Memo To Political Leaders On Texas School Finance

The saga continues. As the title indicates, this is the third of a series of essays on the efforts to address the overhaul of Texas public school finance and search for a successor to the flawed “Robin Hood” system crafted by a series of special legislative sessions in the mid-1990’s. In the wake of District Judge John Dietz’s ruling that the current system is in violation of the Texas Constitution, the scramble is once again underway to fix the problem politically, while awaiting the inevitable appeal of the decision by the State to the Texas Supreme Court.

The primary issues remain those of “equity” and “adequacy”, as those are vaguely defined by the Constitution, amplified by the Edgewood vs. Kirby decisions and subsequent legislation. Equity, as defined by the Edgewood case, means that all students shall have access to an education of high quality that will prepare them to participate fully now and in the future in the social, economic, and educational opportunities in Texas, and that the organization and management of all levels of the education system will be productive, efficient, and accountable. Funding adequacy seems to be in the eye of the beholder, and none of the recent studies analyzing the adequacy of Texas public education funding are conclusive by objective analysis. I should add that one particular study concluded that current funding levels are sufficient to provide a 55% passing rate on the TAKS reading and math exams, and this has been used in court by the State to justify current spending as adequate, a dubious claim at best, even though the Texas Education Agency’s current definition of an “acceptable” district is one with a TAKS pass rate of 50% for reading, 35% for math, and 25% for science!

Clearly, however, given the wide disparity among districts and individual campuses in facilities, teacher quality, and student achievement, including the pervasive achievement “gap” between majority and minority children, no objective analysis of the equity of public education in Texas would produce a positive conclusion. So if funding adequacy encompasses equity, the case is made. But it is a major leap from here to the conclusion that these inequities are the result of inadequate funding of public education in the aggregate, or that increased spending would rectify them, and one can look at the performance and spending growth patterns of every urban school district in the country to validate this point.

Let’s look at spending in Texas. Based on analyses produced by the Benchmark Educational Resource Group, annual public education operating expenses in Texas approximate $7,000 per student, and total spending increased by over 40% over the past five years, more than twice the sum of enrollment growth and inflation during that period. For taxpayers, this growth in spending translates into huge increases in local school property taxes, which, for the five largest cities in Texas, doubled during the five years from 1997-2002. In addition, the allocation of resources leaves much to be desired. About 57% of education expenditures are allocated directly to the classroom, and while some would have us believe that this is reasonable given the increasing burdens of necessary support services, it should be noted that, in 1965, Texas spent 60% of its personnel costs on teachers compared to less than 40% today. Meanwhile, as to student performance, although much progress has been made with increased standards and accountability, which is reflected primarily in improved TAAS/TAKS scores, college entrance exam scores are flat at best, national norm-referenced exam scores reflect that over one-half of Texas students cannot read at grade level, and the minority achievement “gap” is not closing.

So, put simply, in the aggregate, we don’t have a funding problem in public education finance, we have a cost structure and productivity problem. And I don’t mean to paint all schools with the same brush, for some schools have relatively high productivity, but the reason for the overall inadequacy of productivity is the misallocation of resources because of the perverse incentives that are by nature so deeply embedded in education cost structures. The current delivery model that has been in place essentially unaltered for over eighty years is flawed because, in spite of all the good work done on standards and accountability in recent years, the system remains primarily “input” and compliance driven rather than “output” and performance driven.

The solution, both for productivity enhancement and the transformation of education finance, is major systemic restructuring, beginning with marketizing the delivery system by adopting and expanding comprehensive school choice in all its manifestations-vouchers, charters, online education, home schooling, etc.-evaluated by value-added assessments of performance in terms of student achievement. This will introduce the dynamics of competition to the incentive structure, which is the ultimate accountability, and will produce the only means of finally determining the adequacy of funding.

Earlier this year, the Texas Public Policy Foundation and the Texas Conservative Coalition Research Foundation published a list of principles for school finance which includes the fundamental point that the basis of the equity argument for increased education funding should be challenged, because educational equity is not the same as school funding equity. The list goes further to say that the equity issue should focus on whether or not children are being educated, not on how much money is being spent, and that, although it may cost a certain sum to deliver a particular type of education, it does not require the same amount for all types. In other words, one size does not fit all, and funding should be tied to individual student outcomes.

Former House Education Committee Chairman Paul Sadler has written that no tax, however fairly applied, perfectly matches the cost drivers in every school district or grows at the same or predictable rate, nor is there a formula that perfectly matches state funds to any given school district. Although he has never been known as a supporter of school choice, he probably inadvertently makes the same point as the TPPF report from a different perspective-the funding should follow the child. We should remember that school choice already exists for those who are privileged to be able to afford a private school or a home in an affluent neighborhood with a high quality public school. The substantial majority of those left behind without such choices are relatively poor, inner city, and often minority children. We owe them the same opportunity to “vote with their feet”.

Polling in Texas consistently shows that significant majorities of voters favor finance plans that include school choice alternatives that would allow parents to transfer their children out of under-performing schools to other public or private schools. Meanwhile, the Coalition to Invest in Public Schools, representing many of the lead plaintiffs in the current funding adequacy case, has adopted as one of its principles adamant opposition to “the use of public funds to provide financial resources to private elementary and secondary schools through funding of programs or materials, tax credits, virtual charters, and/or vouchers, and considers such funding an improper use of tax revenue and public monies.” This kind of antiquated, “one best system” thinking is detrimental to the future of further advances in education accountability and finance reform, as well as, ultimately, the growth in educational achievement of the children of Texas.

Windham, a Houston businessman, is editor and publisher of The Texas Pilgrim (www.texaspilgrim.com). This commentary was originally distributed by The texas Pilgrim.