Archive for the ‘State Board of Education’ Category

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governance in New Jersey and California was eroded to the point where local control of education has been largely superseded by the state and its extension, county government.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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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. 

 

 

 

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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.  

 

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