1. 1 Education Finance and Adequacy Presentation to the Joint Legislative Oversight Committee on Costing an Adequate Education (RSA 193-E:2-d) Room 100, State House September 24, 2007 Steve Norton Executive Director, NHCPPS “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” Board of Directors Martin L. Gross, Chair John B. Andrews John D. Crosier Gary Matteson Chuck Morse Todd I. Selig Mike Smith Donna Sytek Georgie A. Thomas James E. Tibbetts Brian F. Walsh Kimon S. Zachos Staff Steve Norton Dennis Delay Ryan Tappin Doug Hall

2. 2 Presentation Topics  Education Finance History  What Do We Mean by Adequacy?  Methods for Costing Out Adequacy.  Data (and it’s limitations) for Costing Out Adequacy.  Targeting to Special Needs Populations (and data).  How Will Costs Grow?

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4. 4 Before reform, NH was last in state aid for schools.

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6. 6 9.8% Annual Growth Rate 21 Other State Expense? Catastrophic Aid

7. 7 Other State Expense? School Building Aid

8. 8 1999 reforms had little impact on per- pupil expenditures.

9. 9 1999 reforms had initial impact on taxpayer equity.

10. 10 Big, one-time impact on local property tax.

11. 11 What about changes in educational attainment as a result of reform? We don’t know.

12. 12 Evolution of Judicial Review  Part 1: Constitutional Mandate  Part 2: What is Adequacy?  Part 2a: Adequacy and Outcomes  No Child Left Behind and proficiency standards  State (and local) assessment programs to meet NCLB requirements.  Part 3: Cost of Adequacy

13. 13 The question of ‘adequacy’ remains. Adequacy Definition Part 1 HB 927 School Approval Standards Curriculum Frameworks Includes content definition of outcomes for some subjects (e.g. NECAP and grade level expectations) Adequacy Definition Part 2: What is the standard? States (and the judicial review process) are increasingly turning to a definition of proficiency 100% Proficiency by 2014? 79% of districts proficient in 3 years (e.g. Connecticut?) 100% of students pass 10 th grade test by 12 th grade (e.g. South Carolina?)

14. 14 Methods to Costing-Out Adequacy: An Art NOT a Science Standards (e.g. levels of proficiency) What methods lead to those outcomes (e.g. student teacher ratios, evidenced based practices) or What inputs are necessary to meet this goal? (Professional judgment panel) or Successful Schools (Use econometric methods to id which schools are efficiently meeting the standard, holding other factors constant) or Multiple methodologies

15. 15 What Expenses are Included? Or, “How Do You Come up With Cost Estimates?”

16. 16 Data on Expenditures  DOE 25 the primary source of data on school expenditures.  These forms were not designed for this purpose.  Significant work to identify what is useful.  Problems in comparability  Some schools pay for school crosswalk; others rely on municipality to pay for that.  Manchester pays for transportation of out of district students.  While helpful, the DOE 25 cannot be considered precise.  Staff accounts for most of expenditure levels

17. 17 Estimating The Costs of Instruction  Administration Salary - By SAU, the annual salaries of superintendents, assistant superintendents and business administrators is reported.  Teacher Average Salary - By district, the number of full- time classroom teachers and their average salary is reported.  Teacher Attainment - Reported for each district are the percent of individuals who hold a Bachelor's, Master's and beyond Master's Degrees. This data has been collected for full and part-time teachers of grades kindergarten through high school (preschool teachers are not included). This data does not include administrators and non-teacher professionals.  Should all teachers be included in the estimate of adequacy?

18. 18 Targeting: Judicial focus on special-needs populations.  Language, disability, and other factors an increasingly specified factor in other state’s (and judiciary’s) decision-making.  State currently targets general fund aid based on  Disability (e.g. special education catastrophic aid program)  Capital decisions at the local level  Various other factors (income, free and reduced lunch, limited english)

19. 19 How Are (should?) Costs Increasing (Increase)? Recent annual increases in spending as measured by average spending per pupil

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21. 21 Demographics and the Cost of Adequacy.

22. 22 Lessons Learned from Previous Efforts?  New Hampshire?  HB 999 – Modified successful schools model  Funding the Gap - Professional judgment model  National?  Decreasing reliance on ‘successful schools’ models because of statistical issues.  Increasing reliance on ‘evidence-based’ models and professional judgment models.  Use of multiple methods on the rise.  What are the lessons learned?  Assumptions are critical.  Significant variation in the cost estimates depending on which method is used (Texas=0% increase in state aid; other states generally 20- 40% increase)  No single method guaranteed to meet judicial muster.  Increasing focus on outcomes and special needs populations.  Anything that appears like the traditional ‘foundation aid’ method receives judicial concern.

23. 23 www.nhpolicy.org All of our reports are available on the web: www.nhpolicy.org New Hampshire Center for Public Policy Studies “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” Board of Directors Martin L. Gross, Chair John B. Andrews John D. Crosier Gary Matteson Chuck Morse Todd I. Selig Mike Smith Donna Sytek Georgie A. Thomas James E. Tibbetts Brian F. Walsh Kimon S. Zachos Staff Steve Norton Dennis Delay Ryan Tappin Doug Hall