School Funding Reform, Hard Work and Fraught with Potential

People love to argue about how much funding schools get, whether it’s too much or too little or whether schools should be run like businesses. Most people, though, don’t focus on the details—the complicated state formulas that allocate the majority of the nearly $650 billion spent annually to fund public schools across the country. Legislators, on the other hand, must care about the details. Those formulas are the primary mechanism for enacting big changes in school funding and school policy. But conflicting values and political interests create stagnation where there should be energy.  Texas, the most recent state waging a school finance battle in the courts, will likely face another protracted school finance debate in the (hopefully) not too distant future (see my related post here), provides a showcase for the challenges of school finance policy and its potential as a launch pad for other education policy reforms.

Texas is illustrative because it highlights the tension between demands of local representation and the ideological realities of statewide politics. All legislators represent school districts, and all school districts want increased funding. As a result, legislators are loath to go home with less money for local schools. However, for meaningful change to be made in a system that already garners 40 percent of state spending in Texas (and similar levels in most other states), the numbers get very large very fast.

The result is a kind of cognitive dissonance in a conservative political environment between the need to deliver the goods to constituent districts and abhorrence to big government spending. This battle between parochialism and ideology (waged within many legislators’ minds as well as among legislators) creates a nearly intractable policy environment for meaningful school finance policy.

And, again, the complexities of the system are understood only by a few. The school finance formulas are so complex that their simplification is itself a common policy goal. Complaints abound from districts that have to hire consultants just to determine what to expect for their own budgets. If the beneficiaries of the formulas don’t get it, it’s no wonder that the details are rarely discussed publicly.

There’s a reason for their complexity that goes beyond the usual weirdness that legislative processes tend to beget with committee-based policy design and political trade-offs. The structures of school finance formulas across the country reflect values based in history and reinforced by decades of litigation. At its core, school finance policy seeks to address disparities in resources with roots in issues like race, class, and economic development. Those are heady issues with no simple solutions. And school funding formulas address them by adjusting funding entitlements by a range of interwoven factors related to student and community characteristics and state and local tax structures.

Because of the primacy of equity as a goal in school finance system design, the formulas disproportionately benefit less wealthy districts and those with high concentrations of needier students. The consequence is that driving significant funding to wealthier districts or those with fewer high-needs students is difficult, making it a challenge to bring home the bacon to everyone when funding is increased. The only ways to do it are either to dump such huge sums of money into the system that some will trickle up to those “hard to fund” districts or to dial back on funding equity by targeting funding to districts that naturally benefit less. Neither of these scenarios is very efficient; the first runs afoul of fiscal conservatism; and the second is a fast track back into the court room. Nonetheless, these types of trade-offs are the political reality in Texas, and everywhere else, though the balance of opposing forces varies by degrees.

So what’s the takeaway? That in spite of its inherent challenges, school finance reform efforts provide a huge opportunity for policy change. First, school funding is simply important, and it’s worth the struggle to get it right. Second, because of the universal impact on communities, school finance legislation requires broad political buy-in. If you remember your School House Rock (I’m only a bill…yes, I’m only a bill…), getting that buy-in necessitates collaboration among stakeholders. And this leaves room for negotiation on policy changes outside the formulas themselves. So, in the horse-trading process inherent to any big legislation, it’s possible for some innovative policy ideas to go along for the ride. Most legislation that does anything meaningful costs money, which is hard to come by in conservative states or cash-strapped ones. As a result, even well-vetted, promising policy changes can die on the vine. School finance bills create a unique opportunity to advance proposals that might otherwise stall for fiscal reasons. Proposals that would otherwise be “too costly” become small when absorbed in a larger school finance package. If a legislator is already going to take a vote on a bill that spends millions or billions, adding on other policy changes can buy political will with marginal relative cost impact.

And that’s the bright light- opportunity. The trick for Texas, and for other states facing similar scenarios down the road, is not to squander this chance to make bold policy that heads off and doesn’t set up the next law suit.