State policymakers have little say over how federal education dollars are allocated and used, so this policy brief focuses exclusively on state and local funding.

While school finance systems vary considerably across states, school districts generally rely on four distinct revenue streams that can be broadly categorized as follows:

State Funding Formula Aid is a state’s primary method of delivering education dollars to school districts. A combination of state and local dollars fund most state formulas through a foundation program. Arizona, for example, employs a funding formula where each student receives $4,775.27, using weights to augment that funding for students with greater needs. Additionally, each school district in the state is assumed to tax at a certain rate locally to contribute toward that per-student amount, with the state filling in the gaps when districts can’t cover the full amount locally.

Outside-the-Formula State Aid are allotments that often come in the form of restricted-use grants for specific purposes such as reading intervention, textbooks, and staffing positions. These are funded exclusively by the state. Continuing with the example of Arizona, the state allocates various grants outside of its core formula for items like school safety and teacher salary increases.

Local Operating Levies are local education dollars raised by school districts to support operating expenses such as teacher salaries, classroom supplies, and routine maintenance. These often require voter approval, but school boards sometimes have the discretion to determine levy amounts within set limits. Georgia, for instance, allows school district boards to levy local property taxes above and beyond their formula contribution to support school operations.

Local Capital Levies are local education dollars raised by school districts to support capital expenses such as construction, equipment, and building improvements. These usually require voter approval and are often used to pay off bonded debt.

Importantly, every state education funding formula is heavily based on school district enrollment. While states vary on how enrollment-sensitive their funding systems are, overall, school districts in every state generally gain or lose funds when enrollment increases or decreases, all else being equal.

This column is an excerpt from Public Education Funding Without Boundaries: How to Get K-12 Dollars to Follow Open Enrollment Students

The post How K-12 education is funded appeared first on Reason Foundation.

“Everyone knows that our schools are chronically underfunded,” said state Rep. Matthew D. Bradford (D-Montgomery County) in a recent press conference concerning Pennsylvania election results. 

But data show Pennsylvania already spends plenty on public education.

Between 2002 and 2020, Pennsylvania’s real education revenue skyrocketed by 49%, going from an average of $14,434 spent per student to $21,524 per student, placing the Keystone State at fifth-highest in the country for K-12 per-student funding. During this time, Pennsylvania’s public school enrollment plummeted by 11.7%, but the state still increased its share of inflation-adjusted funding by some $3.4 billion.

Incredibly, these figures don’t even account for more recent spending and enrollment trends, including record-breaking education appropriations in each of the past two years and a nearly 3% public school enrollment decline since the start of the COVID-19 pandemic.

In short, more money is being spent on fewer students – but where are all those dollars going?

For starters, they aren’t boosting teachers’ take home pay. Despite historic funding levels, Pennsylvania’s teachers are taking home less on average, as real salaries fell by 3.7% between 2002 and 2020. Instead, the state’s education dollars increasingly go to two main expense categories: employee benefits and new staffing positions.

From 2002 to 2020, real per-student spending on employee benefits – which includes expenses such as teacher pensions and healthcare – grew by 173.6%. This growth exceeded that of every state’s except Hawaii and Illinois, and Pennsylvania now spends $5,656 per student on benefits alone. A key driver of this spending is the increasing cost of paying for pension debt. Pension debt, also known as unfunded liabilities, is the shortfall in assets needed to pay for retirement benefits already promised to current and future retirees.  

Research by the Reason Foundation shows that Pennsylvania’s teacher-pension unfunded liabilities grew from $8.22 billion in 2002 to $49.28 billion in 2020, due in part to unrealistic investment-return projections combined with insufficient contributions. As a result, education dollars have increasingly gone to cover this shortfall, with employer pension contributions now accounting for 34% of payroll expenses, according to the retirement-research organization Equable Institute.

Additionally, Pennsylvania’s public schools have been on a hiring binge despite losing over 207,000 students in the last two decades. In 2020, there were 4.9% more teachers and 15.8% more non-teachers compared to 2002 levels, as a total of 23,321 staff members were added to public school payrolls. Non-teachers – which include support staff, administrators, and instructional aides – now outnumber teachers in the state.

The merits of these staffing trends are debatable, but there’s no doubt that public schools have doubled down on hiring and have more staff in schools than ever before.

With the state’s Commonwealth Court set to rule on a years-long school finance case, there will be calls for even more public school spending. But Shapiro would be wise to focus on structural reforms that make better use of education dollars, starting by addressing teacher pension costs and eliminating a hold-harmless provision in the state’s funding formula that both Republicans and Democrats recognize as unfair.

He should also continue to back Lifeline Scholarships, which give some students access to funding for educational expenses, including private school tuition. Shapiro strayed from Democrats’ typical opposition to school-choice programs by voicing his support for the scholarships, and doing so may have given him a boost this November. A recent poll by EdChoice shows that most parents favor this type of policy. 

Finally, the governor-elect should push for changes to the state’s antiquated public school student-transfer law, which makes it hard for students to access available seats across school district boundaries. A recent study by the Reason Foundation gave Pennsylvania’s student-transfer policy low marks, hitting only one-of-five best-practices benchmarks. States such as Wisconsin, Arizona, and Florida all have open-enrollment policies that make it easier for students to exercise public school choice.

At a time when public school enrollment is plummeting and funding stands at record levels, Pennsylvania policymakers need to find ways to put public education dollars to better use for students.

A version of this column was previously featured in RealClear Pennsylvania.

The post Pennsylvania public schools need funding reform, not more money appeared first on Reason Foundation.

Foundation formulas take different forms across states (and not every state uses one), but generally operate using three basic steps:

STEP 1: Determine School Districts’ Revenue Entitlement: The state calculates how much revenue each district will receive, commonly referred to as a “revenue entitlement.” States have varying approaches, but formulas are often based on some combination of enrollment counts, student characteristics, and district characteristics.

STEP 2: Determine School Districts’ Local Share: The state calculates the share of each district’s revenue entitlement that can be covered by local revenue sources—often property taxes. Usually, this calculation is based on a uniform local property tax rate that is either assumed or mandatory for districts to levy. The higher a district’s local wealth (i.e. its ability to pay), the greater its local share will be. Nebraska’s formula, for example, assumes each school district will impose a local property tax rate of $1 for every $100 in assessed valuation.

STEP 3: Determine School Districts’ State Aid: A school district’s local share is then subtracted from its revenue entitlement to determine its state aid. If a school district can’t raise its full revenue entitlement from local sources, the difference is backfilled with state aid. Generally, most school districts require state aid to meet their revenue entitlement under a foundation program. However, many states have at least some districts that are off formula, meaning they raise their entire revenue entitlement locally and don’t receive any state aid. Off-formula districts tend to be property-wealthy and are generally unaffected by the state’s funding formula.

This column is an excerpt of Public Education Funding Without Boundaries: How to Get K-12 Dollars to Follow Open Enrollment Students.

The post How state education funding formulas work appeared first on Reason Foundation.

States are increasingly enacting open enrollment policies that give students options across school district boundaries. But this is only half the equation. Policymakers must also ensure that education dollars follow the child to the school of their choice, a concept referred to as funding portability. Without sufficient portability, school districts have weak financial incentives to enroll transfer students and may limit opportunities for families. Non-portable dollars also reinforce district boundaries, which lock families into public schools based on where they can afford to live, not what is necessarily best for their children.

The primary culprits inhibiting funding portability are districts that are entirely locally funded due to high property wealth, and both local education funding and state funding streams that aren’t sensitive to changes in enrollment.

New Hampshire provides a valuable case study that illustrates these problems. In total, 39 of the state’s 237 districts are off-formula and don’t generate additional state aid when new students enroll. Moreover, nearly two-thirds of New Hampshire’s non-federal education dollars are generated locally and aren’t portable across school district boundaries. As a result, most districts only receive a fraction of their average per-pupil spending amounts when enrolling additional students, which weakens financial incentives for an open enrollment program.

Ideally, school finance systems should “attach” dollars directly to students so that all state and local education funds flow seamlessly across district boundaries. States vary considerably with how close they are to this vision, and the first step for policymakers is to take stock of funding portability in their state. From there, states can take three different pathways to improve portability: comprehensive school finance reform, targeted solutions, and creating a distinct funding mechanism that supports open enrollment. While all solutions are worth considering, the most direct approach is to follow Wisconsin’s lead by establishing a stand-alone funding allotment for public school open enrollment. Three best practices can help policymakers craft this funding policy.

Uniform: Start with a Single Statewide Base Per-Pupil Amount

Open enrollment funding policy should center around a single per-pupil amount that follows students across school district boundaries, an approach Wisconsin has successfully employed for more than two decades. This provides robust transparency while also guaranteeing that all school districts are operating under the same set of financial incentives. There are numerous ways to set this amount, but policymakers should strive to maximize the share of overall state and local per-pupil funding attached to students.

Responsive: Account for Students’ Needs

Policymakers can attach weights or additional per-pupil amounts to students with disabilities and other categories of need. For example, Wisconsin provides a greater per-pupil amount for students with disabilities, plus reimbursement for costs that exceed this amount up to a specified limit, which is paid for by students’ home districts.

Incentivize: Tap into Local Education Dollars

Ideally, states should ensure that local dollars follow the child across school district boundaries. One way to do this is to deduct a per-pupil amount from home school districts’ state aid for each student who transfers out and allow it to follow the child across district lines. Tapping into local dollars ensures that districts’ incentives are maximized, and this approach negates the need for district-to-district billing of local dollars, which is undesirable because it reinforces the idea that dollars belong to districts, not the students.

Fundamentally, establishing portable education funding moves states closer to a boundaryless public education system—an idea first pioneered by Milton Friedman. In its purest form, this means eliminating residential assignment and funding students directly so that they can choose whatever option best fits their needs.

Download the full policy brief: Public Education Funding Without Boundaries

The post Public education funding without boundaries: How to get K-12 dollars to follow open enrollment students appeared first on Reason Foundation.

Nationwide, inflation-adjusted average teacher salaries have been nearly flat since the turn of the century, going from $64,986 in 2000 to $65,090 in 2021. But there’s significant variation among states, with inflation-adjusted pay increasing by 10 percent or more in nine states — including Washington, Massachusetts, and Oklahoma — and decreasing by 20 percent in Indiana over that same timeframe. Average teacher salaries now range from less than $48,000 in Mississippi to nearly $88,000 in New York.

Many factors play into salary trends, with cost-of-living contributing to differences across states. Less noticeable is that the U.S. teacher workforce has shifted over time with proportionally fewer veterans in classrooms, making longitudinal comparisons imperfect. But when average salaries are broken down by experience level a similar picture emerges: Teacher salaries have barely outpaced inflation.

None of this means that taxpayers haven’t done enough to support public schools. Between 2002 and 2020 real U.S. public education spending increased by 25 percent per student and now stands at over $16,000 per student on average. In total, per-student education revenue increased in 49 of 50 states from 2002 to 2020 with ten states boosting funding by more than 33 percent.

In short, more education money hasn’t resulted in larger paychecks for teachers in many states. For instance, Illinois has increased education funding by 55 percent per student, yet average teacher salaries have declined, with similar trends playing out in Connecticut, Pennsylvania, and elsewhere.

So where are education dollars going, if not to boost teacher salaries?

For starters, real spending on employee benefits — a Census reporting category that includes teacher pensions, health insurance, and other expenditures — increased by 79 percent between 2002 and 2020, going from $1,907 per student to $3,406 per student. Salaries accounted for 74 percent of teacher compensation in 2004 they now account for just 65 percent, mainly due to ballooning retirement debt.

But pension benefits haven’t gotten better for many teachers, they’ve only grown more costly. For years, most states have failed to adequately fund their retirement obligations, with the public retirement research organization, Equable Institute, estimating a nationwide shortfall of $878 billion in teacher pension plans. As a result, an average of 20 percent of public school payrolls are eaten up by employer pension contributions, most of which goes to cover debt costs that don’t benefit current teachers.

Public schools have also been on a hiring binge in the last couple of decades as the latest available data show staff growth — nearly 7 percent for teachers and 20 percent for non-teachers — outpaced a modest 2 percent bump in public school student enrollment nationwide. This trend is especially pronounced in Pennsylvania, where over 23,000 employees have been added to the state’s public-school payrolls despite a 12 percent enrollment dip since 2002. Such a stark contrast leaves no doubt that public schools have prioritized staffing up over teacher salaries, a costly strategy with little student performance benefits to support it.

Differences in average student-teacher ratios between states also highlight the inherent tradeoff between teacher salaries and class sizes. All else being equal, states forgo increases to teacher pay when they use new education funds to decrease class sizes or to keep class sizes small. State variations in average class size might explain why lower-spending states with above average student-teacher ratios like Nevada and Utah pay teachers better than their spending rankings would suggest, while relatively higher spenders with low student-teacher ratios like West Virginia and North Dakota pay teachers less.

To be sure, there isn’t a simple answer to whether the country’s 3.2 million teachers are underpaid as compensation is more than just salaries and local context matters. But any meaningful policy aimed at delivering more dollars to teachers requires fixing the structural problems diverting education funding away from salaries. At the state level, this involves tackling the pension debt crisis by paying down legacy costs, like Arizona and Michigan have done in recent years. School-district leaders should also reconsider spending priorities, which might mean standing up to teachers’ unions that push for expanding membership rolls.

With the amount of money being spent on K–12 education in most states, there’s no reason for teacher salaries to be an issue. But without structural reforms, there’s little reason to expect that more funding will deliver the payday that teachers expect and voters want.

A version of this article previously appeared in National Review.

The post Why teacher salaries are flat as school spending soars appeared first on Reason Foundation.

For state policymakers looking to give families more public school options, open enrollment data transparency reform is low-hanging fruit and a key building block of sound open enrollment policy.

Open enrollment reporting promotes accountability by helping to ensure school districts uphold fair policies that welcome transfer students. Data reporting can also give policymakers the information they need to refine their student transfer laws and serve as a parent-driven indicator of school district performance by highlighting the state’s in-demand school districts.

Wisconsin shows what’s possible when a state combines good open enrollment policy with robust data transparency. The state currently has over 70,000 students attending schools outside of their assigned school districts. Each year, Wisconsin’s Department of Public Instruction produces a report for the governor and legislature detailing key open enrollment trends for each school district, including the number of transfer applications received, transfer students enrolled, and a summary of transfer student denials.

So what can we learn from Wisconsin’s open enrollment data?

First, it’s clear that families are looking to leave the state’s lowest-performing school districts. Table 1 shows the bottom 10 school districts in Wisconsin as measured by 2018-19 accountability ratings. All but one of the school districts had more students applying for seats in other districts than applying to come in that same year. In Milwaukee’s case, the difference was staggering. For every non-resident student who applied to transfer into the Milwaukee Public Schools, about seven of the school district’s students applied to leave—7,619 in total.  

Table 1

Next, looking at Wisconsin’s 10 highest-performing school districts in Table 2, the trend is flipped, with all 10 school districts receiving a net positive number of transfer applications. Importantly, just because a school district is delivering on test scores doesn’t mean they meet the needs of all families, which is why even some high-performers are losing some students to open enrollment. Chart 1 provides additional context for these figures, showing school districts’ net transfer applications as a share of total enrollment.

Table 2

Chart 1

It’s clear that a strong open enrollment policy coupled with transparent reporting can deliver a powerful form of parent-drive accountability that can’t be replicated by merely reporting test scores or other metrics commonly used in state accountability systems.

But Wisconsin’s data also shows that far too many students are still being denied transfer opportunities. In the 2020-21 school year, 44,264 students applied to transfer to a different public school district, but 8,331 students were denied their transfers, mostly for space and reasons related to special education.

Students shouldn’t be denied opportunities simply because of their home address or disability status, and policymakers should do more to ensure that public schools welcome all comers. The first step to addressing this problem is knowing and admitting it exists. Unfortunately, due to the lack of information reported, policymakers in most states are operating without any open enrollment data at all.  

Chart 2

State policymakers across the country should ensure open enrollment data are readily available on their state education agency’s websites. Requiring this via statute is a straightforward policy reform that can pay huge dividends for students. For a good start, states can simply follow Wisconsin’s open enrollment playbook.

The post Improving K-12 open enrollment transparency is low-hanging fruit for state policymakers appeared first on Reason Foundation.

O’Rourke has repeated this claim in radio and newspaper ads targeting rural Texas areas. But Texas’s K-12 education spending data do not support O’Rourke’s allegation. Between 2002 and 2020, inflation-adjusted education spending in Texas increased by 16%, going from $11,473 per student to $13,346 per student.

Much of this funding increase went to staffing costs, with spending on employee benefits — a Census Bureau data category that includes teacher pensions and healthcare expenses — rising by  24% per student. Capital expenditures, such as building construction and equipment, have shot up by nearly 18% per student since 2002.

While it’s true that Texas trails the national spending average by $2,716 per student, that is partly because Texas is a relatively low-cost-of-living state. Legal rulings have also prompted policies restricting what single school districts can raise locally for their own operating costs, such as salaries and classroom supplies.

These policies mean wealthy school districts can’t drive up the statewide spending average as easily as they do in other states, resulting in a more equitable funding system that complies with the state’s constitution. For example, Austin, where property values are among the highest in the state, was required to send over $762 million of its local education-focused property tax money to other school districts across the state last year.

O’Rourke’s defunding claims also ignore important school finance legislation Abbott signed into law in 2019 with overwhelming bipartisan support. House Bill 3 made critical changes to the state’s funding formula and added $6.5 billion in new education spending, including bumps to the minimum teacher salary schedule and other assurances that increase teacher compensation.

The reform also directs more money to low-income students and rural school districts while creating new allotments for early childhood education, bilingual education, and students with dyslexia. These changes target a greater share of the state’s education funding to students who need it most.

Rather than cutting funding, Abbott and taxpayers have given Texas public schools a financial boost since the beginning of the COVID-19 pandemic. Education funding is typically tied to student attendance levels, but widespread enrollment losses during the pandemic would’ve decimated many school district budgets if not for key policy tweaks Texas made to help stabilize public school funding. For example, the Houston Independent School District lost 6.1% of its enrollment in 2020-21 — 12,759 students in total — but rather than losing 6% of its funding, its total revenues increased by 1.7%.

“Providing this adjustment to the 2021-22 school year will ensure school systems have the funding they need to retain the best and brightest teachers and provide quality education to all public school students across Texas,” Abbott said.

Putting it all together, there is nothing in Abbott’s record indicating his recent endorsement of school choice is aimed at defunding public education. Spending on K-12 education has increased since he took office, and many would agree that Texas’s school finance system is better than the one he inherited. If anything, taxpayers might question whether these investments were put to good use and why public schools aren’t being held financially accountable for enrollment losses incurred in the past couple of years.

While O’Rourke is criticizing Abbott’s embrace of school choice, many education advocates might ask the governor and Texas Republicans, who have controlled every branch of state government for 20 years, why it has taken this long to start providing more educational choices for families.

But, belated as it may be, if Abbott follows through on promises to let students attend “any public school, charter school, or private school with state funding following the student,” that’s not defunding schools. Instead, that’s finally an effort to give all families access to additional educational opportunities.

A version of this column previously appeared in the Washington Examiner.

The post Has Texas defunded public schools? appeared first on Reason Foundation.

In recent years, states such as Oklahoma, Kansas, and Florida have adopted cross-district open-enrollment policies that give families easier access to schools outside of their residentially assigned districts. But Texas has lagged behind these leaders in reforming its student-transfer law (only a small percentage of students successfully cross district lines) and is missing out on potentially massive benefits from open enrollment.

We found, for instance, that when given the opportunity, Texas families are more likely to transfer to higher-performing school districts. In the 2018-2019 school year, about 45,000 students transferred to a school district rated at least one letter grade above their residentially assigned district; 91% of students who left C-rated school districts enrolled in districts with an A or B rating.

We also found evidence that student transfers are promoting parent-driven accountability, with school districts rated C, D, and F losing nearly three times more transfer students than they gained. In total, 18,956 students transferred out of these underperforming school districts, showing that parents will vote with their feet when given options. 

These findings align with research in other states. For example, an analysis of Florida’s open-enrollment policy found that over 90% of transfer students opted to attend A- or B-rated school districts, while a Wisconsin study showed a positive link between districts’ proficiency rates on state exams and the number of transfer students they enrolled.

These trends are encouraging, but Texas is another story. Our findings show that only 2.6% of students in the state attended school in a non-assigned district in the 2018-29 school year. By comparison, states such as Wisconsin and Colorado—which, unlike Texas, have broader open-enrollment policies in place—boast transfer rates of 9% and 6%, respectively.

Texas should be doing more to provide families with opportunities across district lines. State policymakers can remove barriers for families by pursuing three policy reforms that would modernize the student-transfer law.

First, lawmakers should adopt a comprehensive open-enrollment policy that ensures all families have access to available seats, regardless of where they live. Currently, not all school districts welcome transfer students, and those that do often consider academic achievement such as test scores and course grades in admissions decisions. States such as Florida, Arizona, and Wisconsin have protections in place so that districts can reject transfer applications only for legitimate reasons such as capacity or expulsions.

Next, policymakers should remove financial obstacles that put open enrollment out of reach for low- and middle-income families. Many Texas school districts charge transfer tuition, even though Texas’s education-funding system provides additional revenue for transfer students to the receiving school. For example, in the 2022-23 school year, Lovejoy Independent School District will charge transfer students $9,000 while collecting an estimated $7,220 per student from the state, double-dipping on the backs of families.

Lastly, while Texas’s system for reporting data on student transfers is more transparent than most states, it still has room for improvement. Policymakers should ensure that the Texas Education Agency reports key data, like the reasons school districts rejected transfers, and also require school districts to post their open-enrollment policies online.

Each year, Wisconsin’s Department of Public Instruction produces an open-enrollment report for the governor and legislature, detailing key data for every school district such as the number of transfer applications received, transfers approved, and reasons for rejection. This report shines a light on school district practices and has helped lawmakers improve the state’s policy over time.

Open enrollment would not only unleash opportunities for families but would also prove popular with voters and build upon other school-choice policies that Texas is considering. A recent poll conducted by EdChoice and Morning Consult found that 76% of parents overall, 72% of Democrats and 69% of Republicans support cross-district open enrollment. 

Open enrollment is low-hanging legislative fruit. Texas policymakers should act accordingly in 2023.  

A version of this column previously appeared in RealClearEducation.

The post How Texas can improve the state’s student transfer law appeared first on Reason Foundation.

With annual revenues exceeding $18.7 billion, college sports are big business. Power Five schools alone — the 69 programs competing in the NCAA’s most prestigious conferences — rake in about $8.3 billion each year from various sources, such as the Big 10’s new seven-year media deal valued at $1.2 billion annually.

But players receive nothing in the form of wages, despite the fact that the average economic value of a Power Five football player is estimated to be $1.3 million over a four-year collegiate career. That’s because the NCAA has long held that its athletes are amateurs, not professionals, strictly forbidding most forms of compensation and threatening players and programs with harsh penalties for violating its bylaws. 

This model was dealt a blow in last year’s NCAA v. Alston decision, when Supreme Court Justice Brett Kavanaugh’s concurring opinion raised antitrust concerns, observing, “The NCAA’s business model would be flatly illegal in almost any other industry in America.” While the unanimous decision was limited in scope, finding the NCAA can’t limit education-related payments to athletes, Kavanaugh warned of an “overdue course correction.” 

The Alston decision pushed the NCAA to establish a temporary NIL policy and at least 28 states have passed laws enshrining collegiate athletes’ rights to earn NIL compensation so they can pursue endorsement deals, autograph sales, and other money-making ventures that were previously banned by the NCAA. But the NCAA’s interim NIL policy and guidance clings to its amateurism fairy tale, making it difficult for players to get the best deals possible. 

Notably, the NCAA still prohibits recruits from communicating with third-party boosters, and NIL agreements can’t be tied to enrollment at a particular institution. This makes it hard to shop around for the best deal and has resulted in one-sided contracts with unfavorable terms for athletes, according to reports by The Athletic. Under the rules, deals must be based on the value each player brings to an NIL agreement, meaning they can’t get extra money just because they’re the star quarterback or a heralded recruit.

The NCAA, it seems, is hell-bent on capping how much players can earn from NIL, claiming the rules promote competitive balance by putting schools on an even playing field for recruits. But considering donations account for 24 percent of Power Five college athletic revenues, it’s more likely they just don’t want competition for this $2 billion funding pie that helps fund elaborate facilities, multimillion-dollar salaries, and expanding bureaucracies. 

For example, the University of Alabama is making $600 million in upgrades to its athletics facilities and recently awarded Nick Saban with a $93.6 million contract. While boosters have plenty of cash to throw around, NIL deals could eat into athletic department budgets, threatening their lavish status quo.   

But the NCAA knows its rules may be on shaky legal grounds, which is why they’re lobbying Congress for a federal policy that would preserve their monopoly. Ultimately, they’re seeking an antitrust exemption to prevent an onslaught of lawsuits once they start enforcing NIL restrictions with sanctions and other penalties. 

For anyone who spends their fall Saturdays watching football, inviting the likes of House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) to regulate college sports is a recipe for disaster. Americans need less — not more — politics in their lives. But more importantly, federal legislation likely would codify an unjust system that shortchanges players to the benefit of the NCAA and its 1,100 member colleges and universities. 

Rather than looking to Washington for solutions, the NCAA should embrace the free market by letting boosters and players agree to whatever financial terms work best for them. This is how the rest of society organizes itself and collegiate athletes should be no different. 

A version of this column previously appeared in the Hill.

The post The NCAA should embrace the free market when it comes to player compensation appeared first on Reason Foundation.

Reason Foundation’s 2022 K-12 Education Spending Spotlight includes both real and nominal U.S. Census Bureau data for all 50 states dating back to 2002, which is the starting point for continuous state-level summary figures.

Reporting from the 2020 fiscal year is the most recent school finance data available at this time. Reason Foundation’s K-12 Education Spending Spotlight data analysis and dashboard with 2019 data can be found here.

2020 Data Highlights

• Inflation-adjusted per-pupil education revenue increased in 49 of 50 states between 2002 and 2020. 
• While spending went up, 22 states plus the District of Columbia saw declines in student enrollment during this time.
• Between 2002 and 2020 total education spending on employee benefits (such as pensions and healthcare) in the U.S. nearly doubled from $90 billion to $164 billion a year. 
• Overall inflation-adjusted spending on salaries grew much less – from $342 billion to $372 billion – in this time period.
• Per-pupil education spending on total benefits increased by an average of $1,499 while per-pupil spending on total salaries increased by $492 between 2002 and 2020.
• All 50 states saw real per-pupil spending increases on total benefits between 2002 and 2020. During that time, 14 states saw benefit spending grow by over 100% and two states saw growth of 200% or more. 
• In 2020, total education system long-term debt surpassed $500 billion, reaching a total of $505 billion in the U.S. Between 2002 and 2020 long-term debt grew by $188 billion or $3,798 per student.

K-12 Education Revenue Growth

Nationwide, inflation-adjusted per-pupil K-12 revenues grew by 25%—or by $3,211 per student—between 2002 and 2020. During this time, per-pupil revenues increased in all but one state (North Carolina). Sixteen states, plus D.C., increased their education funding by 30% or more during this time period. In the most recent year, education spending grew by $8 billion across the United States, for an average increase of $169 per-pupil from the 2018-2019 school year to the 2019-2020 school year. 

The below map displays the rates at which states have increased their education spending since 2002. Users can explore various data and national education spending trends using the drop-down and slider in the interactive map.

Well before the pandemic decimated student enrollment numbers, many states were already losing students. The District of Columbia and Michigan both saw over a 24% decline in students between 2002 and 2020. Overall, 22 states and D.C. experienced enrollment declines between 2002 and 2020. All these states, with the exception of Michigan, increased their total inflation-adjusted education spending during that time.

In per-pupil terms, every state except North Carolina saw an increase in education revenue from 2002 to 2020. Table 1 below shows the rates at which states have increased education spending since 2002 and the changes in student enrollment figures during that time period. 

Table 1: Changes in Per-Pupil Revenue from 2002 to 2020 by State

State dollars accounted for the largest slice of the K-12 funding pie at 47% in 2020. Figure 2 displays how education funding sources, as well as total funding by state, have changed over time. Select a state from the drop-down menu to find state-specific metrics over time.

Instruction and Support Service Spending

Instruction and support services are the largest spending categories for schools each year. These categories cover everything from teacher salaries to school counseling services. Between 2002 and 2020, instruction expenditures increased from $6,818 per-pupil to $8,176 per-pupil. Interestingly, salaries only accounted for about $226 of this per-pupil growth while spending on benefits, such as retirement and health care, soared by $995 per-pupil during that time

Inflation-adjusted support service expenditures grew from $3,841 per pupil in 2002 to $4,815 per pupil in 2020. Salaries accounted for $268 of this growth while spending on benefits increased by $473 per pupil. 

Between 2002 and 2020, the total amount spent on instructional and support benefits in the U.S. nearly doubled from $87 billion to $159 billion a year (or from $1,840 per pupil to $3,307 per pupil).  Overall spending on instructional and support services salaries grew from $331 billion to $360 billion in the U.S. in this time period (from $7,014 per pupil to $7,509 per pupil). 

Between the 2018-19 and 2019-20 school years, increased spending on instructional benefits far outpaced spending increases on salaries in some states. In Hawaii, spending on instructional benefits increased by more than double the increased spending on instructional salaries—benefits went up by $246 per pupil while salaries increased by $120 per pupil from year to year. In Kentucky, spending on instructional benefits went up by $9 per pupil between the 2018-19 and 2019-20 school years, while spending on salaries actually decreased by $96 per pupil.

A Closer Look at Support Services

Importantly, the support services category covers a wide range of expenditures. To get a better understanding of how these categories further break down, readers can examine the financial accounting manual published by the National Center for Education Statistics. 

Note that spending increases between 2002 and 2020 weren’t disproportionately absorbed by schools or general administration, which grew from $629 to $758 per pupil and $224 to $265 per pupil, respectively. The biggest increase in support services came from growth in pupil support services, which increased from $566 per pupil to $864 per pupil. This category includes non-instructional items such as psychological, guidance, and health care-related expenditures. It also includes paraprofessional services offered to students with disabilities such as speech pathology and occupational therapy. You can view a breakdown of support service spending for every state using the drop-down in the right-hand corner of the below visualization. 

Also note that the biggest single cost under this group is operation and maintenance, which accounted for 25% of all support services in 2020. This includes items like building repairs, security, and groundskeeping. Spending on this category actually fell between the 2019 and 2020 school years, reversing the nine-year trend of continued growth.

More on Total Benefit Growth

A substantial cost-driver for K-12 education is spending on benefits. Total benefits are a Census Bureau expenditure category that includes retirement contributions, pension costs, health care insurance, retiree health care insurance, workers compensation, and other expenses for school employees. Disaggregated figures aren’t available, but research suggests that teacher pension costs are responsible for a substantial share of the observed growth in benefit expenditures. Inflation-adjusted total benefit costs rose dramatically between 2002 and 2020. Every state saw real per-pupil spending increases on total benefit expenditures. 14 states saw benefit spending grow by over 100% and two states, Illinois (200%) and Hawaii (260%) saw growth of 200% or more. 

Nationally, the average expenditure on benefits was $3,406 per-pupil in 2020, up 79% since 2002.

Table 2: Total Benefit Spending by State

Education Debt Obligations by State

The Census Bureau also reports how much short and long-term debt school districts across the county have on their balance sheets each year. In 2020, K-12 long-term debt surpassed $500 billion, reaching a total of $505 billion.  Between 2002 and 2020 long-term debt grew by $188 billion or $3,798 per student in real terms. It is important to note that these totals do not include any pension or other post-employment debt states and schools owe. 

Conclusion

Reason Foundation’s K-12 Education Spending Spotlight can help state policymakers and other stakeholders make informed policy decisions that best serve students. The full 2019 Spending Spotlight with data for all 50 states is available here. 

Additional analysis of 2020 education spending can be found below:

• How K-12 support services spending can divert education funding from instruction
• Increases in education spending have little correlation with actual student counts, data show

Methodology

The educational finance data used for this report come from Census Bureau’s Annual Survey of School Style Finances (F-33 survey). The full F-33 survey reports figures at the district level – the data used in this report come from the aggregated state summary tables which are aggregated by Census. Due to differences in state financial accounting methods, Census makes adjustments to make the state data more comparable.

These charts and underlying data utilize Census reported fall enrollment to calculate per pupil figures. This is consistent with Census reported per pupil figures, except for “Total Instruction” and “Current Spending”. For these categories, at the per pupil level, Census pulls out certain categories (e.g., payments to charters and private schools for “Total Instruction”).

A consequence of this is that in the “K-12 Instructional Spending” chart there are instances (Rhode Island and D.C.) where the Total Instructional figure is less than the sum of instruction salary and benefits. While the total figure is consistent with Census reporting, this results in a negative “Other” value which is calculated from the other three variables (Other = Total – (Salary + Benefits)).

The inflation-adjusted figures are scaled with the Consumer Price Index for All Urban Consumers (CPI) using monthly figures that are averaged over the fiscal year (July to June). Inflation-adjusted figures are in FY 2020 dollars.

The post K-12 Education Spending Spotlight: An in-depth look at school finance data and trends appeared first on Reason Foundation.

Student-centered funding can take many forms but typically sets a base funding amount for regular-program students, with additional weights added for classifications such as English language learners, special education, and poverty. Under this system, a student would generate the same level of funding regardless of geographic location or what type of school they attend. Student-centered funding is based on four principles: 

Fairness: Education dollars should be allocated based on the needs of individual students. 

Transparency: School finance formulas should be streamlined and easy for parents, teachers, and school administrators to understand. 

Portability: Education funding should not be tethered to a student’s zip code and should follow the child to the school of their choice.

Flexibility: Education leaders who are closest to kids are in the best position to decide how education dollars are spent.

The ideal student-centered funding system would follow a path like this:

In many states, relying on local property tax revenue to determine student funding causes serious disparities across school districts. Not only does this put kids on uneven playing fields, but it can also make it difficult to implement open enrollment programs that give families options across school district boundaries.

The below chart highlights key differences between outdated education funding models and student-centered funding.

Student-based budgeting also refers to district-level funding reforms that district administrators can adopt to increase funding fairness, transparency, and flexibility. Student-based budgeting systems can empower school principals and other school leaders to make localized decisions for their students. 

In 2013, California’s Local Control Funding Formula (LCFF) streamlined more than 30 categorical grants into a single weighted-student formula. A study by Education Trust-West found that this change helped drive substantial improvements in equity. LCFF remains a popular reform—in a survey of superintendents, 82 percent agreed that it is leading to greater alignment among goals, strategies, and resource allocation decisions, and 74 percent indicated that the financial flexibility enabled their district to match spending with local needs. A separate survey found that, of those familiar with the law, 72 percent of likely voters and 84 percent of parents viewed it positively.

Hawaii implemented a student-centered funding plan in the 2006-07 school year. The state continues to fine-tune its weighted-student formula in response to school leaders, community stakeholder concerns and other issues as they arise. However, since its introduction, the weighted-student formula has provided a much more equitable, needs-responsive, and transparent way to fund Hawaiian schools while boosting community engagement in key decisions about their local schools.

Most recently, Tennessee passed a law to use a new student-centered funding formula to fund school districts in the state. Before the reform was signed into law in the spring of 2022, Tennessee was one of only nine states that still employed a resource-based formula for allocating education dollars to school districts. This approach put the focus squarely on inputs such as staffing ratios rather than students’ needs and was mired in layers of complexity that reduced transparency.

Policymakers should keep in mind that there isn’t a one-size-fits-all solution to school finance, and weighted-student formulas should be based on the unique needs of a state’s students.                               

In fact, for open enrollment policies to work effectively schools must be fairly compensated for accepting transfer students. Research from California’s public schools shows it’s critical to get the financial incentives right in order for school districts to accept transfer students. Student-centered funding models that attach education dollars to students are one way to ensure this happens. 

Across the United States, public education systems are increasingly becoming untethered to zip codes via policies like charter schools, public school open enrollment, private school choice, and innovative learning methods like micro-schools. As student populations become more mobile and choose to attend a school outside of their residentially-assigned public school district, it will be crucial for states to make student-centered funding reforms.

Reason Foundation’s Christian Barnard outlined how this problem is impacting Arizona:

“This school-finance system is causing a number of issues for students and schools because it hasn’t been updated to reflect today’s choices, including charter schools, or modernized to the funding system needed when kids choose a school other than their assigned neighborhood school. First, there’s the funding gap between charter schools and district schools. Because district schools have access to various local property tax sources for facilities and daily school operations that charter schools do not, the average charter-school student receives $1,308 less in funding than the average district-school student. In a state where the Arizona Charter Schools Association finds more than one in five students now attend a charter school, this inequity is a major problem.”

Oftentimes, resource-based funding formulas can restrict district flexibility over spending decisions, which can lead to greater inefficiency. This can lead to insufficient services and poor student outcomes for not just higher-need students, but all students in a school district. 

1. Streamline: Allocate education dollars based on students’ needs using a weighted student formula.

2. Equalize: Determine funding levels based on students, not by property wealth or zip code.

3. Empower: Deliver flexible education dollars and give families options outside of their residentially-assigned public schools.

4. Inform: Show parents and taxpayers how education dollars are allocated and spent.

Want more information on how your state can implement a student-centered funding formula?

Check out our Student-Centered Funding Roadmap for Policymakers here. 

The post Frequently asked questions on student-centered funding appeared first on Reason Foundation.

For starters, Wisconsin’s policy allows families to access available seats in any school district, setting the foundation for a robust program. In cases where transfer applications exceed supply, school districts use randomized lotteries to select students and place any remaining applicants on waiting lists. In comparison, most states don’t provide the same protections for families, allowing unused seats to remain empty even when potential transfer students are eager to fill them.  

Another key feature in Wisconsin is transparency. Wisconsin’s Department of Public Instruction (DPI) publishes easily-accessible data showing statewide open enrollment trends and related policies. The state also provides an annual report for the governor and legislature detailing key data for every school district such as the number of transfer applications received, transfers approved, and reasons for rejection. Ultimately, this information—which is often difficult or impossible to obtain in most states—helps policymakers ensure the policy is working as intended.  

For instance, DPI’s 2020-21 report finds that nearly 7,600 students in Milwaukee Public School District applied to other school districts versus only 1,062 students applying for spots in their schools. Last year’s report also highlighted numerous school districts that rejected hundreds of transfer requests including Shorewood, Menomonee Falls, and Greendale. State and local policymakers can use this information to gauge whether districts are serving families effectively and help identify potential barriers to educational opportunities. 

But the most consequential aspect of Wisconsin’s open enrollment success might be its approach to funding. 

The state has established a statewide per-pupil amount—set at $8,224 in 2022-2023—that follows transfer students to their new school districts. This funding amount is updated annually by the state legislature. These students are still counted in their home school districts’ enrollment for funding purposes, with transfer amounts for exiting students deducted from their state aid. This ensures revenue neutrality for the state and allows students’ home districts to retain a portion of funding for students that leave their schools.

Beginning in 2016-17 Wisconsin also adopted a transfer amount for students with disabilities, which is set at $13,076 for the 2022-2023 school year. After a student’s first year of transferring, receiving districts can submit a financial statement to the state if the actual costs of required services exceed this amount. This means students who are open enrolled for two or more years generate either the statewide transfer amount for students with disabilities or the actual costs to the receiving district up to $30,000.

Establishing a uniform approach to open enrollment funding is important because K-12 school finance systems weren’t designed with student transfers in mind, an issue that afflicts virtually all states. For instance, about 10% of California’s school districts are off-formula, meaning they are entirely dependent on local dollars and don’t generate aid through the state’s Local Control Funding Formula. As a result, enrollment changes for these school districts—positive or negative—don’t affect funding and districts have little incentive to enroll transfer students absent a separate funding policy.  

Wisconsin’s open enrollment funding mechanism is also unique in other ways. The state reimburses low-income families for up to $1,218.54 in mileage expenses for student transportation costs, with payments prorated if claims exceed available appropriations. This helps alleviate transportation barriers that might otherwise limit opportunities for families with fewer resources at their disposal.

Another interesting feature is that students enrolled in public high schools—including open enrollment students—can take up to two courses at any time outside of their home district. While there is not a state funding mechanism for part-time enrollment, receiving school districts bill students’ home districts directly for the cost of a course as defined under administrative rules. Dedicated funding for part-time enrollment means families can access courses and learning opportunities that otherwise wouldn’t be available to them.

For too long, educational opportunities have been tethered to where students live. Wisconsin’s experience with open enrollment is a model for state policymakers looking to undo this outdated practice by removing barriers to cross-district enrollment. 

A sound open enrollment policy should put families first, shine a light on district practices, and ensure that the right financial incentives are in place to encourage district participation.

A forthcoming study published by Reason Foundation will examine the benefits this open enrollment policy has produced for Wisconsin’s students and school districts alike.  

The post Wisconsin’s open enrollment policy success is a model for states looking to increase educational opportunities appeared first on Reason Foundation.

Before the COVID-19 pandemic, public education spending was at record levels, averaging $15,656 per pupil in the 2018-19 school year and exceeding $20,000 per pupil in states such as New York, Connecticut, and Pennsylvania. Education funding plummeted during the Great Recession of 2007 to 2009, but most states had replenished or exceeded their previous inflation-adjusted K-12 spending highs by 2019, thanks to strong economic growth and policymakers’ eagerness to boost funding as state budgets recovered.

At the onset of COVID-19, state lawmakers and school district leaders feared the years of balanced budgets were over, but, thankfully, most dire economic forecasts never materialized. In fact, stronger-than-expected state tax revenue plus $190 billion in federal K-12 relief have left many school districts with more dollars than they can spend. Per-pupil spending growth in states such as New Hampshire, Oklahoma, and Texas surpassed 7% in 2020-21 even though the bulk of the federal relief funds remain unspent.

This influx of cash, combined with states’ hold-harmless policies that base school funding on prior year enrollment counts, have largely protected districts’ bottom lines in the face of declining enrollment. For instance, Houston Independent School District lost 12,759 students in 2020-21 — 6.1% of its enrollment — but its total revenue increased by 1.7%, while per-pupil spending jumped by $1,032. It was a similar story for Dallas Independent School District, which lost 5.64% of its students but still got $1,002 more per pupil.

But once federal relief funding expires in 2024, school districts will have to rely on state funding to plug budget holes caused by student losses and sustain long-term commitments made with the one-time funding, such as new hires and salary increases. The billion-dollar question is to what extent state policymakers will continue their hold-harmless policies once federal funding dries up.

Pre-pandemic trends offer clues of how this might play out across state capitals. 

Between 2016 and 2019, 30 states had enrollment losses, and eight of them — New Hampshire, Illinois, Mississippi, Vermont, Louisiana, West Virginia, Connecticut, and Massachusetts — saw substantial declines of 2% or more. Of these states, only three (Mississippi, Louisiana, and West Virginia) saw inflation-adjusted cuts in total education revenue, and all increased real per-pupil funding. Notably, Illinois’ enrollment fell by 3.9%, yet its total education budget increased by 8.4% with a $2,158 spike in per-pupil revenue.

Clearly, aggregate education spending doesn’t track neatly with enrollment declines. But revenue is only half of the school finance equation, and the fiscal fate of districts will also depend on how dollars are allocated through state formulas and related policies. Generally, districts lose state funding when enrollment declines, with prominent examples in the last decade including Los Angeles, Detroit, and Baltimore. But pandemic policies have muddied this relationship.

For instance, in the past two years, Texas policymakers have overridden their student-based funding system with various hold-harmless policies that use outdated student counts to fund school districts. Illinois has also already committed to using pre-COVID enrollment counts for funding calculations through at least 2024. Despite having a relatively strong student-centered education funding formula that allocates dollars to schools based on real student needs, policymakers in California are now considering ways to weaken the link between funding and enrollment changes.

But these hold-harmless policies are expensive to maintain and divert resources away from students in districts with steady or increasing enrollment. After all, every dollar spent protecting districts from the fiscal effects of declining enrollment is a dollar not spent supporting students in the schools they attend. If states removed hold-harmless policies, these funds could be spread fairly among all schools, based on the actual number of students they are serving. 

While it will be a painful process, states need to acknowledge that school districts losing students should not get more funds to teach fewer kids. 

Districts that spend their one-time funding irresponsibly could face an unprecedented fiscal cliff when the money runs out and won’t be able to avoid layoffs, school closures, and other cuts. Rather than wait and see, school districts should get their fiscal houses in order now, while they have flexibility in their budgets.

A version of this commentary first ran at The 74.

The post What will public schools do when federal pandemic relief funding runs out? appeared first on Reason Foundation.

You can explore the interactive model here: Arizona K-12 Funding Reform Model

Arizona’s K-12 funding system is broken, with research showing the state’s highest property-wealth school districts generate $5,599 per pupil more on average than their lower-wealth counterparts. For instance, Queen Creek Unified School District gets 184% more per student than Isaac Elementary School District due to factors that have nothing to do with student needs. Matthew Ladner, director of the Arizona Center for Student Opportunity, also notes that nearly one-third of districts receive at least twice as much funding per-pupil as Snowflake Unified, Arizona’s lowest-funded district.

But gaping differences in funding levels aren’t the only problem. Equally as important is the fact that the school finance system—a relic of the 1980s—wasn’t designed to support an education ecosystem with robust school choice for families. With 21% of Arizona’s K-12 public school students now attending charter schools and many more exercising open enrollment, it makes little sense to continue tying dollars to local property wealth and the whims of low-turnout revenue elections.  

Over the past decade, the number of charter students in the state has nearly doubled yet, on average, students in charters receive $1,308 less per pupil compared to school districts and not all dollars follow students across district boundaries when families decide to transfer, leaving hundreds of thousands of students shortchanged. Reason Foundation’s Christian Barnard summarizes Arizona’s situation perfectly:

“School choice is becoming mainstream, and that’s great news. But before long, states will also need to grapple with updating school-finance formulas that fail to fund all kids fairly, are too reliant on local taxes, and don’t easily accommodate student movement between schools.”

Unfortunately, school finance reform is a daunting task for state legislators even when there’s widespread agreement on its merits. For example, it was only after years of deliberation that Tennessee finally adopted a student-centered funding system this past May, and until recently Texas was allocating billions of dollars each year through its Cost of Education Index, which adjusted funding using demographic data from 1989-1990.    

The reality is that politics is deeply ingrained in public education, and calls for greater equity only get you to the start line of the funding reform marathon. Many policymakers just want to know: how would a policy affect my school district’s bottom lines?

This type of information can be tough to come by, which is why Reason Foundation’s education policy team developed the Arizona K-12 Funding Reform Model. This tool, which streamlines several datasets into one dynamic interface, allows policymakers and advocates to explore complex policy solutions in real-time, including the estimated impacts on 226 school districts and 427 charter schools, and the state’s K-12 budget. Users can explore myriad combinations of reforms including adjustments to special education weights, changes to the base level amount, and the effects of replacing local levies with state dollars.

Our team mapped three reform scenarios, which are discussed here, to help users get started.

But this is only the start, as we aim to revise our model over time to reflect updated data, stakeholder feedback, and innovative policy solutions. Arizona’s K-12 funding system is in desperate need of repair, and stakeholders should be empowered with the tools needed to get reforms across the finish line. To learn more or to schedule a training, please e-mail Ari.DeWolf@reason.org.  

The post Arizona K-12 Funding Reform Model appeared first on Reason Foundation.

California’s District of Choice program started in 1993 and aims to provide families with greater choices within the state’s public education system. School district participation is optional and unlike the state’s primary student transfer law—the Interdistrict Permit System—families can apply directly to Districts of Choice without the consent of their home school districts, removing bureaucratic obstacles that can prevent students from accessing open seats in other schools.

Although California’s policy falls well short of robust open enrollment laws in states such as Florida, Wisconsin, and Arizona, its 45 participating school districts open their doors to nearly 10,000 students each year. In 2021, the state’s Legislative Analyst’s Office (LAO) produced a follow-up evaluation to its 2016 report, once again giving high marks to the program and providing valuable insight for state policymakers across the country.

LAO’s findings largely align with other research on open enrollment. Importantly, nearly all participating students transferred to higher-performing districts as measured by test scores and college-going rates, with families also seeking out specialized courses such as foreign languages, arts, and Advanced Placement programs. They also found that low-income students have used the program at disproportionately lower rates, but account for a rising share of participants at 32% up from 27% in the 2014-15 school year. In total, 40% of participants are Latino, 28% Asian, and 26% white, with the remainder belonging to other racial groups.  

Additionally, LAO uncovered evidence indicating positive effects from competition that the program has created. School districts that lost students to the Districts of Choice program took steps to mitigate enrollment losses including gathering feedback from families and communities, evaluating programmatic offerings, and implementing reforms that led to fewer students transferring out. They also had greater improvements in math and English language arts proficiency rates over time compared to the statewide average and a comparison group of similar districts, which should help alleviate concerns about students who remain in these school districts.  

But LAO’s findings on financial incentives stood out from the rest of the analysis. In California, education funding is a shared responsibility between state and local coffers, with education dollars following students rather seamlessly across school district boundaries for most districts. But about 10% of school districts—so-called Basic Aid districts—generate local dollars in excess of their revenue entitlement (i.e. they raise more money than what the state’s funding formula determines) and don’t generate additional formula dollars when new students enroll.

Because California’s Basic Aid school districts have virtually no financial incentive to enroll new students from outside of their district boundaries, the state previously provided those that participated in the District of Choice program with 70% of each transfer student’s base amount. However, this inducement was slashed to 25% in the 2017-18 school year with predictable results. By the 2019-20 school year Basic Aid districts reduced transfer enrollments by 24% and several stopped participating in the program altogether. The LAO’s report noted: 

“Several basic aid districts we interviewed indicated this reduction had caused them to become more cautious and reduce the number of students they were willing to accept through the program.”

For policymakers in other states, LAO’s finding highlights the importance of financial incentives when designing open enrollment policies. Good policy design requires close attention to how dollars flow across school district boundaries when students transfer. If school districts don’t receive sufficient funding when they accept a student from a neighboring district, they’re not going to be as willing to participate in an open enrollment program. They could also attempt to game the system to avoid accepting students if they’re required to participate in open enrollment without financial incentives. 

In California’s case, policymakers need to do more to ensure funding for Basic Aid districts is sensitive to enrollment. For other states, the problem and fixes might look different but the takeaway is the same: open enrollment works best when good policy is coupled with education dollars following the child. 

The post Data shows financial incentives matter for K-12 open enrollment policies appeared first on Reason Foundation.

Last year, Oklahoma legislators passed a historic reform prohibiting school districts from denying transfer requests except in limited circumstances such as capacity constraints or student absenteeism. As a result, families now have more access to educational opportunities outside of their residentially-assigned public schools, including schools across district boundaries.

When the legislation was being considered, concerns were raised that the new law would usher in the Wild West for student-athletes, where transfer decisions would be driven by on-the-field factors rather than academics. While student-athletes should be free to transfer to schools of their choice in the same way as students focused on science or music do, these worries were unfounded as Senate Bill 783 left the athletics status quo in place for the state. The Oklahoma Secondary School Activities Association (OSSAA) still sets eligibility requirements and, under its rules, student-athletes may not participate in extramural athletic competitions for one year unless granted a hardship waiver by the OSSAA.

In fact, the only mention of athletics in Oklahoma’s open enrollment law is that local education agencies “cannot accept or deny transfers on the basis of ethnicity, national origin, gender, income level, disability, proficiency level in English, measure of achievement, aptitude, or athletic ability.” Athletic ability can’t factor into a school district’s enrollment decisions, and if demand at a school is greater than available seats then students must be admitted on a first-come-first-served basis.

In Arizona, where open enrollment is immensely popular with both families and school districts, student athletic eligibility decisions are also made by a third party. As with Oklahoma, the Grand Canyon State’s policy only states that admission may not be based on athletic ability, and is otherwise silent on athletics. That job is left to the Arizona Interscholastic Association (AIA), which unfairly requires student-athletes to sit out half a season when they transfer to a new school, even if their residence has changed. 

These states’ policies, while unfair to student-athletes, prove that athletics need not stand in policymakers’ way of crafting strong open enrollment policies. However, to better ensure students who want to participate in athletics have access to the schools that best meet their learning needs they should follow Florida’s lead on the issue.

In 2016, Florida passed the Controlled Open Enrollment law that allows students to transfer to any school in the state with few exceptions and also mandates immediate eligibility for student-athletes. This means, unlike in Arizona or Oklahoma, families in Florida don’t have to make difficult tradeoffs between academics and athletics and can instead make decisions based solely on what’s best for their circumstances, which is impossible for distant bureaucrats to assess. 

A common pushback against Florida’s approach is the claim that participating in athletics is a privilege for students and shouldn’t be prioritized over academics. It’s easy for some to sympathize with this critique, but then why aren’t similar restrictions applied to other privileges such as debate club, school bands, or performing arts? 

Extracurricular activities—sports or otherwise—help develop positive skills and traits that aren’t readily taught in classrooms, and forcing families to make arbitrary choices seems to be more about adult agendas than what’s best for kids. Granting student-athletes immediate eligibility can even help with socialization and adjusting to their new environment. 

In any event, evidence from Arizona suggests that punitive policies don’t always work as intended. Even after the Arizona Interscholastic Association adopted more restrictive rules for the 2016-2017 school year in an effort to curtail athletic-related transfers, they still increased in subsequent years. The only difference was these student-athletes were punished and weren’t immediately eligible to play for their new schools. 

For policymakers, the priority should be to adopt universal open enrollment that gives families access to greater educational opportunities, and there’s no reason to let concerns about who plays for which high school team prevent this from happening. Policymakers should be giving families the freedom to choose the schools that best suit them and should also consider eliminating restrictive provisions that unfairly punish student-athletes. 

The post Open enrollment policies don’t have to affect student athletics  appeared first on Reason Foundation.

The COVID-19 pandemic has obviously disrupted the education system and school choice is sweeping much of the rest of the nation. More than 30 state legislatures are considering bills that would allow families greater control over their student’s K-12 education. But, for now, the legislative path to school choice appears to be rocky, at best, in California.

Fix California Education suspended its effort to get a school choice initiative on the statewide November ballot and a similar effort led by Californians for School Choice only collected one-fifth of the signatures needed and did not make it onto the ballot.

Fortunately, there are policy options outside of the typical school choice agenda that could provide more education options to California’s families and would have a better shot at garnering bipartisan support in the state.

For starters, New Hampshire’s Learn Everywhere program is shattering public education’s monopoly by allowing students to earn high school credit for completing courses—from robotics to music lessons to karate—at approved providers in their communities.  The program was created to recognize that learning experiences were already happening outside of classroom walls under the tutelage of local scientists, artists, entrepreneurs, and others. According to New Hampshire Education Commissioner Frank Edelblut, who spearheaded the program, “It’s basically about mass customization.”

Similarly, through Idaho’s Advanced Opportunities program, families can access up to $4,125 for public school students between 7th and 12th grades to use on things such as college credit courses, advanced placement exams, and workforce training. The policy had bipartisan support when it was adopted in 2016 and has since expanded to include private school families. In 2020-21, nearly 38,000 Idaho students used Advanced Opportunities with most of the funding spent on dual high school-college credits offered by Boise State, the University of Idaho, and others.

Lastly, Wisconsin’s public school choice program, which has maintained bipartisan support through the years, shows how California policymakers could give families educational opportunities outside of their residentially-assigned public school districts. The Badger State’s student-transfer law allows public school students to easily attend a school outside of their assigned school district and it employs the right financial incentives for high performing school districts to fill their open seats with students.

Right now, many of California’s school districts don’t have much financial incentive to accept new students and few families can access a public school in a nearby neighborhood that may be a better fit for their students. At the state level, California’s Local Control Funding Formula made significant improvements. It made the state’s school finance system funding more fair, transparent, and flexible. And in some ways, the funding formula is a model for other states. But, ultimately, funding students over systems is the gold standard for education reform.

Parents and students should be able to pick the school that’s best for them and the education funding should follow them to the school of their choice.

While California’s policymakers may not be ready to fully embrace school choice yet, they can and should look for creative—and practical—solutions like those programs clearly helping kids in New Hampshire, Idaho, and Wisconsin. As state leaders examine the declining enrollment numbers, they should recognize students and parents want and deserve more education choices.

A version of this column first appeared in the Los Angeles Daily News.

The post California needs school choice appeared first on Reason Foundation.

Yet despite a banner year for the school-choice movement in 2021, state spending on school-choice programs such as vouchers, education savings accounts, and tax-credit scholarships consists of less than 0.5 percent of total K–12 public-education expenditures in the U.S. This is because most programs are narrowly targeted to subgroups such as students from low-income families and those with disabilities.

For state legislators, the obvious solution to this supply-and-demand problem is to establish programs that are available to all student groups while expanding eligibility under existing policies. The good news: More than 30 states are considering school-choice legislation this session, unlocking millions more dollars for families to spend on private educational services.

Unfortunately, even under these proposals, most families still won’t have access to school choice, and other reforms are needed to help those who remain in public schools. To do this, state policy-makers should look to the work of Milton Friedman: the economist who inspired the modern school-choice movement.

Friedman advocated offering vouchers that families could use for private-school tuition, but his vision also extended to increasing competition among public schools. He imagined a system in which all families could take their taxpayer-funded education dollars to the public school of their choice. According to Friedman and his wife, Rose, “The size of a public school would be determined by the number of customers it attracted, not by politically defined geographical boundaries or by pupil assignment.”

Several studies conducted over the last decade indicate that public-school vouchers would offer many of the same benefits of private-school-choice programs, including expanding options for families and incentivizing public schools to be more responsive to students’ needs. The concept is straightforward: A per-pupil dollar amount would be attached to each student, and families would be allowed to use this funding to enroll in public schools regardless of where they live.

This type of program has the potential to achieve scale and reach millions of families that are currently left out of choice programs. To make public-school vouchers a reality, policy-makers should pursue three policy goals.

First, states and school districts need to do away with residential assignment — the practice of determining kids’ schools based on where they live. Residential assignment is deeply embedded within school systems, and district lines provide further obstacles to student movement. Fully implemented public-school vouchers would require a boundaryless system in which the default is parental choice.

Lawmakers in states such as Oklahoma, Arizona, and Florida are chipping away at this restriction with open-enrollment policies — an arrangement that allows families to enroll in schools inside or outside their districts with open seats. This is a good start, but residential assignment should be eliminated altogether so that no school district has a monopoly on student enrollment.

Next, states should revise their funding formulas, which are typically a patchwork of education-funding allocation streams that weren’t designed with student movement in mind. As a result, dollars don’t seamlessly follow students to the school they attend, and some districts have weak financial incentives to enroll new students or hold on to existing ones.

To get around this, policy-makers could follow Wisconsin’s lead by establishing a flat per-pupil amount for all transfer students — with additional dollars for students with disabilities — that is paid for by resident school districts. Not only does this ensure that the right financial incentives are in place, but it’s also designed to be revenue-neutral, putting no additional pressure on state coffers. This mechanism has served the Badger State well, as 70,428 students now attend schools outside of their resident districts.

Lastly, policy-makers should send these dollars directly to families by putting them into restricted-use spending accounts, similar to how education savings accounts already operate in states such as Arizona and North Carolina. This way, school districts could set tuition rates based on local considerations, and families could use any remaining dollars for such expenses as transportation, tutoring, or certification exams.

To be sure, public-school vouchers alone would fall well short of Friedman’s vision for a robust educational marketplace in which all providers, both public and private, compete on a level playing field for students and innovate in response to demand. Nevertheless, eliminating residential assignments and putting parents in charge of funding — even if it’s just for public-school options — would give all families more agency over their education and help tip the balance of power in their direction.

A version of this column previously appeared in National Review.

The post Public school vouchers could increase education competition appeared first on Reason Foundation.

While Congress is equally unlikely to pursue the president’s proposal this year, it’s important to note why doubling down on Title I funding would be such a flawed strategy. Research consistently shows the program, intended to provide federal funding for schools with higher percentages of children from low-income homes, has failed in its aim to close achievement gaps between low-income and higher-income students since its inception in 1965 as part of the Elementary and Secondary Education Act. For example, a study by researchers at George Mason University concluded: 

“Given the modest evidence on academic gains and gaps closure attributable to Title I, and considering that the program costs about $15 billion per year, we conclude that Title I compensatory program has been largely ineffective in accomplishing its goal of closing the achievement gaps between disadvantaged and non-disadvantaged students.”

The ineffectiveness should come as no surprise to those familiar with how Title I works. After Biden proposed the 2022 Title I windfall last year, my colleague Christian Barnard and I highlighted just a few of the program’s faults in National Review:

“The current formulas are riddled with complexity, including political provisions that have nothing to do with students’ needs. For example, states are guaranteed a minimum amount of funding even if their share of Title I–eligible students doesn’t warrant it. As a result, Title I dollars are delivered like buckshot, ranging from Idaho getting $984 per eligible student in 2020 to Vermont getting $2,590 per eligible student — 163 percent more per pupil than Idaho. Title I spending needs to be fixed, not increased.”

Keep in mind that President Biden’s Title I proposal comes at a time when many public schools are already flush with cash, thanks to $190 billion in federal COVID-19 relief funding that is supposed to prioritize students in high-poverty school districts. Not only that, but public schools are also facing sharp enrollment declines, meaning the budget proposal calls for spending more money on fewer kids when K-12 spending is already at record levels. 

Policymakers should be skeptical of continuing to pour more money into a broken federal program. Instead, they should pursue reforms that make Title I dollars flexible, so they support giving families more opportunities and the ability to customize their education. For example, Congress could update the program’s allocation rules and ensure the aid follows students to their public or private school of choice.

Lawmakers could also overhaul the program’s complex web of formulas and non-transparent compliance rules that contribute to school districts’ ineffective spending of the federal funding.

There are a lot of needed reforms to reduce achievement gaps and improve outcomes for low-income students, but pouring more money into Title I isn’t one of them.

The post Biden doubles down on Title I funding increase in 2023 budget proposal despite program’s poor record appeared first on Reason Foundation.

Some of Arizona’s highest-quality schools are unable to offer pupil transportation thanks to well-meaning but antiquated state law. Additionally, many of Arizona’s public schools cannot meet the geographic diversity of their students’ transportation needs through traditional 60-foot yellow school buses. These buses are expensive to acquire, operate, and maintain, and require a driver with a commercial driver’s license. Smaller, lower-cost vehicles would help students living in rural, geographically diverse areas of the state, but also assist urban families who have the opportunity to attend a school that is miles across town.

Senate Bill 1630 would make the following improvements to the way Arizona manages student transportation:

1. Enabling the use of 11-to-15 passenger vehicles

• Allows the use of 11-to-15 passenger vehicles that have been successfully and safely operated by transit agencies for decades.
• Permits these vehicles as a tailored, environmentally-friendly pupil transportation solution for rural, suburban, and urban areas.
• Includes generated route mileage in the Transportation Support Level.

2. Modernizing school transportation governance

• Renames School Bus Advisory Council to the Student Transportation Advisory Council.
• Increases council membership from 9 to 14 members to include representatives of public charter schools, with electric vehicle expertise, and the broader public.
• Encourages consideration of vehicles beyond the traditional yellow bus.

3. Assuring safety in pupil transportation

• Requires the Department of Public Safety to issue new regulations on 11-to-15 passenger vehicles used in pupil transportation.
• Requires operators of these vehicles to meet the same standards as yellow bus drivers, minus the commercial driver’s license required for operating heavy-duty trucks and buses.
• Any vehicle type must be assessed by the department before it can transport students.

The post The benefits of the pupil transportation policy reforms in Arizona’s SB 1630 appeared first on Reason Foundation.