The Adequacy and Fairness of State School Finance Systems

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schoolfinancedata.org

Bruce D. Baker Matthew Di Carlo Mark Weber

About the Authors

Bruce D. Baker is Professor in the Graduate School of Education at Rutgers University and author of Educational Inequality and School Finance: Why Money Matters for America's Students.

Matthew Di Carlo is a Senior Fellow at the Albert Shanker Institute in Washington, D.C. He has a B.A. from Fordham University and a Ph.D. in Sociology from Cornell University.

Mark Weber is the Special Analyst for Education Policy at the New Jersey Policy Perspective and a lecturer at Rutgers University, where he recently earned his Ph.D. He is also a music teacher in Warren Township, NJ.

Acknowledgments The authors wish to acknowledge the assistance of Bilan Jama, Ajay Srikanth, and Vicki Thomas, as well as the W.T. Grant Foundation for its past support of the data and model development.

Abstract 1

Introduction 2

Measuring Funding Adequacy and Fairness 3

Results: Core Indicators 5

Effort 6

Adequacy 8

Progressivity 15

Describing State School Finance Systems 20

Evaluating State School Finance Systems 22

Resource Allocation Indicators 24

Conclusion 25

References 26

Appendix Tables 27

(ln) = b0 + b1Statei + b2LaborMarketij +

b3CWIij + b4 ij + b5PopulationDensityij +

b6 Enrollment ij + b7 ij + b8Scaleij + b9Povertyij + b10SchlTypeij + b11 ij + e

When it comes to American education, few policy areas are as misunderstood — or as crucial — as school finance. Over the past several years, a political and empirical consensus has emerged about the importance of equitable and adequate school funding for high-quality K-12 education. Certainly, there are plenty of contentious debates about how education funds should be spent. But regardless of one’s opinions on specific education policies, virtually all of the options for improving America’s schools require investment --- particularly for disadvantaged students. We introduce in this report an updated, public database of state school finance measures, and present results for three key measures in this system: effort, adequacy, and progressivity. Our results indicate, as would be expected, that states vary widely on all three measures. There are several states in which educational resources are comparatively adequate and distributed equitably. In general, however, resources in most states tend to be allocated non-progressively or even regressively, That is, higher-poverty districts do not receive more funds — and in some cases receive substantially less — than do lower-poverty districts, even controlling for factors that affect costs, such as regional wage variation, district size, and population density. Moreover, using models that estimate the spending levels required to achieve common outcome goals, we find that the vast majority of states spend well under the levels that would be necessary for their higher-poverty districts to achieve national average test scores. We do not provide state rankings or grades in this report, as the interplay between effort, adequacy, and progressivity is complex. We do, however, include recommendations on how researchers, policymakers, and the public can use our findings, as well as our database, to evaluate state systems and inform debates about improving school finance in the U.S.

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Over the past decade, there has emerged a political consensus regarding schools, money, and state school finance systems. This consensus — that money does, indeed, matter — is supported by a growing body of high-quality empirical research regarding the importance of equitable and adequate financing for providing high-quality schooling to all children (Baker 2017; Jackson 2018; Baker 2018).

There is, of course, serious and often contentious debate about how education funding should be spent, with an ideologically diverse group of policymakers and advocates supporting a wide range of substantive policy options. These debates are important. In education, money can be, and frequently is, used poorly. How money is spent — and on which students — is no less important than how much money is spent.

Yet virtually all potentially effective policies and approaches require investment, often substantial investment. And there is now widespread agreement, backed by research, that we cannot improve education outcomes without providing schools — particularly schools serving disadvantaged student populations — with the resources necessary for doing so. Put simply: We can’t decide how best to spend money for schools unless schools have enough money to spend.

This consensus is the impetus for the School Finance Indicators Database (schoolfinancedata.org), a new and improved collection of data and measures on state and local school finance systems. In building and presenting this system, we rely on the following principles:

1. Proper funding is a necessary condition for educational success: Competitive educational outcomes require adequate resources, and improving educational outcomes requires additional resources.

2. The cost of providing a given level of educational quality varies by context: Equal educational opportunity requires progressive distribution of resources, targeted at students and schools that need them most.

3. The adequacy and fairness of education funding are largely a result of legislative policy choices: Good school finance policy can improve student outcomes, whereas bad policy can hinder those outcomes.

U.S. public school finance remains primarily in the hands of states. On average, about 90 percent of funding for local public school systems and charter schools comes from state and local tax sources. How state and local revenue is raised and distributed is a function of seemingly complicated calculations, usually adopted as state-level legislation. The stated goal of these formulas is to achieve an adequate and more equitable system of public schooling for the state’s children.

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about a concept; activation of prior knowledge and attention Teacher-candidates excelled in areas ranging from behavior management to misconceptions to help to efficient use of instructional time to an absence of negativity in students make connections; their interactions with students. These results at first glance seem to use of content-appropriate contradict the challenges we hear many novice teachers articulate related terminology; and multiple, varied opportunities for to classroom management. While it is possible that programs have practice. responded to classroom management concerns and intently supported Outside of arcane academic journals, the vast majority of school finance discussions and comparisons use simple measures, such as raw per-pupil spending. The problem with this Change in Average CLASS Dimension Scores approach is that the cost of providing a given level of education quality depends on context, 7 –0.7% including the studentsCLASS Domain a district serves, the labor market in which it is located, its size, and other 6.71 6.66 factors. Classroom Organization 4.4% 3.7% 6 4.9% 2.7% Emotional Support 3.9% 3.9% 5.79 5.83 Consider, for example, two hypothetical school districts, both of which5.49 spend 5.58the same amount 5 5.25 Instructional Support 4.91 5.02 5.08 5.07 per pupil. The simple approach to comparing these two4.74 districts 4.74 might conclude that they invest 1.8% 4.64 equally4 in resources, such as2.3% teachers, curricular materials,3.6% facilities, and so on, that have been 4.0% 3.71 3.84 shown to improve2.4% student performance. 3.35 3.49 3 3.30 3.19 3.24 3.03 2.81 If, however,2.65 one of these districts is located in an area where employees must be paid more due 2 to a CLASS dimension score Average much more competitive labor market, or that district maintains a larger number of school buildings1 per student due to population density differences, or serves a larger proportion of students with special needs, then this district will have to spend more per pupil than its counterpart0 to achieve a given level of education quality. Analysis & Instructional Quality of Content Instructional Regard for Teacher Positive Behavior Productivity Negative Student Inquiry Dialogue Feedback Understanding Learning Student Sensitivity Climate Management Climate Engagement Our basic model therefore controls statisticallyFormats forPerspectives the following characteristics (see Appendix Table A for a list of data sources):Administration 1 Administration 2 % Percentage point change on CLASS scale Note: Results refect average change in CLASS dimension scores from the Upper Elementary and Secondary tools based on 436 observations1. Student from ptheoverty 6 Network: Percent member programsof children with CLASS(ages data 5-17) across living both inadministrations. the district The with Negative family Climate incomes dimension is reverse coded: higher values indicate less negativity. Additionally, the Student Engagement dimension is not included within a specifc CLASS domainbelow and the is thereforefederal reported poverty separately. line (data CLASS source: is scored onU.S. a 1-7 Census scale. Bureau);

5 For more on this, see The Science of Learning at deansforimpact.org/resources/the-science-of-learning/

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6 DEANS FOR IMPACT

2. Regional wage variation: An index of variation in the salaries of college-educated professionals who are not educators (data source: Education Comparable Wage Index (ECWI), developed by Lori Taylor [2016]);

3. District size: Number of students served, which accounts for economies of scale in providing services such as transportation (data source: National Center for Education Statistics, Common Core of Data);

4. Population density: Population per square mile of land area (data source: U.S. Census Bureau).

Although no model can account for every factor that influences the costs of education, this approach permits the estimation of per-pupil spending and revenue estimates that are more comparable across states.

Specifically, our model calculates, in each state, current spending and revenue for a “typical” district that has: at least 2,000 pupils; average population density; a labor market with national average (within year); external labor cost pressures; and a given poverty rate (i.e., 0, 10, 20, or 30 percent). As such, our adjusted spending and staffing levels account for:

• Labor cost variation that affects the value of the education dollar; • Quantities of staff who might be employed at any given spending level; • The reality that spending levels and staffing levels are generally higher in states serving large shares of children in remote rural schools.

FIGURE 1 Illustrative Model of Adjusted Revenue/Spending

We call this measure adjusted (or predicted) spending or adjusted (or predicted) revenue (per- pupil). These estimates are used in our measures of adequacy and progressivity, both discussed below. For more detailed information on the model and variables, see our State Indicators Database User's Guide and Codebook.

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The most important of the factors we use in this model is poverty (using data collected by the U.S. Census Bureau). Poverty is highly significant not only because it exerts strong influence on the cost of providing education, but also because there is now broad agreement among scholars and organizations across political and disciplinary spectra that school districts serving higher-needs student populations — those with higher poverty rates in particular — require not the same, but more resources per pupil than districts serving lower-needs student populations.

Of course, poverty is not the only measurable characteristic associated with student outcomes. So too are other variables, such as those measuring whether students are English language learners or on special education plans. We use Census poverty as an imperfect but acceptable proxy, one which is correlated with many other factors, measured and unmeasured, that influence outcomes.

Given this consensus about the need to account for student characteristics, it is clear that state school finance systems should strive to be progressive: They should channel more funds toward districts with higher levels of student poverty, because that is where those funds are needed the most. The equity measures produced in our report, as well as those produced by the Urban Institute and the Education Trust, all acknowledge this basic goal of state school finance systems and framing of equal educational opportunity.

And progressiveness alone is not sufficient. Progressive distributions of funding must be coupled with sufficient overall levels of funding to achieve the desired outcomes. Put simply, even the most progressive school funding systems will not produce results if they provide insufficient resources for students in both poor and more affluent districts.

We propose the following three “core indicators” for comparing and evaluating state (and district) school finance systems.

1. Effort: how much of a state’s total resources or capacity are spent directly on K-12 education;

2. Adequacy: whether states provide sufficient resources to districts, relative to other states or to common outcome goals (e.g., test scores);

3. Progressivity: whether states allocate more resources to districts serving larger proportions of disadvantaged children.

In this section, we discuss each of these core indicators in turn, and present results using the most recent data (the 2015-16 school year).

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CIS Network members hypothesize that candidates may struggle to The CLASS rubric provides assess their own performance in part because as novices, they may not detailed descriptors, know what they don’t know. Candidates are still building mental models summarized below, for of what excellent teaching looks like, and cognitive science research the three dimensions suggests novices cannot inquire into problems as effectively as experts within the Instructional due to their still shallow background knowledge on the subject.5 Support domain in which candidates, on average, Whatever the reasons for this mismatch, valid and reliable observational score lowest. data becomes all the more important to better capture a candidate’s actual classroom abilities. And while it is unclear from current research what magnitude of change could be considered true growth on either measure, Content Understanding we will be able to better clarify the nature of the relationship between the WithinThis the dimension notes foremphasizes each figure intwo which as the data CIS areNetwork presented, matures we and also the providedepth of ourthe data names matures of the with it. specifica teacher’s State ability Indicators to draw Database variables that are used to create the figures, so that readers can replicatemeaningful, real-worldour results or use the same variables in different analyses. connections across concepts, 2. Contrary to widely held concerns about classroom management, facts, and skills; the use of varied examples and non- teacher-candidates seem to excel in classroom organization – The databaseexamples to communicatealso includes more thanyet 100 they additional struggle to delivervariables, rigorous not presentedinstruction. in this report, that users aboutcan adownload concept; activation and ofanalyze themselves, including variables that can be used to construct prior knowledge and attention Teacher-candidates excelled in areas ranging from behavior management alternativeto misconceptions versions to of help the three coreto efficient indicators, use of as instructional well as other time types to an of absence measures of negativity (these in additionalstudents variables make connections; are discussed their below, interactions in the sectio with students.n “Resource These allocation results at firstindicators”). glance seem to use of content-appropriate contradict the challenges we hear many novice teachers articulate related One additterminology;ional and note: multiple, in the figures below, and in all our datasets, years refer to the spring varied opportunities for to classroom management. While it is possible that programs have semesterpractice. of the school year. For example,responded 2016 to classroom means thatmanagement the data concerns pertain toand the intently 2015 -supported16 school year (the most recent year available).

Change in Average CLASS Dimension Scores 7 –0.7% CLASS Domain 6.71 6.66 Classroom Organization 4.4% 3.7% 6 Effort (fiscal effort) indicates how much of a state’s total resources4.9% or capacity are spent directly2.7% Emotional Support 3.9% 3.9% 5.79 5.83 5.49 5.58 on K-512 education. 5.25 Instructional Support 4.91 5.02 5.08 5.07 4.74 4.74 1.8% 4.64 4 2.3% 3.6% In our system, effort4.0% is calculated simply by dividing total expenditures (state plus local, direct to 3.71 3.84 2.4% education) by either: 3.35 3.49 3 3.30 3.19 3.24 3.03 2.81 2.65 1.2 Gross state product (GSP); or Average CLASS dimension score Average 2.1 State aggregate personal income.

0 Analysis & Instructional Quality of Content Instructional Regard for Teacher Positive Behavior Productivity Negative Student Inquiry Dialogue Feedback Understanding Learning Student Sensitivity Climate Management Climate Engagement Formats Perspectives Factors Variables Administration 1 Administration 2 % Percentage point change on CLASS scale

Note: Results refect average change inTotal CLASS K-12 dimension education scores from the UpperCombined Elementary state and Secondary and local tools direct based on 436 observations from the 6 Network memberspending programs with CLASS data across botheducation administrations. expenditures The Negative Climate dimension is reverse coded: higher values indicate less negativity. Additionally, the Student Engagement dimension is not included within a specifc CLASS domain and is therefore reported separately. CLASS is scored on a 1-7 scale. State effort = Divided by 5 For more on this, see The Science of Learning at deansforimpact.org/resources/the-science-of-learning/ Option 1: Gross state product State economic capacity Option 2: Aggregate personal income 6 DEANS FOR IMPACT

FIGURE 2 Illustrative Model of State Fiscal Effort Indicator

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Both of these denominators are measures of a state’s economic capacity; in the simplest terms, how much “money” does a state have? In this sense, effort measures how much revenue each state spends as a percentage of how much it might spend.

In other analyses, effort has been measured by dividing total education spending by total state and local spending. We believe this is problematic, however, because some states choose not to levy sufficient taxes to support any high-quality public services. These states may expend a large proportion of their total governmental spending on schools, but their effort compared to their capacity to spend is still low.

In Figure 3 we present each state’s effort as a percentage of its gross state product.1 The results for the alternative version of effort (using aggregate personal income) are not presented in this report, as they are very similar (the correlation between the two is roughly 0.90), and can be downloaded as part of our State Indicators Database.

Figure 3 indicates that effort ranges from more than 5 percent in Wyoming and Vermont to approximately 2.5 percent in Hawaii and Arizona. In other words, the amount Wyoming spends on its schools is equal to 5 percent of its annual gross state product, while Arizona and Hawaii spend about half as much as a proportion.

Most states cluster around the unweighted state average of 3.5 percent. Note, though, that even small differences in effort can represent substantial increases or decreases in education resources, particularly in high-capacity states.

It bears reiterating that effort is measured in terms of spending as a proportion of capacity; states with large economies and relatively high-income residents have larger “pies” from which education might be funded (via taxation). New York and New Jersey, for instance, are high- capacity states that also put forth above-average effort. California and Massachusetts, on the other hand, are relatively low-effort states, but their low effort will have less deleterious implications for education resources in these high-capacity states than it would in lower- capacity states.

Conversely, Mississippi exhibits rather strong effort, but its relatively small capacity means that students in that state will be under-resourced vis-à-vis states that put forth similar effort but have greater capacity.

That said, effort, as we define it (using state “capacity”), is in large part a policy choice, representing both the decision to levy sufficient taxes and how the state prioritizes public education. Combined with the adequacy of spending levels, discussed below, the effort indicator allows us to determine which states lag behind in school resources because they lack capacity, as opposed to those that lag behind because they don’t expend the effort.

1 The results presented in this report do not include the District of Columbia. The full State Indicators Database, however, does include results for the District of Columbia on some of the variables discussed below.

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0.0 1.0 2.0 3.0 4.0 5.0 6.0 Wyoming 5.3 FIGURE 3 Vermont 5.1 State Fiscal Effort New Jersey 4.7 Direct expenditures as a Alaska 4.7 percentage of gross state West Virginia 4.3 Mississippi 4.2 product, by state, 2016 Arkansas 4.2 Rhode Island 4.2 South Carolina 4.2 Notes: U.S. average is New York 4.1 unweighted. Maine 4.1

Montana 4.0 Variables used: New Mexico 3.9 effort Pennsylvania 3.9

Nebraska 3.8 Effort can also be measured New Hampshire 3.8 as a percentage of states’ Ohio 3.7 Alabama 3.7 aggregate personal income; Connecticut 3.7 this variable (inc_effort) is Kansas 3.6 included in our State Kentucky 3.6 Indicators Database. Minnesota 3.6 Georgia 3.6 US Average 3.5 Iowa 3.5 North Dakota 3.5 Michigan 3.5 Missouri 3.5 Wisconsin 3.5 Louisiana 3.3 Illinois 3.3 Virginia 3.3 Texas 3.3 Oklahoma 3.3 Oregon 3.1 States with higher values in Washington 3.1 the graph invest more of Utah 3.1 their total economy (gross Maryland 3.0 state product or GSP) in K- Massachusetts 3.0 Idaho 3.0 12 education – that is, they South Dakota 2.9 put forth more “effort.” Florida 2.9 However, states with larger California 2.9 economies might exhibit Colorado 2.9 less effort than states with Indiana 2.9 smaller economies, but still Nevada 2.8 achieve the same funding Tennessee 2.8 Delaware 2.7 levels. North Carolina 2.7 Arizona 2.6 Hawaii 2.5

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In school finance scholarship, adequacy has come to be defined as a measure of whether the amount of funding for schools is enough for students to reach a minimal level of education outcomes.

Measuring adequacy involves the complicated evaluation of whether a given state or district spends “enough” on public education. It considers both inputs into the school system, as well as the outcomes those schools achieve.

In our system, adequacy is measured using two indicators, which entail different types of comparisons:

1. Equated spending levels: Comparing a state’s adjusted spending, described above, to that of other states at a given poverty level;

2. Equated spending relative to common outcome goals: Comparing a state’s adjusted spending, at a given poverty level, to the estimated (modeled) spending level that would be required to achieve national average test scores in the previous year.

We might interpret the first approach as addressing the question: Does this state spend a lot, compared with other states? For example, how much do districts spend in New York versus Mississippi, when those districts are equivalent in terms of size, population density, labor market differences, and student poverty?

This first version of the indicator evaluates adequacy entirely in reference to other states, rather than to some “tangible” outcome. These estimates are presented in Appendix Table B.2

We do not present them here so as to focus on our second measure, which is perhaps better- suited to capture “adequacy” per se, as it addresses the question: “Does this state spend enough?” For this measure we use a similar but modified version of adjusted spending by poverty quintile.3 In addition, instead of comparing spending among states, we compare how much each state spends to how much it would have to spend for its students to achieve a common goal.

We define this goal in terms of test scores, specifically how much states would have to spend for their students (in each poverty quintile) to achieve the national average scores from the previous year. We do not intend to suggest that standardized test scores provide a comprehensive picture of the value of schools or investment in those schools. They are, however,

2 Our State Indicators Database includes not only adjusted spending, but also variables for adjusted revenue (by source -– state/local/federal). These too can be used as the first type of adequacy measure. We focus on spending because it is more appropriate in the context of adequacy: Spending is the most direct measure of the resources that are put into the school system.

3 Poverty quintiles are different for each state. In other words, the lowest-poverty quintiles are the 20 percent of lowest-poverty districts in that state. It may be those districts have poverty levels higher than those in the lowest quintile in another, more affluent state.

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a common benchmark of student performance that can be used to assess, however imperfectly, adequacy. Moreover, we contend that increases in spending would benefit not only test scores, but other meaningful student outcomes as well.

Factors Variables

Current education State and local K-12 spending for a spending given poverty quintile (NECM) Adequacy relative to common = Divided by (or minus) outcome goals NECM estimates of spending required Spending required to achieve national average testing results in the previous year

FIGURE 4 Illustrative Model of Adequacy Relative to Common Outcome Goals

These comparisons come from the National Education Cost Model (NECM), which is part of our system. For testing data, the NECM relies on 2013-2015 estimates from the Stanford Education Data Archive (Reardon et al. 2017), a database of testing outcomes that are made comparable across states. In simplified terms, the NECM does the following:

1. Calculates adjusted spending by poverty quintile (using many of the same variables as the original version of adjusted spending);

2. Calculates how much each state would be required to spend for students in each poverty quintile to achieve the national average test score (average for all students); and

3. Compares the difference between actual spending and required spending.

The NECM estimates are therefore measures that define adequacy in terms of actual student outcomes. We can, for example, assess how much more a state would have to spend for students in its highest-poverty districts to achieve average testing outcomes, and then compare this to lower-poverty districts. For more technical details on the NECM, see Baker et al. (2018).

In Figure 5 we present a rough snapshot of adequacy across 49 U.S. states (Hawaii is eliminated from NECM estimates because the state contains only one school district). Note that NECM estimates are calculated state-by-state, as are the thresholds for poverty quintiles and the gaps between actual and national average test scores. This means that the estimates in Figure 5, which are averaged across states, should be interpreted with caution. They do, however, provide a general sense of the national situation when it comes to outcome-based adequacy.

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$25,000 FIGURE 5 Adequacy of U.S.

$20,000 $20,425 Education Spending Predicted current per-pupil $15,000 $14,276 spending and predicted $13,784 spending required to $11,136 $10,135 achieve national average $9,702 $10,000 test scores, by poverty $9,896 $9,835 $9,832 quintile, 2016 $8,202 Actual spending Notes: Averages are weighted $5,000 Required spending by state-level enrollment.

Variables used: $0 necm_predcost_q1 – q5 Lowest poverty Low poverty Middle poverty High poverty Highest poverty necm_ppcstot_q1 – q5 necm_enroll_q1 – q5

In the lowest-poverty districts (0-20th percentile), average spending is higher than required to achieve national average test scores (and, as shown below, in all but three states, test scores for this group are higher than the national average). In the low-poverty quintile (20-40th percentile), required and actual spending are roughly equal. This means that, on average, states are spending enough for their lower-poverty districts to achieve national average test scores, and these districts are achieving that result.

Moving into the middle- and high-poverty quintiles, the gap between required and actual spending increases rapidly, from about $1,300 per pupil (88 percent of the estimated required amount) for the middle quintile to $6,600 (67 percent) among the highest-poverty districts. In other words, on average, the highest-poverty U.S. districts spend only about two-thirds of how much they would have to spend in order for their students to achieve national average test scores (again, this means the national average for all students, regardless of poverty).

These overall averages, of course, mask quite a bit of variation by state. Figure 6 presents current spending as a percentage of the spending that would be required for each state’s highest- poverty districts to achieve national average test scores from the previous year. We focus this state-level graph on the highest poverty districts, rather than on the other four quintiles, because these are the districts serving the students most in need of resources. The full set of estimates for each quintile can be downloaded as part of our State Indicators Database.

To reiterate, this measure defines adequacy in terms of national average test scores for all poverty quintiles. This is a very high bar indeed, particularly for high-poverty districts. Our adequacy measure is not meant to imply that if a state or states were to spend a certain amount that the test scores in that state would increase to the average in the short term. The goal of getting students in high-poverty districts in most states to score at current national averages would require many years of sustained investment and improvement, and would likely be a multi-generational effort. The purpose of this measure is simply to evaluate adequacy based on a concrete reference point that is educationally meaningful.

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0.0 50.0 100.0 150.0 FIGURE 6 Arizona 28.3 Mississippi 34.7 Adequacy of State California 40.4 Education Spending Texas 41.2 Alabama 41.8 on Highest Poverty Georgia 44.8 Districts New Mexico 47.1 Washington 51.8 Current spending as a Oklahoma 56.0 percentage of predicted Nevada 56.6 spending required to achieve North Carolina 56.7 national average test scores, Missouri 57.3 highest poverty districts, by South Carolina 57.4 state, 2016 Michigan 57.4 Idaho 57.5

Kentucky 57.7 Notes: Highest poverty districts Colorado 57.9 are those in the fifth quintile (i.e., Louisiana 59.4 the top 20 percent highest Pennsylvania 60.2 poverty districts in each state). Illinois 61.1 Estimates from the National Oregon 61.7 Education Cost Model (NECM), Arkansas 61.8 part of our State Indicators Virginia 61.9 Database. Ohio 63.9

Indiana 65.5 Variables used: Rhode Island 66.9 necm_predcost_q5 Florida 67.0 necm_ppcstot_q5 New Jersey 67.1

Utah 67.5

Maryland 67.8 South Dakota 68.6 Tennessee 69.4 Wisconsin 71.0 North Dakota 77.5 West Virginia 80.8 Massachusetts 82.0 Montana 85.7 New York 86.0 Connecticut 89.9 Kansas 90.7 Minnesota 91.2 Maine 95.5 States with values close to (or Alaska 96.2 greater than) 100% are those Iowa 97.7 in which spending on the Vermont 105.8 highest poverty districts Nebraska 113.2 approaches (or exceeds) a Delaware 121.0 level adequate to achieve New Hampshire 137.9 Wyoming 139.9 national average test scores.

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That said, somewhat surprisingly, there are five states with “adequate” spending levels (i.e., actual spending is greater than 100 percent of predicted required spending), even in their highest-poverty districts. And there are another four within 10 percentage points of the required amount. In only one of these nine states — Wyoming — are the actual test scores among the highest-poverty districts higher than the national average (these outcome gaps are not presented in Figure 6, but are presented in Figure 7). In the majority of states, in contrast, actual spending is far short of predicted requirements, including seven states in which actual spending is less than half of the estimated required amount. In other words, in most states, the resources expended by the highest-poverty districts are well below what would be required for these students to perform at average levels, and in some states, actual spending is but a small fraction of the estimated requirement.

It bears repeating, however, that these predicted required increases apply to outcome gaps that vary by state. States in which actual testing outcomes among the highest-poverty districts are further below the national average will, according to the model, obviously have to spend more to achieve those outcomes (as will, on a highly related note, states in which districts in each poverty quintile are poorer than their counterparts in other states in the same quintile).

It follows, then, that even states which spend relatively high amounts on education might still have to spend more to achieve average test scores than states that spend less, if the testing outcomes in the former states are further below the national average. The typical district in the highest-poverty quintile in Wyoming and Vermont, for instance, still serves students who are, on average, less poor and score higher than their peers in the highest-poverty districts in New York or California. The spending gaps in the former states will therefore tend to be higher even if those states spend copiously on education.

In other words, adequate spending levels in one state may not be adequate in another state -– adequacy is a relative concept.

To getter a better sense of the actual “distances” involved here, we take a look at the relationship between spending gaps (the difference between required and actual spending) and outcome gaps (the difference between national average and actual test scores) in Figure 7. Here we present three scatterplots: one for the lowest-poverty districts, one for the middle- poverty districts, and one for the highest-poverty districts. Instead of expressing funding gaps as a percentage, as in Figure 6, the scatterplots present the gaps in U.S. dollars (on the horizontal axis). On the vertical axis in each scatterplot is the outcome gap – that is, the gap, expressed in standard deviations, in average test scores between the students in each poverty quintile and the national average for all students. Each state is represented by a red dot.

States located above the horizontal blue lines have test scores that are higher than the national average (for that specific poverty quintile), while dots below the lines have sub-average scores. Similarly, states to the right of the vertical blue line spend more than required for districts in that poverty quintile to achieve average scores, and states to the left spend less. Note that the scales of the axes differ between the three scatterplots.

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Highest poverty FIGURE 7

.05 Outcome Gaps by WY

NH Spending Gaps MA 0 UT KY IN DE Scatterplot of gap between ME VT NV ID TN MNIA FL state average test scores and NJ NC WA AR ND NE CO WI KS PAIL MOVAOH WVCT NY national average test scores GA

-.05 LA OKOR TX NM AND gap between predicted SCRIMD SD AZ MI AL MT required spending and actual MS Outcome gap (s.d.) Outcome gap CA spending, by selected poverty -.1 quintile, 2016

AK Notes: Blue lines within gaps -.15 -20000 -15000 -10000 -5000 0 5000 represent zero gaps. Poverty Funding gap ($) quintiles defined state-by-state. Estimates from National Education Middle poverty Cost Model (NECM), part of the

.1 State Indicators Database.

MA CT NJ Variables used:

NH necm_outcomegap_q1 .05 MN VT INOH NDNEPA RI necm_outcomegap_q3 MT IAKSWI WY SD KYWA necm_outcomegap_q5 NCID NV MDIL necm_fundinggap_q1 0 FL MEDE OKTN MO MI ARCOVA necm_fundinggap_q3 AZ SCUT NY GA WV necm_fundinggap_q5 TX LA OR Outcome gap (s.d.) Outcome gap NM AL MS CA -.05 AK

-.1 -5000 0 5000 10000 15000 Funding gap ($)

Lowest poverty In each scatterplot, states in the top right quadrant of the blue .15 lines spend more than the MA NJ predicted requirement and CT .1 achieve better than national- PA VT MN OH NHRI average test scores. The bottom IN IL WA WI MD KS IA NE left quadrant includes states that MI NY

.05 MT AZ NC ME spend less and get below- MOND DE GAUT IDOKCA SDCO TXTN KYAR VA average results. Note that axis FL

Outcome gap (s.d.) Outcome gap SC OR AL WY MS LA AK scales vary between the three 0 WV scatterplots. NM NV

-.05 0 5000 10000 15000 Funding gap ($)

As would be expected, given the research on school funding, the dots in all three graphs exhibit an upward sloping pattern, indicating a positive relationship between funding gaps and outcome gaps. That is, states that spend more than required achieve higher test scores relative to the national average.

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Consequently, looking at the horizontal and vertical blue lines, the vast majority of states in all three scatterplots fall into either: 1) the bottom-left quadrant (spending below predicted requirements and test scores below the national average); or 2) the upper-right quadrant (spending above requirements and test scores above the average). In the highest-poverty scatterplot (the plot on top), most states are in the former quadrant. In the lowest-poverty scatterplot (the bottom plot), most states are in the latter. And in the middle-poverty scatterplot, there is a roughly equal split.

This indicates, as was also suggested by Figure 5, that most states provide sufficient resources to their lowest-poverty districts and achieve above-average outcomes. The opposite is true, however, of the highest-poverty districts: they are underfunded vis-à-vis predicted requirements, and their students perform accordingly. For instance, Massachusetts, New Hampshire, and New Jersey tend to spend above requirements and achieve above-average outcomes, while other states, such as Mississippi and Alabama, spend less than required and exhibit accordingly low outcomes.

There, however, are exceptions to the general finding that states spend adequately on their lowest-poverty districts and inadequately on their highest-poverty districts. New Mexico spends so little on its lowest-poverty districts that students in these districts do not even achieve national average test scores. Spending in Mississippi’s lowest-poverty districts is similarly low, and its students barely exceed the average.

Conversely, in New York’s lowest-poverty districts, funding is far above the predicted requirement, but testing outcomes are much lower than would be expected from the overall relationship. This may be due in no small part to the fact that many suburban New York districts with relatively low-needs students spend exorbitantly, but do not achieve testing outcomes commensurate with this spending (a possible “ceiling effect”). Similarly, Alaska’s middle-poverty districts spend far more than the predicted requirements but still have test scores far below the national average. This may be attributed to the uniqueness of Alaska, where transportation, facilities, and other basic needs not accounted for by the variables available to researchers cost far more than they do in other states. As a result, spending is higher but outcomes are not.

On the whole, though, our measure of adequacy relative to common outcome goals indicates that the highest-poverty districts in most states spend substantially less than required to achieve average test outcomes, and perform accordingly, while the opposite is true of the lowest- poverty districts.

A progressive school finance system is one in which districts serving higher shares of children from low-income family backgrounds (all else equal) are provided greater resources than their counterparts serving students from higher-income families.

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Progressivity is therefore the comparison of resources between higher- and lower-poverty districts. In our system, it is calculated in one of two ways:

1. Substantial progressivity: The ratio of adjusted state and local revenue in higher-poverty districts (10, 20, or 30 percent poverty) to that of the lowest-poverty districts (0 percent poverty) within a given state.

2. Systematic progressivity: The correlation between revenue and poverty (labor market centered) among all districts within a given state.

Substantial progressivity compares adjusted revenue, within a given state, between otherwise similar districts at two different levels of poverty. As an example: The highest-poverty districts in a state may receive 30 percent more revenue than the lowest-poverty districts, while in another state, the highest-poverty districts may only receive 5 percent more revenue. We would say, then, that the first state is more substantially progressive than the other.4

In Figure 8, we present substantial progressivity ratios, by state. There are three ratios for each state: The ratio of adjusted revenue in districts with 10 percent poverty to districts with 0 percent poverty, the ratio of 20 to 0 percent poverty, and the ratio of 30 to 0 percent poverty. Ratios larger than 1 indicate progressivity -– that is, states allocate more revenue to their higher-poverty districts than they do to their lowest-poverty (0 percent) districts.

Note that the three values in each bar represent progressivity ratios at the 10:0, 20:0, and 30:0 poverty levels. The total length of each bar is simply the sum of the three, a rough measure of “total progressivity” that takes into account all three ratios.

Half of the states exhibit at least nominal progressivity, although, in several cases, such as New York, Oklahoma, Oregon, and Idaho, the ratios are so close to 1 that they are more accurately described as non-progressive (i.e., neither progressive nor regressive). In Alaska, Wyoming, and Utah, adjusted revenue among the highest-poverty districts is at least 60 percent more than it is for districts at 0 percent poverty.

At the other extreme, in Illinois and Nevada revenue is extremely regressive, with the highest- poverty districts receiving only a fraction of the revenue provided to districts with 0 percent poverty.

We might cautiously compare these ratios to the results presented in Figure 5, which provides estimates of how much spending would be required to achieve national average test scores. In Figure 5, required spending in the highest poverty districts is, on average, about 150 percent higher than in the lowest-poverty districts. From this perspective, even states that exhibit progressive revenue in Figure 8 may not be progressive enough.

4 Once again, our State Indicators Database includes progressivity measures not only for revenue, but also for other variables, such as spending and student/teacher ratios.

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0.00 1.00 2.00 3.00 4.00 5.00 FIGURE 8 Alaska 1.219 1.485 1.810 Substantial Wyoming 1.179 1.389 1.638 Utah 1.168 1.364 1.593 Progressivity Ratios Minnesota 1.106 1.223 1.353 Ratio of adjusted state and Nebraska 1.077 1.160 1.250 local revenue in 10/20/30 Delaware 1.063 1.129 1.200 percent poverty districts to Massachusetts 1.053 1.109 1.167 adjusted state and local Ohio 1.049 1.100 1.154 revenue in 0 percent poverty Tennessee 1.034 1.069 1.105 California 1.026 1.053 1.081 districts, by state, 2016 New Jersey 1.026 1.052 1.079 South Carolina 1.025 1.050 1.077 Notes: Values within the bars North Carolina 1.020 1.041 1.062 are progressivity ratios at each Wisconsin 1.020 1.040 1.060 poverty level (vis-à-vis 0 percent Georgia 1.019 1.039 1.059 poverty). Total length of bar is Colorado 1.018 1.036 1.054 the sum of the three ratios. Kansas 1.016 1.033 1.050 Mississippi 1.012 1.025 1.038 Variables used: Arkansas 1.012 1.024 1.036 predicted_slocrev0_ Vermont 1.007 1.014 1.021 predicted_slocrev10_ Kentucky 1.006 1.012 1.018 predicted_slocrev20_ New York 1.002 1.003 1.005 predicted_slocrev30_ Oklahoma 1.001 1.003 1.004 10% poverty Oregon 1.001 1.002 1.003 Idaho 1.000 1.001 1.001 20% poverty Indiana 0.999 0.998 0.997 West Virginia 0.998 0.997 0.995 30% poverty Pennsylvania 0.997 0.994 0.991 Louisiana 0.992 0.985 0.978 Michigan 0.991 0.981 0.972 Florida 0.991 0.981 0.972 Connecticut 0.988 0.976 0.964 Texas 0.985 0.970 0.956 Values over one indicate Washington 0.985 0.970 0.955 progressive education Rhode Island 0.983 0.966 0.949 New Mexico 0.983 0.966 0.949 funding – that is, moderate Iowa 0.982 0.965 0.948 and high poverty districts Maryland 0.979 0.959 0.938 receive more revenue than Montana 0.973 0.947 0.922 zero percent poverty Arizona 0.972 0.944 0.918 districts, all else being equal. South Dakota 0.971 0.943 0.916 The states toward the Virginia 0.964 0.930 0.897 bottom fund education Alabama 0.962 0.926 0.891 Hawaii 0.962 0.926 0.891 regressively – zero percent Maine 0.962 0.925 0.890 poverty districts actually New Hampshire 0.961 0.923 0.887 receive more revenue than Missouri 0.939 0.882 0.828 moderate and higher North Dakota 0.917 0.840 0.770 poverty districts. Illinois 0.884 0.781 0.690 Nevada 0.785 0.616 0.484

This aggregate state-level relationship, however, might hide underlying variation between districts. It is possible, for example, that a subset of the highest-poverty districts in a state receives extremely high revenue, while another subset receives only moderate revenue – that is, revenue is progressive overall but not for many districts. These variations might play out in complex ways across districts that have similar characteristics but receive different levels of school funding.

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Systematic progressivity measures the consistency of the relationship between poverty and funding, as represented by the correlation between revenue and poverty across all districts (revenue and poverty are centered around the labor market average to account for variation in labor costs and poverty). These correlations are presented, by state, in Figure 9.

-0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 FIGURE 9 Minnesota 0.625 Louisiana 0.408 Systematic Ohio 0.336 Progressivity Georgia 0.310 Within-state correlations Utah 0.287 between district state and Alaska 0.277 Kentucky 0.273 local revenue and district Massachusetts 0.238 poverty, by state, 2016 Delaware 0.232 New Jersey 0.228 Virginia 0.200 Notes: Hawaii not included Arkansas 0.196 due to its having only one Wyoming 0.170 school district. Revenue and Colorado 0.166 poverty are centered around South Dakota 0.163 (i.e., divided by) the average Wisconsin 0.159 of the district’s labor market. New Mexico 0.153 California 0.145 Variables used: Maryland 0.135 syst_prog Indiana 0.109 Pennsylvania 0.102 Nebraska 0.098 Montana 0.084 New York 0.045 Oklahoma 0.039 Washington 0.012

Maine -0.004 North Dakota -0.011 Kansas -0.016 Oregon -0.017 South Carolina -0.027 Michigan -0.029 Arizona -0.033 Mississippi -0.060 Idaho -0.065 Iowa -0.072 Positive numbers in the West Virginia -0.104 graph indicate that higher North Carolina -0.117 poverty districts tend to Vermont -0.120 receive more revenue Texas -0.126 (progressivity), whereas Connecticut -0.142 Rhode Island -0.162 negative numbers denote Missouri -0.176 the opposite (regressive Alabama -0.199 funding). The higher the Florida -0.216 number, the greater the Nevada -0.229 strength of this positive or Tennessee -0.256 negative relationship. Illinois -0.403 New Hampshire -0.415

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As was the case in Figure 8, roughly half of the states exhibit at least a nominally positive relationship between district revenue and poverty. Most states with relatively high substantial progressivity also exhibit relatively high systematic progressivity.

Even where the relationship is positive, however, virtually all of the correlation coefficients are modest at best – i.e., the relationship between revenue and poverty is generally weak. Part of this is due to the fact that school finance is, for lack of a better term, messy -– even in states where revenue is distributed progressively, on average, the association is far from tight. But it is also consistent with the results in Figure 8, which show that most states’ funding systems tend not to allocate revenue in a consistently progressive fashion.

In order to examine this generalization, in Figure 10 we present a rough illustration of national average progressivity in 2016. Each bar represents average state and local revenue (centered around the labor market mean) by poverty quintile. Once again, poverty quintiles are defined state-by-state, so this graph requires cautious interpretation, but it provides a good idea of the national picture when it comes to progressivity.

1.5 FIGURE 10

1.4 Progressivity of U.S.

1.3 Education Funding Average (labor market- 1.2 centered) state and local 1.1 revenue to districts, by 0.98 0.98 0.97 0.99 0.98 poverty quintile, 2016 1

0.9 Notes: Revenue centered around each district’s labor 0.8 market’s average. Averages weighted by quintile enrollment. 0.7 Poverty quintiles defined state- by-state. 0.6

0.5 Variables used: Lowest poverty Low poverty Middle poverty High poverty Highest poverty (District Indicators Database) ctr_slocrevpp povgroup

If revenue were distributed progressively, the bars would slope upward, whereas regressively- distributed revenue would be indicated by downward sloping bars. Instead, we see that the relationship between district revenue and poverty is almost perfectly flat.

It is important to note that the allocation of revenue is a state-level policy decision, and so national averages represent the results of 50 separate systems. That said, it is clear that the distribution of district revenue in the U.S., on average, is not progressive.

Moreover, unlike adequacy, in which capacity plays a significant role, progressivity is almost entirely a function of the policy choices that states make. The fact that so many states are either non-progressive or regressive is by design. Given the well-established fact that districts serving

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larger proportions of disadvantaged students will require more resources than more affluent districts to provide the same level of education quality, these results are troubling.

We now use our three core state measures to paint a simplified picture of the relationship between funding and outcomes:

1. State effort, combined with states’ capacity, drive state and local education revenue;

2. The progressivity of state and local systems allocates revenue depending on student need (e.g., poverty), which in turn determines per-pupil expenditures for districts at different poverty levels;

3. How these resources are spent, and whether they are sufficient to provide high-quality education to students in each district, determines adequacy.

Progressivity

State High poverty effort district spending

State K-12 State K-12 Medium poverty revenue spending district spending

State Low poverty capacity district spending

FIGURE 11 Illustrative Model of State School Finance Systems

We might conceptualize each state’s funding system as a “profile”: a representation of how effort, adequacy, and progressivity combine to determine how a state’s schools are funded. In Figure 12, we present three hypothetical state profiles.

The red lines in these profiles represent “adequate” funding, however defined (in our system we use nationally-normed test scores to determine adequacy). The blue lines represent actual spending. The horizontal axis represents student poverty.

State A is a progressive funding system. Total spending increases as student poverty rises (i.e., the blue line is sloped upward). Suppose, for the sake of this illustration, that there are an equal number of students served at each measured poverty level. This means that the total area underneath the blue sloping line represents total state spending for education. The triangle- shaped area, shaded in yellow, between the sloping blue line and the dotted line represents the degree of progressivity -– how much more districts spend the more economically disadvantaged students they serve.

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State A: High Spending, Progressive All else being equal, the steeper the blue spending slope, the larger the yellow area in the triangle; consequently, more funding is Adequacygap targeted at higher-poverty districts, making

Required spending the system more progressive. Note that in states with regressive systems (i.e., those in which higher-poverty districts actually spend Actual spending Progressivity fewer resources, on average, than lower- Spending poverty districts), the slope would be downward, and the area within the triangle would represent regressivity rather than progressivity. Total spending (area under blue slope) Total Student poverty The distance between the blue line, State B: Low Spending, Progressive denoting actual spending, and the red line, denoting adequate funding, represents the state’s funding gap. In reality, this gap almost always varies by poverty, but in our

Required spending illustrative profiles it is consistent across Adequacygap poverty levels, which means that the total area between the red and blue lines, shaded in light green, represents the total Spending amount of funding that would be required

Actual spending to achieve adequate outcomes. Progressivity

Total spending Total In State B, due to either effort or capacity (or both), revenues are lower than in State A, Student poverty and, thus, spending is lower -- the blue slope State C: Low Spending, non-progressive is further down in the graph. Note that progressivity has not changed (the area within the yellow triangle is just as large). There is, however, less revenue to go around

Required spending in State B, and so total spending (the total area underneath the blue sloping line) has

Adequacygap decreased markedly relative to State A. In addition, of course, the adequacy gap, Spending represented by the total area shaded in Actual spending light green, has also increased.

Total spending Total

Student poverty FIGURE 12 Illustrative State Finance Profiles

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This illustrates how two states might be similar in how they distribute education resources (progressivity), but differ drastically in terms of how much they spend, and thus in the degree to which that spending is or is not adequate.

Finally, consider a third and final hypothetical state profile, State C, in which the distribution of resources is neither progressive nor regressive -– that is, districts receive the same amount of funding regardless of their student poverty levels.

In this profile, the yellow progressivity/regressivity triangle has disappeared entirely, because there is no variation in spending by poverty –- i.e., spending is non-progressive. The total area underneath the blue line, however, is the same as it was in State B (although it is a different shape). State C, in other words, spends just as much total money on education as does State B, but the former allocates those resources in a manner that ends up having no relationship with student poverty. The adequacy gap -– the total area between the red and blue lines, shaded in light green -– is also unchanged, but the gap is now far larger for high-poverty than for low- poverty districts.

Just as two states might be equally progressive (or regressive) but spend different amounts, as illustrated by the comparison of StatesCIS Network A and members B, comparing hypothesize States that B and candidates C shows may how struggle the to converseThe CLASS is also rubric true: provides States mightassess spend their equal own amounts performance but differin part in because terms of as: 1)novices, the progressivity they may not of howdetailed those descriptors, resources are allocatedknow; whatand they2) how don’t (and know. whether) Candidates adequacy are still building varies bymental poverty. models Adequacysummarized and below,progressivity, for then,of mustwhat excellentbe considered teaching in looks tandem like, andwhen cognitive evaluating science state research financethe threesystems, dimensions because they are,suggests at least novices in theory, cannot independent. inquire into problems as effectively as experts within the Instructional due to their still shallow background knowledge on the subject.5 Similarly,Support effort domain alone in whichmight be a misleading measure of the quality of states’ finance systems. As Whatever the reasons for this mismatch, valid and reliable observational discussedcandidates, above, on average,larger, wealthier states may not need to put forth as much effort to achieve data becomes all the more important to better capture a candidate’s actual adequatescore lowest. resource levels as less-prosperous states. classroom abilities. And while it is unclear from current research what magnitude of change could be considered true growth on either measure, Content Understanding we will be able to better clarify the nature of the relationship between the We canThis construct dimension emphasizes a profile similar totwo these as the illustrative CIS Network models matures for each and statethe depth using of our our State data maturesIndicator with it. Database,a teacher’s but ability it would to draw not be feasible to present all 50 states’ profiles in this report. We instead encouragemeaningful, readers real-world to use the data visualization tools on our website, which include effort, adequacy, and progressivityconnections across profiles concepts, for each state.2. Contrary These toolsto widely can held be accessedconcerns about at: classroom management, http://schoolfinancedata.org/analyzefacts, and skills; the use of -data. teacher-candidates seem to excel in classroom organization – varied examples and non- examples to communicate yet they struggle to deliver rigorous instruction. about a concept; activation of prior knowledge and attention Teacher-candidates excelled in areas ranging from behavior management to misconceptions to help to efficient use of instructional time to an absence of negativity in students make connections; their interactions with students. These results at first glance seem to use of content-appropriate contradict the challenges we hear many novice teachers articulate related terminology; and multiple, We do not offer any state ratings or grades based on our three core indicators. The complexity varied opportunities for to classroom management. While it is possible that programs have and multidimensionalitypractice. of schoolresponded finance systems to classroom belies management simple characterization concerns and andintently boiling supported these systems down to one rating or a small set of ratings would at this point entail substantial subjective (and, in no small part, arbitrary) decisions. We are, however, exploring the possibility Change in Average CLASS Dimension Scores of designing and publishing a more holistic version of a ratings system in the future. 7 –0.7% CLASS Domain 6.71 6.66 Classroom Organization 4.4% 3.7% 6 4.9% 2.7% Emotional Support 3.9% 3.9% 5.79 5.83 5.49 5.58 5 5.25 Instructional Support 4.91 5.02 5.08 5.07 4.74 4.74 22 | The Adequacy and Fairness of1.8% State4.64 School Finance Systems | schoolfinancedata.org 4 2.3% 3.6% 4.0% 3.71 3.84 2.4% 3.35 3.49 3 3.30 3.19 3.24 3.03 2.81 2.65 2 Average CLASS dimension score Average

Administration 1 Administration 2 % Percentage point change on CLASS scale

Note: Results refect average change in CLASS dimension scores from the Upper Elementary and Secondary tools based on 436 observations from the 6 Network member programs with CLASS data across both administrations. The Negative Climate dimension is reverse coded: higher values indicate less negativity. Additionally, the Student Engagement dimension is not included within a specifc CLASS domain and is therefore reported separately. CLASS is scored on a 1-7 scale.

5 For more on this, see The Science of Learning at deansforimpact.org/resources/the-science-of-learning/

6 DEANS FOR IMPACT

In the meantime, we can use the core principles put forth at the beginning of this document as general guidelines for how to use our three core measures to evaluate state finance systems:

1. Effort: All else being equal, more effort is better, particularly for states with less capacity. Conversely, however, states with larger economies may not require as much effort as states with smaller economies.

2. Adequacy: In light of widespread agreement that educational outcomes in the U.S. must improve, we assert, as a general principle, that allocating more resources to schools is better. However, states should also provide resources to schools that are commensurate with achieving common outcomes or improvement toward those outcomes.

3. Progressivity: States’ allocation of resources should be progressive -– i.e., districts serving more high-needs students should receive more revenue. The optimal degree of progressivity, however, might depend on factors such as the amount of inequality of education outcomes (for example, states with large achievement gaps might allocate resources more progressively).

These general recommendations illustrate the interconnectedness of our core indicators, and how they provide a nuanced but clear picture of school funding. Even the most progressive school funding systems, for example, might still provide inadequate resources, just as the highest- spending states overall might be short-changing high-needs students if their systems are regressive. Moreover, the lowest-capacity states may simply be incapable of achieving adequate funding regardless of effort.

Wyoming is a good example of the importance of state context. The state’s effort, adequacy, and progressivity are among the best in the nation. But one critical factor our measures cannot capture is that the state is able to spend a lot on education and other public services due to unusually high revenue from natural resources. In addition, while there are a handful of extremely high-poverty districts in Wyoming, they are small districts. The rest of the districts in the highest-poverty quintile in Wyoming are not as poor as their highest-poverty counterparts in other states. These two factors, in addition to a progressive revenue allocation system, mean that even the highest-poverty districts in Wyoming receive ample funding, and have test scores that are actually above the national average. The same funding situation applies to Wyoming’s lowest-poverty districts, but these districts barely meet the national test score average, because the districts in this quintile are not as affluent as their counterparts in the lowest-poverty quintile in other states.

New Jersey’s school finance system is also high-effort and very progressive, and its funding is adequate for all poverty quintiles except the highest-poverty quintile, where funding falls far short of the estimated required amount. The latter finding is most likely due to the extreme poverty in New Jersey’s highest-poverty districts (including districts such as Camden and Newark), which push up the cost of achieving national average outcomes. In other words, even though New Jersey’s high-poverty districts receive more funding than its low-poverty districts, the additional revenue is not sufficient to make up for the needs of the state’s extremely poor districts.

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Mississippi, in contrast, is a low-capacity state that, despite relatively high effort, could not possibly raise enough revenue to meet the needs of its even middle-poverty districts, to say nothing of it highest-poverty districts, which are among the poorest in the nation. The state does allocate revenue in a moderately progressive fashion, but its low capacity means that funding is woefully inadequate in virtually all districts, regardless of poverty. As a consequence, testing outcomes among districts in even the highest-poverty quintile, barely surpass the national average.

These examples illustrate how each core indicator should be evaluated with an eye on the others, and each state’s specific characteristics, measurable and unmeasurable, should be considered when evaluating their systems.

In addition to our three core indicators of effort, adequacy, and progressivity, the State Indicators Database also includes a number of important state-level variables that focus on how states actually spend those resources.

1. Teacher/non-teacher wage competitiveness: Comparison of teachers’ wages to wages of other professionals in the same state, controlling for factors such as age and education.

2. Predicted staffing ratios: Teacher-per-student ratios by district poverty adjusted for district size, regional wage variation, and population density. Can be compared with high- and low-poverty districts in each state.

3. Predicted class size: Average class size by district poverty, for both departmentalized and self-contained classes, adjusted for district size, regional wage variation, and population density. Can be compared with high- and low-poverty districts in each state.

4. Teacher salary competitiveness: Ratio of actual to predicted teacher salaries, adjusted for degree, experience, and labor market, by poverty (poverty as a percentage of poverty within the labor market). Can be compared with high- and low-poverty districts in each state.

5. Coverage and charter market share: The number of school-aged students enrolled in public schools as a percentage of all school-aged children, as well as total charter school market share by state (percent of all public school students enrolled in charter schools).

6. Income-based early childhood schooling gap: The number of 3- and 4-year-olds from low-income families enrolled in school as a percentage of the total number of 3- and 4- year-olds enrolled in school.

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the three dimensions suggests novices cannot inquire into problems as effectively as experts within the Instructional due to their still shallow background knowledge on the subject.5 TheseSupport measures, domain which in which are all part of our State Indicators Database, can be used independently Whatever the reasons for this mismatch, valid and reliable observational or in coordinationcandidates, on average, with our three core indicators. One might, for example, examine the data becomes all the more important to better capture a candidate’s actual relationshipscore lowest. between progressivity of resources and progressivity of class sizes or staffing ratios. classroom abilities. And while it is unclear from current research what

magnitude of change could be considered true growth on either measure, Content Understanding we will be able to better clarify the nature of the relationship between the ReadersThis can dimension also download emphasizes our Districttwo Indicators as the CIS Database, Network matures with includes and the over depth 200 ofdistrict our datalevel matures variables. with it. Manya of teacher’s these abilityare used to draw to construct our state indicators, but can serve as useful measures in their own right. Thesemeaningful, data, real-world along with supporting documentation, are all freely available at: http://schoolfinancedata.orgconnections across concepts,. 2. Contrary to widely held concerns about classroom management, facts, and skills; the use of varied examples and non- teacher-candidates seem to excel in classroom organization – examples to communicate yet they struggle to deliver rigorous instruction. about a concept; activation of prior knowledge and attention Teacher-candidates excelled in areas ranging from behavior management to misconceptions to help to efficient use of instructional time to an absence of negativity in students make connections; their interactions with students. These results at first glance seem to Thereuse is aof largecontent-appropriate and growing body of high-quality empirical research showing that the amount contradict the challenges we hear many novice teachers articulate related and distributionterminology; and of multiple, school funding has a profound effect on student outcomes. Moreover, while to classroom management. While it is possible that programs have the issuevaried of opportunities how to spend for money remains contentious, the centrality of funding to improving responded to classroom management concerns and intently supported outcomespractice. is slowly gaining political consensus in all but the most extreme ideological camps. The idea that “money doesn’t matter” is no longer defensible. Change in Average CLASS Dimension Scores But acting on this empirical and political consensus requires data and measures that are likewise 7 –0.7% widely acceptedCLASS as Domaincredible, and can serve as the “raw materials” for important debates about 6.71 6.66 Classroom Organization 4.4% 3.7% how to6 improve states’ K-12 education funding programs. 4.9% 2.7% Emotional Support 3.9% 3.9% 5.79 5.83 5.49 5.58 School5 finance systems, and their measurement, are highly complex, and often difficult to 5.25 Instructional Support 4.91 5.02 5.08 5.07 4.74 4.74 understand for policymakers, parents,1.8% and4.64 the general public. Our goal here is to make school 4 2.3% 3.6% funding data and analysis4.0% more accessible to all stakeholders. Based on our extensive 3.71 3.84 2.4% experience collecting, analyzing,3.35 and disseminating3.49 finance data, and in collaboration with 3 3.30 3.19 3.24 3.03 2.81 other researchers2.65 and organizations, we have designed a range of indicators that we believe capture2 the complexity of school finance in a manner that is useful and comprehensible to Average CLASS dimension score Average researchers and non-researchers alike. 1 In this report, we have presented data from three of the measures included in our system. These 0 are the threeAnalysis &that Instructional we feel Quality provide of Content the mostInstructional useful Regard picture for Teacher of the Positive fiscal resourcesBehavior Productivity raisedNegative and Student Inquiry Dialogue Feedback Understanding Learning Student Sensitivity Climate Management Climate Engagement allocated by state’s school finance systems:Formats effort,Perspectives adequacy, and progressivity. Our results indicate that, while states vary widely on all three measures, most states finance systems are Administration 1 Administration 2 % Percentage point change on CLASS scale either non-progressive (high- and low-poverty districts receive similar funding) or regressive (low- Note: Results refect average change in CLASS dimension scores from the Upper Elementary and Secondary tools based on 436 povertyobservations districts from thereceive 6 Network less member funding). programs Moreover, with CLASS while data across there both are, administrations. to be sure, The laudable Negative Climate dimension is exceptions,reverse coded: the higher results values of indicate our modelsless negativity. of how Additionally, much the states Student would Engagement have dimension to spend is not in included order withinto a specifc CLASS domain and is therefore reported separately. CLASS is scored on a 1-7 scale. achieve national average test scores (i.e., adequacy) indicate that the vast majority of states

spend5 For moreonly on a this, fraction see The of Science estimated of Learning requirements, at deansforimpact.org/resources/the-science-of-learning/ particularly among their highest-poverty districts.

6 WeDEANS are making FOR IMPACT all of our data and its full documentation, updated annually, freely available to the public, and will be publishing a series of reports and policy briefs on an ongoing basis using these data. It is our hope and intention that this collection of data and measures will become an important tool in constructing better school funding systems.

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Baker, Bruce D. 2017. How Money Matters for Schools. Palo Alto, Calif.: Learning Policy Institute.

Baker, Bruce D. 2018. Educational Inequality and School Finance: Why Money Matters for America’s Students. Cambridge, Mass.: Harvard Education Press.

Baker, Bruce D., Weber, Mark, Srikanth, Ajay, Kim, Robert, and Atzbi, Michael. 2018. The Real Shame of the Nation: The Causes and Consequences of Interstate Inequity in Public School Investments. New Brunswick, NJ: Rutgers University.

Jackson, C. Kirabo. 2018. Does School Spending Matter? The New Literature on an Old Question: Cambridge, Mass.: National Bureau of Economic Research.

Reardon, Sean F., Ho, Andrew D., Shear, Benjamin R., Fahle, Erin M., Kalogrides, Demetra, and DiSalvo, Richard. 2017. Stanford Education Data Archive (Version 2.0). Palo Alto, Calif.: Stanford University. http://purl.stanford.edu/db586ns4974.

Taylor, Lori. 2016. The Education Comparable Wage Index. College Station, Texas: Texas A&M University. http://bush.tamu.edu/research/faculty/Taylor_CWI/

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Appendix Information on Data Sources Table A Indicator Variable(s) Source Direct expenditures on elementary Tax Policy Center Data System and secondary education Effort Gross State Product Bureau of Economic Analysis Personal income Bureau of Economic Analysis U.S. Census Bureau – Small Student poverty (district) Area Income and Poverty Estimates U.S. Census Bureau – Public Local and state revenue Elementary-Secondary Adequacy (progressivity) and current Education Finance Survey (equated spending (adequacy) per pupil (F33) spending) and Education Comparable substantial Regional wage variation Wage Index (Lori Taylor) progressivity NCES Common Core of Data District size/enrollment – Local Education Agency Universe Survey U.S. Census Population Population density Estimates Adequacy Nationally-normed test scores Stanford Education Data (equated (2013-2015) Archive (SEDA) spending relative Estimated required and actual National Education Cost to common goals) spending, by poverty quintile Model (NECM)1 U.S. Census Bureau – Public Elementary-Secondary Local and state revenue per pupil Education Finance Survey Systematic (F33) progressivity2 U.S. Census Bureau – Small Student poverty (district) Area Income and Poverty Estimates Notes: This table includes only data sources for variables presented directly in this report. For more information on these variables and their sources, see the documentation for our State and District Indicator Databases.

1 For more details on all the variables used to generate NECM estimates, see Baker et al. (2018)

2 Both revenue and poverty are centered around the mean of the district’s labor market

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Appendix Adjusted State and Local Current Spending Table B by Poverty Level and State, 2016 District poverty level State Name 0% 10% 20% 30% Alabama $ 8,046 S 8,236 $ 8,430 $8,629 Alaska 10,493 13,957 18,565 24,694 Arizona 5,699 6,125 6,582 7,073 Arkansas 7,644 8,178 8,748 9,358 California 8,379 8,942 9,542 10,183 Colorado 7,710 8,174 8,665 9,185 Connecticut 16,737 16,508 16,283 16,061 Delaware 10,961 12,286 13,770 15,434 Florida 7,338 7,663 8,003 8,358 Georgia 7,591 8,052 8,540 9,058 Hawaii 12,324 12,615 12,913 13,218 Idaho 5,353 6,067 6,877 7,795 Illinois 12,297 11,956 11,624 11,302 Indiana 7,780 8,422 9,116 9,868 Iowa 8,787 9,403 10,062 10,766 Kansas 7,568 8,554 9,669 10,929 Kentucky 8,198 8,556 8,929 9,319 Louisiana 9,643 9,779 9,918 10,058 Maine 11,338 11,296 11,254 11,212 Maryland 11,684 12,060 12,449 12,851 Massachusetts 12,623 13,310 14,035 14,799 Michigan 8,561 9,060 9,587 10,146 Minnesota 8,517 10,107 11,995 14,236 Mississippi 6,686 7,112 7,565 8,047 Missouri 8,889 8,848 8,808 8,767 Montana 8,291 9,337 10,515 11,840 Nebraska 8,301 9,982 12,004 14,435 Nevada 12,302 9,418 7,210 5,519 New Hampshire 12,825 13,454 14,114 14,806 New Jersey 15,036 15,163 15,291 15,420 New Mexico 7,121 7,666 8,253 8,885 New York 18,519 18,628 18,737 18,847 North Carolina 6,897 7,393 7,925 8,495 North Dakota 10,140 11,446 12,921 14,587 Ohio 8,666 9,389 10,172 11,021 Oklahoma 6,036 6,596 7,208 7,878 Oregon 8,298 8,829 9,393 9,994 Pennsylvania 13,676 12,868 12,107 11,391 Rhode Island 13,863 13,750 13,638 13,526 South Carolina 7,743 8,440 9,198 10,025 South Dakota 6,881 7,895 9,059 10,395 Tennessee 7,210 7,583 7,976 8,388 Texas 6,783 7,215 7,675 8,164 Utah 4,922 6,095 7,549 9,349 Vermont 15,703 16,608 17,564 18,576 Virginia 9,816 9,783 9,750 9,717 Washington 8,966 9,668 10,424 11,240 West Virginia 9,124 9,623 10,148 10,703 Wisconsin 9,432 10,010 10,623 11,274 Wyoming 13,199 15,013 17,076 19,423 Notes: Estimates adjusted for district size, population density, and regional wage variation. Variables used: predicted_curexpp0_; predicted_curexpp10_; predicted_curexpp20_; predicted_curexpp30

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(ln) = b0 + b1Statei + b2LaborMarketij +

b3CWIij + b4 ij + b5PopulationDensityij +

b6 Enrollment ij + b7 ij + b8Scaleij + b9Povertyij + b10SchlTypeij + b11 ij + e

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