Shedding light reducing the heat: numerous efforts are under way to develop statewide estimates of the resources needed to provide an "adequate" education for all of California's students.

Underlying the very heated debate over California's education budget for 2005-06--and the battle over Proposition 76 on the November ballot--were two very different perspectives on school funding.

Members of the Education Coalition hold a deep and passionate conviction that California schools do not receive enough funding to adequately do what is expected of them. At the other end of the spectrum are some state and business leaders who are equally convinced that just giving schools more money would not further the goal of improved student performance. They are frustrated at the Gordian knot of the current school finance system and concerned that the funds school districts now receive are not well spent.

These fundamental differences in perspective can stymie efforts to effect meaningful change. As long as powerful constituencies disagree strongly about the nature of the problem, hopes for a policy solution seem slim.

Yet most Californians can agree on two things: too many children are poorly served in our public schools and the state's current school finance system represents a major obstacle to addressing that problem. It thus seems like good news for the future of public education in California that the Governor's Advisory Committee on Education Excellence, Democrats in the state Legislature, and the state superintendent of public instruction have all requested research on school finance reform, examining questions of efficiency and asking how much investment would ultimately be needed to meet the state's goals for student achievement.

Four private foundations (the William and Flora Hewlett, Bill & Melinda Gates, James Irvine and Stuart foundations) have agreed to fund an independent and nonpartisan research project aimed at creating an accurate and shared understanding of the state's complex funding issues. The project has the potential to shed light on several important questions.

What do Californians really expect their public schools to accomplish?

State officials have established official academic expectations for schools based on their conviction that the Golden State needs an education system that meets a gold standard. At the behest of state lawmakers, the California State Board of Education adopted a comprehensive set of academic content standards considered by many to be the most rigorous in the country. The SBE has overseen the development of performance benchmarks and approved a statewide testing system that set a particularly high bar for proficiency related to those standards.

And the federal government has established a system of school and district accountability based on the notion that there shall be "no child left behind" and the expectation that all students shall reach proficiency as defined by the state.

But do Californians as a whole understand what these standards mean? Are these the educational outcomes the public cares most about? Further, do Californians believe that achieving those outcomes is possible given the way schools are currently funded?

The foundations have already conducted focus groups and public opinion research around these questions. In addition, a group of California organizations--including the California School Boards Association, Children Now, the League of Women Voters, the California State PTA and ACSA--are interviewing key opinion leaders throughout California to get their perspectives.

They are also asking their own constituents about these issues and working to gather opinions from other education stakeholder groups, including teachers and administrators. Improving the collective understanding about what the public expects from schools is important groundwork for addressing the issue of school funding.

How much would be enough?

A richer understanding of the public's perceptions regarding outcomes will also help inform the single largest component of the research--three "costing-out" or "adequacy" studies. These studies' central purpose is to develop statewide estimates of the resources needed to provide an "adequate" education for all California students. They will each produce multiple cost estimates based on three different outcome targets.

Such studies are not a new phenomenon. According to information from ACCESS, the Advocacy Center for Children's Educational Success with Standards, the majority of states have undertaken some type of education cost study. ACCESS characterizes the general purpose of these studies as being "to obtain rationally based, objective information on how to fund public education so that all students have a genuine opportunity to meet the learning standards" a state has adopted.

Some of these studies have been mandated by court order, but increasingly states are doing them on their own initiative, as is California. The ACCESS Web site, at www.schoolfunding.info, provides extensive background on costing-out studies nationwide.

The central hallmark of costing-out studies is that they attempt to estimate what resources schools need, largely in terms of personnel, in order for all students to meet state expectations for performance. Typically, the studies use the concept of a prototypical school to calculate the number of teachers and other staff needed to meet the level of educational outcomes expected. The calculations posit an optimum class size and the appropriate number of administrators, instructional aides, counselors and other staff; plus the additional resources needed to operate a school effectively.

Some studies create prototypes for elementary, middle and high schools. They also take into consideration the extra costs associated with serving special needs students. Central to this approach is the well-supported concept that some students will be more expensive to educate than others. Typically these include English learners, children who come to school from impoverished home environments and those with disabilities. Some states have also differentiated costs for gifted students and by grade level. Other considerations include regional cost differences, school district configurations and school size.

As has been the case in other states, the California research effort will estimate appropriate funding levels in relation to the state's academic goals, its students, and the cost of operating schools in California. One of the studies will be what is called a "cost-function study." It will use current expenditure data in California to estimate the cost of putting in place the level of resources typically identified in other states' studies. Jennifer Imazeki, assistant professor in the Department of Economics at San Diego State University, will head up this effort.

Another costing-out study will depart from the approach used in many other states. Among other things, it will reflect and adjust for the wide diversity of school and district configurations in California. Researchers hope, through this process, to also develop a recommendation for a new school funding system that could replace the current approach of revenue limits and categorical programs. This study will be conducted by the Public Policy Institute of California. The principal investigator for the project is Jon Sonstelie, a senior fellow at PPIC and professor of economics at U.C. Santa Barbara.

The costing-out studies are part of a larger research agenda that goes well beyond the question of what level of resources schools need. It will also look at questions of efficiency, including how well education funds are spent in California now and how the system's effectiveness might be improved.

What needs to be changed to make sure funds are well spent?

The question of education expenditures relates to two different sets of governance and allocations systems. The first is how the state allocates funds to school districts. The second is how well school districts spend those funds, including their allocation of resources to schools. Anyone attempting to understand these issues in California must be prepared to work around the lack of data on one hand and the complexity of the existing finance system on the other.

To best examine the effectiveness and efficiency of school district spending, for instance, one would have a clear idea of how resources are allocated to each school. But school-level funding information is not generally available in California. Even though all districts are now required to use the new Standardized Account Code Structure, which includes fields for tracking site-level expenditures, districts are not required to compile that data or report it to the state.

And if one wanted to evaluate the effectiveness and fairness of the state's current system for allocating funds to school districts, a look at the revenues a district receives per pupil should be a reasonable start--but not in California! Here, thanks to the way both categorical and revenue limit funding is allocated, two districts that receive similar revenues can vary dramatically in the types of students they serve and the challenges they face. And two districts that are similar in size, configuration and student demographics sometimes receive dramatically different revenues. Add to that the wide variations in local miscellaneous revenues, and the picture is even less clear.

Education leaders know that the historical accretions of funding formulas and adjustments in California--combined with the potpourri of categorical programs and other funding source--has created this confusion. But to those unfamiliar or impatient with that reality, it raises suspicions that someone must be hiding something. Whenever a single district is found to have acted unwisely or unscrupulously, there is no way to easily prove that is the exception rather than the rule. The lack of clear data also leaves critics free to speculate about inefficiencies, pointing to "bureaucratic bloat" or "poor teacher performance" without real proof of their prevalence or effect.

The foundations will be attempting to learn what they can about the effective ness of California's resource allocations--from the state to districts and from districts to schools--given the serious limitations in the available data. They are also authorizing some research to look at the aspects of the system that act as obstacles to efficiency.

The various studies will examine school funding delivery mechanisms, education governance structures, teacher recruitment and retention, and administrator preparation and development. In some cases, this will involve comparisons with other states. In others it may depend on surveys and other data-gathering strategies that go beyond what state databases can provide.

What are Californians willing to invest in quality public schools?

A persistent undercurrent in the conversation about school funding is where to find additional money. In particular, what would it take to create the political will necessary to fund schools better, especially given Californians' apparent aversion to increasing taxes?

A growing contingent of concerned Californians believes that creating a clear and accurate vision of the problem must be the first step toward building that political will and perhaps fixing a school finance system most people believe is broken. This broad-based, independent research effort could be critical to forming that shared vision among California's leaders and the public in general.

Other studies are being added to the research agenda, which will be finalized in early 2006. Susanna Loeb, economist in the School of Education at Stanford University, is overseeing the research effort. For more information, you can contact her through her assistant Katherine at [e-mail].

California's capacity to fund education appears
to be comparable to the national average

* California has more personal income per resident that
the U.S. average ...

California     $32,845
U.S. Average   $30,804

* But California also has a higher proportion of children ...

California     27 percent
U.S. Average   25.3 percent

* Resulting in almost average personal income per student in
2001-02

California     $187,122
U.S. Average   $187,219

Excerpted from "How California Ranks: A National Perspective,"
EdSource, 2005.

Data from the National Education Association "Rankings & Estimates
2004-2005."

Note: Table made from bar graph.

Mary Perry is deputy director of EdSource (www.edsource.org), an independent organization that develops information to clarify complex K-12 education issues.