. 5, September/October 1996.

Rose v. Council for Better Educ., No. 88-SC-804-TG, Supreme Court of Kentucky, 790 S.W.2d 186; 1989 Ky.

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