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4 Court-Mandated School Finance Reform: What do the New Dollars Buy?
Pages 99-135

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From page 99...
... This chapter uses data from intensive case studies of Kentucky, New Jersey, and Texas to answer three sets of questions about the impact of court-mandated school finance reforms on both education revenues and services: 1. How did low- and high-wealth districts respond to court-mandated state 99
From page 100...
... Although we present evidence on what the new dollars that flowed to school districts as the result of court-ordered finance reforms enabled districts to purchase, we cannot address the ultimate question of the impact of finance reforms on student performance. None of the studies considered here collected student achievement data.
From page 101...
... By examining the different studies and different states, they found that, on average, school districts used about half of the increases in state general education aid on educational programs and about half to reduce local tax rates. Districts that received large increases in state aid as part of New Jersey's 1975 education finance reform, however, directed most of their new funds about 85 percent on average to education rather than to tax relief (Goertz,1979~.
From page 102...
... "ecology of games" to explain how school districts use new resources generated by school finance reforms. School finance reform comprises at least four games: the court, state politics, state policy, and local administration.
From page 103...
... at Rutgers University in the aftermath of these states' court-mandated school finance reforms.) The heart of these studies is a set of qualitative case studies that examined district response to reform in a small number of school districts in each state: two low-wealth and two high-wealth districts each in Kentucky and Texas; six low-wealth urban, two moderate-wealth suburban, and four highwealth districts in New Jersey.
From page 104...
... IMPACT OF SCHOOL FINANCE REFORMS ON SCHOOL DISTRICT REVENUES The school finance laws enacted in Kentucky, New Jersey, and Texas were designed to respond to their respective court mandates. Court decisions in Kentucky (Rose v.
From page 105...
... Other demands are made on these dollars, including a press for tax relief. Table 4-2 shows, however, that school districts in all categories of wealth in the three study states generally increased their local tax rates in response to changes in state funding formulas.
From page 106...
... The reform laws in both Kentucky and Texas increased districts' RLEs substantially: from O to 3 mills in Kentucky and from 3.4 to 8.2 mills in Texas. Nearly half of the school districts in Kentucky had been taxing below their RLE prior to the Kentucky Education Reform Act of 1990 (KERA)
From page 107...
... This provision was successful in both states. All but two of Kentucky's 176 school districts participated in the Tier 1 program to some degree (Koch and Willis, 1993~.
From page 108...
... Texas that lost state aid (and in the case of Texas, lost local revenue through county equalization) raised their tax rates to offset these reductions.
From page 109...
... Changes in Revenues and Revenue Equity The interaction of new finance structures, increased state aid, and rising tax rates resulted in substantially more revenues for school districts in Kentucky,
From page 110...
... Growth in the wealthy communities reflected the increased local tax effort discussed above. Table 4-3 shows the extent to which school finance reforms in the three states equalized spending and education tax rates.
From page 111...
... Summary Kentucky, New Jersey, and Texas all made major changes to their funding formulas in the aftermath of court decisions declaring their school finance systems unconstitutional. These changes targeted substantially more revenues on low-wealth, low-spending school districts and provided increased funds to middleincome communities as well.
From page 112...
... WHERE DID THE NEW DOLLARS GO? In this section we examine where local districts in Kentucky, New Jersey, and Texas chose to allocate the new dollars flowing from school finance reforms.
From page 113...
... As noted earlier, the literature on district decision making suggests that multiple sources drive district resource allocation decisions, some of which might cause districts to maintain previous spending patterns and others of which might cause districts to depart from those patterns. For example, districts must contend with various fixed costs of operation, including those imposed by state and federal regulations.
From page 114...
... CCorrelation between current revenues per pupil and property wealth per pupil. SOURCES: Table compiled from data from the following: Kentucky (Adams and White, 1997)
From page 115...
... (1997) examined the spending patterns in 12 school districts 4 high-wealth districts, 2 middle-wealth districts, and 6 of the 30 poor urban districts that were the focus of the Abbott v.
From page 116...
... All types of districts used substantial portions of their new dollars for fixed costs: 17 percent in the poor urban districts, 10 percent in the middle-wealth districts, and 35 percent in the wealthy districts. The districts differed in the proportions of new dollars added to operations and maintenance, fixed charges, and capital outlay.
From page 117...
... In dollar terms, spending on the direct education expense category increased an average of $1,350 in the poor urban districts, almost twice as much as that in the wealthy districts ($7431. The foundation aid districts spent an additional $1,568 and $820 on direct education expense.
From page 118...
... 118 a' Cq a' x so a' 8 Cq a' so a' 3 ·_4 Cq a' be ¢ Em ;^ o v o 4= C)
From page 119...
... Texas Reports issued by the Texas Education Agency (1991, 1993) provide information on expenditures in Texas school districts for the 1989-90 and 1992-93 school years.
From page 120...
... SOURCE: Texas Education Agency, 1991, 1993. TABLE 4-8 Percentage Expenditure Distributions Across Major Functions for Texas School Districts, 1989-90 and 1992-93 Expenditure Function 1989-901992-93 Expenditures Instructional 5251 Central administrative 7 7 Campus administrative 5 5 Plant services 10 10 Other operating 15 15 Nonoperating 11 12 Instructional Expenditures Regular education 71 69 Special education 11 11 Compensatory education 10 12 Bilingual/ESL 2 3 Vocational education 4 4 Gifted and talented 1 2 SOURCE: Texas Education Agency, 1991, 1993.
From page 121...
... Administration, on the other hand, received a proportionate share of the new dollars in all three states. What is most striking about these states is that the patterns of spending across functional areas remained relatively unchanged in the aftermath of the school finance reforms.
From page 122...
... Staff Development KERA provided $17 per pupil for staff development. Professional development was viewed as important in all four districts.
From page 123...
... Statewide, low-wealth districts spent 84% of new personnel dollars on salary increases while high-wealth districts spent 90% of such dollars on salary increases. Three of five low-wealth districts increased One low-wealth district hired new counselors staff between 4% and 9% in the first year for curriculum development in math, reading, following the reform.
From page 124...
... One special as high-wealth district offered extended school services; the other programs offered all required categorical programs (extended school from then services, preschool, and family resource and youth service to respond centers)
From page 125...
... One high-wealth district that experienced a funding reduction reduced central office staff and hired fewer replacement teachers. The other high-wealth district that received new money from a local property tax increase initiated curriculum improvement activities at the school site level.
From page 126...
... Other districts increased purchases of ancillary materials in support of new text series that incorporated new approaches to the teaching of reading, mathematics, and science. Programs In all three states low-wealth districts used the additional funds provided by the finance reforms to increase their program offerings.
From page 127...
... Local districts react to a host of local, state, and national contextual factors in shaping their decisions on the allocation of resources in the wake of finance reforms. District responses to increases or decreases in funding are influenced by the following: other state education policies, particularly in the areas of curriculum, assessment, and accountability; demographic trends in the districts (e.g., enrollment changes, changes in the composition of the student body)
From page 128...
... All three of these can be observed in the case of school finance reform. State governments have influenced local school districts in their spending patterns through mandates for certain programs as well as through setting expectations for what constitutes legitimate expenditures.
From page 129...
... Therefore, districts are more apt to spend new dollars on "one-shot" expenditures, like equipment and facilities. Local districts in Kentucky, New Jersey, and Texas experienced a significant change in state policy with the finance reforms.
From page 130...
... New Dollars and New Data There is limited research on how and where districts spend new state aid dollars in the aftermath of major school finance reforms. Further research requires the collection of quantitative data by expenditure function and object (particularly salaries)
From page 131...
... Assessing the impact of changes in state funding on student outcomes will quire researchers and policymakers to identify and track important intermediate outcomes, such as changes in the size and mix of educational staff, size and quality of facilities, instructional and student support services, and classroom curriculum and instruction. At the moment, the determination that certain intermediate outcomes of finance reform are important for producing student learning rests on a foundation of assumptions with varying degrees of support from empirical research.
From page 132...
... School districts must contribute to this foundation amount, typically by levying a state-established tax rate. State aid is the difference between the foundation amount and the district's required contribution.
From page 133...
... White II 1997 The equity consequences of school finance reform in Kentucky. Educational Evaluation and Policy Analysis 19(2)
From page 134...
... 1994 The local impact of school finance reform in four Texas school districts. Educational Evaluation and Policy Analysis 16(4)
From page 135...
... Austin, TX: Texas Education Agency, Office of Policy Planning and Evaluation. 1993 Snapshot '93: 1992-93 School District Profiles.


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