1. Attaining School Finance Adequacy in a Time of Fiscal Constraint Lawrence O. Picus Professor USC Rossier School of Education February 7, 2003

2. Lawrence O. Picus Today’s Discussion Setting the Context School Finance Adequacy Revenue Stability Serving Children Truly Systemic Reform

3. Lawrence O. Picus Education and the Fortune 500

4. Lawrence O. Picus The Problem Perception of Low Per Pupil Spending Low Student Performance Limited Revenue Options Large “At Risk” Student Populations

5. Lawrence O. Picus Finding A Solution School Finance Adequacy Simple easy to understand formula Services for all children Revenue stability

6. Lawrence O. Picus School Finance Focus Equity (most of 20th century) Variation in per-pupil expenditures Uneven distribution of property tax base Productivity (1990s) Linkage between level and use of funds and student achievement Adequacy (now and in the future)

7. Lawrence O. Picus What is Adequacy? Adequacy requires provision of sufficient fiscal resources to enable all students to perform at high levels

8. Lawrence O. Picus Status of Adequacy in the States Wyoming Oregon Maryland Others Kentucky Arkansas Nebraska Montana Kansas

9. Lawrence O. Picus Costing Out Adequacy Defining adequacy Establishing a system to achieve the educational standard or goal Measuring costs and expenditures Concerns and other issues

10. Lawrence O. Picus Four Approaches to Defining Adequacy Cost functions Expenditures in districts/schools that meet performance benchmarks Professional judgment Cost of effective school-wide strategies

11. Lawrence O. Picus Implementation How proscriptive should the model be? Who controls spending decisions? Simple, transparent and easily understood Establish a base “foundation” level Adjust for: Student characteristics District characteristics Price differences

12. Lawrence O. Picus Measuring Cost and Expenditures Understanding the difference between a cost and an expenditure Choosing which to use Wyoming  Costs Oregon  Expenditures Combinations of the two

13. Lawrence O. Picus Concerns and Other Issues Look at the total picture Individual components of the funding model may not tell the whole story Details are important, but don’t forget the major assumptions in the model

14. Lawrence O. Picus What Does This Mean for the States? School spending levels Changes in school operations Tax rates and state finance Other implications? School Finance Reform

15. Lawrence O. Picus Reform of School Finance Need for comprehensive reform of the finance system System must be simple, easy to understand and transparent Should be based on a measure of adequacy

16. Lawrence O. Picus Revenue Stability Need mechanisms to handle the surplus and deficit years and smooth funding Rainy day funds and tobacco settlements are inadequate Tax cuts in times of surplus won’t work

17. Lawrence O. Picus Managing the Flow of Revenue

18. Lawrence O. Picus Meeting the Needs of Children It’s no longer schools vs. others Need to develop comprehensive models of services for children In CA, education is as top down as other social service programs Find ways to consolidate and coordinate programs to meet the needs of families and children

19. Lawrence O. Picus Contact Information Lawrence O. Picus, Professor USC Rossier School of Education Division of Administration and Policy WPH 702G University of Southern California Los Angeles, CA 90089-0031 Voice 213 740-2175 E-mail lpicus@usc.edulpicus@usc.edu