Committees
Funding for Success Committee
September 7, 2004 Minutes
In attendance were Chairman Matt Filipic, Vice Chairman Dick Maxwell, Eric Burkland, John Brandt, Paolo DeMaria, Representative William Hartnett, Russ Harris, Representative Jim Hoops, Senator C.J. Prentiss, Senator Jeff Jacobson, Jim Mahoney, Denny Woods, and Susan Tave Zelman. Other Task Force members in attendance were Task Force Chairman William W. Wilkins, Vice Chairman Jim Hyre, Susan Bodary, David Locke, Dan Navin and Barbara Shaner.
Presentation:
- Status Report on the Work of the Funding for Success Committee (PDF*, 20 KB)
- Revised Staff Proposal (PDF*, 19 KB)
Mr. Filipic called the meeting to order at approximately 10:00 a.m. He noted that this was the last meeting of the Funding for Success Committee, as the rest of the meetings will be meetings of the whole Task Force.
Mr. Filipic distributed a graph that showed the various funding sources and amounts for all school districts for the 2002-2003 fiscal year. The graph indicated how much funding, in addition to the base level, is available to school districts. It distinguished the amounts of local funding that are parts of the base and the parts that are in addition to it.
Building Blocks
Mr. Filipic next turned to Mr. Marshall, who described the components of the "building blocks" approach to school funding that is being considered by the committee. Mr. Marshall noted that the cost-of-doing-business factor has not yet been deducted in the building blocks chart, which provides samples of rich and poor, urban, suburban and rural school districts.
Mr. Navin asked whether the basics of the graph being described are different from the ones at the last meeting. Mr. Marshall responded that the approach is the same. The difference is that the foundation components are separated into three components. Also, based on feedback from the committee, some intervention funding is provided to all school districts and additional funding was inserted for professional development for all school districts.
Staff Funding Proposal
Mr. Marshall turned to Ms. Weir, who described in more detail the proposed "generalized" funding (for all school districts) and the proposed poverty-based aid. Under the staff's proposal, all school districts would receive $5.50 per student for data-based decision making and additional state support for professional development for principals, assistant principals and teachers in the use of data. The staff proposal includes additional funding to pay for one day of professional development for more than 70% of all teachers. Staff assumed an average class size of 20 to calculate the number of teachers, for which the state would supply $225 each. The $225 was based on cost estimates provided by the Department of Education. This funding would be on top of what districts are already spending for professional development. The final generalized funding item is intervention funding, which would provide all school districts 0.5% of the per-pupil base funding amount (about $25) for all students, at an annual cost of approximately $10 million.
Mr. DeMaria observed that job-embedded professional development is the most effective, but is also the most difficult to track. Mr. Filipic concurred that the Department of Education has a significant challenge in accounting for various types of expenditures, and job-embedded professional development is a good example of why this is so difficult. It will be a challenge for the department to make sure that professional development funding is actually spent for professional development. Mr. DeMaria assured Mr. Filipic that the department was up to this challenge.
Senator Prentiss expressed concern that $225 per teacher might be more than some districts need and not enough for others. How can we account for the variations in costs faced by different types of school districts?
Ms. Weir responded that we could begin by requiring school districts to account for their professional development money in their Comprehensive Continuous Improvements Plans. If districts are required to show how they are spending their money, then we can examine how well they are doing compared to how they are spending their money.
Mr. Maxwell asked how the poverty-based professional development component was derived. Ms. Weir responded that this item would support additional professional development for districts that are at or above the statewide average poverty rate. Districts with at least twice the state-average poverty rate would receive $450 per teacher, with proportionally lesser amounts for districts below this threshold. Mr. Filipic said that, stated another way, all school districts would receive $225 per teacher and higher poverty school districts would get from $0 to $225 more per teacher, depending on their poverty rates
Senator Prentiss asked why staff has proposed that all school districts receive some intervention funding. If a district has something like a 100% graduation rate, why should it receive state intervention support? Mr. Filipic answered that some committee members thought that there was too exclusive a focus on poverty, and that some intervention funding should be available to everyone. He added that the staff's proposal would make more money available to school districts with higher concentrations of poverty.
Senator Prentiss asked Mr. Woods why his district should get intervention funding if the district's proficiency test passage rate is 85%. Mr. Woods responded that he would spend the resources on the 15% who did not pass. The state requires intervention so the state should pay for it. Senator Prentiss agreed, but asked whether this was a good use of the state's limited resources. Mr. Maxwell observed that we are discussing an allocation formula; we are not telling districts how to spend the money. Districts will not spend $25 on each child for intervention. Mr. Hyre added that $25 per student is a modest amount for most school districts.
Mr. Filipic noted that the items being discussed were added by staff in response to comments made by committee members. He added that the committee has tried to be responsive to providing some additional funding level for all school districts, while focusing most of the attention and resources on high-poverty school districts.
Mr. Maxwell asked whether the various funding components could be converted to percentages of the per-pupil base cost amount. Ms. Weir said that they could be. Mr. Filipic suggested that there are advantages to doing that. It could be useful to describe what we are buying, then link it to base-cost funding. Mr. DeMaria added that converting these items into weights also facilitates the debate. Policy makers can then debate if the percentage for something is adequate and make the change.
Senator Prentiss asked what the committee was recommending relative to base cost. Mr. Filipic answered that the committee needs to determine what an appropriate base cost inflator is, as well as determine which additional items will become part of the base cost.
Ms Weir continued with her description of the staff's revised proposal. She noted that the last level of the poverty-based funding would still be allocated to the Urban 21 school districts, but for community liaisons and attendance officers instead of for "parental engagement."
Senator Prentiss stated her need for clarity on how staff intended the intervention funds to be used. How can we be sure that this money is actually spent for intervention? Ms. Weir replied that staff did not really address restricting the use of intervention funds, but will do whatever the committee wants. We do not want to be too vague or too restrictive.
Mr. Marshall added that the committee's general approach has been that school districts that are making satisfactory progress would be left alone. Spending requirements could be more prescriptive for districts that are not making satisfactory progress.
Senator Prentiss asked if staff looked at numbers of students who were at basic or below-basic achievement levels in developing the recommendations. Ms. Weir responded that the proficiency test achievement data have problems. There is a strong correlation between poverty and the level of student achievement, so staff decided to use the DPIA index as the principal funding determinant.
Senator Prentiss asked whether the staff's proposal reflects the needed intensity of intervention, differentiating among children who need considerable intervention and those who need little. Ms. Weir answered that staff reviewed the total available intervention funding available, including sources like Title I, and decided that districts would have enough resources to fund the levels of intervention that the six school districts staff analyzed could do.
Senator Prentiss noted that Cleveland had told staff that they would double the number of students receiving intervention if they had the resources. Did staff take this into account in developing their proposal? Ms. Weir replied that staff based their proposal on the total number of poverty students. Staff's proposal is not based on the number of students receiving intervention at a given time, but on the total number of students that might need intervention, using poverty as the proxy for need.
Mr. Filipic opined that the committee needs to know what the impact of the staff's proposal would be, school district by school district. That does not mean that the committee's recommendations would be based on this analysis, but the committee should understand the impact of the proposal.
Representative Hoops was concerned about the emphasis on the Urban 21 school districts. Rural and suburban school districts have security issues as well.
Mr. Filipic observed that one of the consequences of using the new poverty indicator is that more money will flow to the non-urban school districts. The committee is attempting to make sure that there is some balance in the funding and wanted to backfill some of what was lost by the Urban 21 school districts.
Mr. Filipic asked if the requirement that school districts have at least the statewide average poverty rate to qualify for all-day kindergarten funding is a "cliff." Ms. Weir responded that this is the minimum threshold to qualify for all-day kindergarten based on current law. She added that, once a district is eligible for all-day kindergarten, it retains eligibility even if its poverty rate slips below the state average.
Mr. Filipic noted that, under current law, school districts that are just above and below the statewide average poverty rate threshold get treated very differently relative to all-day kindergarten funding. He would like to see that changed. In the staff's proposals there are no such cliffs. There is always a slope.
Senator Jacobson stated that the committee recognizes that there needs to be a significant reduction in class size to get value from spending for this purpose. What is the value of having a slope in this case, since a small reduction would not help? Could we not say that school districts only "in-between" money if they are able to match it with local funding that will complete the reduction? Otherwise you are wasting money.
Mr. Marshall answered that, for those districts that received partial funding, they would need to target the resources at a particular building - not reduce class size district wide.
Senator Jacobson suggested that the use of the class-size funds be restricted to actually reducing the size of the class. We want to make sure that it is being spent the way we intended. Senator Prentiss answered that the legislature would have to amend current law to accomplish this, since current law allows school districts considerable latitude in the spending of class-size reduction funds. Senator Jacobson would allow flexibility in the use of these funds for districts that are doing well, but restrict how it is spent for districts that are not meeting expectations.
Mr. Harris expressed his concern that class-size reduction funds will not be used to actually reduce class sizes to 15 students. He believes that there is a strong possibility that it will not happen based on current experience. How will we be able to tell if it happens, and then see how the children are doing in those particular classrooms?
Mr. Filipic stated that the Board of Regents required institutions of higher education to provide matching funds and show that they had spent Academic Challenge funds in a way that increased the budgets of affected programs by at least 1 percent, not spread it around to everyone. The committee could recommend something similar relative to class-size reduction funding. Any building or classroom that benefits from this money must have a class size no larger than 15.
Mr. Harris liked Mr. Filipic's suggestion. He opined that facilities will be a constraint, as well as the number of qualified teachers. If facilities and qualified teachers are not available, we would want to adjust funding in the future. Mr. Harris suggested that urban school districts would be hard pressed to reduce classes, even given the funds. We may need to be more creative about how the funds might be spent to get the same result.
Ms. Weir returned to her presentation and noted that preschool is one of the inputs recognized as important by the committee. She added that staff is working with the Department of Education on developing a preschool proposal. Senator Prentiss opined that preschool is the most important input.
Senator Jacobson expressed concern with funding a new group of children when we have not yet completed a proposal for supporting students for which the state is already responsible. He believes that preschool is a good idea, but these children are not in the foundation now. Dr. Zelman responded that early childhood education research is compelling and other states are gaining on us because they are funding preschool and getting very positive results. Senator Jacobson stated his belief that the first priority should be to finish our current responsibilities before taking on new ones.
Mr. Filipic stated that he would be leery of the committee committing to universal preschool, which is extremely expensive. He agreed that it would be appropriate to provide a preschool experience for children in poverty. Mr. Woods opined that it is very important that preschool have good academic content. Dr. Zelman added that the academic content should be tied to state standards.
Senator Jacobson observed that one option might be to not have Parity Aid grow as expected, which could be a source of funding for more preschool. Mr. Harris opined that children in poverty should be the first to be offered preschool, but he supports universal public preschool in the future. Dr. Zelman views preschool as a public-private partnership. It would be available to all children, but people who can afford it should share in the cost. She added that other states do this differently.
Mr. Filipic suggested that supporting funding for preschool for poverty children could be viewed as the first step towards universal preschool. It could also be seen as the camel's nose under the tent. If our argument is that this is a good investment, then school districts should be allowed to divert funding to this program if it is the best thing that they can do with their funding. We need to decide what our argument is.
Mr. Burkland opined that there is another set of issues to talk about. How the state structures the delivery of those services would require another task force. There is currently a large private sector that is doing this and would have to be involved in this discussion.
Senator Jacobson noted that the question seems to be whether preschool should be mandatory. If it is required, it will be a very inefficient system for a long time. We should begin slowly with preschool, because it is going to take a long time to work the bugs out of the system. Senator Jacobson added that there is currently no consensus to make preschool a reality. We simply do not know how to make this work today. We should have a continual review of this program.
Senator Prentiss agreed that, even if we had adequate staff and space, the children would not be there. She stated that some former welfare recipients became childcare providers as a result of the welfare-to-work plan. Some of these individuals have eight children in their home and there is nothing happening academically.
Dr. Zelman concurred that we need better training for daycare providers. We need a more flexible system that can provide assistance to parents who need it the most. Other countries are doing this. There are models of people who are doing this much better than we are.
Mr. DeMaria asked what school districts can do regarding all-day kindergarten if their Disadvantaged Pupil Impact Aid (DPIA) funding for this purpose is insufficient. Is there flexibility in our proposals to address this? Ms. Weir replied that there are other funding sources available to supplement all-day kindergarten, such as federal Title I dollars. Staff has really not addressed the issue of allowing other components of poverty-based assistance to be used to supplement all-day kindergarten support.
Mr. Filipic opined that committee members seem to be arguing with themselves. We support local discretion to allow school districts to determine the best way to use their funding. We say that if they are successful, the funding would be unrestricted. We also think that some things really work and we want people to be required to do them. There is a conflict between those two ideas.
Senator Jacobson suggested that the committee could pick which items to require of school districts. Senator Prentiss offered that she encountered tremendous resistance from urban school districts when she supported restrictions on what they could do with DPIA funding. She observed that it was the biggest fight she has ever had. The urban school districts argued that they needed flexibility in how they spent DPIA support because they are in financial trouble. Senator Jacobson countered that the draft proposal would give them several hundred million dollars more annually. He added that these districts have already lost that argument once. We need to use a carrot and a stick.
Ms. Weir continued to describe the materials that staff provided to the committee, specifically noting what could be purchased at the recommended funding levels.
Mr. Harris stated that the Department of Education, in its presentation at the committee's last meeting, described data-based decision making programs that use personal digital assistants and other hardware. Is funding for this hardware included in the recommendations? Ms. Weir replied that there is no central inventory of what hardware schools currently have. Data-based decision-making funding could be used for hardware, if needed. Otherwise it would be used to purchase software. Senator Jacobson added that it is not possible to push a button and have a program. There must be a phase-in period before it is fully operational.
Senator Jacobson expressed support for using some intervention money for an internet bank of resources. This bank would include a variety of materials that could be used by parents, teachers and children to foster student achievement. Senator Jacobson had no specific recommendation for a funding level, but argued that some money should be used for this purpose.
Mr. Woods asked why this resource bank should come out of subsidy to schools and not out of the Department of Education's operating budget. Senator Jacobson replied that this would be a very expensive project that would benefit all children. Representative Hartnett added that, in the long term, if we do this, there will be more information about not how to teach, but how children learn. Mr. Maxwell observed that there seems to be a good deal of agreement on doing this, but there remains the question of whether to fund it through the foundation program or through a separate allocation.
Senator Prentiss stated that the legislature has given many more responsibilities to the Department of Education that require additional staff to implement those programs. Something needs to be done to recognize that the department is playing a central role in this and needs staff to make sure that it happens.
Mr. Harris supported Senator Jacobson's suggestion. He noted that Ohio has the beginnings of a resource bank with model practices and model curricula. Mr. Harris added that the state needs to renew its commitment to technology in the classroom. The technology purchased with the initial rounds of funding through SchoolNet is now too old to be effective. We have stopped purchasing new technology. Funding for technology should not be in the formula, but we have to take a hard look at what is available to the students and teachers and fill in the holes.
After lunch the committee continued with its agenda. Mr. DeMaria described the Department of Education's efforts in the area of data-based decision making. He observed that the department is attempting to develop better cost estimates. Different approaches have different costs. The department will contact staff when it has a better idea of relative costs.
Inflation Factors
The next topic on the agenda was a discussion of which inflation factors might be used in the school funding formula. Staff distributed materials that outlined several different approaches. Mr. Filipic began the discussion by telling the committee that Senator Jacobson had asked him to express his concern with using inflators that were tied to a specific industry rather than to the total economy, at least with regards to salaries. Senator Jacobson does not have the same problem with educational materials, such as textbooks. Mr. Filipic said that the question is, are the market baskets in the various indicators similar enough to a market basket of items for schools to make them appropriate measures for the school funding model.
Mr. Sobul suggested that the broader inflation indicators are probably more stable than schools' costs because they include things such as housing and other stable items. Schools do not spend money on housing and by removing that factor they lose stability. Mr. Sobul added that there is a component of the Consumer Price Index - Urban that measures educational costs.
Mr. Filipic requested committee members' opinions of using a broad white-collar index for salaries and some education-specific indicator for non-compensation items. Mr. DeMaria asked if staff had a chart showing the history of the white collar index over the past several years. Mr. Filipic answered that the materials given to the committee on the Higher Education Cost Adjustment (HECA) include the HECA average, 75% of which is driven by the Employment Cost Index for white collar workers, but we do not have it specifically.
Mr. Navin noted that the Ohio Chamber of Commerce had tried to drill down to an Ohio inflation index, but had a hard time doing that. It is easiest to find national trends, less easy to get regional trends, and nearly impossible to get statewide trends. Mr. Filipic offered that he has attempted to examine data on regional inflation rates. His recollection is that it is just for a few metropolitan areas and that the data are very volatile. He does not know if it is a question of sample size or if spending is just more volatile in metropolitan areas. He was unable to find a good Ohio inflator. Mr. Filipic asked whether the committee would want an Ohio inflator if one were available. He opined that an Ohio inflator might reflect what is going on with Ohio's schools, but that might also lead to "the more you have, the more you spend."
Mr. Burkland stated that he would be satisfied with a national average, and offered that the committee might be able to get data on teachers nationally. Mr. DeMaria asked if Mr. Burkland was suggesting an inflator that was more focused on educators. Mr. Burkland responded that he was not. The question is who is competing with the education sector for employees, so you would want to be looking at the rest of the labor market that is in competition for these same individuals.
Mr. Filipic noted that the paper describing the HECA inflator recommends not using inflators tied to specific industries since they are self-referential. For example, the older Higher Education Price Index is based on higher education costs, so as these costs would rise it would drive even higher increases.
Committee Report on Areas of Agreement
The committee turned briefly to the staff-prepared document entitled Status Report on the Work of the Funding for Success Committee. Mr. Marshall stated that staff attempted to capture those areas where there is general agreement among committee members. He added that it was not an exhaustive list and did not represent unanimity within the committee, but general agreement.
Senator Jacobson opined that the committee should make specific what kinds of funds should be reallocated. We should reallocate funds that are at odds with the committee's goals. For example, the cost-of-doing-business factor is in conflict with the committee's goal to give school districts with high concentrations of low-income students more money.
The committee returned to a discussion of inflators because Mr. Sobul returned with historical inflationary rates for different indices.
Mr. Harris asked whether the Employment Cost Index includes the cost of fringe benefits. Mr. Sobul replied that it does. Senator Jacobson asked whether we could, instead, look at wages and fringe benefits separately. Mr. Sobul answered that he believed that information was available. Senator Jacobson suggested that separating wages and fringe benefits would allow the committee to use disproportionate weights for different components. For example, if we come up with a new medical benefit program, we might use the index for that particular program without regard to the national average for medical benefits.
Mr. Filipic offered a counter argument. A broader inflation index might reflect the balance of those issues as decisions about them are being made throughout the economy. It might be that salaries are being restrained because of fringe benefits increasing at a higher rate.
Senator Jacobson responded that if that is done, the teachers' pension benefits have to be backed out since they give teachers a privileged position that has to be taken into consideration. Ms. Shaner stated that, under state law, pension costs are going to increase since it is a fixed percentage. The inflator selected by the committee might be higher than some other index because some of these costs are required by statute.
Senator Jacobson opined that a school district is not going to be saddled with any increases that are outside of its control. The benefits provided to public sector employees, in comparison to those given to private sector employees, are much better. This difference needs to be taken into consideration when looking at these indices. In the private sector there is movement between benefits and salaries that occurs on a completely different level in the public sector, which starts with higher benefits than in the private sector. When you combine salaries and benefits you are comparing apples to oranges.
Mr. Filipic observed that there is a tradeoff between salary growth and health care insurance costs to employees because of the big increases in the cost of health care insurance. He believes that committee members' goals are the same but members are taking different paths to get there. He feels that there is a lack of consensus on how to get there.
Senator Prentiss noted that many school districts are projecting deficits in their five-year forecasts. She asked whether anyone had conducted an analysis to determine what was causing these deficits. Mr. Marshall replied that part of the problem is that school districts cannot anticipate the passage of a levy when making their forecasts, so all projections, going out far enough, will show a deficit.
Senator Prentiss opined that our schools are in trouble. How can we develop a formula that recognizes that many of our school districts are having trouble meeting their responsibilities? Mr. Filipic answered that the financial challenges identified by Senator Prentiss cannot be addressed through the state's funding formula. When you review how much state funding school districts receive through the formula, and how it works, all the extra local funds that they receive are slowly and steadily being driven to nothing as a result of the H.B. 920 tax reduction factors. The state's foundation formula cannot raise the base cost enough to offset the loss of this extra money.
Mr. DeMaria observed that using an artificially low inflator also impacts this erosion.
Mr. Filipic agreed that, if the current inflator is too low, adopting a better inflator might help with some of the problem. Senator Jacobson responded that there is another way to look at inflation. If the state is only giving a school district so much money, the district cannot enter into contracts that it cannot fund. If we give school districts clearer projections, perhaps they will not sign contracts that cannot be funded. For the most part, school districts do not get into financial difficulties because revenue has dropped, but because their costs are increasing faster then they anticipated their revenues would increase.
Mr. Hyre opined that it is good that the Revenue and Taxation and Funding for Success committees are now coming together. Some of the Revenue and Taxation recommendations will affect this conversation. There is never enough money. Mr. Hyre believes that the committee should recommend a blended inflation indicator that is an appropriate reflection of the cost pressures felt by school districts.
Senator Jacobson asked whether the inflator should be blended on the total by taking proportionately different percentages of different indices, or whether we should keep things separate and inflate the separate items. He felt that over time a blended approach may not represent what is current reality. Inflating separate items would alleviate this potential problem.
Mr. Burkland offered that the committee might want to separate anything that we want to manage. If we want to examine energy costs, we separate them and monitor them over time to see if we are effective. The committee appeared to agree that this was a good suggestion. Senator Jacobson added that, over time, policy makers will be able to have better conversations because of the changes that the committee is recommending. They will allow for future discussions regarding separate parts of the budget. We are creating a framework so that we can have better discussions in the future.
Back to Committee Report on Areas of Agreement
Mr. Filipic asked whether members objected to any elements of the staff's summary. Otherwise, this document is what we will put forward.
Senator Prentiss objected to the recommendation that all school districts receive some intervention funding. Senator Jacobson expressed his opposition to using a three-year average count of average daily membership for school districts that are experiencing enrollment declines. This funds students who are not there and we are having a hard enough time funding those who are there.
Mr. Filipic countered that an advantage of using the three-year average is improved predictability. There is a problem for school districts in having their funding tied to a number that they do not know until well into the year.
Mr. Maxwell noted that Ohio has used three-year averages for a long time - well before the DeRolph decision. This is not an unusual concept. Many other states do the same thing. It improves funding predictability. Without this provision the changes from year to year can be dramatic. Mr. Filipic stated that using a three-year average enrollment count effectively funds declining school districts on their prior year's enrollment.
Senator Jacobson interjected that he could support a two-year averaging.
Mr. Filipic observed that the committee will end its work with some issues unresolved. He thanked committee members for their patience. He added that the committee has come a long way in its discussions. We have recommendations that reflect the experience of our districts and national research. Mr. Filipic expressed his hope that as we make these investments we will come to know better what it takes to make students successful. He added that there is no better argument for more funding than a close relationship between what schools are buying and success. Mr. Filipic closed by thanking staff for their work.
Mr. Burkland thanked Mr. Filipic for his leadership. He stated that he does not know too many people who could have done what Mr. Filipic has.
Senator Prentiss asked when the preschool recommendations would be completed. Mr. Filipic responded that he expected preschool recommendations sooner rather than later.
Senator Prentiss asked whether each committee would offer separate recommendations or one combined recommendation. Mr. Filipic responded that there would be one document that incorporates the work of both committees.
Senator Prentiss noted that there are many things in the recommendations that she disagrees with, but there are many other recommendations that she is very excited about. She expressed her appreciation for Mr. Filipic's leadership.
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