Tigger, of course a reference to the poor child.

Earlier I commented on the Texas Education Board’s most recent short-sighted decision. I’ve written broadly about education while an undergraduate. Policies affecting education, in general, fascinate me, but those involving high school especially catch my attention, partly because my experience does not typify that of most students (I dropped out of high school in the 10th grade) and partly because puzzling results arise during the course of researching these policies.

We all know that education allows individuals to make the most of various opportunities but can be costly. When financed by taxpayers, policymakers face difficult decisions about how to provide that education for all students. There have been many disagreements over the equal financing of public schools, given that equal spending per student has not necessarily resulted in increased performance. In this study, I used repeated cross sectional observations of seven school districts in Texas for the period 1988 thru 2007 to determine whether one school district in particular, Edgewood, and other school districts, in general, indicate records of improved performance after judicial intervention in the way funds have been allocated over this period.

Methods of financing public education in the United States were established through litigation. While the state’s authority over educational issues, in general, can be found in state constitutions through what are called education articles—provisions within a constitution that serve as a mechanism by which the state’s role in education is formed—the cultural norms that guided governmental control over education actually came before any state constitution. Religious leaders of the Massachusetts Bay Colony were not simply at ease with the trust traditionally placed on parents for educating their children, so laws were established that compelled parents to teach their children how to read, or requiring towns of certain sizes to hire a teacher or establish grammar schools. This was important because it illustrated how American society initially institutionalized education, although not with unanimous support. For example, in 1647, a law known as the “Old Deluder Satan Act” (ODSA) set forth obligations for towns with at least fifty household to hire an instructor to teach the community’s children how to read and write in order to frustrate “that [old] deluder, Satan.” The instructor would receive wages from the parents or general population of the community; not complying resulted in a fine.[1] Laws such as the ODSA, thus, served as mechanisms by which citizens would get used to the notion that educating the youth of our nation was a fundamental right that should be provided by the government, although not without dissent.

Individuals have challenged the authority of government, whether locally, or nationally, over the financing and provision of a public school system ever since organized public school became established. In 1839, for example, an individual named Billy Brown refused to pay a tax levied on only parents with children in school, so the tax collector seized his heifer as payment. As the issue made its way through the courts, on appeal, the Vermont Supreme Court held that the tax was constitutional. Thus, while the ODSA guided expectations many people had about the role government should have with regard to school issues; it soon became apparent, however, that paying for this fundamental right was problematic.[2]

Broader socioeconomic, demographic and political trends across the nation began shaping efforts to finance a large-scale school system. Coupled with the industrial revolution, circa 1830s through the early 1900s, influencing a demographic shift away from smaller communities and into larger urban areas and an increasing population due to massive immigration, a more sophisticated method of financing education became apparent. As states formed constitutions, they soon incorporated education articles, which were rationalized by the realities of a shifting society. These education articles, however, were often couched with ambiguous language urging legislatures to establish a “thorough and efficient” school system. In addition, state legislatures gave consent to the creation of local school districts, with considerable authority delegated over how to actually fund schooling through “equal and uniform” provisions.[3] Litigation would, thus, force society’s hand as to how a school should be financed.

The legal principles governing school finance then took shape in both the courts and the state’s legislatures. Precedents emerging from early school finance cases involved issues related to the “equal and uniform” tax provisions. Known as the equalization principle, states assessed and levied taxes equally, but local districts were allowed to determine how those taxes were distributed. In other words, state funds were allocated to local school districts in an inverse relationship to local property wealth.[4] This resulted in equalities, as school districts with a higher valued property wealth had more opportunities for its students. Through litigation, this has been ruled unconstitutional because many state constitutions provide that legislatures also provide a “thorough and efficient” school system. Courts then have authority to interpret a state’s education article and impose a constitutional duty on legislatures to provide a “thorough and efficient” school system based on the level of uniformity in the allocation of school revenues through mandatory property taxes.[5] Not surprisingly, extreme disparities resulted in the tax base and expenditures among local districts. The methods of financing public education in Texas were established through litigation, similar to this national trend.

In 1845, the state constitution provided that “It shall be the duty of the Legislature of the State to establish and make suitable provision for the support and maintenance of a thorough and efficient system of public free schools.”[6] One year later, the Texas Legislature started the Available School Fund that distributed money on a per capita basis. Most of the funds, however, would come from the local level. In 1949, the Gilmer-Aiken Laws were enacted, creating a Minimum Foundation Program. This provided school districts with a minimum amount of financing from the state and local governments. The state allocated all districts with 80% of the funds needed for operations, and the local government set a property tax to collect the other 20%. But local districts remained “free to enrich their contributions” above the designated amount, and the inequities became apparent. A lawsuit was filed in the late 1960s, but not decided until 1973, concerning educational discrimination, and the funding mechanism was revised even further.[7]

In 1984, a basic allotment became established for each student, but inequalities persisted and a series of lawsuits challenged the constitutionality of schoolfinance further. A long court battle, classified in four distinct phases, ensued and lasted almost 10 years.[8] In the first court case, known as Edgewood I, the Texas Supreme Court held that the school finance system was unconstitutional noting, “districts must have substantially equal access to similar revenues per pupil at similar levels of tax effort.” [9]

After revising the structure of financing the public school system yet again, in Edgewood II, the Texas Supreme Court declared school finance plan unconstitutional and suggested the consolidation of local education districts and tax bases.[10] During the interim, on an amended complaint, the Court then refused to overrule a 1931 decision prohibiting the use of local property taxes outside the district, again urging tax base consolidation. [11] However, in Edgewood III, the Texas Supreme Court declared the consolidation plan unconstitutional because the constitution requires voter approval of local property taxes and prohibits state property taxes. [12] Finally, in Edgewood IV, the Court held this method constitutional.[13]

The resulting system would cap a school district’s taxable property, “recapture” property wealth and allocate it to poor districts based on three tiers, and set forth five methods for wealthy school districts to utilize in completing this “recapture” process. [14] Through the reallocation of revenues from property taxes, justified by policies to equalize funds across districts, revenues from districts with more property wealth were distributed to districts with less property wealth, dubbed aptly, the Robin Hood Plan.[15] Although that plan, as discussed below, “reduced the disparities in the districts’ ability to raise revenue,” the court warned of the potential for the system to become unconstitutional if it “fail[s] to supply a suitable education finance system” or if “the local districts lose meaningful discretion in setting the local ad valorem tax rate.” Supra at 12.

This is exactly what occurred. In West Orange-Cove v. Alanis, 107 SW3d 558 (Tex. 2003), plaintiffs contended that property taxes, though imposed locally, became in essence a state property tax, prohibited by article VIII, section 1-e of the Texas Constitution, because the state did not allow districts meaningful discretion to tax below maximum rates. [16] The courts agreed, deeming the “Robin Hood Plan” unconstitutional. And after years of special sessions and efforts to reform the current plan legislatures now struggle over how to simply define “meaningful discretion” in setting the tax rates. [17]As indicated above, efforts at reforming the way in which public school is financed has not been without debate as reliance on local property taxes for primary funding resulted in extreme inequalities in property wealth with shareholders having conflicting beliefs, namely, lower taxes by taxpayers and excellent schools.

Many researchers have evaluated the effectiveness of public policies intended to equalize expenditures per pupil, some with an obvious ideological axe to grind, others with no apparent bias. Beginning in 1966, Coleman et.al made the ironic observation that student achievement was influenced more by student’s and school district’s socioeconomic circumstances, rather than by school quality.[18] Later research has focused on the effect of equalizing resources across school districts. Greenwald et.al examined whether any evidence exists that resources or expenditure differences affect student performance by looking at production functions. Their formal tests lead to rejection of the “restricted” null hypothesis that it did not. [19] Downes used two cross-sections of California school districts, one from before and the other after controversial school finance cases in California; his analysis showed “significant convergence across school districts in per pupil expenditures, but [did not indicate] a concomitant convergence in student performance.” [20]

Yes, there is a method to my madness. Using data from the Texas Education Agency (TEA) related to student performance and expenditures per student both before Edgewood I and after Edgewood IV, my research replicated that of others, notably, Downes although applied in Texas and on a much smaller scale and with less sophistication. This data consists of repeated cross sectional observations for the period 1988 thru 2007 from 7 school districts and the state wide average. (To provide a representative sample, I attempted to include the averages for the 27 school regions in Texas; time constraints and poor planning prevented me from doing so.) Performance or output measures included: percentage of students in grades 3 thru 12 passing state accountability exams in math, science, reading and writing each year, and annual dropout rates for students in grades 7 thru 12. Input measures included: revenues per student, expenditures per student and district wealth.

District wealth refers to the total taxable property wealth divided by the total number of students in school district, or assessed property value in local school district per student. Inputs and output measured defined above are reliable indicators in this study. [21] No attempt was made to delineate revenues or expenditures per student from the three sources of public school funding: federal, state and local. A dummy variable defined as either a minority or non-minority school district was further established using demographic data from the TEA’s Division of Performance Reporting.

The research strategy was to evaluate the significance, if any existed, of school expenditures on the performance of Edgewood ISD after court intervention mandated a more equitable system. While Edgewood ISD was the focus of this evaluation, other school districts could not have been jettisoned. The coefficient of determination with a small sample—Edgewood, State averages, and Alamo Heights—would have resulted in an even higher level of imprecision than that already reached. That said, the first regression equation suggested whether the percentage of students passing accountability exams depended on expenditures per student, property wealth per student, and minority school district. A second regression included the same independent variable, but indicated the impact on annual dropout rates.

What does data say? Well, in the same year that the court declared the school finance system unconstitutional, Edgewood ISD, one of the poorest districts in the state, had $40,2233 taxable property wealth per student; Alamo Heights ISD, which is in same county as Edgewood ISD, had $592,674 taxable property wealth per student; the state average was $213,524. Clearly, wide variations exist in the value of property located among these districts. As you can see, Edgewood ISD is that brown-looking line, which indicates the amount of property wealth in that school district. Just on the other side of town, Alamo Heights ISD’s property wealth per student shows up on the orange line.

While property-wealth has not, nor will it likely ever, become equal, Texas has seen reduced inequalities in expenditures per student over this same period. This has resulted from the “leveling down” discussed above. Every year since the Edgewood I decision, there has been an increase in school funding due to school finance formulas that reward increased tax effort, increased property taxes, and the revenues shared across school districts. Notably, Edgewood ISD has spent and received more funds per student than the state average in almost every year over the period in which the “Robin Hood” plan has been in effect, yet Alamo Heights’ expenditures and revenues per student has, or have, remained above both the state’s average and Edgewood ISDs. Beginning in 2004 though, after the “Robin Hood” plan was declared unconstitutional, Alamo Height’s and Deer Park’s expenditures per student increased at a much faster rate, while Edgewood’s expenditures per student decreased steadily and Abernathy’s decreased quickly. This trend has remained ever since 2005.

Notwitstanding the evidence that Edgewood ISD’s expenditures per student have remained above the state average since Edgewood I and has more revenue to allocate for various school expenses, the spending gap remains: Edgewood district’s mean expenditures per student over this period was $4,028, in Alamo Heights, a mean of $4,507 appears over the same period. Performance in Edgewood ISD, Alamo Heights ISD, and the state average suggests that there is a link between expenditures per student and student performance. A positive direction of association was predicted. Edgewood ISD had higher dropout rates almost every year during the interval with significant fluctuations, in many years almost double that of the state average; in every year, the dropout rate in Edgewood ISD was at least double that of Alamo Heights ISD. The inverse has been true in the Alamo Heights ISD; in every year over the period, a lower dropout rate is observed; in many years, two times less than the state average. Additionally, student performance as measured by the TAKS exams does seem to indicate a signicant connection between expenditures per student and performance.

The results of regressing the four independent variables (revenues per student, expenditures per student, assessed property value per student and the dummy variable, minority district) on the dependent variables, percentage of students passing TAKS exams and dropout rates, however, were consistent with prior findings on similar research questions.

In words, 36 percent of the variation in the percentage of students passing TAKS exams can be explained by the input variables. Similarly, 64 percent of the differences in student’s performance on exams in this sample, which admittedly is small, will be due to other factors not included in analysis. In addition, 4 percent of the variation in the annual dropout rates can be explained by the input variables. These results were largely consistent with prior research.

Financing a public school system in the United States requires the balance of multiple parties’ interests. Given the contentious historical record, that seems impossible. With arguments following the typical lines of reasoning ranging from observations that milking the rich for their wealth will not work because the data shows other factors influence student’s performance to concerns over how it is morally deplorable for a rich man’s cat to drink the milk that a poor child needs to stay healthy. Given that Texas has a tax system that ranks as one of the most regressive in the United States, repealing the Robin Hood plan did not seem to make much sense on equitable grounds.  It is not difficult to imagine the implications of declaring Robin Hood unconstitutional. Property taxes in poor districts will increase to support existing operations, while taxes in property wealthy districts could, in theory, decrease while maintaining the same standard, possibly even a higher one. In a society comprised of diverse interests, perhaps political decisions could ultimately transcend narrow interests, so that everyone can truly have an education that will allow them to live well. That, however, distracts from one of the underlying presumptions at issue in school finance reform. To the extent by which children are asked to compete in society, they will have different outcomes because not all children begin at the same starting point. Obviously, students in some districts will cross the “finish line” much quicker and in a greater proportion than students in other districts. This, therefore, is expected, although difficult to accept. While writing this, I could not help but think of a more obvious observation; that is, the reality of a self-fulfilling prophecy that relates academic achievement to social class. Sounds Marxian right? I’m just sayin….

Sources

[1] Education in the United States: A Documentary History 393 (Sol Cohen ed., 1974).

[2] Sparkman, W. E. (1994). The legal foundations of public school finance. Boston College Law Review. 35, 569-95.

[3] Id.

[4] James G. Ward, An Inquiry Into the Normative Foundations of American Public School Finance, 12 J. Educ. Fin. 463 (1987)

[5] Linn, Robert L The Design and Evaluation of Educational Assessment and Accountability Systems.  CSE Technical Report 539, UCLA Graduate School of Education, Los Angeles, 2001

[6] Texas Constitution Article VII, Section I.

[7] (From the court record, the richest district, by the way, had over $14 million in property wealth per student, and the poorest district had only about $20,000 per student. One million students in the upper range; one million students in the lower range. Students in upper range had more than two and a half times as much property wealth. The 300,000 students in the lowest-wealth schools [had] less than three percent of the property wealth to support their education, while the 300,000 students in the highest-wealth schools [had] over twenty-five percent of State property wealth to support their education. In the 1985-86 school years, due to great disparities in district property wealth, spending per student varied between districts from $ 2,112 to $ 19,333. The 600,000 students in the wealthiest districts had two-thirds more spent on their education than the 600,000 students in the poorest districts. Vastly differing burdens were imposed upon taxpayers to support education. In the poorest districts, taxpayers paid more than twenty cents per one hundred dollars valuation to raise one hundred dollars per student; in the wealthiest districts taxpayers paid less than two cents per one hundred dollars valuation to raise one hundred dollars per student. (San Antonio I.S.D v. Rodriguez). This case was really significant because it was the first and only school finance case to reach the United States Supreme Court. SCOTUS ruled that the Minimum Foundation Program was constitutional, but urged the Texas Legislature to develop a more equitable system and set a precedent that school finance litigation was a state’s issue, not a federal one. (Equity and Adequacy in Education Finance: Issues and Perspectives. National Academy of Sciences, National Research Council). (Minorini, P., & Sugarman, S. (1999). School Finance Litigation in the Name of Educational Equality: Its Evolution, Impact, and Future. Equity and adequacy in education finance: Issues and perspectives (pp. 34-71). Washington, D.C.: http://search.ebscohost.com).

[8] School Funds (Chicago, 1911 Texas Almanac, 1994-95)

[9] Kirby v. Edgewood ISD 761 S.W.2d 859; 1988 Tex. App. LEXIS 3292

[10] Edgewood ISD v. Kirby 777 S.W.2d 391; 1989 Tex. LEXIS 129; 33 Tex. Sup. J. 12

[11] Edgewood ISD v. Kirby 804 S.W.2d 491; 1991 Tex. LEXIS 8; 34 Tex. Sup. J. 287

[12] Edgewood ISD v. Kirby 804 S.W.2d 491; 1991 Tex. LEXIS 21; 34 Tex. Sup. J. 368

[13] Edgewood ISD v. Meno. 917 S.W.2d 717; 1995 Tex. LEXIS 169 

[14] Specifically, two mandates in the bill required that (1) school districts strictly limit a $1.50 tax rate per $100 assessed property value for maintenance and operations (M&O), and (2) districts limit M&O revenues which do not exceed a statewide rate per student. The excess of any Texas school district is given to the poorer districts. Formula funding established the Foundation School Program (FSP) and three tiers determined the amounts given. Tier One served as the foundation and “[ensured] a base…funding level for all students at a local tax rate of $0.86 per $100 of property value.” Tier Two referred to an enrichment tier and provided additional funds, set between $0.86 and $1.50 per $100 property value by the local districts. Finally, Tier Three assisted districts with facility-related debt. Id. Even though this law decided how much of the funds to recapture, property-wealthy districts were allowed to choose a method of recapture. The five methods to recapture the excess wealth included: “consolidation by agreement, detachment and annexation of property by agreement, purchase of attendance credits from the state, contract with other districts for educating their students, and tax-base consolidation” Id.

[15] Statutory provisions in Chapter 16 of the Texas Education Code, Tex.Educ.Code Ann. § 16.01 et seq. discuss this at length, although it’s not enjoyable reading material.

[16] Article VIII, section 1-e states simply: “No State ad valorem taxes shall be levied upon any property within this State.”.

[17] Moore, P. (2006). Robin Hood: To Not Be or How To Be, That is the Question- An Analysis of the Problems with Texas School Financing Today and a Proposal for a Better Tomorrow. Texas Tech Law Review. 38 (455). Retrieved June 16, 2009, from http://libproxy.library.unt.edu:2090/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T7813081699&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T7813082302&cisb=22_T7813082301&treeMax=true&treeWidth=0&csi=139170&docNo=2

[18] Coleman, James S. Equality of Educational Opportunity (COLEMAN) Study (EEOS), 1966 [Computer file]. ICPSR06389-v3. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2007-04-27. doi:10.3886/ICPSR06389

[19] Greenwald, Rob, Larry V. Hedges, and Richard D. Laine. 1996. “The Effect of School Resources on Student Achievement.” REVIEW OF EDUCATIONAL RESEARCH 66.

[20] Downes T. EVALUATING THE IMPACT OF SCHOOL FINANCE REFORM ON THE PROVISION OF PUBLIC EDUCATION: THE CALIFORNIA CASE. National Tax Journal [serial online]. December 1992;45(4):405-419. Available from: Business Source Complete, Ipswich, MA. Accessed November 7, 2009 

[21] National Forum on Education Statistics. (2005). Forum Guide to Education Indicators (NFES 2005–802).

U.S. Department of Education. Washington, DC: National Center for Education Statistics.