Category Archives: School Funding

3 Reasons Why Teacher Pensions Are Critical to School Funding Equity

Money spent on public teacher pensions is often left out of analyses of school finance equity. Rather than a being seen as an issue affecting students’ education, pensions are often viewed as a budgetary dilemma for state legislators. Yet, both of these approaches overlook the effect pension spending can have on increasing the funding gap between schools based on students’ race.

Last week I released a new report, “Illinois’ Teacher Pension Plans Deepen School Funding Inequities,” that shows just how much pension spending in Illinois affects the state’s finance equity. The results are startling and reveal that teacher pensions are yet another example of how states and districts underinvest in the education of low-income students, and the educations of black and Hispanic students.

Here are three key reasons why teacher pensions should be thought of as a key part of the push to ensure educational equity:

  1. Class-based gaps grow by more than 200 percent after accounting for pension spending. Teacher salaries comprise the lion’s share (roughly 80 percent) of school expenditures. And, unfortunately, the most experienced and highest paid teachers are unevenly distributed across schools. In Illinois the salary gap between the schools serving the highest and lowest concentrations of low-income students is on average around $550 per pupil. After factoring in pensions, however, the disparity jumps to over $1,200 per student.
  2. Race-based gaps increase by more than 250 percent after accounting for pension spending. In Illinois, the average teacher salary-based gap is $375 between schools serving predominantly white students and those serving predominantly nonwhite students. But after accounting for money spent on teacher pensions, the inequity increases to nearly $950 per pupil.
  3. States are investing more money in their pensions (because they’re in significant debt), and that will widen the gaps even further. From an educational equity point of view, the Illinois pension system is the problem. Since pensions are paid as a percentage of teachers’ salaries, which are unevenly distributed across the state, funneling more money into the system may help to decrease unfunded liabilities, but it also will result in even larger funding disparities.

Illinois is widely considered to operate one of, if not the most, inequitable school finance systems in the country. Yet, many prior analyses underestimated the problem because they have not always included money spent on teacher pensions. This problem is not unique to Illinois. On the contrary, pensions will increase funding disparities in any state with an uneven distribution of teachers. The effect will likely be greater and more closely resemble Illinois in states, such as Missouri and New York, where large urban cities operate separate pension funds.

There are a couple of steps states can take to mitigate the increase in education funding disparities due to pension spending. Those states with more than one retirement system should consider folding the district plans into the state fund. The state has greater resources and almost always contributes to the pension fund at a higher rate. This would ensure that schools in the district — which disproportionately serve low-income students and students of color — receive pension payments at the same rate as other schools.

As it stands now, low-income students and students of color receive far less than their fair share in school funding. To change that, states must address the structure of their teacher pension systems as well as their school funding formulas. Teacher pensions are a key feature in the broader education equity debate.

This 40-Year-Old Supreme Court Case Allows States to Fund Schools Inequitably

People sue the government for discriminating against them all the time. The Trump Administration was recently sued by a handful of states after the attempted travel ban, claiming religious discrimination. The owners of Hobby Lobby sued the Obama Administration arguing that the Affordable Care Act (ACA) violated their religious freedom by requiring the company’s insurance to pay for contraception.

Lawsuits against state governments for school funding inequities are commonplace. In February Chicago Public Schools (CPS) sued Illinois Governor Bruce Rauner claiming that the state school funding system and its teacher pension system discriminate by underfunding low-income students and students of color. They have a point: a recent study found that Illinois operates the most inequitable school funding system in the country. CPS educates around 20 percent of the children in the state, yet it receives roughly 15 percent of state funding. While the judge recognized that Illinois’s school finance system is obviously broken, he nevertheless threw out the case.

Photo by Andy Blackledge

So what can affected children and families do now?

The short answer is nothing. Although Judge Franklin Valderamma is allowing the plaintiffs to refile their case, the efficacy of school finance litigation, regardless of a court’s ruling, depends entirely on the state’s willingness to right a wrong of its own creation. In other words, those treated unjustly by a state school finance system must hope that their abusers change their ways without any way for the state to be held accountable.

This latest case in Chicago raises the specter of San Antonio v. Rodriguez from 1973, in which the U.S. Supreme Court ruled that there is no Constitutional right to education. The court also ruled that wealth (economic status) is not a protected class, unlike race or religion, and therefore is not subject to the strict scrutiny test, the most demanding form of judicial review. This means that the constitutional rights’ of low-income people are not afforded the highest level of protections when weighed against the government’s interest.

There are several serious consequences of Rodriguez. First, state courts are more likely to rule in the state’s favor even if the system discriminates against low-income students. Second, the hands of the federal government are basically tied when it comes to inequitable state school finance systems. Thus, if a state ignores a court order to improve its school finance system, families have no recourse. They are stuck. Third, school funding systems based on local property taxes, which comprise virtually every system in the country, are constitutional, even though they produce class-based disparities.

Due in large part to Rodriguez, there have been over 40 years of school finance litigation that struggle to produce sustained results increasing equity. Texas has been in and out of court since Rodriguez was decided. The state took action in response to a court order, and then rolled back those policies. The pattern continues to this day.

For a more recent example, consider the victory of the Campaign for Fiscal Equity in New York. The plaintiffs won a strong pro-equity ruling, and the state of New York responded positively. Good news. The problem, however, was that shortly thereafter, the state’s commitment wavered and eventually buckled. Now students are back in the same situation they were in previously.

The problem is similar in Washington State, where the state supreme court held the legislature in contempt of court for failing to comply with their order. And when the legislature has proposed changes, the court has continuously rejected them as far too insufficient to repair their broken education finance system. The court is doing the right thing here, but the buck stops with the legislature.

And although there is no silver bullet that could suddenly end disparities in school funding, overturning Rodriguez would provide a significant boost for equity. The federal government would then be able, as it does with voting rights, to ensure that all students have equitable access to the necessary resources for a high-quality education.

This Financing Model Could Make School Buses Cheaper and Greener, But No One Is Using It

Every day, nearly 500,000 school buses transport students to and from school in districts across the country. Many of these buses are older diesel models that release dangerous emissions, harming both the environment and student health. While cleaner and cheaper alternative fuels like propane, compressed natural gas (CNG), and electric exist, higher upfront costs prevent most districts from transitioning.

The good news: there’s an increasingly popular financial tool out there that could solve this problem.

Social Impact Bonds (SIBs) are typically used to finance programs that can generate both societal benefits and cost savings, particularly programs administered by nonprofit organizations and government entities. Under the SIB model, private investors provide initial capital in exchange for a return funded from eventual cost savings. Those investors, and not taxpayers, absorb the financial losses if these programs do not achieve projected savings. SIBs have been used to fund programs related to prisoner recidivism, high-quality preschool, and reducing common health hazards, with varying levels of success. As of 2016, nine SIBs operate in the United States, with 50 more in development, representing over $90 million in private investment.

As we describe in our recent report, “Miles to Go: Bringing School Transportation into the 21st Century,” the benefits of switching to buses that run on alternative fuels are well-documented. And they cost less to run, benefiting district budgets. However, in contrast to the public transit sector, where more than one in three buses runs on alternative fuels or hybrid technology, uptake in the school transportation sector has been limited. Of all buses sold in the U.S. and Canada in 2014, only six percent were alternatively fueled. In 2012, that figure was less than three percent.

This is largely due to the additional costs associated with shifting away from diesel. Propane buses cost about five percent more than their diesel counterparts; that figure is 25 percent for buses run on compressed natural gas. Electric buses, which offer the most cost savings and environmental benefit, are more expensive still — often costing an additional $100,000 to $120,000 more than diesel buses.

Transitioning to these buses may also require infrastructure expenditures in the form of fueling and charging stations. For example, case studies from the Department of Energy estimate that installing a propane fueling station costs between $55,000 and $250,000, depending on the station’s size and equipment.

This is where SIBs can help. For SIBs to work, projects have to attract investors by demonstrating the potential for a return on investment. A number of case studies have provided evidence of the potential cost savings of switching to alternatively fueled buses, savings sufficient to offset the higher upfront cost. A 2014 report from the U.S. Department of Energy’s Argonne National Laboratory found savings of between $400 and $3,000 per bus per year associated with replacing diesel with propane, with the incremental costs of the vehicles and related infrastructure being offset over a period of three to eight years. And researchers from the University of Delaware have shown that using an electric school bus instead of a diesel bus could save a district roughly $230,000 per bus over a 14-year lifespan, with the initial investment being recovered after five years.

Alternatively fueled buses are cheaper to fuel, operate, and maintain than diesel buses. Alternative fuels cost less than diesel, and their prices remain relatively stable compared to diesel, which varies with the fluctuation of crude oil prices. There are also a variety of savings from maintenance costs. These buses use less oil and cheaper filters, and unlike their diesel counterparts, they do not require additional treatment to meet federal vehicle emissions standards, potentially saving thousands of dollars in maintenance each year.

Electric buses that use vehicle-to-grid technology — which allows vehicles to communicate and interact with the overall power grid, rather than just draw a charge from it — can even become “prosumers,” meaning they return energy to the grid. The energy stored in the buses’ batteries can be tapped to lower a facility’s electricity bill.

A SIB model for bus replacement could work as follows:

Graphic by authors

SIBs are not without criticism: they may limit the savings that governments could reap from traditional means of public investment. This is the other side of the equation when privatizing potential risk: governments also privatize some of the reward.

However, to date, most districts have not been able to invest the initial capital needed to replace their diesel fleets. Implementing a SIB model could help speed up this process without further draining district budgets. Such a program would not only benefit the environment: districts could also reinvest the savings to improve other aspects of their school transportation systems, or funnel those dollars back into classrooms. It could be a win-win.

To learn more about the current state of the school transportation sector, including how it impacts the environment, read Bellwether’s new report: “Miles to Go: Bringing School Transportation into the 21st Century.”

ICYMI: Recapping Bellwether’s School Transportation Event

This week, Bellwether released a new report, “Miles to Go: Bringing School Transportation into the 21st Century.” The report analyzes the current state of school transportation from multiple perspectives, including efficiency, educating students, and environmental impact.

In conjunction with the report’s release, we hosted an event at Union Station’s Columbus Club. The event, moderated by Bellwether Partner and Co-Founder Andrew Rotherham, featured a great lineup of panelists with decades of experience in the school transportation sector:

  • Cindy Stuart, Hillsborough County (FL) School Board member and voting member of the Hillsborough County Metropolitan Planning Organization
  • Mike Hughes, Assistant Director of Transportation at Boston Public Schools
  • Joel Weaver, Director and Principal of Chief Tahgee Elementary Academy (CTEA), a Shoshoni language immersion charter school located on the Fort Hall Indian Reservation in southeast Idaho
  • Kristin Blagg, Research Associate in the Income and Benefits Policy Center at the Urban Institute, focusing on education policy

The discussion focused on issues that affect school districts across the country — the cost of running buses with empty seats, approaches to providing service to charter schools and other schools of choice, integration of school transportation with public transit systems, and conversion to buses powered by alternative fuels like propane.

Following the event, attendees were shuttled to various parts of the city in — of course — a yellow school bus!

Every day nearly 500,000 school buses transport more than 25 million students to and from school. That fleet of school buses is more than twice the size of all other forms of mass transit combined — including bus, rail, and airline transportation. And yet, it has remained largely unchanged for more than 50 years. As districts continue to grapple with tightening budgets, rising costs, declining ridership, and the ever-changing way in which schools enroll and serve students, school transportation will continue to play an important part in federal, state, and local policy decisions.

To learn more, read the full report, and watch the archived video of the event below.

Miles to Go: Bringing School Transportation into the 21st Century

We're talking school transportation this morning at Union Station with a great panel! Check out our new report, "Miles to Go: Bringing School Transportation into the 21st Century." bit.ly/bellwetherbus

Posted by Bellwether Education Partners on Tuesday, May 2, 2017

 

How Will States Handle New Title I Powers with Minimal Federal Oversight?

U.S. Secretary of Education Betsy DeVos, photo by Michael Vadon via Flickr

U.S. Secretary of Education Betsy DeVos, photo by Michael Vadon via Flickr

Last week Congress threw Every Student Succeeds Act (ESSA) accountability regulations out the window, and all signs from the Department of Education under Secretary Betsy DeVos point to a minimal review of state ESSA plans. For example, a little known ESSA provision could change the shape of Title I spending in schools, and under new guidelines, states don’t even have to describe their plans for implementing this new power.

Title I is a $14 billion federal grant program aimed at supporting low-income students. For decades, Title I programs have been split into two categories: targeted programs, where funds exclusively support low-achieving students, and schoolwide programs, where funds can support schoolwide improvements more flexibly. Prior federal law restricted schoolwide programs to schools with more than 40 percent low-income students. Under ESSA, all states now have the power to waive the 40 percent requirement and allow schools with less concentrated poverty to implement schoolwide reforms using Title I funds. This new flexibility could make Title I programs more effective for disadvantaged students — if states step up and use their new power wisely. But, while the Obama-era regulations required states to explain how they would issue schoolwide Title I waivers, the new template issued yesterday by the Trump administration doesn’t ask states about this provision.

There are several upsides to the expansion of schoolwide programs. Schoolwide Title I programs require schools to perform a comprehensive needs assessment, while targeted programs do not. These needs assessments are designed to engage the whole school community, and use data to identify to key areas for improvement. In contrast, a common criticism of targeted Title I programs is that they encourage schools to implement small add-on programs, like tutoring, rather than addressing bigger issues that impact all students, like curriculum and teacher quality. Schoolwide programs also allow for Title I funds to be combined with other federal and state funding streams, amplifying the impact of multiple small funding streams and reducing administrative overhead.

But there are risks that come along with this flexibility. Title I’s convoluted funding formulas already give plenty of money to wealthy, large school districts, and unchecked flexibility in spending could further dilute the effects of Title I on its intended beneficiaries — low-income students. While combining multiple funding streams reduces administrative burdens, it can also remove guardrails to ensure that money is being spent responsibly and equitably. That is why state monitoring of school Title I plans and interim progress indicators are all even more important under ESSA.

In a few states, schools below 40 percent low-income students are already allowed to implement schoolwide Title I programs. Even before the passage of ESSA, the Education Flexibility Partnership Act (Ed-Flex) approved ten states for Title I flexibility beginning in 1999. More recently, several states used their No Child Left Behind Flexibility Waivers to allow for schoolwide Title I programs in their lowest performing schools.

The success of this new nationwide flexibility will depend on states taking an active role to monitor and assess schoolwide Title I programs — whether they are enacted at schools above or below the 40 percent threshold. Early drafts of ESSA state plans suggest that many states do not yet have a clear vision for this — and now they don’t even have to include details on Title I waivers in their state plans at all. Out of 15 draft ESSA state plans available online last week (all likely to be rewritten), nine states had very broad, non-specific language for how they would review requests to shift to a schoolwide Title I program.

Light oversight is no excuse for states to take it easy. States should not just rubber-stamp requests for flexibility when it comes to Title I when there is so much at stake for low-income students, and advocates should push for more specifics on how states will ensure Title I money is well-spent.