Tag Archives: school finance

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.”

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.

5 Things the Pence Pick Could Mean for the Future of Federal Education Policy

Read more live coverage of #EDlection2016 via Bellwether and The 74’s Convention Live Blog.

Donald Trump and Mike Pence talk to “60 Minutes.” Photo: CBS News

The Veep-stakes are over! The pick is in. Mike Pence, the sitting Governor of Indiana, will run as Trump’s Vice President. Although he has only been Governor for a few years, Pence also served in the U.S. House of Representatives. Putting those records together, we can get a sense of what the Pence pick could mean for public education.

  • Tough sledding for civil rights. Pence’s stance on equal rights is pretty clear. Everyone remembers the law he signed permitting individuals and businesses to discriminate against LGBT people. So, many federal student protections could be in jeopardy, including President Obama’s executive action on bathroom use for transgender students. In a similar vein, Pence strongly supports states’ rights and local control. He likely would advocate for reducing (perhaps even further) the federal footprint in education. This is bad news for low-income students and students of color who frequently receive low-quality educations and depend on federal support.
  • Funding redistribution (but not to support low-income students). If his most recent budget in Indiana is any indication, Pence certainly feels that something needs to be done to improve school funding in this country. Unfortunately, however, he seems to think wealthier districts need an even bigger slice of the school funding pie.
  • Charter expansion. In addition to increasing funding for charters broadly, Pence also supported the so-called “Freedom to Teach” bill. The idea is to help provide teachers with the flexibility they need to innovate in their classrooms. Some teachers and union representatives argue that they already have that freedom. Instead, they believe that the bill is designed to limit union power and invite private entities to run public schools.
  • Vouchers Vouchers Vouchers. For years Pence has been a vocal proponent of school vouchers and expanding the use of public funds to pay for private education. Last year he helped to shepherd a bill to raise the voucher limit on funds available for elementary school students. A Trump/Pence White House may provide the strongest support for expanding voucher programs in decades.
  • Preschool a priority (kind of). It’s a far cry from universal pre-K, but Pence was able to expand Indiana’s pre-school program. He also recently committed to expanding the program further with or without federal support. It is important to note, however, that Pence previously refused millions of dollars of federal support, and only seemed interested in them now that he is up for reelection. 

In education policy, Pence sticks to the party-line. For that reason, his selection should make many conservatives happy. But students and teachers should be on high alert. In a Trump/Pence White House, it would take a watchful eye and strong advocacy to preserve critical federal protections for vulnerable students, ensure low-income students get their fair share of funding, and prioritize students’ needs over states’ rights.

Why the Entirely Expected Death of Texas’s School Finance Overhaul Isn’t Entirely Bad News

If you felt a disruption in the force at 11:59 pm on May 14th, it was the sound of a million bills suddenly crying out in terror and then being suddenly silenced in Texas.  The Texas legislative session is in its waning days, and according to House rules, May 14th was effectively the last day that House-authored bills could move along without extraordinary measures (like super-majority votes and intricate parliamentary maneuvering). That means that any House bills that didn’t win approval by the majority before the clock struck  midnight died, struck down by a procedural Death Star. And one of the casualties of the day was the school finance overhaul proposed by House Public Education Committee Chairman Jimmie Don Aycock.

The plan had little chance of making it to the Governor’s desk for several reasons. For one, the state is on the losing end of a district court ruling finding the school finance system is both underfunded and unfairly funded; but the appeal is still pending with the Texas Supreme Court. With the suit unresolved, it’s not surprising to find little appetite in the legislature to make a bold move on school finance. Second, school finance isn’t the big policy priority for leadership this session, especially on the Senate side. It’s tax relief. Both chambers want it. They’ve built billions for it into their budget plans. But they haven’t reach agreement on which tax to cut. And that’s the premier political battle being waged as the session hurtles toward a close, not addressing a school finance system that isn’t under the gun.

In pulling his bill down, Mr. Aycock did the right thing for the chamber. He saw the writing on the wall and avoided a lengthy floor debate that would have doomed many of his colleagues’ bills to the harsh reality of the clock. So he bought some good will (or at least avoided some bad), and ultimately, it’s not all bad news for the school finance debate either.

Aycock’s bill opened the dialogue on several politically challenging features of the current system. And it laid the groundwork for some very technical, but important, fixes to the school finance formulas that would improve both their function and their transparency. Plus with significant turnover among legislators in recent years, the process of educating members on the technical aspects of the system to build comfort and support around a big overhaul is critical. Aycock’s bill provided a platform for that process.

Yes, it would have been great to see the legislature move ahead with a thoughtful school finance plan without being forced by the court to do so. The court process takes years. And meanwhile, millions of Texas children and thousands of Texas schools continue to operate under a system that the district court found fundamentally broken.

But given the distance between the district court’s ruling (finding a $10 billion annual shortfall in funding), and the “if you can’t squeeze blood from the turnip, squeeze harder” brand of fiscal conservatism that dominates the Texas legislature, it’s hard to see the political downside of waiting for a final ruling by the markedly more conservative Texas Supreme Court. That way, if they do end up having to spend a boatload of money to address the final ruling, members can blame the court and maintain their fiscal conservative cred with their constituents.

And they need that cover. Purity testing of conservative ideology is happening on a whole new level. In addition to primary battles focused on pandering to the extreme wings of the parties, now operatives are recording casual off-the-record conversations with legislators in an effort to catch them not walking the ideological walk.

Now the ball is firmly with the Texas Supreme Court, and we have to wait and hope for the best. What does the best look like? A court ruling that keeps the needs of all Texas children front and center and that gives the legislature a clear path and political courage. A state treasury that can bankroll what needs to be done would also be nice.

Wonky Texas School Finance Proposal has Merit, but is it Worth the Political Bloodletting?

The Texas legislature is wrangling with its school finance system again. For once, they are only sort of under the gun, having lost a law suit in a district court that found that the state was neither spending enough on education (to the tune of $10 billion) nor spreading funds equitably among school districts. But the appeals process has yet to play out, and it won’t finish until well after the legislature has tied the current session up with a bow. So, technically, they don’t have to do anything this session.

The fact that the legislature is considering taking up a major school finance bill in spite of the ultimate outcome of the law suit still pending is encouraging. Making school finance policy solely in lockstep with litigation is less than ideal. But in laying out the plan to colleagues, the bill’s sponsor, House Public Education Committee Chairman Jimmie Don Aycock, made the disheartening statement that it isn’t intended as a “permanent fix,” rather a way simply to address “pressing concerns.”

Many of the provisions the bill aims to address are political hot buttons, and the price tag is steep- $3 billion over two years. So, if this is a “temporary” fix or a half-measure, I question whether it’s worth the fight. School finance debates are hugely expensive in both political capital and real dollars. Why not go all in? If you start off by saying you’re probably going to have to do it all over again in a couple of years, what’s the incentive to do the hard work now?

The proposal has some merit. It cleans some noise out of Texas’s formula made up of remnants of past efforts, mostly driven by attempts to change policy without any district coming out of the process with less funding per student. These “hold harmless” provisions tend to drive funding to districts inequitably and, frankly, weirdly. So if you’re a fan of fiscal equity or just a fan of having the statutory formulas “work” the way are written, this bill has some very good stuff.

But it doesn’t go far enough. It’s pretty lukewarm on overall equity (data wonks: check out the analysis by district wealth categories at the bottom of this). It drives the biggest increase in funding to the wealthiest school districts. And even at $3 billion, it falls well short of the district court’s price for adequacy. Though whether the district court’s ruling stands as written is an open question (and if history serves the Texas Supreme Court will at least reduce the cost).

Maybe the intent is to get the conversation started on some hyper-technical provisions to lay groundwork for a bigger effort in future sessions. The learning curve is steep on this for many legislators, and it takes time to build a sufficient comfort level to secure a vote. But why wait? There’s going to be blood on the carpet either way.