School Funding Reform & Weighted Student Funding

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Thank you for the opportunity to offer testimony to this commission on the important topic of reforming how we distribute state funding for education.

Our written testimony will focus on the benefits of weighted student funding and discuss how “hold harmless” increases inequity between districts, while also briefly putting Pennsylvania funding in a national context. We also describe a few of the best state models for weighted student funding formulas.

Weighted student funding (WSF)—also referred to as student-based budgeting, backpack funding, or fair-student funding—is a method for distributing education dollars that promotes fairness and transparency.[1] Pennsylvania’s Basic Education Funding Commission presents an opportunity for lawmakers to join the growing number of states that have implemented WSF.

The specifics of WSF vary in other states and school districts. However, the guiding principles of WSF serve as a marked improvement to the commonwealth’s current education funding system, which is plagued by a problematic “hold harmless” provision.

Hold harmless—which guarantees each district receives no fewer state dollars than it received the previous year—is a major factor in Pennsylvania’s education finance dilemma. In 2012-13, 25 districts received over $10,000 in state funding per Average Daily Membership (ADM), while 50 districts received less than $3,000 in state funding per ADM.[2] (See the attachment for a ranked list of school districts by state aid). This discrepancy is largely attributable to hold harmless.

Hold harmless benefits shrinking districts while, in fact, harming growing districts. The gap in state funding between districts with declining enrollment and districts with growing enrollment is widening.

In 2012-13, state aid per student in the 20 fastest-growing districts was slightly more than $3,000. In contrast, state revenue per student among those districts with the largest decreases in enrollment since 1996 was nearly $10,000.

Put another way, school districts with declining enrollment received more than three times the state funding per student than growing districts.

PA’s 20 Fastest Growing School Districts 1996-2013
School District County Enrollment Growth  Change State Revenue Per Student 1996 State Revenue Per Student 2013 Increase Per Student
Garnet Valley SD Delaware 119% $1,761.47 $2,877.47 63%
Perkiomen Valley SD Montgomery 89% $2,007.74 $2,826.65 41%
South Fayette Township SD Allegheny 86% $2,464.86 $2,698.31 9%
Spring-Ford Area SD Montgomery 83% $2,097.98 $2,764.82 32%
Pine-Richland SD Allegheny 74% $1,882.87 $2,686.28 43%
New Hope-Solebury SD Bucks 61% $1,278.56 $2,777.26 117%
Central York SD York 60% $1,769.47 $2,555.85 44%
Oxford Area SD Chester 56% $2,718.68 $4,538.11 67%
Avon Grove SD Chester 53% $2,220.76 $4,340.74 95%
Daniel Boone Area SD Berks 53% $2,325.82 $4,282.96 84%
Mars Area SD Butler 52% $2,845.95 $3,217.76 13%
Lower Moreland Township SD Montgomery 48% $1,884.32 $2,888.73 53%
Kennett Consolidated SD Chester 47% $1,508.17 $2,842.80 88%
Jim Thorpe Area SD Carbon 45% $1,589.15 $2,885.29 82%
Central Bucks SD Bucks 45% $1,563.52 $2,401.97 54%
Tredyffrin-Easttown SD Chester 44% $1,536.96 $2,211.83 44%
Owen J Roberts SD Chester 41% $2,177.99 $3,120.39 43%
Peters Township SD Washington 40% $1,834.02 $2,608.30 42%
Wilson SD Berks 39% $1,692.79 $2,784.51 64%
Northeastern York SD York 38% $2,948.35 $4,602.52 56%
Average Top 20 59% $2,005.47 $3,095.63 57%
 
PA’s 20 Fastest Shrinking School Districts 1996-2013
School District County Enrollment Growth  Change State Revenue Per Student 1996 State Revenue Per Student 2013 Increase Per Student
McGuffey SD Washington -30% $3,787.87 $7,979.42 111%
Sullivan County SD Sullivan -30% $3,129.75 $6,208.08 98%
Southeastern Greene SD Greene -31% $4,708.76 $11,399.85 142%
Warren County SD Warren -31% $3,306.88 $7,881.19 138%
Jeannette City SD Westmoreland -32% $3,481.43 $9,242.87 165%
Ligonier Valley SD Westmoreland -32% $2,821.31 $5,611.11 99%
Susquehanna Community SD Susquehanna -32% $4,056.27 $10,778.41 166%
Union SD Clarion -32% $4,953.65 $11,529.47 133%
Punxsutawney Area SD Jefferson -32% $3,980.33 $9,524.06 139%
Austin Area SD Potter -32% $3,586.77 $11,885.68 231%
Galeton Area SD Potter -33% $3,494.98 $7,903.20 126%
Cranberry Area SD Venango -33% $3,905.42 $8,525.50 118%
Farrell Area SD Mercer -33% $5,086.05 $12,197.76 140%
Marion Center Area SD Indiana -34% $4,671.21 $10,288.15 120%
Northern Potter SD Potter -35% $4,330.35 $10,904.21 152%
Allegheny-Clarion Valley SD Clarion -35% $4,498.89 $11,479.26 155%
Purchase Line SD Indiana -35% $4,773.89 $12,383.83 159%
Johnsonburg Area SD Elk -36% $4,730.09 $11,175.29 136%
Salisbury-Elk Lick SD Somerset -39% $3,338.61 $9,555.59 186%
Cameron County SD Cameron -39% $3,541.78 $10,600.96 199%
Average Bottom 20 -33% $4,009.21 $9,852.69 146%

Proponents of hold harmless defend the provision on the grounds that it provides districts with financial stability from one year to the next. This, however, ignores the needs of districts with growing enrollment that are not compensated with additional state dollars. Enrollment trends throughout Pennsylvania’s 500 districts are varied to the point that hold harmless can no longer be accommodated.

Phasing out hold harmless in favor of a WSF model would not compromise a school district’s ability to plan for the next school year, and it would more accurately provide districts with the necessary resources for their unique circumstances. WSF is a simpler, more transparent allocation method that does not leave schools guessing about next year’s bottom line. Some districts might receive less state aid under a WSF model, but this is only because their status-quo funding levels are disproportionate to their students’ needs.

A WSF model provides the same baseline amount of per-pupil funding in each district, with a further adjustment based on individual student characteristics. In addition to low-income students and English-language learners, additional weights could be provided for those who are returning dropouts, have recently changed schools, or have learning disabilities. WSF eliminates much of the disparity in per-pupil state aid while ensuring that education dollars “follow the student.” A district with high concentrations of economically disadvantaged students, for example, would see greater state funds per ADM than a district with low concentrations of economically disadvantaged students. WSF recognizes and accounts for the fact that some students have greater educational needs than others.

Pennsylvania ranks among the nation’s leaders in total spending per pupil.[3] State taxpayers contribute more than $5,000 per student, which ranks in the middle of the pack compared to the national average.[4]

Public School Revenue per Student, by Source, 2010-11
Per Pupil Revenue Total Federal State Local
United States $12,217 $1,527 $5,394 $5,296
Pennsylvania $15,153 $1,851 $5,230 $8,073
 
PA Rank 10 11 27 7
Source: National Center for Education Statistics, Digest of Education Statistics, Table 235.20. Revenues for public elementary and secondary schools, by source of funds and state or jurisdiction: 2010-11, http://nces.ed.gov/programs/digest/d13/tables/dt13_235.20.asp

Some claim that Pennsylvania’s “state share” of education funding once reached 50 percent, and returning to this level of state funding should be a policy goal. However, according to state Department of Education records, Pennsylvania’s state share never topped 45 percent, which occurred in 1974.[5]

While the state share has modestly declined over the last several decades, this is not due to a reduction in state subsidies for education. State aid—adjusted for inflation—increased by 41 percent since the 1970s. The state share only declined because local tax revenue—also adjusted for inflation—increased 98 percent over that timeframe.

Accordingly, the problem with education funding in Pennsylvania is not insufficient levels of state taxation. The problem is centered on how current funding is apportioned, which does not account for enrollment trends or student needs. Transitioning to a WSF model does not require additional education appropriations—it simply provides a more efficient and equitable method for distributing current funding levels. Furthermore, there is little evidence that additional education spending produces better outcomes. A study funded by the National Science Foundation found “either no or very weak association between levels of education expenditures and student achievement” in Pennsylvania.[6]

For the purposes of the Funding Commission, WSF represents an improved method to direct state funds to school districts. It should be noted, however, that WSF can (and should) also be used at the district level. More than a dozen of the largest school districts in the nation have implemented WSF to direct district funds to individual schools.[7]

Although the Funding Commission is not charged with directing district level policy, school districts would be well served to utilize WSF models to allocate funds to individual schools based on student need instead of inflexible staffing schedules. Ideally, school principals would receive WSF dollars on a per-pupil basis and be granted the autonomy to spend those dollars based on student need. Moving from a staffing-based allocation to a student-based allocation is equally important at the state and district level.

There is no one-size-fits-all approach to WSF, as no two WSF models are precisely the same, but it is instructive to examine the experience of other states in designing and implementing WSF.

Hawaii

In 2004, Hawaii’s legislature initiated the transition to WSF by establishing a “Committee on Weights” that determined which student characteristics would be weighted and how much weight to apply for each characteristic.[8] The Committee is comprised of principals, teachers, parents, and other education professionals. It holds regular meetings throughout the year to consider potential changes to the formula.

Beginning in 2006-07, Hawaii implemented a budget-neutral WSF model. Adopting the WSF model did not result in more or less funds being available to the state’s Department of Education—it merely changed how the funds were allocated.[9] Hawaii’s education system is more centralized than Pennsylvania’s system of 500 districts. Hawaii operates with a single statewide school district, and all education funds are distributed from the General Fund, as the state does not rely on property taxes to finance public schools. This likely eased the transition to a WSF model.

Hawaii applies different weights for three levels of English proficiency (full, limited, and non-English), as well as for economically disadvantaged, transient, and gifted and talented students (see Figure 1).[10] WSF does require careful record keeping of student enrollment. The Hawaii Department of Education regularly collects data on the state’s student population to project the Official Enrollment Count (OEC). There are three allocation adjustments throughout the year—the first of which occurs shortly after the school year begins. Each school’s funding allocation is recalculated based on updates to official enrollment, demographic information, and the overall WSF appropriation provided to the Department of Education.[11]

An evaluation by American Institutes for Research (AIR) concluded that Hawaii’s transition to WSF resulted in increased funding equity and improved funding predictability: “Prior to implementation, no significant pattern existed between socioeconomic disadvantage and state education dollars.”[12] Since implementing a WSF model, AIR found stronger, statistically significant relationships between funding levels and student need.

Rhode Island

Rhode Island enacted a WSF formula in 2010 with the stated goals of improving equity and transparency.[13] Similar to Pennsylvania, Rhode Island’s previous method for allocating education dollars included a hold harmless provision that did not account for changes in district demographics. The new formula is in the midst of a multi-year implementation process. Rhode Island provides weight only for students eligible for Free and Reduced Price Lunch. There are no weights for English language learners, students in vocational school, or gifted and talented students.

Rhode Island’s formula has three primary components: core instructional amount, student success factor, and state share ratio. The core instructional amount is a baseline funding level that covers salaries, supplies, curriculum development, professional development, and leadership costs.[14] The second component, the student success factor, accounts for economically disadvantaged students. Students eligible for Free and Reduced Price Lunch receive an additional 40 percent of the core instructional amount.[15]

A district’s ADM is multiplied by the core instructional amount, which is then added to the district’s Free and Reduced Price Lunch population multiplied by the student success factor. Finally, the Rhode Island state share ratio is applied to the total funding amount, which determines how much revenue must be raised locally and how much is provided by the state. The state share ratio accounts for a district’s ability to generate revenue by analyzing property values and median family incomes.

Florida

Florida’s Education Finance Program (FEFP) utilizes WSF principles to distribute state funds to school districts. In order to participate in the FEFP, each district must keep records of its full-time equivalent (FTE) student enrollment. FTE students are then multiplied by relevant cost factors (see Figure 2) resulting in weighted FTE students.[16] (Program cost factors account for the different costs associated with educating different types of students).

Next, the weighted FTE students are multiplied by a base student allocation (BSA) and again by a district cost differential (DCD) to reach the base funding level. The BSA is a foundation level of funding—$4,031 in the 2014-15 school year—while the DCD accounts for differences in labor costs across Florida school districts.

The base funding level is added to a number of different supplements (see Figure 2), which results in the gross total of state and local funds. While these supplements are relatively inexpensive, the sheer quantity of supplements is suboptimal from a transparency and simplicity standpoint.[17] The final step is an adjustment for required local effort. This ensures that districts with low property values receive larger state aid than districts with higher property values. The percentage of funding from local sources in Florida ranges between 10 and 90 percent of the total funding level.[18]

Toward a Smarter Funding System

Pennsylvania’s education system is not underfunded, but it certainly is broken and irrational. Only by implementing a WSF model—and following the lead of other states who have moved toward a smarter funding method—can the commonwealth construct a more efficient and effective system to fund a first-class education for all of its students.



[1] Thomas B. Fordham Institute. “Fund the Child: Tackling Inequity & Antiquity in School Finance,” June 2006: http://edexcellence.net/publications/fundthechild.html

[3] National Center for Education Statistics, “Total and current expenditures per pupil, 2009-10.” Table 215: http://nces.ed.gov/programs/digest/d12/tables/dt12_215.asp

[4] United States Census Bureau, “States Ranked According to per Pupil Finance Amounts: Fiscal Year 2012.” Table 11: http://www2.census.gov/govs/school/12f33pub.pdf

[5] Pennsylvania Department of Education, Summary of Annual Financial reports. Prepared by the Commonwealth Foundation: https://docs.google.com/spreadsheet/pub?key=0AqduBXrlJrJxcDVfcVE2bWFSSm1zOFYwY2VZTFhuRlE&output=html

[6] The 21st Century Partnership for STEM Education; “Are Educational Expenditures Associated with 11th Grade Student Achievement in Pennsylvania School Districts?” November 2010: http://21pstem.org/EducationalExpendituresPA.pdf

[7] Snell, Lisa and Furtick, Katie. Reason Foundation, Weighted Student Formula Yearbook 2013: http://reason.org/studies/show/weighted-student-formula-yearbook

[8] Committee on Weights For the Weighted Student Formula, “Recommendations to the Hawaii State Board of Education.” January 2005: http://reach.k12.hi.us/empowerment/wsf/committeeonweights/cow1/CmteRecToBoe0501.pdf

[12] American Institutes for Research. “Evaluation of Hawaii’s Weighted Student Formula: Highlighted Findings,” June 2013: https://www.hawaiipublicschools.org/DOE%20Forms/WSF/Evaluation_Hawaii’s_Weighted_Student_Formula_06-17-13.pdf

[17] Excessive supplements and unnecessary complexity creates the environment for political manipulation over state funds.  Ideally, a high percentage of the total education funding would be placed in the Basic Education line item—and within this line item, there would be few supplements except for essential weighting factors.

[18] Florida House of Representatives. Florida Education Finance Program (FEFP), Education Fact Sheet 2010-11, pg. 30: http://basiceducationfundingcommission.pasenategop.com/files/2014/10/2010-11-Florida-Education-Finance-Program-FEFP.3.pdf