An Urban Myth? New Evidence on Equity, Adequacy, and the Efficiency of Educational Resources in Pennsylvania

How and in what ways money matters in education is a long-standing question among policymakers and education researchers. This issue is particularly salient to large, urban school districts, where debates on the organization of school often gravitate toward issues of financial resources and academic performance. Large urban districts, the story goes, spend more money per pupil but generate lower than expected results. In this policy brief, University of Pennsylvania researchers Matthew P. Steinberg and Rand Quinn present evidence that addresses the oft-told story that large urban districts, such as the School District of Philadelphia (SDP), are inefficient. Disciplines Economics | Education Economics | Education Policy Comments PB #14-4 View on the CPRE website. This policy brief is available at ScholarlyCommons: http://repository.upenn. edu/cpre_policybriefs/4 November 2014 PB #14-4 An Urban Myth? New Evidence on Equity, Adequacy, and the Efficiency of Educational Resources in Pennsylvania How and in what ways money matters in education is a long-standing question among policymakers and education researchers. This issue is particularly salient to large, urban school districts, where debates on the organization of school often gravitate toward issues of financial resources and academic performance. Large urban districts, the story goes, spend more money per pupil but generate lower than expected results. In this policy brief, University of Pennsylvania researchers Matthew P. Steinberg and Rand Quinn present evidence that addresses the oft-told story that large urban districts, such as the School District of Philadelphia (SDP), are inefficient. Equity concepts in education finance generally refer to the fair distribution of available resources to students across school districts. Adequacy refers to the provision of resources sufficient to produce desired educational outcomes for all students. The difference between the resources that districts need for all students to achieve academically and the amount districts actually spend is called the adequacy gap. To allow for comparisons across districts, the researchers construct EQ—the ratio of a district’s per pupil adequacy gap to its actual per pupil spending. This measure allows for an assessment of the extent of crossdistrict inequality and inadequacy in district spending throughout the state. Matthew P. Steinberg and Rand Quinn What constitutes a “fair” distribution of resources is contested. Three forms of equity are commonly understood. Horizontal equity conceptualizes all students as equivalents, leading to uniform per-pupil spending throughout a system. In contrast, vertical equity takes into account student characteristics associated with increased need, leading to (appropriately) unequal funding. A third principle of equity, fiscal neutrality (or equal opportunity), stipulates a decoupling of educational expenditures from district wealth or tax effort.1 Legal and policy context of school funding in Pennsylvania Early court battles to alter state finance systems focused on equity. However, more recent cases, fueled by the standards and accountability movement, focused on addressing both equity and adequacy. In 1992, the Pennsylvania General Assembly discontinued its use of a fixed formula to determine basic education funding. In 2007, a Costing Out study was presented to the Pennsylvania State Board of Education.2 The following year, the Pennsylvania school code was amended to include language mandating that education funding to districts be based largely on the formula offered by the “Costing Out” study. In 2011, the funding formula requirement to account for student and district characteristics was removed from the school code and the state budget included an overall reduction in basic education funding. 2 Augenblick, Palaich, and Associates. (2007). Costing out the resources needed to meet Pennsylvania’s public education goals. Denver, CO: Augenblick, Palaich, and Associates, Inc. Philadelphia is doing more with less, when compared to its peer high-poverty and lowachieving districts. Steinberg & Quinn (2014) 1 Berne, R. , & Stiefel, L. (1984). The measurement of equity in school finance: Conceptual, methodological, and empirical dimensions. Baltimore, MD: Johns Hopkins University Press. Education spending across districts in Pennsylvania is inadequate. » An additional $3.55 billion would have been required to close the adequacy gap between current perpupil spending and an educationally adequate level of spending for the 2009-10 school year for the 412 school districts with an estimated adequacy gap4. ◊ The average district-level adequacy gap was $1,559 per pupil. ◊ For the 25% of districts serving the largest percentage of poor students, the average adequacy gap was $2,416 per pupil. ◊ In contrast, the 25% of districts with the lowest percentage of students in poverty had an average adequacy gap of $442 per pupil. Assessing and addressing equity and adequacy » An adequate and equitable system would be one in which the EQ ratio would be zero for each district in the state—in other words, a system in which no district had an adequacy gap and district spending in every district was equal to the amount necessary to educate all students, given the characteristics of the students served. » The majority of school districts in Pennsylvania have a negative EQ ratio (e.g. EQ=-.10 implies that a district would have needed to spend 10 percent more per pupil to provide an adequate level of education for all of its students). Using school revenue, expenditure and achievement data from the 2009-2010 school year3, the researchers examined the distribution of school funding in Pennsylvania and the extent to which the equitable and adequate distribution of resources is shaped by the students that districts serve. Note: EQ is the ratio of a district’s per pupil adequacy gap (surplus) to its actual per pupil spending during the 2009-10 school year. Districts spending more than would be necessary (e.g. adequacy surplus) to meet performance expectations and assure academic success for all of its students will have positive values of EQ; districts with adequacy gaps will have negative values of EQ. The mean (standard deviation) value of EQ for 491 (of 500) PA districts is -. 153 (.154), suggesting that, on average, districts would have needed to spend 15 percent more per pupil to educate all students to meet performance expectations. 0 20 40 60 80