Paul Vallas, Chief Executive Officer of Chicago Public Schools.

Testimony

PowerPoint slides and charts

Ending Social Promotion in the Chicago Public Schools (brochure available - please email your request)

Executive Commentary to Trending Up - Four-Year Education Progress Report (report available - please email your request)

Attachment 1 - Establish a Foundation Level of Funding for a Quality Education

Attachment 2 - FY 96 $4,225 Foundation Level Adjusted for Inflation to FY 2002

Attachment 3 - A New Poverty Indicator to Distribute Disadvantaged Pupil Impact Aid (DPIA)

Attachment 4 - Constitution of the State of Illinois, Article X

Attachment 5 - "Lawsuits Loom Over Schools Capital Spending", Standard & Poor's CreditWeek Municipal, September 11, 2000

Chicago Public Schools Testimony to the 

Education Funding Advisory Board

September 28, 2000

In my testimony today, I will focus on solutions to the state's education funding problems that I think EFAB should consider.

Solutions EFAB can Recommend for FY 2002

Even though time is short there are still many important things EFAB can and should recommend for FY 2002.  The most significant of these are:

Make the continuing appropriation permanent with a provision that adjusts last years foundation level by the most recent CPI if there is no specific foundation level set in law - school districts need the financial stability provided by a continuing appropriation. It was a good idea when it was adopted on a temporary basis in 1997. It has worked well. It should be made permanent.

If EFAB does not have time to do a proper study of the foundation level for FY 2002 it has the following two options for a FY 2002 foundation level recommendation: (1) The FY 2002 foundation level should be at least the FY 2001 foundation level increased by the most recent CPI. This could be the same CPI number that is used for the tax cap calculation (the December to December change in the CPI - which is estimated to be 3.2% for 2000). This is the absolute minimum that can be expected next year. (2) The FY 2002 foundation level could be the original $4,225 foundation level adjusted upward for inflation since FY 96.  The basis for this suggestion is that the $4,225 foundation level was originally recommended as a FY 96 level, even though it was not first used until FY 99 (see attachment 1 - as excerpt from the report of the 1996 Governor's Commission on Education Funding).  The $4,225 wasn't adjusted for inflation in the 1997 school funding reform because there was inadequate commitment to fully fund the Commission's recommendations.  Now could be the time to correct that shortcoming.  Fully adjusting the $4,225 foundation level for inflation would produce a FY 2002 foundation level of approximately $4,900 (see attachment 2 - a table showing the $4,225 level adjusted for inflation).

If there is no study on the proper level for the poverty grants then these grants should be increased by the same percentage as the increase in the foundation level.

Develop a new poverty count using TANF and Food Stamp data from DHS and Medicaid and Kidcare data from IDPA.  The new poverty count that ISBE developed using TANF and Food Stamp data was a good start and ISBE was resourceful in finding a way to address data privacy concerns. However, we can and must do better. The new poverty count must also take into account the children enrolled in the Medicaid and Kidcare programs. The appropriate count to use would be an unduplicated count from all four programs. This is similar to the poverty count that was recently adopted in Ohio (see attachment 3 - the executive summary of the education poverty count study in Ohio).

Use the higher of the current year student count or a three year average - this is a reasonable measure to phase-in the financial impact of declining student enrollment.

Long Term Adequacy Solutions In the longer term EFAB must address both its formal statutory charge to recommend funding levels for the foundation and poverty grants and broader school finance problems that go beyond its formal charge.  I believe that EFAB has the capacity to do this.  With sufficient resources and support from political leadership EFAB can be the forum  in which the state systematically develops workable solutions to many vexing school finance problems that still need to be addressed in Illinois.  Some of the proposals that need to be part of these solutions are:

Explicitly link the foundation level to the academic performance levels established in the state accountability process. The foundation level must provide at least enough resources to ensure that every child can meet the minimum academic standards set in the state education accountability process. The language of the education clause of the state constitution regarding "high quality public educational institutions" and "educational development of all persons to the limits of their abilities" suggests that the long-term goal should be substantially higher than this (see attachment 4 - the education clause of the state constitution).

Expand the concept of educational adequacy to take into account capital and technology needs. The current K-12 funding structure only addresses adequacy for day-to-day operations. It does not address adequacy for the investments in school facilities and technology that are needed to properly support day-to-day operations. In the long run this oversight must be corrected The state must determine an adequate level of school facility and technology services and make sure that every child is supported by the resources necessary to fund these. Recent school finance litigation as already forced some states to address these issues (see attachment 6 - a recent article about school finance litigation on school capital funding issues)

Expand the concept of education adequacy to include universal preschool - eventually we need to offer publicly funded preschool to everyone who wants it if we are going to achieve our education goals.  EFAB should consider addressing universal preschool funding through the general state aid formula.

Use a student count based on enrollment - since school districts must budget on the basis of enrollment they should also be funded on the basis of enrollment. Penalizing districts for low attendance reduces funding for those students who need it the most.  The state's legitimate concerns for accountability for student performance should be addressed through the academic accountability process.

Adjust the foundation level for regional variations in the  'cost of education - the cost of education is not the same in all parts of the state and the school funding formula should reflect this.

Consider financing alternatives that would decrease the state's high reliance on property taxes to fund education - the state's heavy reliance on property taxes to fund education makes it more difficult to address education adequacy on a statewide basis.

Long Term Efficiency and Accountability Solutions Ensuring that the state funds education at adequate levels is not the only way that EFAB cab contribute to better educational results.  In the long-term EFAB can also help by investigating and recommending changes that will improve educational efficiency and accountability.  Some of the changes EFAB should consider are:

Consolidate the categorical programs - school districts need much more flexibility in their funding structure. Accountability issues should be addressed through the state academic accountability process and not through detailed oversight and reporting requirements for each separate categorical program. The consolidation could be done through the creation of block grants (as was done in Chicago) or by folding the categorical programs into the state aid formula with pupil weightings.

Apply key components of the 1995 Chicago School Reform to the state as a whole by: (1) Increasing local accountability powers as was done in Chicago - if school districts are to be held accountable they need these powers. (2) Consolidating rate limited tax levies - this greatly increased financial flexibility in Chicago. It should be considered for the rest of the state.

These reforms, combined with vigorous implementation, have contributed to dramatic results in Chicago (see CPS material).

Expanding Competition in Education by - expanding the number of Charter Schools - allowing and encouraging nonpublic schools to take state ISAT tests

There is much important work for EFAB to do.  It will not happen overnight.  But it can happen if EFAB does good work and if it is persistent.  The CPS is committed to helping EFAB make it happen.

PowerPoint Slides

Chicago Public Schools

High School Reading Improvement From

1994 to 2000

LOWEST PERFORMING HIGH SCHOOLS

MID PERFORMING HIGH SCHOOLS (25% to 40%)

Attachment 1

Establish a Foundation Level of Funding for a Quality Education

Statement of the Problem:

The current foundation level (the required minimum per pupil funding level to be provided from state and local sources) is not based on educational need, quality, cost, or efficiency. The current foundation level is established arbitrarily, based on the amount of dollars allocated in the state budget for general state aid. The current system does not provide the amount of funding necessary for a quality education in all schools across the state. Deficiency in general state funding, coupled with the costs of specialized and mandated programs, has added pressure on already strained local school revenues. In addition, some districts are receiving less than the foundation level because they are not exerting sufficient local tax effort.

Recommendations:

• A per pupil foundation level for funding a quality basic education should be determined by a reliable methodology and be guaranteed for each public school pupil. The General Assembly should assign responsibility for reviewing and revising the foundation level to the State Board of Education with the advice of an independent advisory body. The foundation level should be reviewed for its adequacy no less frequently than every two years.
• The Performance-Based Methodology (detailed below) provides a sound means to determine an appropriate foundation amount. The Commission examined several different approaches to establishing a foundation level of funding and chose this model. The Commission is comfortable with this model because it incorporates not only educational expenditures but a measure of student performance and efficiency.

• The foundation methodology, rather than a specific dollar level, should be written into law.
• The state must provide a minimum level of funding (at least 50 percent of the aggregate foundation cost) and assure through equalization that the foundation level is met for all pupils through a combination of state and local resources.
• Each district should be required to exert at least a threshold level of tax effort in order to qualify for general state education funding.

Attachment 2

Attachment 3

A New Poverty Indicator to Distribute Disadvantaged Pupil Impact Aid (DPIA)

Attachment 4

Constitution of the State of Illinois, Article X

Attachment 5

"Lawsuits Loom Over Schools Capital Spending"  Standard & Poor's CreditWeek Municipal, September 11, 2000

A new wave of court mandated school spending may be on the horizon.  Unlike previous litigation, however, which had the effect of equalizing per pupil revenues for operations, litigants have recently asked - and won - additional state constitutional mandates to equalize the quality of school facilities throughout a state.

Recent litigation in Arizona, Colorado, New Jersey, Texas, New Mexico, and Wyoming has already moved these six  states toward this end to varying degrees,  with Arizona going the farthest in terms of  guaranteeing to raise all school facilities to  a minimum standard and cutting off state  capital aid to districts above this level.  Pending litigation in California (Roxanna Godinez v. Gray Davis et al.) may lead to a similar outcome there.   

California's seminal Serrano v. Priest decision in 1971 laid the foundation for the nation's following wave of litigation equalizing operational funding per pupil. Since then, only five states have not faced litigation attempting to equalize per pupil funding for operations, although not all litigation has been successful. 

  School facilities funding entails huge financial obligations, and adverse decisions could strain state finances.  A 1999 U.S. Department of Education study estimated the average age of public school buildings to be about 42 years old; 73% are at least 30 years old.  More than a quarter of U.S. schools were built before 1970 and have also not been renovated since 1980. 

  The department estimates school construction needs of $127 billion nationwide,  and these needs will continue to increase.  Most of the new school construction needs will likely follow enrollment growth in the West and South, while Northeast and Midwest enrollments are expected to decline, while still needing substantial school  renovation. According to projections, enrollment in grades 1-12 will peak in 2006, as the baby boom echo moves through the educational system. 

Arizona has moved farthest in attempting to impose a substantially equal quality of school infrastructure for all students. The state took upon itself nearly all funding for statewide school facilities after its recent round of litigation, and is now asking voters to approve a sales tax increase in November to fund the increased costs. The cost of bringing all 1,210 state schools up to a minimum level of "adequate" facilities by 2003 is estimated at $1.17 billion, according to the Arizona School Facilities Board.  However, even if the voters approve the sales tax increase - and Arizona voters are often resistant to tax increases - it would be enough to fund only $800 million of school bonds. The remainder would come from general state revenues and developer contributions. 

California could potentially face very large expenditures if its state supreme court hands down a similar decision. Chronic underfunding of school facilities in poor districts the aftermath of Proposition 13 and the state's recession of the early 1990s could require large doses of state aid to remedy, if litigation similar to that in Arizona succeeded. Until recently, the state required a third of each public school district's pupils to be housed in portable classrooms in order to be considered for state capital construction grants. While poor districts struggled to gain the two-thirds voter approval to issue GO bonds to fund a required local match for state grants, rich districts managed to gather developer aid, corporate and other contributions, and impose Mello-Roos and other taxes to maintain a high level of infrastructure as well as enjoy a generally better ability to gain voter bond approval.

California intends to vigorously defend itself in the Roxanna suit brought by parents of Los Angeles Unified School District parents. A Los Angeles Superior Court hearing on Aug. 24 denied an initial request by plaintiffs for an injunction against the state, although the suit remains ongoing and will not likely be decided any time soon. 

  The suit attacks California's current distribution of school capital aid grant monies from state bond proceeds. The present system for the most part allocates new construction aid grants on a matching basis in the order in which districts apply for them, once certain guidelines are met, rather than strictly on the basis of need. This fall, when the state legislature discusses placing a new  state school bond issue on next year's ballot, legislators may consider changing the current system of grant allocation. It is unlikely, however, that the current system's dependence on local bond elections will go away. 

  In most states, school facilities are funded through local GO bonds supported by direct taxation on local property, often with the supplementation of partial state grants or state matching grants. Thus, districts rich in property valuation often have a much higher quality of school infrastructure than poor ones. 

  Some research has indicated that there may be a weak connection, if any, between the quality of school facilities and student rest scores. Nevertheless, the quality of school facilities is turning into a hot topic as poor districts fear being left behind in today's changing world of internet wiring, computer literacy, and increased needs for technical education. 

  However, determining how to make facilities funding truly equitable poses many questions. Do states equalize facilities based strictly on annual grants per pupil?  Or by the age of facilities, or per square foot?  By cost to maintain?  

By engineering surveys of the state of good repair of schools? If so, by whom, and how would disputes by handled? Should all magnet schools with different curriculums and facilities needs be treated the same? What about different physical air conditioning/heating needs, or necessarily small, but perhaps inefficient rural schools? Can outside parents/developers' groups contribute extra funding? Should districts with low levels of wealth get extra facilities to make up for previous disadvantages? What about special needs students? These questions will remain contentious. 

  In addition, some researchers have suggested, based on states' recent experience, that school revenue equalization laws have led to less disparity between rich and poor school districts in operational funding, but  at the cost of lower overall funding-even  lower than it would have been otherwise in many poor districts. This result, if true, may suggest that the state of school facilities could eventually decline. 

  Arizona is meeting its court mandate on physical facilities through its "Students FIRST" law. Under the law, the state's School Facilities Board was required to conduct an examination of each school's

physical plants. This was done through a consultant at the cost of $2.6 million. The highest projected costs to remedy school infrastructure deficiencies to the state's minimum guidelines came from rural and remote school districts, costing approximately $967,000 per school in the rural areas and $1.3 million per school in the remote areas. These schools often require complete replacement, according to the consultant's report. Suburban and higher wealth districts generally need the least repair. 

  The board expects all projects' construction work to commence in the beginning of 2001 to remedy current deficiencies. The board also expects to award about $120 million of construction work to maintain existing school facilities. New schools would be funded by the state based on enrollment. Rich districts can still fund school facilities at a level of quality above the state standards; however, any bonding to do so would be on their own, without state matching aid.      

  Colorado settled pending litigation in April (Giardino, et al. v. Colorado State Board of Education) over school infrastructure funding. The settlement entailed legislation (SB00-181) providing  $105 million over an 11-year period for emergency health and safety capital expenditure assistance to needy school districts.  The legislation also added $85 million over 11 years to existing construction and renovation funds for grants to local school districts for capital construction purposes. The settlement is not perceived as completely funding all poor districts' facilities needs, but rather, as ameliorating the worst needs of poor districts. Increased funding mandates in Colorado are always problematical due to the state's constitutional Amendment One limit on expenditures. This creates a potential to pit any new program against funding for existing programs. 

  Wyoming first encountered school equalization litigation over operational funding in 1980. However, litigation in December 1999 caused a district court to declare unconstitutional the capital construction component of its school finance reform legislation. The order is stayed pending completion of an appeal to the state supreme court, and existing statutes regarding bonded indebtedness remain in effect as long as the bonds remain outstanding. 

  New Jersey, under court pressure, has recently granted 100% capital funding to selected poor school districts, and 40% matching grants to all other districts. The Texas legislature on its own has also recently passed a revised capital funding formula that provides extra help for poor school districts. 

  The 1971 California case, Serrano, set the tone for the following three decades of litigation in state courts over educational funding disparities. That case mandated essentially equal per pupil operational revenues for school districts statewide. Since then, 45 states have been sued to equalize operational funding under state constitutional clauses requiring an "adequate" or "thorough education", "equal protection", or similar language. In those states, at least 19 have experienced court ordered revisions in their systems of funding education. 

  School funding litigants have focused on state constitutional arguments, following federal court decisions that found no federal constitutional mandate to fund education.  Some states, such as Michigan and Utah, reformed their funding formulas without the pressure of court rulings.