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School performance isn't just about spending

LAST APRIL, Superior Court Judge Margot Botsford concluded that the Commonwealth's foundation budget -- a school district's minimum allowable spending -- is constitutionally inadequate in four low-income districts that are part of the Hancock case. As the Supreme Judicial Court hears arguments in the case today, it is time to take a hard look at the reasoning behind the opinion.

The plaintiffs' original argument was based on two "adequacy" studies they commissioned. One found that Cambridge was one of the only adequately funded districts in the state, a district ranked by the Globe at 311 out of 373 on MCAS results. Another came to the equally curious conclusion that two-thirds of the state's highest-performing districts were not spending enough to succeed. Botsford rightfully rejected both of them.

The court relied instead on evidence of a disparity in spending as a percentage of foundation budget between high- and low-scoring districts. The court also cited "profound cuts" in education funding during the recent downturn. A closer look at the data show that these, too, are at best a shaky basis for the finding of inadequate funding.

Under our system, the Commonwealth funds the difference between what a district can afford and the foundation budget. The formula assigns a premium for educating low-income children, so the foundation is about 25 percent higher in poor districts than in wealthy ones.

As a result, per-pupil spending among districts in the poorest quartile last year averaged $8,700, a bit more than the wealthiest districts, at $8,500. Massachusetts is one of the few states in the nation that has reversed the spending gap.

Instead of actual spending, the plaintiffs based their case on spending as a percentage of foundation budget. Foundation budget is much lower for wealthy districts, but they are free to spend more, and many of them do. Consequently, as a percent of foundation, wealthy, high-scoring districts spend more than poor ones, even though they spend less in actual dollars. From this admittedly "rough" approach, the court concluded that the state is in constitutional violation, with the foundation budget too low for every district in the state.

There are several fundamental flaws with this reasoning. Chief is the confusion between association and causation. High-scoring districts spend more above foundation, but they also have demographic advantages. Dozens of analyses prepared for the court found no evidence linking spending and performance after controlling for demographics.

Among high-poverty districts, Revere scores the highest, but spends the least -- about 101 percent of foundation. Medfield, a relatively wealthy district, also spends little more than foundation and is among the highest scoring districts in the state.

Higher spending also doesn't correlate with improved performance. The Globe's recent list of most improved districts not only includes Revere, but also Winchendon and Springfield -- two of the four Hancock districts.

The court's reliance on spending as a percent of foundation has the following implication: No increase in the low-income premium, no matter how large, could eliminate the finding of underfunding. Increasing the poor districts' foundation budget would raise their spending in actual dollars, but not as a percent of foundation; the disparity on that measure would remain.

Botsford finds funding inadequacies have been exacerbated during the recent economic downturn. But the court's data are wrong. The judge estimated that Brockton's spending would decline by $10 million last year; it actually rose by $2.6 million. Per-pupil spending barely dipped in one of the plaintiff districts and rose 2 to 3 percent in the others.

Statewide, education spending grew by 12.7 percent from fiscal 2001 to 2004 and did not fall in any year of the recession. Total education wages grew steadily, rising 14.8 percent in the Hancock districts from calendar year 2000 through 2003, even as total private sector wages fell.

In January 2003 -- as state revenues were in freefall -- Brockton negotiated a contract under which any teacher with fewer than nine years of service could expect to receive 25-37 percent raises over three years. The court cites program cuts and layoffs in districts such as Brockton, but these cuts would not have been necessary, had negotiators shown more restraint.

At this stage of education reform, funding is neither the problem nor the solution. In one candid passage, Botsford observed that sharp variation among one district's schools, "shown not to be particularly related to funding, indicates unaddressed problems of management and leadership."

The thrust of the Hancock suit -- funded almost entirely by the unions -- is an attempt to redirect policy back to another round of school funding hikes, and away from the central issues of accountability, leadership, flexibility, and effective intervention that are so critical to fulfilling the promise of education reform.

Robert M. Costrell is chief economist in the state Office for Administration and Finance. This column is adapted from a longer article in CommonWealth Magazine. 

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