CONGRESSIONAL RESEARCH SERVICE LIBRARY OF CONGRESS Hllllfi niversi I Imlminniilii I 010-10393 soufl - c llllll 6 ll 9 ml 6 mb I lllll 9 ELEMENTARY AND SECONDARY SCHOOL FINANCE: CONGRESSIONALLY HANDATED STUDY RINI BRIEF NUMBER MB80220 AUTHOR: Jordan, K. Forhis Education and Public Welfare Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGINATED ggzggggg DATE UPDATED gggggggg FOR ADDITIONAL INFORMATION CALL 287-5700 0805 CBS- 1 T I EBBGZZG UPDATE-G8/05/80 l§§E§_2§El!l2lQ! Immediate issues concerning the congressionally mandated study of elementary and secondary school finance are (1) whether or not the appropriations committees in the House and Senate are going to permit reprogramming of funds so that the study may be initiated, and (2) what level of funding will be provided. The purpose of the study is to address congressional issues of longer duration. Those longstanding issues are related to (1) the fiscal needs for education in the 1980s, (2) the impact that changes in State school finance statutes have had on different types of school districts and their capacity to provide educational programs and services for different pupils, and (3) the role that the Federal Government should have in financing elementary and secondary schools. EAEEEBQQED- During the 1970s, various interest groups tried to achieve greater equity in the allocation of funds for public elementary and secondary schools. Over 20 States enacted legislation designed to reduce the disparities in expenditures per pupil in their State school support programs. (The net effect of this effort typically has been to raise the spending level for nreviously low spending districts and to reduce the disparity in expenditures 1 slowing the growth rate for high spending districts.) During the 1970s the states also enacted legislation to improve or extend services to various special populations, e.g., handicapped, bilingual, and disadvantaged children. Even though only a limited number of States have enacted State-funded programs for all of these special populations, some observers have contended that State and Federal programs often cannot easily be coordinated and that some Federal and State efforts could be viewed as duplicative because of Federal requirements that current expenditure levels be maintained and that Federal funds be used to supplement existing programs. Another factor related to the interest in reexamining the pattern for financing schools is that an increasing number of States are eligible to consider Federal impact aid payments as local resources in the calculation of the State equalization payments to local school districts. when State statutes require this process, and the State is determined to be eligible by the Department of Education, local districts find that the Federal funds are used to displace State payments to the local districts. Tmese conditions have contributed to the emphasis on securing more information concerning the status of elementary and secondary school financing. is preparation for the Education Amendments of 1978 (P.L. 95-561), 2 days of hearings were held on the issues of how the States distribute funds for elementary and secondary education, what progress the States had made in achieving in-State equalization, and what role, if any, He Federal Government should assume in encouraging a more equitable llstribution of these funds. Much of the attention in the hearings was given to the status of existing State school support programs, relative ability and effort of the States to support education, and direct and indirect roles that the Federal Government could assume in financing elementary and secondary V schools. The focus of the hearings was on H.R. 1138, one of the measures introduced in the 95th Congress that would have provided general Federal aid CRS- 2 HB8022G 9PDATE*G8/O5/ O for the operation of local schools. This legislative proposal was not reported by the Committee on Education and Labor, but the proposal an; hearings appear to have contributed to the introduction of amendments to H.B. 15 (P.L. 95-561) that resulted in the congressionally mandated school finance study and the advisory panel. Questions were raised during the hearings concerning the impact of the school finance reform activities of the 1970s on the quantity and quality of education available to various types of school districts and pupil populations. some witnesses testified that the Federal Government should encourage equal expenditures per pupil within and among States, but there was little agreement as to the amount of funds that should be invested in this activity. Questions were raised about the adequacy of available data and about the differences of opinion concerning the operational definitions of such terms as equity and equalization as related to fiscal resources available for the education of children in elementary and secondary schools. From the hearings, it was concluded that presently available data were not sufficient to aid in the development of Federal education funding policy. Further, during the hearings, a consensus appeared to develop that more thought should be given to ways in which the Federal Government could assist the states in their efforts to achieve equalization. Providing for a comprehensive study appeared to be especially timely since authorizations for the major Federal efforts for elementary and secondary education will be expiring in the mid-1980s. The committee report noted that Federal aid for education had become an accepted fact and that many States had begun to provide funds for educational activities first funded by Federal programs‘ these two conditions suggested that the time had come for a re-examination of the Federal role in elementary and secondary education. The Education Amendments of 1978 contained provisions for three separate but related school finance activities. First, biennially, the National Center for Education Statistics is required to develop composite profiles of each State's level of equalization of resources for education. Second, authorization was provided for grants to States to assist them in revising their systems for financing elementary and secondary education. Included in this authorization were provisions for the development of model programs and materials to assist the States and the establishment of a national dissemination center on fiscal equalization for States. Third, the Department of Education is to conduct a series of school finance studies that will include an analysis of recent trendsajn school finance, standards used to measure fiscal equalization, impact of State and Federal categorical programs, effects of school finance reform on large urban and poor rural school districts and special student populations, effects of reform on the cost and quality of education and on curricular and extracurricular activities, advisability of Federal aid to private schools, and alternative roles for the Federal Government in financing elementary and secondary schools . The National.Center for Education Statistics has proceeded to develop the profiles with funding through the regular budget of the agency. Those grants authorized to states and providing for the dissemination activities have no+ been implemented, for the Administration did not request the requisit appropriations in either the FY80 or the F181 budget. Funds for the research studies are to come from the research setaside for Title I of the Elementary and Secondary Education Act and other available funds. The Department of Education has determined that this authorizing language requires a reprogramming of funds and is seeking congressional approval from the CBS’ 3 EWOZZO UPDATE-O 3/05/80' gpropriate House and senate committees. The research activities in the third component are to be conducted by the Department of Education, but the Education Amendments of 1978 also call for a presidentially appointed 15-member advisory panel whose function is to provide the secretary and the Congress with advice and counsel from the public on financing of elementary and seconary schools. The panel consists of representatives of public and nonpublic schools, State and local officials, citizens, and school finance experts. Among the members are a governor, state legislators, a chief State school officer, local government officials, an elementary school teacher, private and public school superintendents, leaders of the two major teacher organizations, researchers, and college professors. The chairperson of the Advisory Panel is Victoria Lederberg, a member of the State legislature in Rhode Island, and the staff director is Bill Byers from the Advisory Commission on Intergovernmental Relations. 2919192522: 9: the §y.1§.1.£.1.en The evolution of the school finance study plan actually occurred in two stages. Following the signing of the statute in November 1978, the first stage officially began. For several weeks prior to the signing of the legislation, an ad hoc group in the Administration had been involved in discussions about the research agenda and management of the study. After the ill became law, a study staff was selected and this staff interacted extensively with policy analysts and researchers in the Administration and also with economists and school finance researchers from private consulting firms, public interest groups, and major universities. The plan went through at least two drafts during this period that began in January 1979 and continued the remainder of the year. This earlier plan was more extensive than the final plan in terms of complexities of the research, types of data, and budgetary reguirementsl An additional problem with the first study plan was that the research activities would have extended beyond the deadlines for reporting to the Congress. Over 1,500 persons reportedly were invited to comment on the plan. Comments were received in the form of letters, interviews, meetings, invited conferences, and extended written critiques. The initial period of plan development was longer than expected, and was further extended by the delay in appointment of the advisory panel. some interest was expressed in submitting the study plan to the Congress before the appointment of the advisory panel, but congressional staff advised that submission be delayed until the advisory panel was appointed and provided with an opportunity to review and comment on the plan. The first meeting of the advisory panel was in October 1979. The second stage in the development of the study plan began with the first meeting of the advisory panel. Various members of the panel expressed reservation about portions of the study plan. The panel passed 16 separate wtions concerning the plan; items of concern included the magnitude of the study, degree of attention to private schools, need for greater attention to the Federal education programs funded from agencies other than the Department of Education, and various relationships between the Federal, State, and local governments in delivering educational programs and services. The revised study plan developed during the second stage places less reliance o the collection of new data and greater reliance on utilizing the results of CBS“ fl fiB30220 UPDATE-03/05/80 studies by other sponsors that have recently been completed or are currently underway. Background discussions in the plan also suggested that the results should be of greater value to the Congress because the research will be oriented to Federal policy issues. The bdget for research work in the current plan is estimated to total 311 million as contrasted with $16 to $20 million in the first draft. The study plan has grouped the research activities into six broad areas —~ the context of school finance, current Federal policies and their effects on education, prospects for support of elementary and secondary education, equity in education finance, finance of private education, and options for Federal roles and programs. In contrast to» the sequential design of the original plan under which more of the research activity would have been interrelated and interdependent, the current study plan permits various research activities to be conducted simultaneously with findings drawn together in the development of the final report to be submitted to the Secretary and the Congress. ' Studies on the gen§e;§_g§_§ghQe;_finange:will address the evolution of Federal involvement in education, recent issues and policy developments, theoretical concepts such as adequacy and equity, and consideration of ‘alternative school finance futures. The study component dealing with current §ede;el_ pe;ieie§_ eed_ gheig effeege on education willcinclude studies of the development of current programs; a summary of existing programs; interactions between Federal, State, and local educational efforts; local.school district participation i: education programs administered outside of the Department of Education; at literature summary on Federal program implementation and effectiveness; and an analysis of the implications of knowledge_about school effectiveness for Federal education programs. The section on the pgg§pee§§_ §e;_ egppegg will focus on trends and projections of fiscal resources with the development of models to» simulate the effects of changing policies and conditions. studies related to eqgigy will consider intrastate and intradistrict allocations as well as interstate equity questions. These studies will include macro data analysis as well as case studies of the impact on educational curriculum and service costs. Consideration will also be given to the fiscal and distributional impacts of alternative policies and conditions. Research efforts related to pgiye;e_ egheelg will include descriptive studies of the characteristics of these schools, Federal and State assistance to those schools and levels of program participation, alternative patterns of support, and legal and constitutional issues. Provisions are also made for a household survey of attitudes toward publiczand private schools. The final group of studies will focus on el§e§getiye_ §e§e§egie§_ £9; §ege;el_pgeq§ee§, simulation of different program options, and formulation and assessment of alternative Federal policies. Two interim study reports are to be submitted in December of 1980 and 1981 with the final report being submitted in December of 1982. This deadline for the subnission of the final reports is especially critical because Congress will begin considering reauthorization of the Elementary and Secondary Education Act at that time. The advisory panel is to submit interim reports CRS- 5 fiB80220 UPDATE-08/05/80 1d its final report according to the same schedule. In addition to its reports, the advisory panel is to submit its comments on the study reports, recommendations, and legislative proposals in February of 1981, 1982, and 1983. Neither the reports of the study group nor those of the panel are to be submitted to any outside review prior to their being submitted to the acongress. Views and recommendations of the advisory panel are also to be submitted to a White House Conference on Education authorized in The Education Amendments of 197a. .1E§§P.§§ Various issues and concerns have been expressed about different aspects of the study. Among items discussed are (1) the role of the advisory panel, (2) scope of the mandate, (3) need for the study, (4) level of funding, and (5) paperwork burden. The legislative history of the actions leading to the authorization of the advisory panel provides insight into the lack of clarity concerning the role of the advisory panel in the school finance study. In the authorizing legislation passed by the House, the study was to be conducted by the National Institute of Education and no provision was made for an advisory inel. During the deliberations of the Committee on Education and Labor, an anendment was offered that would have provided for the appointment of an advisory panel to direct the study, but the amendment was defeated. rhe Senate—passed version of the Education Amendments of 1978 provides for an advisory panel that would be responsible for conducting the study and developing a procedure, in consultation with the National Center for Education statistics, for collection of uniform school finance data. As finally passed by the Congress, the measure provides for an advisory panel in the Department of Education, but responsibility for the conduct of the studies is vested with the Secretary. Both the panel and the Secretary are to submit independent reports to the Congress. Even though the advisory panel does not have official control over the design and conduct of the studies, the study plan indicates that ‘the necessity for interaction was clarified when congressional staff members said that the study plan should not be submitted to the Congress until the advisory panel had formally commented on the plan. In retrospect, it appears as though the advisory panel has only an "advisory" role relative to the studies, but that the study staff has a responsibility to listen and respond to the "advice" of the panel. éeope of the C2n9£2§§i2ne;.§endete During the deliberations on H.R. 15 in the Subcommittee on Elementary, Secondary, and Vocational Education, amendments providing for a national study of school finance were introduced. The first set of amendments focused on judicial and legislative developments, effects of equalization efforts on different types of local school districts and pupil populations, measures of equalization, inpact of Federal education programs on State and local efforts CBS- 5 HB80220 UPDATE—08/O5/80 to fund programs and services, and alternative Federal roles in the financing of elementary and secondary schools. Subsequent amendments in the Subcommittee and also in the Committee on Education and Labor called for studies of the impact of school finance equalization on the cost and quality of education and also on the availability of curricular an extracurricular ictivities. The Senate Committee on Labor and Human Resources added study elements related to effects of equalization on tax burden by level of government, type of revenue, and family income of taxpayer; participation by local school districts in education programs not administered through the Department of Education; a broad charge related to studies of pivate elementary and secondary schools; and a projection of the prospects for adequate financing of elementary and secondary schools through 1989. lead f21.=_2t.ne-.S.2I_1.i2.1 During the 1970s, an extensive number of publicly and privately supported studies of school finance were conducted at the State and national level. At the beginning of the decade, reports from the National Educational Finance Project (funded through Title V of the Elementary and Secondary Education Act) were being completed, and President Nixon's Commission on School Finance conducted comprehensive studies of financing elementary and secondary education. Throughout the decade, various States became involved in school finance research, and advocacy and interest groups have also analyzed the current system. Through the former Office of Education, funds were provided for States tot conduct studies and develop a plan for financing their schools; most of these efforts referred to as "Section 842 Studies” were completed in 1978 and 1979. (These research activities were authorized in Section 8H2 of P.L. 93-380.) They also added to the volumes of research on school finance. However, most of these efforts focused on equity and related issues about school finance programs in individual States. The primary missing component in the total review of financing elementary and secondary schools was the manner in whfich the various Federal educations programs interacted with State and local funding. Congressional testimony also revealed that most of the research had.taken place before the recent changes in many State statutes for financing schools and that only limited research had been conducted that would provide information about the impact of school finance reform legislation on school districts, schools, students, and taxpayers. The two major concerns in the legislation mandating the school finance studies were the impact of reform efforts on the various education constituents and the analysis of existing Federal education programs in terms of their impact upon educational delivery systems. From this analysis, judgments may be undertaken on the approriateness of current Federal education programs and possible modifications. Level Qt Fgnéins The original research study design called for an estimated total budget of approximately $25 million over the 3-year period of the study with up to $20 million for research work. This level of funding was questioned by the advisory panel, but the panel also made suggestions for additional studies in some areas. much of the early design work on the study was completed before CRS- 7 HB80220 9PDATE—08/05/80 ecretary Hufstedler was appointed in December, 1979, ht she reportedly has made the study one of the priorities of the new Department of Education. " Following review of the original design and receipt of the reactions from the advisory panel, the scope of the study was reduced by the study staff to the present level of approximately $14 million for all activities and about $11 million for contracted research. One problem with national studies of any locally conducted governmental service is the necessity to- have information about the topic under examination. with 50 State systems of education, approximately 16,000 local public school districts, and an unknown number of private schools, the potential data-gathering or paperwork problem is obvious. However, additional data requirements for all States and localities will be reduced because of the lower budget and time constraints under which the study is to be conducted to meet congressional deadlines and because portions of the research on local districts can utilize the national data recently assembled by the National.Center for Education Statistics. conceivably, the study staff night develop cooperative relationships with one or more States and local school districts in which mutual research interests could be pursued. If these conditions should naterialize, requirements for additional data would largely be limited to case studies on particular issues in a sample of school districts.