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Robin Hood School Finance

 

Judge Thomas Moukawsher of the Connecticut Superior Court issued a sweeping ruling this week calling for the comprehensive reform of public education, from governance to funding.

In the background of the Judge’s decision were troubling allocations of education funding going to School districts during the State’s budget crisis. Despite their extreme challenges, many poor districts suffered reductions in support, while relatively affluent districts enjoyed increases in support.

Financing of public education often follows this pattern of reverse Robin Hood. Because we primarily rely on property taxes and state formulas, wealthy communities ride the escalator up, while low-income communities who experience population or economic declines fall into a downward cycle. 

This was brought home to me vividly in a conversation I had with a leader of the public schools in East St. Louis, Illinois. He casually mentioned that the City of East St. Louis had both the highest property tax rates in the state, as well as the lowest assessed property valuations. For an economist, this is a classic version of a public finance death spiral, a setup where the only option for raising (or maintaining) public services is to increases property tax rate, forcing more property owners out of the locality, and ultimately making the City less attractive to newcomers. It becomes a downward spiral, where the poorest communities get poorer.

This process is endogenous. More affluent families with children select into communities with high quality schools, bidding up the assessed value of real estate, which leads to more resources available for schools, which makes the Schools and communities become even more attractive to homeowners, and the cycle continues.

In the St. Louis region, Clayton, Missouri, is one of the most affluent school districts in the state.  It borders the City of St. Louis, one of the most challenged and under-resourced urban school districts in the State, much less the nation. Spending for public education in Clayton is $19,681 per student. Spending in the City of St. Louis is $9,826. In other words cross an arbitrary jurisdictional border (from the perspective of teachers and students) and school funding drops by half.

These disparities are repeated all over the region and all over the nation. A recent NPR tool visually maps these disparities in spending by School district across the entire country. The range is stunning, from $9,794 to $28,639 per student (even in the State of Illinois).

NPR School Financing Map

These wide differentials in spending, of course, do not take account of the additional social supports, educational attention, or special education that children in the City of St. Louis, East St. Louis, or other disadvantaged districts truly need. In very simple terms, the base and level of funding is separated from resource capacity or resource needs in communities.

Well-resourced schools also have access to varieties of nonpublic financing of education and extracurricular activities. There is more and more literature about the supplements — tutoring, coaching, lessons, etc. — that more affluent students have available, further widening the disparities we see in formal public education finance.

In health care, we would be discussing the “risk adjustment” in financing and payments that are necessary for compensating providers to take care of patients who are poor, have complicated social or medical histories, or other forms of medical or social disadvantage. The government and insurance payers have developed various payment mechanisms to compensate providers who may be taking groups of patients who present with complications or whose health care is going to be more expensive. These systems are not perfect, but risk adjustment is always in the policy discussion and calculus for providers.

No such risk adjustment takes place in public education or other municipal services.

School financing cases are being litigated in states all over the country. The actual state funding formulas reforms that will be necessary to address these disparities represent some of the toughest political conflicts that advocates for educational reform can face. Money will not solve all of the performance challenges and disparities in public education, but the extreme disparities and disincentives for equity and achievement in public education are the first order policy agenda that districts and states must solve.

Judge Moukawsher has rung the bell that these disparities are a fundamental and constitutional shortfall for this generation of disadvantaged students. He has rightly recognized that the solutions are not simple or partial and that structural changes in public finance will be necessary.

 

 

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