Office of Performance Evaluations

Public Education Funding in Idaho

Released January 2009

Report 09-01

The executive summary of the report is provided below. The full report with exhibits is available in PDF (see above), and a limited number of printed copies are available from the Office of Performance Evaluations (OPE). Specific questions about the report should be directed to OPE. General questions should be directed to the Department of Education and the Board of Education.

Executive Summary

In March 2008, the Joint Legislative Oversight Committee (JLOC) directed the Office of Performance Evaluations (OPE) to examine the issue of the adequacy of kindergarten through grade twelve public education funding in Idaho. We evaluated Idaho’s approach to funding in relation to other states, the strengths and weaknesses of Idaho’s approach, and the funding issues of concern as identified by Idaho stakeholders.

This report does not provide a definitive answer on how, or how much, Idaho should fund public education. Rather, we provide information and tools the Idaho Legislature can use to identify educational goals and move toward those goals in a measured and fiscally responsible manner.

Findings

Conducting an Adequacy Study Is Not the Solution

Many states have placed a significant amount of weight on adequacy studies to provide answers for how the state should fund public education. Often, states conduct adequacy studies in response to legal challenges, to avoid litigation, or to improve the state’s education system. In general, adequacy studies attempt to place a monetary value on what is needed to achieve particular student outcomes.

Sometimes states perceive adequacy studies to be a definitive solution for resolving funding problems. However, in spite of what adequacy studies promise to achieve, they have not been able to clearly link the often large funding increases they recommend with specific educational outcomes. Without this key link, states that have conducted adequacy studies cannot guarantee that providing the recommended funding will achieve the specified outcome. If a state defines adequacy (particularly within the context of a constitutional requirement) and is unable to achieve that definition, instead of insulating itself from litigation, the state may open itself to legal challenges.

Another often overlooked weakness of adequacy studies is that definitions of adequacy are inherently subjective. Different definitions can have widely varying fiscal implications and a definition that might seem appropriate today could be outdated a decade from now.

Concerns and interest in the matter of adequate funding are legitimate. However, given the limitations noted above, we do not recommend that Idaho follow the path of other states in conducting a formal adequacy study.

Idaho Can Move Forward Without an Adequacy Study

In general, funding public education requires setting achievement goals and establishing the programs and services necessary to achieve those goals. Idaho can fulfill its most basic responsibilities in a measured and modest way by (1) engaging in a process to set and measure goals, and (2) ensuring that Idaho’s system of public education is held to the same standards and accountability as any other governmental program. In following this process, the state should recognized that goals can represent an intention instead of a rigid requirement, and goals can and should change over time as circumstances change.

A general set of funding objectives and distribution characteristics can be used by any state government to guide the creation, funding, and administration of programs or services. The objectives of funding any state program or service should be: promote equity, achieve cost-effectiveness, follow best practices, establish clear policy objectives, and promote outcome accountability. Characteristics of distributing funds to any state program or service should be: easy to understand, transparent, flexible, predictable, and provide a safety net for emergency needs. Idaho should hold itself to these standards in the context of public education funding.

In lieu of conducting what is understood to be an adequacy study, Idaho can move forward by following a cyclical process of goal setting, investment, implementation, and evaluation. Currently, Idaho uses a standardized test to measure progress toward student achievement goals as required by the federal government. However, Idaho is not bound to this measurement if the state were to create its own set of goals for educational outcomes. Stakeholders that participated in our evaluation provided their perspectives on additional measures that Idaho could use to gauge achievement of its student outcome goals.

Idaho’s Funding Approach Should Be Reviewed

Idaho last made major revisions to its public education funding approach 15 years ago. In many ways, the needs of the educational system today are not the same as they were when the formula was last revised in 1994. Our examination of the funding formula and our communications with stakeholders revealed several places where, over time, the formula no longer reflects the original funding rationale or, in some cases, the original rationale is no longer relevant. Stakeholders also provided their perspectives on major funding concerns and top priorities.

The funding formula revisions of 1994 were intended to address issues of inequity. Because issues of equity are closely tied to, and often overlap with, issues of adequacy, the state must consider both when examining how education funds are distributed. To better understand the relationship between equity and adequacy, we conducted an analysis of how funding was distributed among districts and students in Idaho. Our analysis of equity revealed that local, state, and federal revenue sources each contribute differences in per pupil funding among districts; however, local funds contribute the largest share of differences. In the case of state funding, distributions by student are not equal across all districts. Distribution differences likely reflect deliberate legislative decisions, such as funding smaller districts at a higher level per student to promote equal educational outcomes. When compared to large districts, small districts must provide the same level and array of services, including the associated fixed costs of providing these services to small numbers of children.

• In regional superintendent forums and stakeholder surveys, stakeholders identified ways in which they believe the funding formula currently does not fully support district needs. Stakeholders generally had particular concern with teacher salaries, recruiting, and retention. In response, the Legislature could consider an evaluation of the components of teacher salary reimbursement and school districts' challenges in recruiting and retaining qualified teachers.
• Many stakeholders reported that the state does not provide enough discretionary funds. Stakeholders are concerned that limited discretionary allocations may be due to misperceptions about how districts use discretionary funds. The Legislature could consider conducting a study to determine which fixed costs districts pay with discretionary funds.
• We found several issues with Idaho’s method for funding special education. The Legislature could review Idaho’s approach to special education funding and consider specifically addressing issues such as more closely tying funding to the estimated cost of educating a special education student and the significant growth in students identified as seriously emotionally disturbed.

Acknowledgments

We appreciate the assistance we received from the following entities: the State Department of Education, legislative Budget and Policy Analysis, the Office of Attorney General, the State Board of Education, the Idaho Association of School Administrators, the Idaho School Boards Association, and the Idaho Education Association. We also appreciate the input received from Dr. Jay Chambers, a nationally recognized expert in school finance and education cost analysis.

Carrie Parrish, Maureen Shea, and Jeff Shinn of the Office of Performance Evaluations conducted this study. Hannah Crumrine of the office assisted with research, and Margaret Campbell was the copy editor.

Additional assistance was provided by three consultants:

• Bob Thomas, Robert C. Thomas & Associates and a Senior Principal Management Auditor at the King County Auditor’s Office in Seattle, Washington
• Kathleen Sullivan, Ph.D., former Professor and Director of the Center for Educational Research and Evaluation, University of Mississippi, Oxford, Mississippi
• Tedd McDonald, Ph.D., Associate Professor and Director of the Master of Health Science Program, Boise State University, Boise, Idaho