Public Education’s Economic Challenges and Policies

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Table of Contents

Introduction
Federal Funding
State Funding
Competitive Grants
References

Introduction

The funding of public education and control of the school system within the United States has been one of debate for some time. This has especially been a focal point of discussion since the quality of public education throughout the United States has been constantly on the decline. With this in mind, there are many issues involving the funding of education and the political control of all of the entities within the educational system.

In order to offer a meaningful discussion of these two elements, it is prudent that we first offer an operational definition for public education. Public education is mandated education offered to the children within in given nation and is funded by the Federal, State, and Local governments through tax initiatives. The scope of the public education offered generally applies to basic education and extends from kindergarten to the twelfth grade. Historically, the right to free public education is one that has been guaranteed by the constitution, and funding and control have been relegated to the individual states and municipalities (Wikipedia, n.d.).

Currently, there is funding on all levels of government, and some control is asserted on each level, with the lion’s share of the funding and control residing with the individual states and municipalities. In order to fully understanding the funding and control paradigm, this paper will first examine funding and control at the highest level—The federal government and funnel it down to funding and control initiatives on the local level with and an examination of the role of the individual states plays serving as a bridge between the Federal and Local initiatives.

Federal Funding

Public education funding and control on the federal level is one that is facilitated by impacting legislative initiatives when the quality of the education received by the public school system becomes of national interest, and there is a need to supplement the state and local funding. When such is the case, the federal government goes through a legislative process and impacts acts to rectify the situation for all states within the United States. Historically, there have been two such initiatives within the United States. These two initiatives, the Elementary and Secondary Education Act (ESEA) and the No Child Left Behind Act of 2001 (NCLB), were implemented as a direct response to the systematic failure of the educational system with regards to the indigent population.

Federal support for the public education system first began with the passage of ESEA in 1965. Under this initiative, the government provided grants to elementary and secondary schools for programs that serviced the indigent population within all states. This initiative provided funds for library resources, textbooks and other instructional material, educational research, and professional development for teachers. In addition to these services, it made it possible for schools to have additional educational centers and related services as well as for initiatives aimed at strengthening state educational agencies.

This act, however, proved to be deficient over the course of time and was reauthorized under a new name—the No Child Left Behind Act of 2001 (NCLB). NCLB consisted of seven clear and concise titles—Titles I-VII.

Title I aims to close the achievement gap for disadvantaged students by providing funding for schools whose constituents are predominantly poor and includes funding for items such as initiatives aimed at improving parental participation.
Title II aims to improve teacher quality by providing grants which can be utilized to engage teachers in various forms of professional development. Additionally, this title allows for funding for math and science partnership initiatives.
Title III provides funding to aid in increasing English language proficiency for bilingual students.
Title IV aims to promote parental choice by increasing the flexible funds available for the state and local municipalities.
Title V provides funds to support drug and violence prevention and education for students and communities.
Title VI provides funds for rebuilding schools for Native Americans and children from military families.
Title VII aims at establishing a system for increased accountability on the part of the state and local governments whereby additional funding was provided for student testing and other accountability measures (The White House, n.d.).

State Funding

Funding and control on the state level, however, proved to be more complicated than federal level funding and control. Funding on the state level involved three types of aid—basic aid, categorical aid, and competitive grants.

Basic Aid

Basic aid is general-purpose aid allocated by a state to school districts within its borders, usually on a per-pupil basis. It may be used for any legitimate cost the school district incurs, such as salaries, benefits, maintenance, operations, supplies, and equipment. All states provide some type of basic aid (Sielke & Holmes, n.d., Chapter 1). There are five different types of basic aid. These include flat grants; foundation programs, district power equalizing (guaranteed tax base and guaranteed tax yield); district percentage equalizing; and full state funding.

The oldest method of distribution is the flat grant. Although popular at the beginning of the 20^th century, Delaware remains the only state still employing this method today (Thompson & Wood, 2001, 85). When a state distributes a flat grant, an equal amount of state aid is allocated per unit, such as student, teacher, or classroom. For example, a state might decide to fund $2,000 per pupil. Hence, this aid is not equalized in the sense that it is not sensitive to the differing needs of students or the fiscal capacity of taxpayers.

Created by George Strayer and Robert Haig in 1923 (Strayer & Haig, 1923), the foundation program is utilized in 44 states, making it the most popular of the basic aid programs (Sielke & Holmes, n.d., Chapter 1). The foundation program is a partnership between the state and school districts designed to address student equity, where the state sets a “foundation level” amount necessary to provide basic education for a regular education student. Next, the state establishes a minimum or uniform local tax effort, expressed as mills or rate per thousand dollars of assessed valuation of local property. If the local tax revenues generated by the state-mandated minimum effort fall short of the foundation level amount, the state provides the difference as basic aid.

The third type of basic aid is district power equalizing, which includes the guaranteed tax base and guaranteed tax yield formulae. Created by John Coons, William Clune III, and Stephan Sugarman in 1970, it addresses taxpayer equity and fiscal neutrality (Coons, Clune III & Sugarman, 1970). Wisconsin and Indiana are the only two states using these formulae (Sielke & Holmes, n.d., Chapter 1). In the application of the guaranteed tax base, the state sets a minimum tax base, generally expressed as the state average assessed property valuation per pupil. School districts whose per-pupil assessed valuation falls below state-guaranteed tax base are leveled up for the purposes of calculation of basic aid.

The district percentage equalizing formula is similar to that of power equalization in that it seeks to address taxpayer equity. Created by Harlan Updegraff and Leroy King in 1922, district percentage equalizing is based upon an “aid ratio,” which is equal to the district per-pupil assessed valuation divided by the state average per-pupil assessed valuation (Updegraff & King, 1922). The state then sets an “equalization ratio” that guarantees to fund a percentage of the aid ratio. New York is the only state that uses the district percentage equalizing formula (Sielke & Holmes n.d., Chapter 1).

Finally, in the application of a full state funding system, the state assumes full responsibility for funding public education, placing all the “resources of the state within reach of every child.” (Thompson & Wood, 2001, 89) Revenues are generated from state taxes and “apportioned equally without regard to location or wealth.” (Thompson & Wood, 2001, 89). Only Washington and Hawaii have full state funding, although Hawaii is a unique case because it has only one school district. Under full state funding, school districts have limited or no discretion to raise additional funds locally (Sielke & Holmes, n.d., Chapter 1). In addition, the state should assume funding responsibility for both school infrastructure as well as operating costs.

Categorical Aid

The purpose of categorical aid is to target funding toward a specific purpose or program. Unlike basic aid, categorical aid must be used only for the purpose for which it is intended. The most common categorical aid programs used by states include compensatory education, gifted and talented education, bilingual education, and special education, and each utilizes at least one aid program (Sielke & Holmes, n.d., Chapter 3). All states are reporting fund special education, with the exception of Rhode Island. Thirty states provide categorical aid for gifted and talented education programs, while 24 have bilingual education programs, and 23 states provide categorical aid for compensatory education. Categorical aid generally is distributed without regard to a district’s wealth.

Competitive Grants

Unlike state basic aid and categorical aid, which are entitlements, competitive grants require school districts to make an application, and funds are generally limited so that not all school districts that apply will receive funding. Within the context of legislative, regulatory, and published selection requirements, the applications are evaluated on a competitive basis with the state funding agency, usually the state department of education, determining which applications best address policy goals. Competitive grants provide schools and districts with opportunities to supplement local funding. However, smaller school districts that lack specialized grant writing staff may be disadvantaged in this process.

References

Coons, Clune III & Sugarman. (1970). Private Wealth and Public Education. Cambridge, MA: The Belknap Press of Harvard University Press.

George D. Strayer, G.D. & Haig, R.M. (1923). The Financing of Education in the State of New York, Vol. 1. New York: Macmillan.

Sielke, C. & Holmes, T.C. (n.d.). Chapter 3: Highlights of Categorical Programs and the Significant Changes in these Programs Since 1993-1994. Web.

Sielke, C.C. & Holmes, C.T. (n.d.). Chapter 1: Overview of Approaches to State School Funding. Web.

Thompson, D.C. & Wood, R.C. (2001). Money & Schools. Larchmont, NY: Eye on Education.

Updegraff, H. & King, L.A. (1922). Survey of the Fiscal Policies of the State of Pennsylvania in the Field of Education. Philadelphia, PA: University of Pennsylvania.

The White House (n.d.) No Child Left Behind. Web.

Wikipedia. (n.d.) Public Education. Web.

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