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How State Dominated Educational Systems Level Down Accountability and Increase Costs

Monday, January 3rd, 2011

Introduction

The United States Constitution bestows plenary authority to govern education on the states rather than the federal government. Accordingly, in the American governmental system all the powers of local governments including county governments and school districts are derived from the state. Whatever authority the state grants to local governments, and, therefore, to local school districts, the state also can withdraw or modify.

Still, the tradition of local control is rooted in our democratic principles. It also symbolizes our democracy in action. Local control enables a local school system to be accountable to its constituents rather than being controlled remotely by a governmental entity that imposes its political agenda which is incongruent with local priorities and needs. Remote governing bodies, such as county or state governments, therefore, are not as accountable to the standards necessary to provide quality education as are local schools.

A top-down, state dominated educational system is contrary to our democratic principles and traditions especially when it comes to the governance of our schools. Increased control by the state through state politically appointed county departments of education, such as in New Jersey and California, means less local control because control is a zero sum game. As such, every increase in or recapture of state or county power can only result from a corresponding loss at the local level.

Special attention is given to the states of New Jersey and California because they embody the problems associated with state domination of local school systems as executed through the level of county government. During recent decades, the cherished home rule tradition of school governance in New Jersey and California was eroded to the point where local control of education has been largely superseded by the state and its extension, county government.

The rising power of the states of New Jersey and California (Fusarelli and Cooper, 2009) grew from the states’ increasing domination of school finance and, therefore, policy making because of the strings the states attached to funding. Legal challenges to funding inequities and disparities led to court decisions, such as Serrano v. Priest in California and Abbott v. Burke in New Jersey, establishing financial neutrality as the basis for school funding. The states tried to remedy the disparities among districts with the infusion of incremental state funds and regulation.

Subsequent rulings focused on adequacy which required state governments to provide resources to disadvantaged districts such that the provision of education adequately met their constitutional requirements. New Jersey’s state constitution went even further because of its provisions guaranteeing a thorough and efficient education or a “T&E” education as it became known and manifested in the Abbott v. Burke court decision.

Legal challenges to subsequent state funding formulas such as law suits to address financial inequities and tax base disparities have caused states to greatly increase taxes so as to generate the necessary funds with which to offset the inequalities. Nowhere is this more predominant than in the New Jersey and California.

But greatly increased state taxes and spending have led to corresponding increases in state regulation of local school districts so as to enable states to better control the use of state educational aid. This, in turn, has led to exponential increases in state mandates for administrative regulation, program requirements, standards, and budgetary controls. Naturally, as state mandates and control over local schools increased, the size of state and county bureaucracies increased with a corresponding increase in the costs being passed on to local school districts.

The rise in the power of the state has paralleled the increase in the state’s control over public education finance. The transformation of the state’s educational finance system to a more centralized model has resulted in a corresponding loss of control by the local taxpayer over educational policy, programs, and services. More importantly, it has greatly decreased the ability of local citizens as well as the state government to hold schools accountable for educational performance.

County government (Fischel, 2009) is the entity through which states have traditionally executed their authority. But County government, as the implementation arm of the state, is too distant from the provision of education as well as the educational needs and priorities of local communities to be able to hold local schools accountable.

History

Historically, the American system for organizing school districts has employed two major models based on traditional political boundaries: counties and townships. Every state except Hawaii employs one of these models or a combination as the basis for organizing its schools. Hawaii is the only statewide school district in the nation and its public schools are 100% financed by the state.

The settlers of New England (Fischel, 2009) established the township as the political unit within which school districts were organized and this model spread westward. The Mid-Atlantic and Southern states, however, have generally used the county as the organizing structure for local schools. Indeed, schools in the states (Kenney and Schmidt, 1994, cited in Fischel, 2009) of Maryland, Florida, West Virginia and Louisiana are organized into consolidated countywide districts without individual school districts. For example, (Fischel, 2009, pp. 165-166) “the city of Baltimore is considered a county district in Maryland and is distinct from adjacent, suburban “Baltimore County”; each is a separate (county) school district.”

New Jersey

While such court decisions as Robinson v. Cahill and Abbott v. Burke fundamentally changed the state’s role in education in New Jersey, recreating the office of the Executive County Superintendent of Schools as well as the passage of S1701 into law were similarly profound in their far reaching impact on New Jersey’s school system. Because using property taxes as the primary basis for funding local school districts is inextricably linked to home rule, these actions transcended local taxpayers’ rights to determine the financial and human resources allocations of their local schools. More importantly, these court rulings and laws directly affected local taxpayers’ democratic rights.

Office of the Executive County Superintendent

When New Jersey Governor Corzine signed the CORE Act, CommUNITY Against Regionalization Efforts (2009), Assembly Bill A4 and Senate Bill S19, into law, he transformed the role of county superintendents of education from mere disseminators of state educational policies into powerful Executive County Superintendent of Schools. In so doing, the governor empowered each Executive County Superintendent to begin consolidating all schools into K to 12 districts and ultimately to consolidate all schools within one countywide organization. Indeed, passage of the pending New Jersey Senate bill (New Jersey Department of Education 2010), S450, would eliminate all local school administrators over the level of principal and establish the Executive County Superintendent as the official who will govern and operate all public schools within the consolidated countywide district.

The Executive County Superintendent is a political appointee whose contract calls for him/her to focus on maximizing the reduction of expenses in all of the schools within the county rather than on improving student and school achievement. These political appointees are empowered to veto local school district budgets despite their previous approval by their duly elected local board of education as well as any contracts for vendors or school personnel not covered by a collective bargaining agreement. Also, they have unilateral authority to scale down, postpone, or eliminate any non-mandate protected program or service.

New Jersey gave the Executive County Superintendent unprecedented powers over local school districts through the office of Executive County Superintendent of Schools. These county superintendents have the authority to put New Jersey well on its way to duplicating Maryland’s centralization of power over local school districts at the county level. Indeed, the Executive County Superintendents have the authority to consolidate all of New Jersey’s 600 plus school districts serving more than 1.3 million students statewide within one of 21 countywide districts.

By creating the office of Executive County Superintendent of Schools, New Jersey moved to the verge of replicating the state of Maryland’s county school system model. First, the state of Maryland eliminated all local school officials beyond the level of principal. It then consolidated all of its schools serving less than one million students statewide within one of the 24 countywide districts in each county under an Executive County Superintendent.

Although Maryland abolished all administrators above the level of principal from the local schools in the name of saving money, cutting administrative expenses, and cutting property taxes, these small one time savings were more than exceeded by the ongoing costs of the office of Executive County Superintendent of Schools with its ever increasing bureaucracy. For example, in Maryland, the Montgomery County Department of Education alone has an annual operating budget of approximately $2 billion with nearly 22,000 employees despite having a total student enrollment of less than 138,000. The office of Executive County Superintendent of Schools for Montgomery County, therefore, employs roughly one administrator for every six of its students!

The Executive County Superintendent, who is appointed by the governor, supervises, directs and manages the functions of the County Office of Education as a representative and subordinate of the New Jersey State Commissioner of Education. The Executive County Superintendent oversees all public school districts within his/her county. To accomplish these goals, each county superintendent is given a staff and a budget which are not subject to taxpayer input, approval or elections.

Contrary to core principles of democracy, the Executive County Superintendent has the authority to override a school district’s budget despite its prior approval by its duly elected board of education. He/she can do so without any prior consultation or notification of the elected board of education or the local district’s superintendent or business administrator. Indeed, the Executive County Superintendent’s exercise of a line item veto over non-instructional costs in a local school district’s budget would be contrary to the will of the locally elected board of education that represents the local taxpayers as demonstrated by their previous vote of approval for the vetoed items.

In addition, a board of education is prohibited from transferring funds into any line item that was vetoed by the Executive County Superintendent. The County Superintendent’s line item veto authority covers all non-instructional line items including administrative expenses. The appointed Executive County Superintendent, therefore, could eliminate administrative positions deemed necessary by the elected local board of education who would then lack sufficient recourse.

The Executive County Superintendent is empowered to review all district budgets within the county. He/she has the authority to veto a portion of the district’s budget and the district will have to deduct this portion prior to the budget’s posting on the ballot for the public vote in April. The district is then prohibited from transferring any funds into those line items or spending any funds toward the vetoed items for the fiscal year.

The Executive County Superintendent’s is responsible for ensuring that each school district budget includes sufficient funds to meet the requirements of the state’s Core Curriculum Content Standards (CCCS). The district’s administrative and support services per pupil costs are compared to the state median. The Executive County Superintendent can administer reductions in these areas if the district’s costs exceed the state guidelines.

The Executive County Superintendent is required to review, evaluate, and approve all employment contracts for administrators not covered by a collective bargaining agreement including but not limited to superintendents, assistant superintendents, and business administrators. He/she must also enforce the state mandated caps on accumulated unused vacation and sick days.

According to the School Funding Reform Act (New Jersey Department of Education, 2008), the Executive County Superintendent can withhold or recapture state aid if he/she discovers excessive spending, inefficiencies, or that the district has violated any state law or regulation. Another condition for receiving state aid stipulates that every district must refinance all outstanding debt for which a three percent net present value could be realized.

The Executive County Superintendent enforces the state mandated four percentage point cap on a local school district’s annual property tax levy. The tax levy is also reduced if the district’s budget is found to exceed the state’s calculated adequacy level for that particular district and if the district receives an increase in state aid exceeding the greater of two percent or the Consumer Price Index (CPI.)

The implication behind the creation of the office of Executive County Superintendent of Schools was that it would somehow save the taxpayers’ money and enable the state to have lower property taxes. The experience of such a control model in the state of Maryland contradicts such assumptions as does the New Jersey’s county control model. New Jersey’s 21 counties combine to spend over $6.3 billion annually in property taxes and hold more than $5 billion in outstanding debt. County government places a tremendous burden on New Jersey’s taxpayers especially as compared to those in Connecticut where county government was eliminated in 1960.

While economies of scale apply in the private sector especially in manufacturing, they do not apply as well to the education sector with its value added services. In the education arena it usually takes a defined number of people per capita to provide a defined level of service. Larger school systems such as regional or consolidated countywide school districts, therefore, are more expensive to operate than smaller, local school districts because of their “penalties of scale” (Coffin, 2010, p. 1).

Decentralization rather than centralization brings decision makers closer to the taxpayers and local priorities. Taxpayers have more of a stake in the success of their local school rather than county districts. Indeed, separating the taxpayer from his/her ability to control and influence the operating budget and educational plan of his/her local school district cuts neither costs nor property taxes.

S1701

When New Jersey Governor James McGreevey signed S1701 into law on July 1, 2004, as Chapter 73, Public Laws of New Jersey 2004 (New Jersey Department of Education, 2005), the state took a major step in its continued erosion of local control over school districts especially in terms of a district’s surplus, budget flexibility, administrative spending limits, and spending growth limitation adjustments. While this legislation accelerated the loss of local autonomy for school districts the state did not apply it to county and municipal governments even though these levels of government also are funded primarily by local property taxes.

S1701 reduced the maximum allowable district surplus to no more than three percent in the 2004-05 fiscal year and two percent in the 2005-06 fiscal year and beyond. Prior to the passage of S1701, the state prohibited non-Abbott districts from having a surplus of less than six percent. Because a district’s surplus serves as insurance against unforeseen expenses, S1701 forces a district to either cut non-mandate protected educational programs and services such as regular education or increase property taxes.

S1701 required that any surplus in excess of the percentage limitations must be used for property tax relief. But the property tax relief would be implemented by limiting the amount of property taxes a district could levy in the upcoming fiscal year rather than as a direct refund to taxpayers, furthering constraining local autonomy.

S1701 (New Jersey Department of Education, 2005) limited a district’s budgetary flexibility by restricting the growth in the base budget to the higher of two and half percent or the Consumer Price Index (CPI). It also limited Spending Growth Limitation Adjustments (SGLA) that enable districts to meet unbudgeted increases in expenses for such items as hazardous route transportation, courtesy busing, insurance, utilities, or legal services. Once routine budgetary transfers such as line item transfers exceeding ten percent as well as transfers of surplus and unbudgeted revenue now require county approval.

According to the New Jersey School Boards Association (2004), S1701 further eroded local taxpayer control by limiting a district’s use of second ballot questions, often referred to as second questions. By casting votes on second questions, citizens exert control over the authorization of funds for specific educational programs and services that are in addition to the base operating budget. Through the exercise of second questions (New Jersey School Boards Association, 2004, p. 3), “the community determines if it is willing and able to raise the money to fund the expenditure over cap for programs ranging from full-day Kindergarten and after-school enrichment programs to extra-curricular activities.”

S1701 further eroded the ability of local school districts to develop, approve, and implement their operating budgets. Decision making authority over many budgetary items such as the acquisition and allocation of a school district’s financial and human resources were largely transferred to the county level of government as the state’s execution arm. Indeed, (New Jersey School Boards Association, 2004, p. 2) S1701 “lessened a community’s ability to determine school finance matters and related educational policy.”

Upon taking office in January, 2010, New Jersey Governor Christie announced he would withhold $475 million in promised state aid to school districts statewide as part of his effort to close the state fiscal year budget deficit of approximately $2 billion. What makes the governor’s plan significant is that he requires districts to make up for cuts in state aid by using their surplus and reserve account funds.

Governor Christie’s plan requires districts to use all of their excess surplus plus 25% of the reserve accounts for capital, maintenance, emergencies and excess. This means that most non-Abbott districts will lose most if not all of their state aid for the balance of the fiscal year that ends on June 30. Because the state already required districts to roll over any surplus exceeding the two percent level as property tax relief according to S1701, this reduction in surplus will lead most likely to deeper cuts to non-mandate protected educational programs and property tax increases in districts statewide.

California

While the California Department of Education has the overall responsibility to administer education throughout the state, it does so primarily through California’s 58 counties. Each county department of education oversees the school districts within its boundaries. While the counties collect property taxes on behalf of the state and the mill rate is established in the state constitution, it is the state that determines how much funding including revenue from property taxes each district receives and how those funds are allocated.

But California had enjoyed a long tradition of local control of school district budgets, capital projects, human resources as well as the provision of educational programs and services according to local needs and priorities. The role of the state and county governments in governing and funding local school districts was severely limited. While the state provided a minimal funding level, local school districts levied property taxes to generate the overwhelming majority of their revenues. Taxpayers’ votes determined district budgets as well as the members of their local boards of education. A district’s financial and human resources allocations were based on the district’s educational plan as approved by the duly elected local board of education.

The state ended this tradition by constantly eroding local control through the strings it attached to the funding it provided and the policies it mandated for local school districts. Once the state gained the majority control over school finance, the state was then in a position to also control educational policy in all of the nearly 1,000 school districts.

Today, local school districts depend almost entirely on the state for their revenues and largely lack the authority to raise revenues that only they can control. Because state funds come with powerful strings attached, the state leverages its funding to determine how a district allocates its budget and human resources. Districts have almost no discretion over their use of the majority of state funds.

The strings attached to California’s state aid result in the majority of a district’s funds being restricted only for use according to the state’s mandates. Most of the unrestricted state funding finances the salaries and benefits for a district’s employees. A district’s financial and human resources allocation is overwhelmingly determined by the state according to its one size fits all approach which does not account for differences in local educational needs, priorities, and cost drivers. By controlling school finance and making policy decisions that once were the province of local school districts, California consolidated and centralized the control of education at the state level.

The current recession has adversely impacted the state’s budget over the last few years especially education which is the largest component of California’s expenditures. This has caused the state to pass along revenue cuts, deferrals, and allocation formula adjustments to local school districts despite promises and legislative guarantees to the contrary. Because legislation has forced local school districts to become overwhelmingly dependent on state revenues, districts were forced to depend on unreliable state aid and, therefore, have been disproportionately affected.

But the seeds of California’s fiscal calamity were sown well before the current recession could impact its budget. The roots of the financial crisis are found in California’s history of creating unsustainable state budgets especially during periods of economic growth while simultaneously forcing local school districts to become overly dependent on unreliable state revenue sources. There are three fundamental causes of the fiscal crisis which continue to plague California’s local school districts. These include a major court ruling, state constitutional amendments, and voter passed initiatives.

The first causal factor was the 1971 California Supreme Court’s Serrano v. Priest ruling in which the court declared the system of funding local school districts based on primarily on local property taxes to be unconstitutional if differences in ratables (Fischel, 2001, p. 99) “led to disparities in educational opportunities, which the court apparently took to mean spending per pupil.” This decision not only effectively ended the tradition of local control over school budgets, property tax levies, and capital projects but also led to the centralization of control over school finance at the state level.

But the resultant centralization of school finance at the state level lowered the quality of education generally throughout the state because it separated local taxpayers from their connection or stake in their local schools. This stake derives from the payment of local property taxes for local schools. This demonstrated Fischel’s (2001) homevoter hypothesis because the benefits local taxpayers derived from the quality of the education provided in their local schools funded by their local property taxes were no longer capitalized in their property values. Fischel (2001, p. 129) concludes, “voters are aware of this connection, and that statewide funding especially alienates the majority of the population who have no children in the public school system.”

Fischel (2001) demonstrates how the Serrano v. Priest decision resulted in the passage of Proposition 13 with its dramatic end to local control over the then main source of revenues, local property taxes. According to Fischel (2001,) the Serrano v. Priest decision led to the passage of a state constitutional amendment called Proposition 13 which was the second major cause. The enactment of this legislation in 1978 severely cut the amount of local property tax revenue available to local school districts as well as the amount under local control. The legislation enabled the state to collect and then redistribute local property taxes based on the state’s funding formula rather than according to local needs and priorities.

The third major factor in the reshaping of California’s school finance system was the passage of Proposition 98 in 1988. When voters approved this ballot initiative, the state of California was compelled to guarantee a minimal level of funding for all local school districts throughout the state.

Prior to the Serrano v. Priest ruling, local school districts controlled their budgets including the levying of property taxes to fund school operations. But post Serrano, the state imposed revenue limits on school districts and narrowed the gap in general purpose funding by capping the wealthier districts while providing larger subsidies to low income districts. The (Perry, 2004) ceiling placed on wealthier districts combined with the sliding scale of increases for lower income districts helped the state achieve the equalization standard expressed in the Serrano v. Priest ruling.

But the adoption of Proposition 13 went beyond the Serrano v. Priest ruling in changing the state’s role in school finance by severely limiting a district’s ability to levy and benefit directly from local property taxes. Proposition 13 amended the California State Constitution with its main provisions including:

No property should be taxed at more than one percent of 1975 fair market value; municipalities may impose “special taxes” by a two-thirds vote of the electors; assessments may not grow more than two percent annually from 1975-76 levels, to which they were rolled back, except for property sold after 1975-76; and no increase in state taxes may be enacted without a two-thirds vote of each legislature. (Yudof, Kirp, Levin, & Moran, 2002, p. 798)

Following the passage of Proposition 13, the state was empowered to establish a statewide mill rate, limit millage increases, and, more importantly, prevent local school districts from levying, collecting, and benefiting directly from local property taxes. This overturned the Separation of Sources Act (Barbour, 2007 as cited in Perry & Edwards, 2009) which had granted exclusive control over determining and levying property taxes to local governmental entities including school districts in 1910.

Because of the resultant drastic reduction in the control over and receipt of local property tax revenues, the state was forced to (Yudof et al., 2002, p. 798) “bail them out by using $2.2 billion of the $3 billion state surplus to make up the difference.” While the state gained control over the allocation of locally levied property taxes, the inequities in funding among school districts were then a function of the state’s school funding formula rather than ones caused by disparities in property values and ratables.

Because Proposition 13 and the Serrano v. Priest ruling combined to both severely limit the ability of local school districts to raise their own revenue to fully fund their budgets and centralize the control over school district funding at the state level, the voters amended the constitution by approving Proposition 98 in 1988. Proposition 98 guaranteed that the state would use the local property taxes that it now controlled plus other state tax revenues to fund a minimum level or floor of all local school district budgets.

According to the requirements of Proposition 98, the state guarantees that at least 40% of its general fund resources will be dedicated to funding public education. This guaranteed funding floor is established by modifying the amount a district received in the preceding fiscal year (Edwards & Leichty, 2010) for enrollment, attendance, and statewide income levels.

In 1990, Proposition 111 modified Proposition 98 to the extent that if the state’s General Fund revenues decline, then the growth rate of the guaranteed funding level will be lowered correspondingly. As a constitutional amendment, Proposition 111 enables the state to make “fair share” reductions to the guaranteed funding level during economic downturns (Edwards & Leichty, 2010, p. 5).

The risk to local school district budgets of depending on unreliable revenue from the state’s unsustainable budgets materialized in major way during economic crisis following Governor Schwarzenneger’s election. To alleviate the state’s budget deficit, Governor Schwarzenegger (Picus as cited in Fusarelli & Cooper, 2009) negotiated a one year suspension of Proposition 98. Although the governor guaranteed that the funds would be repaid (Picus as cited in Fusarelli & Cooper, 2009, p. 14) he “did not include them in his annual budget” for the following fiscal year.

Nationwide the soaring cost of under funded state mandates and regulation has forced local school districts to raise property taxes or cut non-mandate protected regular education programs and services resulting in a leveling down of educational quality. California is no exception as Greenhut (2005, p. 1) reports that according to Proposition 4, which was approved in 1979, the state is required “to reimburse local school districts for the mandates it imposes on them. California owes districts more than $3.6 billion.” These deferred payments have caused severe cash flow problems for local school districts.

As the state’s fiscal crisis deepened and with Proposition 98’s guaranteed educational funding being the largest state expenditure (Edwards & Leichty, 2010), the state cut educational funding to the bare minimum. In this way the state not only reduced spending in the current fiscal year (Edwards & Leichty, 2010) but also minimized its obligations going forward. These funding reductions caused districts to cut non-mandate protected regular education programs and services and exacerbated their cash flow problems.

But Proposition 111’s amendments compel the state to accrue a maintenance factor for any shortcomings owed districts resulting from a suspension of or changes in the minimum funding guaranteed in Proposition 98. The maintenance factor (Edwards & Leichty, 2010, p. 5) is the “difference between the actual spending level and what would have been spent under normal growth.” By the second quarter of 2009 the state’s cumulative maintenance factor debt obligation reached $11.2 billion which further highlighted the funding shortfalls for local school districts.

The Serrano v. Priest ruling combined with Propositions 13 and 98 resulted in the state controlling school finance and policy for all of its nearly 1,000 school districts. The state determines how its various educational resources are allocated among the school districts and largely how they will be used.

The state establishes revenue limits for each district. But only through the passage of legislation can the state, rather than the local school district, adjust a district’s revenue limit. When the local property taxes controlled by the state increase, the majority of schools do not benefit because any incremental property tax revenue is applied to the limit and the state’s component is lowered proportionately.

Conclusion

The states of New Jersey and California exemplify the problems associated with state domination of local school systems particularly as executed through the level of county government. State centralized funding leads to a one-size-fits-all approach for education but one that fits no district.

The specific needs of individual school districts vary to such a large degree that they render uniform state funding and policy formulas inadequate. Instead, public school districts need a mass customization of educational funding, control, and policy that can only derive from local control. Oates (1972) supports the notion that public education should be provided at the lowest level. Kenny (1982) also argues for the provision of public education by local school districts.

Baker, Green, and Richards (2008, p. 66) explain how “the local property tax empowers local voters to express what they want for their local public schools.” The consequence according to Baker, Green, and Richards (2008, p. 66) is that “when property taxes become statewide taxes, the political advantages of empowering local citizens and promoting competition and sorting among jurisdictions is lost.” This mass standardization of school finance and policy leads to state funding guidelines that are incongruous with the needs and priorities of local school districts.

It is difficult for state run school systems to be accountable to the taxpayer. California demonstrates its lack of accountability by withholding or deferring funds which it is legally obligated to send to local school districts. As a result, California has “fallen from its position a leader in per-student spending in the 1970’s to now spending well below the national average (Jacobson, 2007, p. 2). As Jacobson (2007, p. 3) explains, because the state has centralized control over local school finance and policy, the state’s “financial resources are distributed in such an irrational way that schools serving similar student populations in similar locations receive different funding.”

California regularly withholds funds that it is required to allocate spend on its public schools but uses these funds to help offset state budget deficits. California has withheld nearly $15 billion of aid for its schools. California owes local school districts more than $3.6 billion in reimbursement for under funded state mandates in violation of Proposition 4 requirements. Moreover, the state’s owes local school districts $11.2 billion in Proposition 111 maintenance factor obligations.

New Jersey is similarly expanding state control and authority through its counties at the expense of local control, autonomy, and accountability. The state increased its bureaucracy and administrative expenses through the greatly expanded Office of The Executive County Superintendent. This appointed official can override decisions made by duly elected boards of education through the exercise of the line item veto.

The authority of the Executive County Superintendent supersedes that of locally elected boards of education effectively rendering local boards of education as no longer the trustees of a district’s financial and human resources whom the taxpayer can hold accountable. Taxpayers have great difficulty holding the state accountable. Examples of this include the state’s recapturing surplus and reserve funds governed by S1701, the failure of the School Construction Corporation, and the continued lack of student and school achievement in the Abbott districts.

Any reduction in local school district control over the levying and allocating of property taxes decreases accountability and adversely affects public school quality. Taxpayers are more involved in, have a much greater stake in their local school districts, and act to hold these school districts accountable when they pay local property taxes directly to their local schools rather than have their local property taxes controlled by the state and redistributed as if they were statewide revenues according to a state funding formula.

Fischel (2001, p. 152) explains the consequences of statewide property tax redistribution using voters without children in the public schools, “At the local level, they are willing to support, or at least not oppose, high levels of spending because better schools add to the value of their homes. At the state level, voters without children do not perceive such an offsetting benefit to their taxes.” Having a lowered sense of ownership in their schools, taxpayers become more complacent as the proportion of state funding increases. This causes a corresponding reduction in the level of accountability required by the stakeholders and the quality of their public schools’ education declines as a result.

State control over schools interrupts the connection taxpayers’ make between their property values and property taxes. As Sonstelie, Brunner, and Ardon explain (Sonstelie, Brunner, & Ardon, 2000, p. 102 as cited in , 2001, p. 136) the “reason that local control produces better schools is that the local property tax system channels the revenues of nonresidential property into public education.” The greater is the proportion of non-residential properties in a district’s mix of ratables, the lower is the tax burden on residential properties. This lowers their “tax price” (Fischel, 2001, p. 136) making their local schools relatively less expensive and as a result, taxpayers are “induced to spend more on education.”

Typical taxpayers resemble investors because they want their major asset, their home, to appreciate in value. As Fischel (2001, p. 136) explains how “voters tolerate property taxes only when the public services financed by them are capitalized in home values.” Home owners have a vested interest in the success of their local schools because the credit rating of a school district’s host municipality is largely dependent on the financial soundness and credit worthiness of its schools. The higher is a municipality’s or a school district’s credit rating; the lower is its debt service expense.

The greater is the quality of the local school district, the greater is the taxpayer’s property value because the demand for quality education leads to a higher market price. As a result, taxpayers strive to protect and improve their property values. They evaluate the quality of their school district so as to maximize their property values. But if their school district’s quality deteriorates or is expected to decline, typical Tieboutian taxpayers will vote with their feet.

By voting with their feet, taxpayers choose the local school district that best meets their needs and one that will contribute to their property values. But taxpayers vote not only with their feet but also on school district operating budgets, capital projects, and board of education members. Through the exercise of these votes, taxpayers control the quality of education provided by their local schools as well as the level of property taxes levied. Their collective decisions lead to a Pareto efficient allocation of local public education. In this context, Baker, Green, and Richards (2008, p. 21) state that the “Tiebout model represents the most basic form of school choice.”

Tiebout (1956) argues that because crowding and congestion affect the provision of public goods and services, it is inefficient to provide public education at a centralized level and public education is more efficiently provided at the local level. Fischel (2001) supports this conclusion with his assessment of California’s centralized school finance system in which taxpayers lost control over local schools and property taxes. This led to reduced levels of taxpayer involvement in and support for public education.

Fischel (2001, p. 161) concludes “the apparent quality of public education has declined nationwide as the states’ share of funding for it has risen.” It is essential that taxpayers rather than states or counties have control over their local schools so they will be motivated to properly fund, support and improve public education.

References:

Baker, B. D., Green, P., & Richards, C. E. (2008). Financing Education Systems. Upper Saddle River, New Jersey: Pearson Education, Inc.

Barbour, E. (2007). State-Local Fiscal Conflicts in California: From Proposition 13 to Proposition 1A. Public Policy Institute of California, http://www.ppic.org/content/pubs/op/OP_1207EBOP.

Coffin, S. (2010, December 26). Penalties of Scale: Why Large School Districts Need to Disaggregate. Retrieved from Coffin’s Education Center, http://www.coffinseducationcenter.com.

CommUNITY Against Regionalization Efforts (2009). Core Act, C.A.R.E. Retrieved from http://www.saveoursmallschools.com/legislation.

Edwards, B., M., & Leichty, J. (2010). School Finance 2009-10: Budget Cataclysm and its Aftermath. Mountain View, California: EdSource.

Fischel, W. A. (2001). The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies. Cambridge, Massachusetts: Harvard University Press.

Fischel, W. A. (2009). Making the Grade: The Economic Evolution of American School Districts. Chicago and London: University of Chicago Press.

Fusarelli, B. C., & Cooper, B. S., Editors. (2009). The Rising State: How State Power is Transforming our Nation’s Schools. Albany, New York: SUNY Press.

Greenhut, S. (2005). State meddling hamstrings schools. The Orange County Register, Retrieved from http://www.ocregister.com

Jacobson, L. (2007). California’s Schooling is “Broken”: Studies Call for Overhaul of Finance, Governance. Education Week, 26(28) Retrieved from http://www.edweek.org/ew/toc/2007/03/21/index.html

Kenny, L. W. (1982). Economies of scale in schooling. Economics of Education Review, (2) 1-24.

Kenny, L. W., & Schmidt, A. B. (1994). The Decline in the Number of School Districts in the United States 1950 – 1980. The Public Choice, (79) 1-18.

New Jersey Department of Education (2005). S1701 Regulations. Retrieved from http://www.state.nj.us/education/finance.

New Jersey Department of Education (2008). School Funding Reform Act. Retrieved from http://www.state.nj.us/education.

New Jersey Department of Education (2010). S450. Retrieved from http://www.state.nj.us/education.

New Jersey School Boards Association (2004). S1701 Signed Into Law. Retrieved from http://www.njsba.org/S1701-Update.

Oates, W. E. (1972). Fiscal Federalism. New York: Harcourt Brace Jovanovich.

Perry, M. (2004). Rethinking How California Funds its Schools. Mountain View, California: EdSource.

Perry, M., & Edwards, B. (2009). Local Revenues for Schools: Limits and Options in California. Mountain View, California: EdSource.

Picus, L. O., (2009). California. In Fusarelli, B. C., & Cooper, B. S., (Editors), The Rising State: How State Power is Transforming our Nation’s Schools, (pp. 9-26). New York, New York: SUNY Press.

Sonstelie, J., Brunner, E., & Ardon, K. (2000). For Better or for Worse? School Finance Reform in California. San Francisco: Public Policy Institute of California.

Tiebout, C. M., (1956). A Pure Theory of Local Expenditures. The Journal of Political Economy, 64, 416-424.

Yudof, M. G., Kirp, D. L., Levin, B., & Moran, R. F. (2002). Educational Policy and the Law. Belmont, California: Wadsworth Group/Thomson Learning.

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Does Mayoral Control Provide a Governance Structure that is well suited for our Schools?

Saturday, January 1st, 2011

Introduction

In terms school reform, accountability is not possible if a school district lacks the proper control model or governance structure for local control. Once the most appropriate control structure is in place, only then can a school district achieve the level of accountability necessary to improve student and school achievement. Educational quality and accountability, therefore, depend on a school system employing the control model that best suits its needs and priorities.

But what control model makes accountability possible? Mayoral control is one governance structure that is often promoted as a model of democratic accountability particularly for large urban school districts. Perhaps its most democratic aspect is that it concentrates all responsibility for a school district’s performance in one person, the mayor. When the mayor has control over the municipality’s school system, then the voters have one focal person whom they can hold directly accountable for their local school district’s performance.

Proponents of mayoral control contend that such a control model provides for greater accountability than does having an elected board of education run a school district. Because there is often a much greater voter turnout for mayoral elections as compared to board of education elections, they are touted as more reflective of the will of people. Still, it is not clear whether having an independently elected school board of education or even an elected school superintendent rather than having only an elected mayor in charge of the school system combined with holding elections in November rather than in April or May would result in comparable voter turnout.

According to the typical mayoral control model, the mayor appoints the board of education as well as the superintendent of schools. But in order for the mayor to have such power, often he/she must be granted the authority by the state government as well as the municipal legislature. Even Secretary of Education, Arne Duncan, (Kroll, 2009) advocates such changes. Secretary Duncan (Kroll, 2009) favors the mayoral control model because he asserts that such a model establishes clear lines for accountability whereas pathways to accountability may be much less clear with a board of education governance structure.

The typical mayoral control model concentrates the authority to govern the municipality’s schools within the office of the mayor placing the mayor rather than the board of education at the top of the governance structure. Advocates believe this facilitates efficiencies and accountability. Viteritti (2009) echoes this position by arguing that mayoral control enables changes to the school system to occur sooner and more efficiently.

Alternatively, opponents of mayoral control argue that an elected board of education control model, within which the board appoints the superintendent of schools, is more democratic and provides for greater accountability. One of their main arguments is that the elected board of education control model grew as a good government response to the corruption, waste, and political patronage that were common place in school systems run by mayors especially in the early to mid twentieth century.

Proponents of mayoral control argue that it is their model that often enables large and particularly urban school districts to solve educational problems because the mayoral control model provides the governance and control structure that makes accountability more likely. Their primary rationale for supporting this model is that it makes one focal person, the mayor, responsible for holding all schools accountable to high standards. When the mayoral control model is applied they contend that there is no divided authority in the governance of schools because the mayor has all the decision making power necessary to affect change and establish reform. This model generates greater accountability especially in urban school districts because there is a clear and direct chain of command emanating from the mayor over all aspects of the city’s schools.

Mayoral control advocates cite that mayors rather than board of education members are more likely to have the experience and the political network necessary to lead a large municipal-wide enterprise. Because mayors are elected in citywide elections, they also may be more likely to have a broader understanding of the full range issues affecting all of the municipality’s schools than would board of education members elected by ward or some other political subdivision of the municipality.

In summarizing their findings concerning mayoral control, Harris and Rotherham (2007, p. 2) state that mayors “are the only officials accountable for the health of entire cities. They have experience delivering and monitoring a wide range of services to their constituents, and are able to mobilize their cities’ resources to create high quality educational options for youth. And, because voters hold them accountable for the quality of life in their city, mayors might as well truly be engaged with improving education.”

Strong Mayor – Weak Mayor

There are different forms of governance structures involving the mayor including the strong mayor and weak mayor forms. Which form mayoral control and authority take influences how the mayor can impact the school system. In this context, Cuban and Usdan (2003) argue that whether or not term limits apply to the mayor affects the extent to which mayoral control can be effective.

The strong mayor or strong mayor – weak council form of government resembles the federal model in which the mayor serves as the chief executive while the council is the legislature. This form gives the mayor broad authority over all administrative and financial aspects of municipal government including developing, proposing, and administering the municipality’s budget as well as appointing, supervising, and replacing all departmental staff. Edelstein (2006) reports that this governance structure facilitates mayoral control of the school system as a function of the powers granted the mayor under this form of government.

The mayor operating under a strong mayor form of government typically appoints the municipal board of education and the superintendent. Proponents believe that this provides for much greater accountability because there is one person who can be held accountable for the quality of education citywide. Opponents disagree according to their belief that such a structure will lead to less accountability because voters can no longer vote for individual board of education members while the mayor’s four year term does not provide enough recourse.

Alternatively, the weak mayor or council – manager form of government more closely resembles that of a corporate governance structure. Under this governance structure, the council is the legislative body while the city manager operates with many of the executive powers granted the mayor when under the strong mayor form which makes the mayor “weak” in the sense that his/her role is largely ceremonial.

According to the weak mayor or council – manager form of government, the city manager wields authority over the administrative and financial aspects of government including developing, proposing, and administering the municipality’s budget as well as appointing, supervising, and replacing all departmental staff while the council appoints the city manager and approves the municipal budget. Because the city manager serves largely in the role of chief executive and the mayor’s authority is correspondingly limited, the mayor’s ability to impact the school system is similarly limited under this form of government.

Mayoral Control Rationale

Increasingly, many large urban school districts are looking to change their control structure and adopt the mayoral control model. Tired of the status quo, these districts seem to expect that the mayoral control model will address the two major shortcomings of their school systems. That is, they want their schools to benefit from having a mayor who is elected citywide and who, in turn, can be held directly responsible for the performance of their school system.

Large urban districts that adopt the mayoral control model do so with an expectation that their democratically elected mayor will hold their students and schools accountable for their performance. In this way, it is believed the mayor will provide the leadership and accountability necessary to overcome what is often perceived as a fragmented, dysfunctional, and less than fully accountable elected board of education governance model when it is replaced with the mayoral control model.

But many major urban school districts desperate for improved student and school performance look to adopt the mayoral control model to improve their district’s academic achievement and educational quality through its democratic accountability. But what if the change from an elected board of education with possibly a weak mayor or council – manager form to a governance structure of mayoral control involving perhaps the strong mayor form of mayoral governance should fail?

The benefits that taxpayers derive from their local school district quality and property taxes are capitalized in their property values. Because taxpayers strive to protect and improve their property values, they constantly evaluate the quality of their school district so as to maximize their property values. If their school district’s quality should deteriorate or is expected to decline, then these typical Tieboutian (Tiebout, 1956) taxpayers will “vote with their feet.”

By voting with their feet taxpayers choose the local school district that best meets their needs and one that will contribute to their property values. But taxpayers vote not only with their feet but also on school district operating budgets, capital projects, and board of education members. Through the exercise of these votes, taxpayers expect to control the quality of education provided by their local schools as well as the level of property taxes levied.

The collective decisions of taxpayers lead to a Pareto efficient allocation of local public education. In this context, Baker, Green, and Richards (2008, p. 21) state that the “Tiebout model represents the most basic form of school choice.” If an urban school district’s quality deteriorates or is expected to decline, therefore, the tax base supporting the local schools will decline correspondingly. This further supports the need for school districts especially urban ones to adopt the school governance model that is best suited to its needs such as an elected board of education.

The Mayoral Control Experience

While more of America’s larger and especially urban school districts are considering adopting the mayoral control model, more than a dozen already have some form of mayoral control including Boston in 1992, Chicago in 1995, Cleveland in 1998, Philadelphia in 2001, and New York City in 2002. A few other school districts are considering mayoral control if even for a second time such as Detroit in which it was established in 1999. But according to Levy (2004, p. 3) “it is difficult to link changes in governance to improvements in student achievement.”

To date, it seems as if the impact of mayoral control model on school and student achievement has been mixed. Levy (2004, p. 3) points out that Boston, Chicago, and Cleveland, “with the longest history of mayoral control, have improved test scores in both elementary and secondary schools, though their racial achievement gaps remain” while “Detroit’s scores have gone down.” Levy (2004, p. 3) continues by stating that “the lowest 20% of schools have improved, and have done so more rapidly that their school systems as a whole.”

Darling-Hammond (2009) reports some different results for the impact of mayoral control model on school and student achievement. Boston (Darling-Hammond, 2009, p. 3) had the “largest gains in student proficiency rates between 2003 and 2007 in fourth and eighth grade math and fourth grade reading.” However, “Boston was tied with San Diego for gains in fourth grade math and with Houston for gains in eighth grade math” while San Diego and Houston did not have mayoral control of their schools. Chicago which had many failing schools and a highly decentralized school system until Mayer Daley took over in 1995, recorded only “modest gains under mayoral control” according to Darling-Hammond (2009, p. 3) while “Austin, one of the highest achieving urban districts in all subjects during all of those years,” did so without a mayoral control governance structure.

New York City

But proponents contend that the mayoral control model is a governance structure that has led to turnarounds in student performance and accountability particularly in previously failing urban school systems. New York City is a prime example, they contend. Testifying in favor of mayoral control for New York City’s public schools, Thomas A. Dunne, Fordham’s vice president for government relations and urban affairs, stated (Howe, 2009, p. 1) “It was not long ago that our schools were a dismal failure and no one wanted to be held accountable. New York City public officials abdicated their responsibility and created 32 local school boards. No one person or authority took responsibility for our schools. There was political infighting, confusion, some school boards became patronage mills and as a result the children suffered. Education was no longer a priority.”

Joseph M. McShane, president of Fordham, summarized (Howe, 2009, p. 2) the benefits of mayoral control by testifying, “A key ingredient in improving school performance is accountability.” The mayoral control model provides one leader whom can held accountable for student and school performance.

Stern (2007) summarizes the factors that led to New York City’s second adoption of the mayoral control model and the replacement of its elected board of education governance model. “The old Board of Education offered a case study of the paralysis that sets in when fragmented political authority tries to direct a dysfunctional bureaucracy. New Yorkers arrived at a consensus that there was not much hope of lifting student achievement substantially under such a regime. The newly elected Bloomberg made an offer that they couldn’t refuse: Give me the authority to improve the schools, and then hold me accountable for the results” (Stern, 2007, p. 1).

New York City’s second adoption of the mayoral control model in 2002 resulted largely from the public’s reaction to the problems associated with the decentralization of the citywide school district into 32 independent school districts in 1969. Each local board of education governed its own district and was elected locally. While each local board of education was fully empowered to operate its district, there was no accountability for school and student achievement.

Segal (2005, p. 132) describes how New York City adopted the mayoral control model, “putting Mayor Michael Bloomberg at the helm of the school system. The idea was to introduce long-needed accountability into what had been one of the most unaccountable bureaucracies in the state.” Segal (2005, p. 132) continues “Bloomberg has repeatedly said he would stake his success on his ability to improve education, implicitly inviting New Yorkers to vote him out of office if he fails.”

New Jersey

New Jersey’s largest public school district, Newark, not only is one of the three districts taken over and operated by the state including Jersey City and Paterson but also has one of the highest per pupil spending rates in the state. As an Abbott District, Newark’s public schools also are funded almost entirely by the state of New Jersey. Despite such lavish spending and state funding, Newark’s schools’ and students’ performances as measured by standardized tests lag far behind the state averages in all subject areas.

Segal (2005, p. 29) goes further in reporting that “in New Jersey, corruption and gross mismanagement clearly correlate with poor student performance. The three school districts that the New Jersey state education department took over – Jersey City, Paterson, and Newark – had the highest rates of systemic corruption and among the lowest test scores and highest dropout rates in the state.” Perhaps either despite or because of these dire conditions, Newark Mayor Booker is advocating that the city change to a mayoral control model as the governance structure for its school system.

Oakland United School District

The Oakland United School District demonstrates what problems can occur within a weak mayor form of government in which the mayor shares power over the school system with an elected board of education. In the Oakland United School District, the mayor appoints some members of the board of education while other members are elected directly to those positions. In 2000, “Oakland voters (Wong and Shen, 2007, p. 742) approved a change in the city’s charter, allowing Mayor Brown to appoint three new school board members to an expanded ten member board.”

The Oakland United School District’s “mixed” board of education did not function effectively (Wong and Shen, 2007, p. 742). The board’s worsening financial position eventually led to its bankruptcy and being taken over by the state of California in 2003. In 2009, however, the State Superintendent of Public Instruction restored full control and authority over the Oakland United School District to a fully elected rather than “mixed” board of education effectively removing the mayor from having influence over the school system.

Detroit

But the mayoral control model is not necessarily a panacea as the failure of the Detroit school system attests. Detroit’s public schools and students consistently have been among the worst performing in the nation. Kirst and Bulkley (2001) believe that Detroit’s weak mayor governance structure may have contributed to the citywide school system’s problems. Indeed, James (2002, cited in Wong and Shen, 2007, p. 743) reports these findings “Detroit’s experience with mayoral control between 1999 and 2004 was politically contentious with teachers unions and the National Association of Colored People on the opposing side and the business and the urban league on the supporting side.”

Indeed, continuous objections to widespread corruption, waste, financial mismanagement, and patronage in Detroit’s school systems caused Detroit to reconsider mayoral control. Moreover, the reliance on the patronage system to make personnel decisions compounded its adverse impact on schools. In 2004, (Wong and Shen, 2007, p. 743) voters disaffected with the continuing poor performance of their school system, rejected Detroit Mayor Kwame Kilpatrick’s attempt to gain their approval of “Proposition E, which would have enabled him to appoint a strong chief executive as well as the entire board.” As a result, Detroit changed from mayoral control to an elected citywide board of education control model.

While test scores and enrollment continue to decline, Detroit has closed more than 145 schools since 2004 (Saulny, 2010). To help overcome the problems plaguing the district including a projected budget deficit of approximately $320 million, Michigan Governor Jennifer Granholm appointed Robert Bobb as the district’s emergency manager in 2009 (Saulny, 2010). Nonetheless, Secretary of Education, Arne Duncan, (Kroll, 2009) advocates Detroit’s returning to the mayoral control model to provide for more continuity, stability, and accountability in the school system.

Chicago

Tired of widespread corruption, waste, financial mismanagement, and patronage mills in its school system as well as poor student and school performance, Chicago adopted the mayoral control model in 1995. Although Chicago’s mayors have historically enjoyed significant influence over the city school system including some appointive authority (Carl, 2009), the passage of the Chicago School Reform Act officially empowered the mayor to appoint the entire board of education and the superintendent of schools.

In passing the Chicago School Reform Act, Chicago’s residents sought to link electoral accountability and the city’s educational performance accountability by holding a singular elected official, the mayor, accountable for improving its student and school achievement. Establishing complete mayoral control in 1995 was actually more of a return to a strong mayor governance structure over the city’s schools because (Carl, 2009) the mayor’s appointive authority over the board of education had been largely transferred to a citywide commission in 1988.

Kirst and Bulkley (2001) studied the history of mayoral control in Chicago. They concluded that the improvement in the Chicago’s school system since 1995 may be linked to the city’s adoption of a strong mayor governance structure. But the track record of Chicago’s school system before full mayoral control was established in 1995 shows that it did not generally lead to gains in school and student achievement. Mayors regularly used their influence over Chicago’s school system to achieve their personal and political agendas prior to the passage of the Chicago School Reform Act.

Carl (2009, p. 305) concludes that Chicago’s mayors regularly used their office to build “coalitions that met their own political interests; with one possible exception, these political interests did not necessarily coincide with higher quality urban schools. All of the mayors embraced educational positions that were as much about marshalling votes and winning the support of corporate Chicago as they were about improving the schools.”

Still, despite a history of mixed results, advocates of the mayoral control model regularly cite the problems associated with having elected boards of education govern large urban school districts. These proponents assert that having the mayor appoint the entire board of education and the superintendent of schools is perhaps the best way for a large urban district to improve school and student achievement.

Yet, Hess (2008) seems to disagree with the mayoral control model in his analysis of the performance history of Chicago’s school system which has been largely under some degree of mayoral control. Hess (2008) takes issue with a board of education that is appointed either in full or in large part by the mayor.

Chicago Summary

According to Hess (2008), there is a risk for any major urban school district including Chicago’s when its board of education is composed of all mayoral appointments that it could lose the transparency necessary for accountability. “Appointed officials, buffered from political and constituent considerations, are more likely to leave significant distributional or value-laden issues unaddressed” continues Hess (2003, cited in Hess, 2008, p. 233). As a result of this avoidance of complex challenges, an appointed board of education may not necessarily represent the wide range of educational views and priorities of the city’s various constituent groups.

In his review of Chicago as well as other major urban school districts, Hess (2008, p. 234) concludes that “mayors can get caught up politicizing school boards in self-serving ways or that, rather than embracing municipal attention to schooling, making education part of a mayor’s portfolio might leave it vulnerable to shifts in mayoral focus.” The inherent risk with the mayoral control model, therefore, may be that education ceases being a major stand alone municipal enterprise with its own duly elected set of officials and stakeholders and becomes perhaps just another city function competing for scarce financial and human resources.

Wong and Shen (2007) assess the impact of mayoral control model on Chicago’s school and student achievement more favorably. Wong and Shen (2007) argue that since its adoption in 1995, the mayoral control model has improved accountability by integrating authority throughout the school system and reversed the trend to fragmentation as well as decentralization.

Also, Wong and Shen (2007) cite how Chicago’s school system was able to correct its flawed financial management under the of mayoral control model. Wong and Shen (2007, p. 740) conclude that under the guidance of the mayor, the administration of Chicago’s school system “improved its capital funding, balanced the budget, and secured labor stability through a four year contract with the teachers’ union.”

Wong and Shen (2007) go further in describing the benefits gained by the Chicago school system by having mayoral control. Wong and Shen (2007, p. 740) report that “The school board launched its first capital improvement plan in decades to address the deterioration of the schools’ physical plant. The administration also improved management efficiency by waging a public battle against waste and corruption, downsizing the central office, and contracting out several operations.”

Boston

Student and school performance had deteriorated to such an extent that by 1992, Boston became the first large urban school district to adopt the mayoral control model. The elected board of education was replaced with one appointed by the mayor (Levy, 2004).

Mayoral control is largely credited with turning around Boston’s school system which had suffered through years of corruption, financial mismanagement, and patronage (Hess, 2008). Proponents contend that by finally having one person, the mayor, to hold accountable for the school system rather than a fragmented elected board of education, Boston was able to turnaround a school system with failing student and school performance.

The Boston school system seemed to benefit from the accountability afforded by the mayoral control model. Portz (Portz, 2003, cited in Hess, 2008, p. 222) assessed the impact of this governance structure, “A more consensual, elite dialogue has replaced the contentious debate, racial divisions, and constituent services. In contrast to long meetings and divided votes, the typical meeting of the appointed committee is both shorter and less contentious.” In addition to providing for greatly increased stability in the school system leadership, mayoral control seemed to provide Boston with the accountability necessary for greatly improved school and student performance. Hess (2008, p. 222) supports this conclusion by listing several accomplishments including but not limited to how Boston:

“Outperformed other Massachusetts districts with similar low-income populations in elementary, middle, and high school.”
“Demonstrated greater improvement by African-American students than did similar Massachusetts districts.”
“Increased fourth and eighth grade reading and math scores on the National Assessment of Educational Progress (NAEP) at a faster rate than the average of other large American cities, as well as faster than the national average.”

In Boston, the change to mayoral control seemed to provide the kind of leadership necessary for school system-wide accountability. In turn, the increased accountability improved the way the school system operated and performed.

Los Angeles

The Los Angeles school district is the nation’s second largest school district. It includes the school systems of 26 other cities besides Los Angeles, over 1,100 schools, and slightly less than one million students. Because it is composed of the school systems of 26 other proximate cities, Los Angeles is often referred to as a large unified school district or the L.A.U.S.D. The L.A.U.S.D. exemplifies a large urban school district with a mixed governance structure that is plagued by a fragmented power sharing arrangement among 26 mayors rather than centralized control under the command of one mayor or locally elected board of education. As such the L.A.U.S.D. suffers from the penalties or diseconomies of scale that afflict large urban districts. It also lacks the benefits of having one just one person or group, one mayor or board of education, which the voters can hold accountable for the school system’s performance.

The Los Angeles school district seems to be a district, therefore, that could readily benefit from disaggregating into several smaller local districts of no more than 3,500 students and unifying control under a locally elected board of education within each of these smaller districts. Each of these districts would be empowered to allocate its financial and human resources according to local needs and priorities. Implementing this arrangement would empower each local district to levy their own local property taxes to fund their schools according to local needs and priorities. This also would require the repeal of California’s Proposition 13 that banned local districts from levying their own local property taxes.

Once a newly disaggregated school district becomes free of the excessive bureaucratic burdens imposed by its former fragmented unmanageably large school district, unified under the control of a locally elected board of education, free of its state’s governmental strings attached to funding, and regains the ability to levy their own property taxes, each small local district would be much better equipped to generate the necessary public support for the public funding of its local public schools. The disaggregation process, therefore, not only could be applied successfully to school districts nationwide with enrollments exceeding 3,500 but also would greatly improve accountability and enable the disaggregated school districts to realize the benefits of economies of scale.

Conclusion

Because mayoral control provides for the mayor to be held accountable for the city’s school and student achievement, quality education can become more of a priority. Still, either mayoral control or an elected board of education can provide the governance structure that makes the accountability necessary for improved school system performance possible. The direct lines of authority under mayoral control or a superintendent under the control of an elected board of education can make for more effective decision making.

But the mayoral control model is neither a panacea nor a cure for all that ails a large urban school district. The chronic failure of the Detroit school system demonstrates how not to operate a school district even with mayoral control. Also, there is no compelling evidence that mayoral control leads to improved performance for all students and schools within a district (Kremer, 2010).

Objections to a history of widespread corruption, waste, financial mismanagement, and patronage in urban school systems has caused more than a dozen large cities to change or to begin the change process from an elected citywide board of education control model to a mayoral control model since 1995. Moreover, the reliance on a patronage system to make personnel decisions compounded the typical elected citywide board of education’s adverse impact on schools. As a result of patronage, the hiring and allocating of school personnel tended to be based less on merit and more on political considerations which caused many well qualified educators and administrators to be excluded from the schools.

In order for the mayoral control model to succeed, therefore, a large urban school district needs to have the right kind of leader who is dedicated to not only improving education and increasing accountability but also to eliminating corruption and imbedded patronage systems. While there may be no perfect control model for large urban school districts, mayoral control can provide perhaps an appropriate platform for achieving accountability for improved school and student achievement.

Large urban school districts seem to benefit from the clear lines of authority and centralized decision making process that accompany mayoral control. While cities should pay close attention to avoiding penalties or diseconomies of scale due to their size, it is possible that mayoral control can overcome many of the problems associated with a dysfunctional large urban district.

Hess (2008, p. 239) summarizes “replacing an elected board with one named by a strong, active, and accountable mayor is a promising way to jump-start coherent and sustained school improvement” especially for large urban school districts. New York City, Boston, and Chicago exemplify large urban school district mayoral control success stories. Hess (2008, p. 240) concludes that “In the case of dysfunctional urban districts, mayoral control seems to offer clear advantage in terms of coherence, political leadership, and accountability.”

References:

Baker, B. D., Green, P., & Richards, C. E. (2008). Financing Education Systems. Upper Saddle River, New Jersey: Pearson Education, Inc.

Carl, J. (2009). “Good politics is good government:” The Troubling History of Mayoral Control of the Public Schools in Twentieth-Century Chicago. American Journal of Education, 115, 305-336.

Cuban, L. & Usdan, M. D. (2003). Powerful Reforms with Shallow Roots. New York City: Teachers College Press.

Darling-Hammond, L. (2009). Response. National Journal Online – Education Experts, Retrieved from http://www.education.nationaljournal.com.

Edelstein, F. (2006). Mayoral Leadership and Involvement in Education: An Action Guide for Success. Washington, D.C.: U.S. Conference of Mayors.

Harris, D. & Rotherham, A. J. (2007). Get Mayors in the Schooling Game. Progressive Policy Institute. Retrieved from http://www.ppionline.org.

Hess, F. M. (2003). “The Voice of the People,” American School Board Journal, 190, (4) 36-39. Cited in Hess, F. M. (2008). Looking for Leadership: Assessing the Case for Mayoral Control of Urban School Systems, (p. 233). American Journal of Education, 114, 219-245.

Hess, F. M. (2008). Looking for Leadership: Assessing the Case for Mayoral Control of Urban School Systems, American Journal of Education, 114, 219-245.

Howe, Bob. (2009). Fordham Advocates Mayoral Control of City Public Schools. Fordham University Website, Retrieved from http://www.fordham.edu.

James, S. (2002, January 22). Schools chief put to the test. Detroit Free Press.

Kirst, M. W. & Bulkley, K. E. (2001). Mayoral Takeover: The Different Directions taken in Different Cities. Report, Consortium for Policy Research in Education, Washington, D.C.: National Institute on Educational Governance, Finance, Policymaking, and Management, U.S. Department of Education.

Kremer, T. G. (2010, February 14). Mayor Should Support District, Not Take it Over. The Post-Standard, p. E 1.

Kroll, A. (2009). Mayoral Control isn’t the answer for Detroit Schools. The Detroit News, Retrieved from http://www.andykroll.com/american-politics/det-news.

Levy, M. (2004). Mayoral Control of Public Schools: Lessons From Other Cities. Public Education Reform Project, Washington Lawyers’ Committee for Civil Rights and Urban Affairs, Retrieved from http://www.dcpswatch.com.

Portz, J. (2003). “Boston: Agenda Setting and School Reform in a Mayor-centric System.” In Henig, J. R. & Wilbur, C. R. (Editors), Mayors in the Middle: Politics, Race, and Mayoral Control of Urban Schools. Princeton, New Jersey: Princeton University Press, Cited in Hess, F. M. (2008). Looking for Leadership: Assessing the Case for Mayoral Control of Urban School Systems, (p. 222). American Journal of Education, 114, 219-245.

Saulny, S. (2010, March 18). Detroit Plan Would Close 45 Schools, The New York Times, March 18, 2010. p. A 19.

Segal, L. G. (2005). Battling Corruption in America’s Public Schools. Cambridge, Massachusetts: Harvard University Press.

Stern, S. (2007). Grading Mayoral Control. Manhattan Institute for Policy Research. Retrieved from http://www.manhattan-institute.org.

Tiebout, C. M. (1956). A Pure Theory of Local Expenditures, The Journal of Political Economy, 64, 416-424.

Viteritti, J. (2009). (Editor). When Mayors Take Charge: School Governance in the City. Washington, D.C.: Brookings Institution Press.

Wong, K. K. & Shen, F. X. (2007). Mayoral Leadership Matters: Lessons Learned from Mayoral Control of Large Urban School Systems, Peabody Journal of Education, 82 (4), 737-768.

Tags:accountability, Boston, Chicago, Detroit, elected board of education, L.A.U.S.D., Los Angeles, mayoral control, mayoral control of schools, NAEP, New Jersey, New York City, Newark, Oakland, Proposition 13, strong mayor, weak mayor
Posted in accountability, autonomy of schools, board of education, California, governance structure for our schools, home rule, local schools, National Assessment of Education Progress (NAEP), New Jersey | No Comments »

Penalties of Scale: Why Large School Districts Need to Disaggregate

Sunday, December 26th, 2010

Proponents of mayoral control frequently argue that concentrating decision-making power over the school system within the mayor’s office rather than at the state level or within an elected board of education enables more resources to be focused on those most affected by education and enables those most involved in providing education to provide better instruction. But state control causes local school districts to spend less time on students as well as parents because more time is required to be spent on state imposed bureaucratic obligations and requirements. Mayoral control advocates, therefore, go further by arguing that concentrating decision-making power over the school system within an elected board of education often leads to instability, fragmented leadership, and a dysfunctional school system.

The local school district not only is closest to the students, parents, teachers, and taxpayers but also has the necessary expertise to most effectively decide how to provide a quality education and to generate the necessary support among local taxpayers for the public funding of public education. But the size of the local school district impacts school and student performance. If a school district gets too large and unwieldy even with mayoral control then parental engagement decreases which harms student achievement because parental involvement is a key component supporting student performance.

Antonucci (1999, p. 1) reports that “the larger a school district gets, the more resources it devotes to secondary or even non-essential activities. In sum, large school districts engage in ‘mission creep,’ building activities which rapidly lose any connection to the original goal of educating children”. Antonucci (1999) argues that large urban school districts are too large to function effectively and to improve school and student performance. Indeed, his research suggests (Antonucci, 1999, p. 2) that the typical “American public school system suffers from penalties of scale”. Many education reformers, especially those who favor large countywide school districts, purport that the larger is a school district the more economies of scale it realizes. These reformers, however, do so based on presumed but unsubstantiated economies of scale that do not account for the true nature of school systems and educational organizations.

Big business is much more like a large public school district than is small business. While scale may differ, the effects of scale and scale economies are largely the same. Most large businesses operate in the flat portion of the long run average cost curve while many of the older, less efficient, larger, perhaps declining industries, utilities or utility-like firms (i.e., railroads) operate beyond the pivot point on the long run average cost (LAC) curve at which their LAC exceeds their marginal cost (MC) which results in operating losses. Large especially urban public school districts also operate beyond this pivot or break point.

The economics of large especially urban school districts resemble those of big business because when a large, often urban, school system’s LAC exceeds its MC it typically results in public subsidies to cover budgetary gaps as exemplified by the Abbott districts in New Jersey. This defines the economics of our nation’s large scale public school systems such as Newark, New York City, Los Angeles, and Chicago. Large scale public school systems operate with enrollment levels that are beyond their optimal level (i.e., approximately 3,500 students) which results in their LAC exceeding their MC. At this pivot point, the cost of their production inputs exceeds the benefits of their educational output largely as a result of congestion and crowding. This is turn results in ongoing subsidies because, as New Jersey demonstrates, state legislators seem to believe that the Abbott school systems should continue and subsidize them according to a rationale similar to the one supporting the railroad industry’s subsidies.

The conventional wisdom or misconception concerning our schools that somehow they are different from yet should be run as if they were each a large private sector business is the root cause of many of the challenges facing our public schools. Larry Cuban demonstrates this principle in his book, The Blackboard and the Bottom Line. In his book, Cuban (2004, pp. 3-4) quotes from the “Blueberry Epiphany” of Jamie Vollmer, a former business executive turned school reformer: “Our schools are not factories”. Indeed, no business could survive if they had not only to abide by the same rules and regulations but also to operate according to the same economic constraints as those that apply to our public schools.

The size of large urban school districts, therefore, influences the extent to which any form of structural control can improve the school system. Large urban school districts generally have not been accountable for improving school and student performance because they have been constrained by their overly large scale with its concomitant penalties of scale or diseconomies of scale. The typical large urban school district needs to be right-sized or disaggregated into several smaller districts with each not exceeding approximately 3,500 students. This would enable the control structure for the school system to improve accountability and lowers its cost structure while freeing it from penalties of scale. The solution seems to be to disaggregate districts with more than 3,500 students into several smaller more manageable but empowered local school districts under the control of a locally elected board of education.

Los Angeles

The Los Angeles school district is the nation’s second largest school district. It includes the school systems of 26 other cities besides Los Angeles, over 1,100 schools, and slightly less than one million students. Because it is composed of the school systems of 26 other proximate cities, Los Angeles is often referred to as a large unified school district or the L.A.U.S.D. The L.A.U.S.D. exemplifies a large urban school district with a mixed governance structure that is plagued by a fragmented power sharing arrangement among 26 mayors rather than centralized control under the command of one mayor or locally elected board of education. As such the L.A.U.S.D. suffers from the penalties of scale that afflict large urban districts. It also lacks the benefits of having one just one person or group, one mayor or board of education, which the voters can hold accountable for the school system’s performance.

Conclusion

References

Antonucci, M. (1999). Mission Creep: How Large School Districts Lose Sight of the Objective – Student Learning (AdTI Issue Brief Number 176). Retrieved from http://www.adti.net/education/antonucci.mission.creep.html.

Cuban, L. (2004). The Blackboard and the Bottom Line. Cambridge, Massachusetts: Harvard University Press.

Tags:disaggregation
Posted in autonomy of schools, bigger is not better, board of education, California, cap on enrollment, disaggregation, education, educational leadership, Small disaggregated school districts | No Comments »

TELs take their Toll on Education

Tuesday, June 29th, 2010

Tax and Expenditure Limits (TEL)

The major question confronting New Jersey’s educational system is most likely whether the state should implement a 2.5% cap on local public school districts’ annual operating budgets which is otherwise known as a tax and expenditure limit (TEL.) This question seems to arise from the most compelling issue facing public office holders, legislators, and policy makers as well as taxpayers statewide which is how to limit the amount and growth rate of New Jersey’s taxes especially its property taxes. Governor Christie’s answer is to implement a 2.5% TEL on local property taxes and expenditures similar to Massachusetts’ Proposition 2.5 or California’s Proposition 13.

Why should taxpayers allow the passage of legislation that would enable the state of New Jersey to limit a local school district’s ability to determine the amount of property taxes it levies as well as its level of expenditures? Voters currently have more control over their local school district’s property taxes than they have over any other form of taxation whether the tax is levied by their municipal, county, state or federal government. Why then should the state be able to set an arbitrary one-size-fits-all limit on the amount of property taxes local school districts can levy when property taxes are set according to local needs and priorities? Such a one-size-fits-all cap will fit no district because districts are unique.

Taxpayers can vote on their local school district budgets in all but a handful of towns but no taxpayer is able to vote on the budget of his/her municipal or county government despite the fact that these two levels of government are funded almost entirely by local property taxes. Because taxpayers can vote on school budgets, they can hold their school systems accountable but without a corresponding vote on municipal and particularly county government budgets taxpayers can not hold these levels of government accountable. This is one of the chief reasons why county government costs New Jersey’s taxpayers more than $6.1 billion annually!

All Local School District Property Taxes are Invested in the Host Municipality

All of a local school district’s property taxes remain and are invested in the schools of the host municipality so that the taxpayers benefit fully from the property taxes levied. County property taxes differ sharply from those levied to fund our public schools because they are redistributed to support an unaccountable, wasteful, and duplicative layer of government. This leads many researchers, most notably O’Sullivan, Sexton, and Sheffrin (2007,) to conclude that “local governments” and public school districts “must have access to a revenue source that they can adjust to meet varying demands.”

Funding our public schools through local property taxes is essential because county government siphons away crucial local property taxes and state governmental financial aid is unreliable. O’Sullivan, Sexton, and Sheffrin (2007) demonstrate that “the property tax can be administered by local government” and public school districts “with relatively little fear of its tax base migrating to other jurisdictions, thus providing local governments with the needed fiscal autonomy. The property tax has been the source of economic independence of local units of government” and local public school districts for generations.

Unfunded State and Federal Mandates Cause TELs to Cut Regular Education

There are only two kinds of programs and services offered by our public schools: those that are mandate protected and those that are non-mandate protected. Because school districts are forced by the state and federal governments to fully fund the unfunded portion of their mandates, public school districts must choose between cutting non-mandate protected programs and services or raising property taxes. School districts have no control over many of their major cost drivers such as the costs resulting from increases in unfunded mandates, enrollment, utilities, transportation, health insurance, legal actions, and the number as well as the mix of special education students. When a school district that is limited by a 2.5% TEL experiences increases in these uncontrollable expenses, it must cut expenses in other areas to stay within the cap.

One major fallacy in the cap advocacy argument is that local school districts are required to fund the unfunded portion of all state and federal mandates over which local school districts have no control. State and federal mandates drive the overwhelming majority of local school district expenditures and, hence, property tax levies. Property taxes could be slashed nationwide especially those funding our public schools and there would be no need for TELs, if the state and federal governments would just fully fund all of their mandates!

A TEL may force a typical school district to increase class sizes so as to minimize its expenditures for teachers and aides. But this will lead to lower test scores and likely No Child Left Behind (NCLB) operational and financial penalties. A TEL, therefore, gives a school district only one course of action: hold property tax increases within the state imposed percentage point limit while simultaneously cutting non-mandate protected programs and services but fully funding the unfunded portion of all mandates. That is, cutting regular education.

There is No Such Thing as a Free Lunch

Governor Christie along with the proponents of TELs purport that school districts will be become more financially responsible because of the state imposed limit on their expenditures and tax levies. TEL proponents argue that if school districts are left to their own devices, they would continue to spend and tax at ever increasing rates while the TEL’s implementation will force school districts to hold down expenditures and property taxes. TEL proponents seem to expect units of local government and our public schools to provide the same level of public goods and services if not a higher quality of education but at a lower price.

TEL proponents and policy makers disaffected by the seemingly ever increasing size and cost of public education assert that the TEL will lower property taxes and, therefore, make the provision of public education more efficient rather than cutting essential educational programs and services. Although most people realize there is no such thing as a “free lunch,” TEL advocates claim that school systems could provide at least the same quantity of education without lowering the quality of education because the TEL would compel districts to eliminate waste. But no TEL can guarantee that any school district will not cut non-mandate protected programs and services or regular education before eliminating any waste or inefficiency.

The passage of the major TEL’s, Proposition 2.5 in 1980 in Massachusetts and Proposition 13 in 1978 in California, shows how voters frustrated with state governmental inefficiency, waste, and overspending resorted to a cap which they perceived as the only means available to remedy their situation. Voters in both states believed prior to the vote that the imposition of the TEL would substantially eliminate inefficiency, waste, and overspending but it would do so without lowering the quality or quantity of public goods and services such as education. But once the TELs were imposed in Massachusetts and California, however, taxpayers acted “consistent with the (O’Sullivan, 2001) regret theory of tax limits” or buyers’ remorse.

The history of TELs, budgetary caps or even the wage and price controls imposed under former President Nixon demonstrates that placing arbitrary limits on revenues and expenditures results in a corresponding reduction in the quantity and quality of the public programs and services such as education provided by the TEL affected entity. Indeed, Downes and Figlio (2008) describe the TEL proponents who assert that “constitutional constraints like Proposition 13 could reduce the size of local governments and, at the same time, have little or no effect on the quality of public services provided” as seeking a “free lunch.”

Apples versus Oranges: Massachusetts’ Proposition 2.5 versus Governor Christie’s 2.5% Cap

Contrary to Governor Christie’s 2.5% cap proposal, Massachusetts imposed its 2.5% TEL during an economic boom and provided significant amounts of incremental state aid to school districts to make up for the loss of local property tax revenue. But New Jersey is mired in a deep recession with seemingly ever increasing state budget deficits which have already resulted in severe cuts to state educational aid. Because state aid is declining and no additional state financial aid is forthcoming to offset lost property tax revenues, school districts would be forced to cut non-mandate protected educational programs and services much more deeply than was experienced in Massachusetts.

State aid is unreliable. Massachusetts educational aid fluctuates while California has not complied with Proposition 98’s constitutional guarantees to provide state aid to local school districts to make up for the property tax revenues lost under Proposition 13. As a result of Proposition 13, California’s per pupil spending fell precipitously to an average of approximately $7,500 per pupil as compared to an average of $47,000 per inmate at its state penal institutions while its average class sizes became the second highest in the nation. Also, Massachusetts imposed its 2.5% cap during a period of declining student enrollment while New Jersey’s enrollment levels continue to increase. Hence, Massachusetts’ lower school district expenditures were largely offset by a much lower level of student enrollment which helped to greatly minimize the cuts to educational programs and services which would not be the case in New Jersey.

Taxpayers’ Expectations for TELs

New Jersey taxpayers generally seem to believe that much greater accountability, efficiency, and transparency at all levels of government will lead to lower spending and, hence, lower taxes. But voters do not want fewer public goods and services; just a much lower price for the public goods and services that they enjoy today. Government at all levels tends to overtax, taxpayers contend, because governments waste financial resources and are inefficient. Governor Christie’s 2.5% TEL, therefore, seems to be a tempting way to accomplish these goals.

In addition, Governor Christie’s 2.5% TEL lacks the flexibility for state and local governments as well as our public schools to respond appropriately to unforeseen circumstances or a declining economy. For instance, public schools tend to experience an increase of students transferring from private schools when the economy declines and parents are more challenged to find ways to pay for tuition in addition to property taxes. Governor Christie’s 2.5% cap proposal, therefore, can not guarantee that any level of government will operate at peak efficiency before cutting the public goods and services including education that they provide.

Governor Christie’s 2.5% cap proposal would enable the state to determine the budgetary and property tax policies of local governments and school districts through its state imposed limitations. If enacted, the 2.5% cap would lead, therefore, to increased centralization of educational funding along with its concomitant increased control over local school districts’ operations. The 2.5% TEL would lead to limitations on local school district expenditures and property tax levies which in turn would lower the quality of public education.

TELs’ Impact on Education and Student Achievement

TELs not only limit the amount of property tax revenue available to school districts but also and more importantly adversely impact how a typical school district provides educational programs and services. Downes and Figlio’s (1999a) findings explain how “the imposition of tax and expenditure limits results in the long-run reductions in the performance of public school students.” Students attending schools in TEL affected districts (Figlio, 1997; Downes, Dye, & McGuire, 1998; Downes & Figlio, 1999b) not only experienced much larger class sizes but also scored significantly lower on mathematics, language arts, and social studies standardized tests. When it comes to education, therefore, TELs lead to a reduction in the quantity as well as the quality of education, an increase in class sizes, and a leveling down of student achievement.

TELs seem to adversely impact student achievement disproportionately to the amount of property tax revenues lost or expenditures cut. Downes and Figlio (2008) conclude that TELs “lead to reductions in student outcomes that are far larger than might be expected given the changes in spending.” Possible explanations for this result include disproportionate cuts in instructional rather than administrative expenditures, higher student-teacher ratios, and a shift especially of the more talented students to private K to 12 schools. Because teacher salaries and benefits generally account for more than approximately 70% of a typical school district’s budget, it stands to reason that these expenses would be cut more severely. Reductions of teachers under the constraints of a TEL often lead to larger class sizes which when combined with the loss of regular educational programs and services tends to result in the transfer of many students especially the more gifted ones to private schools (Downes & Figlio, 2008.)

Conclusion

While Governor Christie aims to limit local public school districts’ property tax revenues and expenditures to no more than a 2.5% annual increase, this cap will most likely lead to a leveling-down of the quality of public education. Indeed, our nation’s two major TELs, California’s Proposition 13 and particularly Massachusetts’ Proposition 2.5 on which Governor Christie’s proposal is modeled, demonstrate the downside of such caps. These TELs (Fishel, 2001) destroyed the connection among local control, property taxes, school district budgets, educational quality, and taxpayer support because taxpayers essentially lost their ability to hold local school districts accountable to their goal of maximizing their property values.

The fundamental problem with trying to hold all of New Jersey’s public school districts’ property tax revenues and expenditures to annual increases not exceeding 2.5% is that it leads to a one-size-fits-all approach for education but one that fits no district. Baker, Green and Richards (2008) explain, “The local property tax empowers local voters to express what they want for their local public schools.” But when the artificial budgetary constraints of a TEL are imposed by the state, as Baker, Green and Richards (2008) conclude, “the political advantages of empowering local citizens and promoting competition and sorting among jurisdictions is lost.” Thus, the TEL leads to school district budgets that are incongruous with the needs and priorities of local school districts.

Governor Christie’s proposed reduction in local school district control over the levying of property taxes and determining the operating budget decreases local school district accountability and adversely affects public school quality. Because reductions of property tax revenues through the 2.5% TEL will reduce the level of local investment in the school district; the stake held by local taxpayers is similarly reduced. Fischel (2001) explains this using the motives of taxpayers without children in the public schools, “At the local level, they are willing to support, or at least not oppose, high levels of spending because better schools add to the value of their homes.” Through the imposition of a TEL, “At the state level, voters without children do not perceive such an offsetting benefit to their taxes.” Having a lowered sense of ownership in their schools, taxpayers become more complacent without local control over their school district’s property taxes. This causes a corresponding reduction in the level of accountability required by the stakeholders and, therefore, the quality of their public schools’ education declines.

Taxpayers choose the local public school district that best meets their needs and one that will contribute to their property values by exercising true Tieboutian choice (Tiebout, 1956) and voting with their feet. But taxpayers vote not only with their feet but also on school district operating budgets, capital projects, and board of education members. Through the exercise of these votes, taxpayers control the quality of education provided by their local schools as well as the level of property taxes levied. Their collective decisions lead to a Pareto efficient allocation of local public education.

But a TEL, such as Governor Christie’s 2.5% cap proposal, would destroy the Tieboutian equilibrium (Tiebout, 1956) enjoyed by local public school districts. It would do so by artificially limiting budgets below the levels congruent with the needs and priorities of local school districts. Because the quality of a taxpayer’s local public schools as well as his/her property taxes are capitalized in the value of their home, the consequence of Governor Christie’s 2.5% TEL would be to lower educational quality and, therefore, property values.

References

Baker, B. D., Green, P., & Richards, C. E., (2008). Financing Education Systems, Upper Saddle River, New Jersey: Pearson Education, Inc.

Downes, T. A. & Figlio, D. N., (1999a). Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality. National Tax Journal, 52, 113-128.

Downes, T. A. & Figlio, D. N., (1999b). Economic Inequality and the Provision of Schooling, Federal Reserve Bank of New York, Economic Policy Review, 5, 99-110.

Downes, T. A. & Figlio, D. N., (2008). Tax and Expenditure Limits, School Finance and School Quality in The Handbook of Research in Education Finance and Policy, Ladd, H. F., & Fiske, E. B., (Editors) (373-388). New York, New York: Routledge Taylor & Francis Group.

Downes, T. A., Dye, R. F., & McGuire, T. J., (1998). Do Limits Matter? Evidence on the Effects of Tax Limitations on Student Performance, The Journal of Urban Economics, 43, 401-417.

Figlio, D. N., (1997). Did the “Tax Revolt” Reduce School Performance?, The Journal of Public Economics, 65, 245-269.

Fischel, W., (2001). The Homevoter Hypothesis: How Home Values Influence Local Government Taxation, School Finance, and Land-Use Policies, Cambridge, Massachusetts: Harvard University Press.

O’Sullivan, A., (2001). Limits on Local Property Taxation: The United States Experience in Property Taxation and Local Government Finance, Oates, W. E., (Editor) (177-200). Cambridge, Massachusetts: Lincoln Institute of Land Policy.

O’Sullivan, A., Sexton, T. A., & Sheffrin, S. M., (2007). Property Taxes and Tax Revolts: The Legacy of Proposition 13. Cambridge, Massachusetts: Cambridge University Press.

Tiebout, C. M., (1956). A Pure Theory of Local Expenditures, The Journal of Political Economy, 64, 416-424.

Tags:Blog, budgets, California, Caps, centralization of funding, education, home rule, local control, locality, mandates, Massachusetts Proposition 2.5, Property Tax Levy, property taxes, property taxes blog, property values, Proposition 13, Proposition 98, public school districts, School Finance Blog, school reform and restructuring, state control, student performance, tax and expenditure limit blog, tax cap blog, TEL blog, TELs, unfunded state and federal mandates
Posted in academic performance, accountability, autonomy of schools, bigger is not better, board of education, Capitalization of property taxes, Capitalization of school district quality, Charles Tiebout, class size, county government, County Property taxes, decision making, education, Eliminate County Government, enrollment, home rule, home values, homeownership, leveling down, Local Education Authority (LEA), local property taxes, local schools, mandates, New Jersey, New Jersey Property taxes, No Child Left Behind (NCLB) Act, No Child Left Behind Act, non-mandate protected programs, per pupil spending, property taxes, property values, public education, public finance, school finance, school funding, school governance, school performance, state financial aid, state mandates, student performance, student teacher ratios, Wallace Oates, William Fischel | No Comments »

School Vouchers: Choosing to Level Down Education

Sunday, May 23rd, 2010

The Opportunity Scholarship Act otherwise known as New Jersey Senate bill S1872 would create a statewide voucher program for certain public, private and religious school students. Should this bill become law, its vouchers would weaken New Jersey’s already financially troubled educational system by diverting scarce state financial resources from our public schools to private and religious schools.

The voucher plan contained in S1872 is advertised as providing perhaps the best way to improve educational quality by creating a competitive model especially for urban school districts. But a voucher plan is merely an alternative funding vehicle for schools rather than a means for improving schools. A voucher by itself does not contribute to helping our schools and students achieve because it provides no operational, curricular, programmatic, or facility improvement.

The Opportunity Scholarship Act would establish a five year pilot program. The pilot program would provide scholarship donation tax credits that would be used to fund school vouchers for tuition assistance. This taxpayer funded voucher plan would enable children from low-income families to transfer from underperforming public schools to the public, private or religious school of their choice.

The voucher plan would allow corporations to contribute to state run scholarship organizations or funds. These state run scholarship organizations or funds would then distribute the monies to private and religious schools or to out-of-district public schools in certain cases. The state treasury, however, would refund each corporate donor’s contribution in the form of dollar for dollar tax credits which would result in the taxpayer subsidizing 100% of the voucher program.

S1872 significantly increases the number of eligible students and the kinds of schools eligible for vouchers. It is estimated that this bill would enable more than 280,000 students to qualify for vouchers especially after its first few years. Students, however, would qualify for vouchers if they were merely residing in a school district with a chronically failing school and not just attending a failing school. Furthermore, students who are currently attending charter, private, and religious schools are also eligible for vouchers.

To finance the vouchers, S1872 would transfer $360 million of state funds to the pilot program that could otherwise have been allocated to public schools statewide. These funds would shift from our state’s public schools to many private and religious schools. S1872 would allocate $90 million of the scholarship’s funds strictly to students who are already attending private and religious schools. Moreover, this amount can increase by the amount of the $270 million allocated for current public school students residing in a school district with at least one failing school that goes unused.

The major adverse impact of the voucher plan is the caps it places on the annual amount for which the state or the voucher student’s parents could be compelled to pay to the voucher student’s chosen public, private or religious school. These caps are $6,000 for kindergarten through eighth grade students and $9,000 for high school students. This would result in voucher payments not only falling short of average tuition charges at the overwhelming majority of public, private and religious schools as well as much further below average per pupil costs but also forcing many participating public, private and religious schools to close.

Many Catholic schools are already financially distressed while some are failing due to their challenges in making revenues meet or exceed expenses despite rather Spartan budgets. Moreover, the amount by which the per pupil cost exceeds the cap would be transferred to the local taxpayers in the host public school district who would be forced to make up the difference by paying higher property taxes! The urban school districts from which most voucher students are expected to transfer would also suffer because they would lose state enrollment-based aid as well as experience a possible degradation of test scores which would lead to No Child Left Behind penalties.

Vouchers will create overcrowding, congestion, and financial burdens for those school districts receiving voucher students if these districts are unable to refuse voucher students especially for capacity reasons. These burdens will deteriorate the quality of education and the level of student achievement in receiving districts which could easily result in many host district taxpayers leaving the host community.

S1872 does not address what discretion if any host school districts might have in being able to determine whether or not to accept voucher students. If a host school district is unable to prevent voucher students from enrolling even if it lacked the capacity then it could be forced to expand, acquire or construct additional facilities to accommodate the voucher students. Even if some of these facility additions were temporary such as acquiring trailers or redesigning cafeterias into classrooms, the host district would be bear the full expense! Furthermore, because the state will make voucher students essentially the “free agents” of the statewide school system, these free agents could depart before the beginning of the following school year leaving the host district with significant unused or under utilized facilities along with the incremental expense!

There is no guarantee that enrollment increases due to voucher pupils would be equally distributed among schools or by grade level within a receiving school or district. Expensive intra-district busing may be a likely outcome. Also, as a result of potential state requirements for the host district to provide inter-district as well as intra-district transportation, vouchers would impose significant transportation costs on districts which do not own or operate a fleet of buses.

S1872 provides no deadline by which voucher students must enroll in the new school of their choice whether public, private or religious. Without a deadline by which voucher students must register with their new school or district, it will become absurdly difficult for a school business administrator to determine the true enrollment level, especially the number of special education pupils, upon which the budget is built. In addition, the Opportunity Scholarship Act provides no requirement for voucher students to remain in their new school or district for any length of time. Because voucher students could leave for another school or district at any time during the school year, this will add significant complexity to the proper management of a school or district’s finances and operations.

A major unanswered question is whether the parents of voucher students would be able to vote on the operating budget and in the election for the board of education members of the host public school district once their children attend its public schools. Would the parents of voucher students also be able to serve on the board of education of the host public school district once their children attend its public schools? The extent to which the parents of voucher students can participate in the democratic process of the host district remains an open question.

Our state and federal governments have consistently under funded but over mandated education especially special education and Title 1 while increasing accountability standards on public schools. Limited state and federal funds should be invested, therefore, in public schools rather than private and religious schools that are not subject to the same accountability standards. Furthermore, the school voucher proposal contradicts the “thorough and efficient” education provision of our state constitution protecting all of New Jersey’s children. S1872 would violate the “thorough and efficient” clause because it will undermine many urban schools and overcrowd many suburban schools while forcing many participating private, religious as well as public schools to lose money on each voucher because the voucher does not cover the per pupil cost for these schools.

Our public schools are already reeling from approximately $1.5 billion in state aid reductions plus the under funding of the most recent state funding formulas, the Comprehensive Education Improvement and Financing Act of 1996 (CEIFA) and the New Jersey School Funding Reform Act (SFRA) of 2008. Although the state’s flawed approach to education funding is exemplified by the new funding formula contained in SFRA, it is manifested in its predecessor, CEIFA. Dr. Reock studied the financial impact on school districts of the state’s failure not only to not fully enact CEIFA but also to freeze most CEIFA funding beginning with the 2002-03 school year (Reock, 2007.) Based on his study (Sciarra, 2008), Dr. Reock found that “the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state.”

Instead of fully funding CEIFA’s school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs as well as state and federal under funded mandates. The shortfall was hardest on those non-Abbott districts that were most dependent upon state aid. During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-Abbott DFG A and B districts, $758 in DFG C through H districts, $386 DFG I and J districts, and $188 in Abbott districts.

As part of his statement in support of the plaintiffs’ opposition to SFRA, Dr. Reock concluded (Sciarra, 2008) that “the State’s failure to fund CEIFA for the past six years directly resulted in an enormous shortfall of funding in districts across New Jersey.” He went further to state, “By 2007-08, the sixth year of the CEIFA “freeze,” the total under-funding of state aid had reached $1.326 billion annually, despite the introduction of several new, smaller aid programs.” The result was a state-driven increase in local property taxes within non-Abbott districts to make up for the shortfall.

Our public schools were founded just as was our nation on the separation of church and state. The school voucher proposal would violate the provision of the United States Constitution which prohibits legislation that favors one or more religions or religious groups. In addition, private schools might possibly accept voucher students selectively such as through arbitrary methods. Moreover, private schools unlike their public cousins can fail students. What would be the process for dealing with those voucher students who flunked out or were otherwise dismissed from private schools? The built in advantages enjoyed by private over public schools are perhaps best summarized by Larry Cuban (2004,) our public “schools are unable to control the quality of their raw material, they are dependent upon the vagaries of politics for a reliable revenue stream, and they are constantly mauled by a howling hoard of disparate, competing customer groups that would send the best CEO screaming into the night.”

The benefits taxpayers derive from their local school district quality and property taxes are capitalized in their property values. The greater is the quality of the local school district, the greater is the taxpayer’s property value because the demand for quality education leads to a higher market price. As a result, taxpayers strive to protect and improve their property values by constantly evaluating the quality of their school district so as to maximize their property values and avoid the risks inherent with vouchers.

Vouchers create burdens for those school districts receiving voucher students which will level down the quality of education. When a school district’s quality deteriorates or is expected to decline, taxpayers will usually vote with their feet. By voting with their feet, taxpayers in districts receiving voucher students are quite likely to choose another public school district that best meets their needs and one that will contribute to their property values rather than one subject to the incremental burdens of voucher students.

Contrary to a voucher plan’s assertion that it will somehow create a “true” competitive model, a taxpayer’s choice of municipalities and, therefore, school districts, already reflects a home owner’s optimal asset allocation decision. Thus, the current model of school choice for the provision of education through taxpayers’ selection of their local public school districts that does not involve vouchers results in a competitive marketplace that aligns taxpayer preferences with the quality of public education better than a voucher plan could ever hope to accomplish.

The provision of education through local public school districts in which all of students who live within the district attend its local public schools enables community members to get to know and understand one another. The public benefit of having children attend their local schools rather than schools in remote districts accrues, therefore, to students and parents alike. This “network of acquaintances” is defined by Fischel (2002) as “community-specific social capital.”

Community-specific social capital (Fischel, 2002) “facilitates collective action” and builds public support for the public funding of public education which “reduces the transaction costs of the provision of true local public goods such as education.” But vouchers would disperse students from their home towns and thereby reduce the communal capital of the local school district.

Parents of school children cease to be true stakeholders in their children’s education when a system of state funded school vouchers replaces traditional local property taxes as the primary method of funding public education. Because when parents are responsible for paying for the majority of their children’s education whether it is in a public, private or religious school, they are more involved with their children’s schools. Parental involvement is also one of the major factors leading to improved student achievement and learning. Moreover, parents are much more likely to hold the school system accountable for how it acquires and allocates its financial and human resources as well as for the quality of education it provides when they rather than the state are paying for their children’s education.

If the question is how to improve the quality of education statewide, then the answer is not found within the Opportunity Scholarship Act. We should oppose the passage of S1872 because it will adversely impact our students and schools statewide while exposing homeowners to the risks associated with vouchers. Taxpayers resemble investors because they want their major asset, their home, to appreciate in value. Home owners have a vested interest in the success of their local schools because they strive to offset risks such as those posed by vouchers to their property’s value which can not be easily diversified.

References

Cuban, L. (2004). The Blackboard and the Bottom Line: Why Schools Can’t Be Businesses, Cambridge, Massachusetts and London, England: Harvard University Press.

Fischel, W. A., (2002). An Economic Case against Vouchers: Why Local Public Schools Are a Local Public Good, Dartmouth Economics Department Working Paper: Dartmouth College.

Reock, E. C. Jr., (2007) Paper, Estimated Financial Impact of the ‘Freeze’ of State Aid on New Jersey School Districts, 2002-03 to 2005-06, Institute on Education Law and Policy, Rutgers University, Newark, http:// ielp.rutgers.edu/docs/CEIFA_Reock_Final.pdf.

Sciarra, D. G., (2008) Certification of Dr. Ernest C. Reock, Jr. for the Supreme Court of New Jersey in support of the Plaintiffs’ opposition to the School Funding Reform Act of 2008, Education Law Center, Newark New Jersey, http://www.edlawcenter.org/ELCPublic/elcnews_080521_ReockCertification.pdf

Tags:Blog, chool choice blog, New Jersey Senate, New Jersey Senate Bill S1872, Opportunity Scholarship Act, Opportunity Scholarship Act Blog, S1872 blog, School Choice, School Finance Blog, school vouchers, school vouchers blog, state funding of private and relgious schools, tuition tax credits, voucher blog, Vouchers
Posted in autonomy of schools, board of education, Capitalization of property taxes, Capitalization of school district quality, charter schools, Community Specific Social Capital, contract, dumbing down, education, enrollment, home rule, homeownership, independent schools, learning, leveling down, local property taxes, local schools, mandates, New Jersey, New Jersey Property taxes, No Child Left Behind (NCLB) Act, No Child Left Behind Act, non-mandate protected programs, Opportunity Scholarship Act, per pupil budget, per pupil spending, property taxes, property values, public education, public finance, regular education, S1872, Scholarship donation tax credits, School Choice, school finance, school funding, school governance, school reform, special education, state financial aid, state mandates, tuition, Vouchers, William Fischel | No Comments »

Countywide School Districts will Increase Administrative Costs and Property Taxes Statewide

Tuesday, April 6th, 2010

Passage of NJ Senate bill, S450, would eliminate all local school administrators over the level of principal and consolidate all school districts within each county under the control of the Executive County Superintendent. S450 would have New Jersey adopt Maryland’s consolidated county school system model. The state of Maryland eliminated all local school officials beyond the level of principal. It consolidated all of its local schools serving less than one million students statewide within one of its 24 countywide school districts under an Executive County Superintendent.

When Maryland abolished all school administrators above the level of principal, it said it was to save money, cut administrative expenses and cut property taxes. But Maryland’s total statewide administrative costs increased rather than decreased as promised under the consolidated countywide school district because the Executive County Superintendent is not accountable to the voters which enables him/her to increase staff without taxpayer input. The ever increasing cost of the County’s bureaucracy continued to more than offset any savings.

In Maryland, for example, the Montgomery County Department of Education has an annual operating budget of about $2 billion with nearly 22,000 employees despite having a total student enrollment of less than 138,000. The office of the Executive County Superintendent of Schools for Montgomery County employs roughly one administrator for every six of its students! The Montgomery County consolidated school district has more than three times the number of administrators per student than it does teachers! Contrary to what S450 purports, it will not provide for a more cost effective educational system rather it will increase costs especially administrative expenses. States that have adopted this model such as California have increased costs and taxes.

The implication behind S450 is that it would somehow save money and enable the state to lower property taxes by eliminating administrators over the level of principal. Proponents even suggest unsubstantiated savings of $553 million. But Maryland’s total statewide administrative costs increased rather than decreased as promised following the implementation of its consolidated countywide school district. The experience of such a model in Maryland contradicts the assumptions inherent in S450 based on its consolidated county school district control model for New Jersey.

Rather than add another bureaucracy, the most effective way to cut property taxes is to eliminate the tax burden imposed by county government. County government places a tremendous burden on New Jersey’s taxpayers especially as compared to those in Connecticut where county government was eliminated in 1960. New Jersey’s 21 counties combine to spend over $6.1 billion annually in property taxes, hold more than $5 billion in outstanding debt and have over 44,000 employees. Just the three counties of Union, Essex and Bergen together levy approximately $1.6 billion in annual property taxes.

The question facing New Jersey’s taxpayers is whether more money would be saved by eliminating county government or by adopting countywide school districts as advocated by S450. The answer is straight forward. Saving $6.1 billion annually in property taxes by eliminating county government would be the best way to ease New Jersey’s tax burden rather than implementing S450 and hoping that an unaccountable county bureaucracy will not overspend and overtax as it does in Maryland.

Tags:Add new tag, countywide school districts, Eliminate County Government, New Jersey's 21 counties spend $6.1 Billlion annually, property taxes, S450
Posted in accountability, bigger is not better, board of education, Capitalization of property taxes, Capitalization of school district quality, county government, County Property taxes, county run school districts, county wide school districts, Eliminate County Government | No Comments »

How New Jersey Senate bill S450 will Increase Administrative Costs and Property Taxes Statewide

Monday, March 15th, 2010

Passage of the pending New Jersey Senate bill, S450, would eliminate all local school administrators over the level of principal and establish the Executive County Superintendent as the official who will govern and operate all local public schools within each of the proposed consolidated countywide school districts. When former Governor Corzine signed the CORE Act (Assembly Bill A4 and Senate Bill S19) into law, he transformed the role of county superintendents of education from mere disseminators of state educational policies into powerful Executive County Superintendents of Schools. In so doing, the governor empowered each Executive County Superintendent to begin consolidating all schools into K to 12 districts and ultimately to consolidate all schools within one countywide organization.

By creating the office of Executive County Superintendent of Schools, New Jersey is moving to replicate the state of Maryland’s consolidated county school system model. First, the state of Maryland eliminated all local school officials beyond the level of principal. It then consolidated all of its local schools serving less than one million students statewide within one of the 24 countywide school districts in each county under an Executive County Superintendent.

Although Maryland abolished all school administrators above the level of principal from its local schools in the name of saving money, cutting administrative expenses and cutting property taxes, these small savings were overwhelmed by the ongoing costs of the office of the Executive County Superintendent of Schools with its ever increasing bureaucracy. The reason Maryland’s total statewide administrative costs increased rather than decreased as promised following the implementation of the consolidated county wide school district is that the Executive County Superintendent is not accountable to the voters and this enables him/her to increase staff largely without taxpayer input.

In New Jersey, the Executive County Superintendent also is appointed by the governor. He/she supervises, directs and manages the functions of the County Office of Education as a representative and subordinate of the New Jersey State Commissioner of Education. The Executive County Superintendent oversees all public school districts within his/her county. To accomplish these goals, each county superintendent is given a staff and a budget which are not subject to taxpayer input, approval or elections.

In Maryland, for example, the Montgomery County Department of Education by itself has an annual operating budget of approximately $2 billion with nearly 22,000 employees despite having a total student enrollment of less than 138,000. The office of the Executive County Superintendent of Schools for Montgomery County, therefore, employs roughly one administrator for every six of its students! Furthermore, the Montgomery County consolidated school district has more than three times the number of administrators per student than it does teachers! Contrary to what S450 purports, it will not provide for a more cost effective educational system rather it will increase costs especially administrative expenses. Indeed, states that have adopted this model or a similar model such as California have increased costs.

The implication behind Senate bill, S450, is that it would somehow save the taxpayers’ money and enable the state to have lower property taxes by eliminating administrators over the level of principal. Proponents even a suggest savings of $553 million. But Maryland’s total statewide administrative costs increased rather than decreased as promised following the implementation of its consolidated county wide school district. Indeed, the experience of such a control model in the state of Maryland contradicts the assumptions inherent in S450 based on its consolidated county school district control model for New Jersey.

Rather than add another bureaucracy, the most effective way to cut property taxes in New Jersey is to eliminate the tax burden imposed by county government. County government places a tremendous burden on New Jersey’s taxpayers especially as compared to those in Connecticut where county government was eliminated in 1960. New Jersey’s 21 counties combine to spend over $6.1 billion annually in property taxes, hold more than $5 billion in outstanding debt and have more than 44,000 employees. Indeed, just the three New Jersey counties of Union, Essex and Bergen together levy approximately $1.6 billion in annual property taxes.

The question facing New Jersey’s taxpayers is whether more money would be saved by eliminating county government or by adopting a consolidated county school district model as advocated by S450. The answer is rather straight forward. Saving $6.1 billion annually in property taxes by eliminating county government would be the best way to ease New Jersey’s tax burden rather than implementing S450 and hoping its unsubstantiated savings of approximately $553 million materialize.

Decentralization rather than centralization brings decision makers closer to the taxpayers and local priorities. Taxpayers have more of a stake in the success of their local school district rather than county districts. Indeed, separating the taxpayer from his/her ability to control and influence the operating budget and educational plan of his/her local school district cuts neither costs nor property taxes.

In these challenging economic times, every home owner wants to make sure their property taxes are as low as possible and are put to use where they can do the most good. Nowhere is this more necessary than in New Jersey, where it is imperative that all levels of government do not waste our scarce financial resources and cut taxes particularly property taxes. To accomplish this goal, it is imperative that New Jersey does not add another unaccountable bureaucracy which will increase administrative expenses and property taxes statewide as would result under S450 should it become law.

Tags:Add new tag, consolidated county school districts, CORE Act, county government, countywide school districts, executive county superintendent, home rule, local control over schools, locality, Maryland's county school districts, New Jersey Property taxes, New Jersey Senate Bill S450, property taxes, S450
Posted in autonomy of schools, bigger is not better, board of education, Capitalization of property taxes, Capitalization of school district quality, county government, County Property taxes, county run school districts, county wide school districts, deregulation of schools, dumbing down, education, executive county superintendent, home rule, home values, homeownership, Local Education Authority (LEA), local property taxes, local schools, Maryland county run school districts model, New Jersey, New Jersey Commissioner of Education, New Jersey Property taxes, property taxes, property values, public education, public finance, regional schools, regionalization of schools, S450, school district consolidations, school district mergers, school finance, school funding, school governance, school performance, school reform, self-funding school districts, self-governance, tax base | No Comments »

CEIFA’s Impact

Thursday, December 10th, 2009

The rising power of state government (Fusarelli and Cooper, 2009) has grown from the states’ increasing domination of school finance and, therefore, policy making because of the strings the states attached to funding. Legal challenges to funding inequities and disparities led to court decisions such as Serrano v. Priest establishing financial neutrality as the basis for school funding. States remedied the disparities among districts with the infusion of incremental state funds and regulation. Subsequent rulings focused on adequacy and required state governments to provide resources to disadvantaged districts such that the provision of education adequately met their constitutional requirements. New Jersey’s state constitution was deemed to go even further because of its provisions guaranteeing a thorough and efficient education especially in the Abbott v. Burke court decision.

Although the state’s flawed approach to education is exemplified by the new funding formula contained in the New Jersey School Funding Reform Act (SFRA) of 2008, it is manifested in its predecessor, the Comprehensive Education Improvement and Financing Act of 1996 (CEIFA.) Dr. Reock studied the financial impact on school districts of the state’s failure not only to not fully enact CEIFA but also to freeze most CEIFA funding beginning with the 2002-03 school year (Reock, 2007.) Based on his study (Sciarra, 2008), Dr. Reock found that “the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state.”

Instead of fully funding CEIFA’s school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs as well as state and federal unfunded mandates. The shortfall was hardest on those districts that were most dependent upon state aid. During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-Abbott DFG A and B districts, $758 in DFG C through H districts, $386 DFG I and J districts and $188 in Abbott districts.

The impact of the CEIFA funding shortfall was minimized on the Abbott districts largely due to their “parity-plus” court mandated protection. State law forbids the budget of an Abbott district from falling below its level of the prior school year (Hu, 2006.) Furthermore, under state law, if an Abbott district increases local property taxes without a state directive to do so, it will lose a similar amount of state aid.

The CEIFA funding shortfall caused serious imbalances between local school districts. During the 2005-06 school year, Abbott districts received approximately 58% of all state financial aid while educating only 23% of New Jersey’s K to 12 student enrollment. This meant non-Abbott districts were educating 77% of New Jersey’s students with only 42% of state aid. This imbalance has continued to widen under SFRA with Abbott aid increasing to approximately 60% of all state aid or $4.64 billion. State aid reductions and the ever increasing unfunded state mandates force non-Abbott districts to balance their budgets by raising property taxes, increasing class sizes as well as cutting regular education programs and services.

As part of his statement of New Jersey Supreme Court certification in support of the Plaintiffs’ opposition to the School Funding Reform Act (SFRA) of 2008, Dr. Reock concluded (Sciarra, 2008) that “the State’s failure to fund CEIFA for the past six years directly resulted in an enormous shortfall of funding in districts across New Jersey.” He went further to state, “By 2007-08, the sixth year of the CEIFA “freeze,” the total under-funding of state aid had reached $1.326 billion annually, despite the introduction of several new, smaller aid programs.” The result was a state-driven increase in local property taxes within non-Abbott districts to make up for the shortfall.

By passing through the majority of the cost of state mandates to local school districts, the State of New Jersey forces local schools to divert resources to bureaucratic regulatory compliance. As a result, disproportionate amounts of a typical school district’s scarce financial and human resources are not invested in the classroom where they are needed most. Local school districts would be able to operate more cost-effectively, earn a higher rate of return on their educational investment and provide greater accountability if they were free to concentrate on improving every student’s performance with the maximum possible level of local public support for the public funding of its public schools.

References

Fusarelli, B. C., & Cooper, B. S., Editors. (2009) The Rising State: How State Power is Transforming our Nation’s Schools, Albany, New York: SUNY Press.

Hu, W. (2008) In New Jersey, System to help Poorest Schools Faces Criticism, New York Times, October 30, 2006.

Tags:Add new tag, CEIFA's Impact on NJ State Education Aid, education, education mandates, Local Education Authority, local school district, mandate, neighborhood schools, property taxes, public school, school finance, school funding formula, school governance, school reform, self-governing school districts
Posted in accountability, autonomy of schools, bigger is not better, board of education, Bruce Baker, Bruce Cooper, Capitalization of property taxes, Capitalization of school district quality, Charles Tiebout, data-based decision making, decision making, education, educational leadership, federal financial aid, home rule, local property taxes, local schools, mandates, New Jersey, New Jersey Property taxes, property taxes, property values, public education, public finance, school finance, school funding, school governance, school law, self-funding school districts, self-governance | No Comments »

Accountability Requires Local Control of Public Schools

Tuesday, September 15th, 2009

During the past 40 years, the locus of school district control has gradually shifted from a tradition of home rule or local control to state control. Control over the decisions governing such areas as funding, budgeting, human resources, standards, capital projects, operations, curriculum and assessment that were once the sole province of local boards of education has been superseded largely by the state. Increased state control has reversed the traditional operating philosophy of school systems that was based on limiting the power of any centralized remote governmental entity could exert over local school districts. Historically, Americans wanted school decision making to be as close as possible to those citizens who were most affected. School district residents realized that by being able to control what and how their children were taught as well as how and who administered and governed their schools plus how their taxes were used that they were able to enjoy the maximum of democratic accountability.

The rising power of the state (Fusarelli and Cooper, 2009) grew from the states’ increasing domination of school finance and, therefore, policy making because of the strings the states attached to funding. Legal challenges to funding inequities and disparities led to court decisions such as Serrano v. Priest establishing financial neutrality as the basis for school funding. States remedied the disparities among districts with the infusion of incremental state funds and regulation. Subsequent rulings focused on adequacy and required state governments to provide resources to disadvantaged districts such that the provision of education adequately met their constitutional requirements. New Jersey’s state constitution was deemed to go even further because of its provisions guaranteeing a thorough and efficient education or a “T&E” education as it became known and manifested in the Abbott v. Burke court decision.

The No Child Left Behind Act (NCLB) accelerated the trend toward adequacy with its national educational standards. Under NCLB, the federal government holds states and school districts accountable for improving performance. As a result, states are forced to define an adequate level of student and school achievement as well as the level of financial resources that would be constitutionally adequate. NCLB, therefore, marked a pronounced policy making shift to an accountability model within which the allocation of school district financial and human resources was made largely at the state rather than the local level largely according to federal guidelines.

But the consequences of centralizing most of the control over the allocation of a school district’s financial and human resources at the state level gave rise to many unintended obstacles to improving accountability. Chief among them was the contradictory challenge of trying to hold local school districts accountable to standards made remotely at the state level that did not reflect and often conflicted with unique local educational requirements and priorities. As a result, when states imposed a one-size-fits-all approach to local school district resource allocation, state funds were not used as efficiently as they could have been. School systems would be more accountable if decision making over financial and human resources was made at the local district level.

A local school district can improve student and school performance best when the district is empowered to allocate its financial and human resources according to its educational plan rather than being required to follow one-size-fits-all state directives. The local school district would have all the tools it would need to hold schools and students accountable because it could make real time decisions based on specific measurable performance goals for each school and student. The local school district is the most qualified to continually calibrate local performance goals because only the local school district can combine a keen understanding of local educational necessities with the timely and specific assessment of individual school and student achievement. State control is too remote which causes not only inappropriate delays but also decisions that tend to be inconsistent with the district’s unique educational plan.

State control especially over a district’s financial and human resource use creates barriers for achieving accountability. When a local school district is limited by the state’s one-size-fits-all approach, it is prevented from developing more innovative approaches to accountability. In order for local school districts to innovate, they must be empowered to deploy more effective approaches for increasing accountability that are best suited to local needs. Improving accountability, therefore, requires the adaptation of new models for the control structure of local public schools that are largely free of state control.

In response to the shortcomings of state dominated local school systems, communities need greater local control over their schools so that they can benefit from increased accountability. Because a local school district’s control structure affects how all of the school system’s stakeholders combine to produce a quality education, school districts nationwide are searching for the most appropriate local control structure model that will provide the highest level of accountability. As a result, local school districts are increasingly adapting a local control structure that provides the maximum accountability possible according to their unique characteristics. What matters most in terms of maximizing accountability is that a school district employs the model that fosters the greatest public support for the maximum public funding of its public schools.

References:

Fusarelli, B. C., & Cooper, B. S., Editors. (2009). The Rising State: How State Power is Transforming our Nation’s Schools, first edition, SUNY Press.

Tags:accountability, Add new tag, autonomous school districts, home rule, local control, Local Education Authority, self-governing school districts
Posted in academic outcomes, academic performance, accountability, autonomy of schools, bigger is not better, board of education, charter, deregulation of schools, education, educational leadership, home rule, Local Education Authority (LEA), local schools, mandates, school funding, school governance, school reform, State Board of Education, state mandates | No Comments »

The Charter School Advantage: Operating as a Deregulated Autonomous Public School

Sunday, June 28th, 2009

The proponents of charter schools (Newman, 1998) purport that charter schools are the answer to what ails our public school system. The rationale supporting how charter schools can provide an education that is superior in quality to that offered by conventional public schools is that they are deregulated autonomous public schools that are granted extreme freedom in how they choose to innovate, experiment, manage operations, “respond to their customers”, govern themselves and enroll as well as educate their students (Sugarman, 2002). “In return for this autonomy, charter schools usually are asked to demonstrate academic outcome results for their children, but that too is supposed to be measured without too much interference with the school’s independence” (Kemerer, 1999, cited in Sugarman, 2002). The core elements of a charter school’s success are its ability to function with autonomy and deregulation, both of which are regularly denied to conventional public schools. The solution to what ails our public school system, therefore, is to enable our traditional public schools to operate with the same degree of autonomy and deregulation as that granted to charter schools.

Charter schools are public schools that are funded primarily by local property taxes but are granted freedom from many state and federal mandates and restrictions so that they can provide innovative and cutting-edge teaching and learning. As a result, charter schools function independently from their host district’s board of education under a charter granted by the state (New Jersey Department of Education, 2001). According to the New Jersey Department of Education, as soon as the charter is approved by the Commissioner of Education, the school is governed by a board of trustees authorized by the State Board of Education and the charter school is thereby granted all the necessary powers to execute and implement its charter.

By agreeing to the contract with the state, a charter school receives public funding with significantly less regulation but it is also expected to provide a quality of education that exceeds that of a conventional public school. But despite their public school charter and property tax funding, charter schools operate independently of their local taxpayers’ input, feedback and control. “While charter schools emphasize that they are a new form of public schools, they are increasingly appearing and behaving like private schools” (Horn and Miron, 2000, cited in Bracey, 2002).

According to the New Jersey Department of Education, however, a charter school “must outline how the school will meet the New Jersey Core Curriculum Content Standards” and “Cross-Content Workplace Readiness Skills” plus all “teachers, administrators, and professional staff must have New Jersey State certification” (New Jersey Department of Education, 2005, cited in Bredehoft, 2005). While charter schools operate independently, the local board of education “must also provide transportation for charter school students residing in its district under the same terms and conditions for district students attending public schools” (Bredehoft, 2005). Also, “a charter school may operate within a ‘region of residence’, comprised of a district or multiple districts identified in the charter school’s application, and must have a physical residence in one of those districts” (New Jersey Department of Education, 2005, cited in Bredehoft, 2005).

A charter school is funded based on its enrollment primarily by the revenues it receives through its local board of education. According to the New Jersey Department of Education, the host district’s board of education must pay the charter school ninety percent of its average per pupil share of the annual operating budget for the specific grade level of each student (Bredehoft, 2005). Although charter schools can not charge tuition, they are eligible to receive federal and state funds. As a result, it seems as if funding is siphoned from the host public school district to the charter school without the direct or indirect approval of local taxpayers.

Because local property taxes as well as state and federal financial aid abide by a zero-sum process, all funds transferred from a conventional public school to a charter school result in a cut in funding that can not be recouped. A conventional public school must cut non-mandate protected programs and services such as regular education in order to make up for the lost revenues. In addition, because state and federal governments either under fund or do not fund their mandates, conventional public schools are forced to pay for these shortfalls while charter schools are often not subject to the same regulations or to the same extent as their host district.

Charter schools enjoy many other advantages over their conventional counterparts. Charter schools can limit their enrollment which enables them to have lower student-teacher ratios and forces conventional public schools to educate the majority of students in comparatively larger class sizes. Charter schools do not have to enroll students after the beginning of the school year which enables them to have much more stable enrollments than conventional public schools. The scarcity of unions and tenure in charter schools also represents another set of cost advantages.

The extent to which charter schools can limit the number of students who qualify for special education, are from low-income or poverty level families, or are English language learners (Levay, 2009) would force traditional public schools to educate a disproportionate number of these needy and at-risk students who are much more expensive to educate. Such a practice would minimize costs for the charter school in the district while it would correspondingly increase the public school district’s expenses. In discussing his study of Michigan’s charter schools Bracey (2002) concludes “And, perhaps most significant, the student bodies look more and more like private schools: Fewer minority and special needs students are enrolled.”

Unlike charter schools that can cap or otherwise more effectively limit their enrollment and, thereby, limit the cost of their raw materials, traditional public schools have to enroll all of the students in the district who wish to attend and, therefore, can not control the cost of their raw materials. This cost advantage in favor of charter schools is highlighted below in the “blueberry epiphany” (Cuban, 2004) experienced by former CEO, Mr. Jamie Vollmer, because as the woman from the audience responds to Mr. Vollmer “… we can never send back our blueberries. We take them all!” and, thus, traditional public schools can not control the quality of their raw materials.

“If I ran my business the way you people operate your schools, I wouldn’t be in business very long!” I stood before an audience filled with outraged teachers who were becoming angrier by the minute. My speech had entirely consumed their precious 90 minutes of in-service training. Their initial icy glares had turned to restless agitation. You could cut the hostility with a knife.

I represented a group of business people dedicated to improving public schools. I was an executive at an ice cream company that became famous in the 1980’s when People magazine chose its blueberry flavor as the “Best Ice Cream in America.”

I was convinced of two things. First, public schools needed to change; they were archaic selecting and sorting mechanisms designed for the Industrial Age and out of step with the needs of our emerging “knowledge society.” Second, educators were a major part of the problem: they resisted change, hunkered down in their feathered nests, protected by tenure and shielded by a bureaucratic monopoly. They needed to look to business. We knew how to produce quality. Zero defects! Total quality management! Continuous improvement!

In retrospect, the speech was perfectly balanced—equal parts ignorance and arrogance. As soon as I finished, a woman’s hand shot up … She began quietly. “We are told sir, that you manage a company that makes good ice cream.” I smugly replied, “Best ice cream in America, ma’am.” “How nice,” she said. “Is it rich and smooth?” “Sixteen percent butterfat,” I crowed. “Premium ingredients?” she inquired. “Super premium! Nothing but triple-A.” I was on a roll. I never saw the next line coming.

“Mr. Vollmer,” she said, leaning forward with a wicked eyebrow raised to the sky, “when you are standing on your receiving dock and you see an inferior shipment of blueberries arrive, what do you do?” In the silence of that room, I could hear the trap snap. I knew I was dead meat, but I wasn’t going to lie. “I send them back.”

“That’s right!” she barked, “and we can never send back our blueberries. We take them big, small, rich, poor, gifted, exceptional, abused, frightened, confident, homeless, rude, and brilliant. We take them with attention deficit disorder, junior rheumatoid arthritis, and English as their second language. We take them all! Every one! And that, Mr. Vollmer, is why it’s not a business, it’s a school!” In an explosion, all 290 teachers, principals, bus drivers, aids, custodians, and secretaries jumped to their feet and yelled, “Yeah! Blueberries! Blueberries!”

And so began my long transformation. Since then, I have learned that a school is not a business. Schools are unable to control the quality of their raw material, they are dependent upon the vagaries of politics for a reliable revenue stream, and they are constantly mauled by a howling horde of disparate, completing customer groups that would send the best CEO screaming into the night” (pp. 3-4).

Charter schools enroll students who would otherwise attend the local public schools thereby forcing traditional public school districts to cut educational programs and services correspondingly. But if a traditional school district lost a disproportionate number of students and terminated a proportionate number of teachers and aids, it would not be able to make up many of the operating expenses associated with those students who left to attend the local charter school. Charter schools, therefore, may seem to provide a higher quality of education than conventional public schools but only as a result of the revenue and cost advantages built into their charters.

Because the majority of state and federal financial aid is in some way related to enrollment levels, a public school district would stand to lose aid in direct proportion to the reduction in its enrollment caused by charter schools. This would force cuts to non-mandate protected programs such as regular education. The double whammy of reduced state and federal financial aid as well as forced cuts to regular education would be especially distressful for public school districts. Therefore, having local property taxes finance charter schools siphons away crucial revenues from traditional public schools.

The proponents of charter schools espouse their competition with traditional public schools as helping to improve the quality of public education. But charter schools serve only a fraction of the school community while diverting scarce funds from their host local school districts that educate the overwhelming majority of students. This unequal playing field levels down the quality of public education.

To date, the general public largely seems to have not fully understood that charter schools are neither traditional public schools nor the extent to which charter schools are publicly funded but without local taxpayer control. While such a misunderstanding might have resulted from the lack of resonance of charter schools on the general public’s radar screen, surely it will evaporate rapidly as President Obama and U. S. Secretary of Education, Arne Duncan, actively promote the development and expansion of charter schools nationwide (Maxwell, 2009). Once the public becomes more aware of the real definition of charter schools and the extent to which they are funded with local property taxes, there will most likely be many questions raised.

________________________

References

Bracey, G. W. (2002). The War Against America’s Public Schools: Privatizing Schools, Commercializing Education, Boston: Allyn and Bacon.

Bredehoft, J. M. (2005). New Jersey Charter Schools: History and Information, New Jersey Community Capital, 1(1), Retrieved from http://www.newjerseycommunitycapital.org.

Cuban, L. (2004). The Blackboard and the Bottom Line: Why Schools Can’t Be Businesses, Cambridge, Massachusetts and London, England: Harvard University Press.

Horn, J. and Miron, G. (2000). An Evaluation of the Michigan Charter School Initiative: Performance, Accountability, and Impact, Kalamazoo: The Evaluation Center, Western Michigan University.

Kemerer, F. R. (1999) School Choice Accountability in School Choice and Social Controversy, Sugarman, S. D. and Kemerer, F. R. (Editors), (174-211). Washington, D.C.: Brookings Institution Press.

Levay, W. J. (2009). Put the Public Back in “Public Charter School”, Edwise, Retrieved from http://www.edwize.org.

Maxwell, L. A. (2009). Obama’s Team Advocacy Boosts Charter Movement, Education Week, 28(35), 1, 24-25.

New Jersey Department of Education (2001). Charter School Evaluation Report, Retrieved from http://www.state.nj.us.

New Jersey Department of Education (2005). New Jersey Charter School Application 2005, Retrieved from http://www.nj.gov.

Newman, M. (1998). New Jersey Rejects Challenge to Charter School Program, The New York Times, April 2, 1998.

Sugarman, S. D. (2002). Charter School Funding Issues, Education Policy Analysis Archives, 10(34). Retrieved from http://www.epaa.asu.edu/epaa/v10n34.

Posted in academic outcomes, academic performance, Arne Duncan, at-risk students, autonomy of schools, board of education, cap on enrollment, charter, charter school application, charter schools, class size, contract, deregulation of schools, double whammy, education, educational leadership, ELL, English language learners, enrollment, experimentation, federal financial aid, IDEA, innovation, local property taxes, local schools, mandates, Michigan, minority students, needy students, New Jersey, New Jersey Commissioner of Education, New Jersey Core Curriculum Content Standards (CCCS), New Jersey Department of Education, New Jersey State certification, non-mandate protected programs, per pupil budget, per pupil spending, President Obama, property taxes, public finance, region of residence, regular education, school finance, school funding, school governance, school law, school performance, school reform, special education, State Board of Education, state financial aid, state mandates, student performance, student teacher ratios, tenure, tuition, U. S. Secretary of Education, unequal playing field, unions | No Comments »

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