Schools money plan faulted
By Beverly Creamer
Advertiser Education Writer
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An independent analysis raises fundamental questions about the adequacy of the state's education funding and whether enough money is being allocated to educate students from disadvantaged families and those with limited English proficiency.
The report by two Mainland professors praised the state for moving in this direction, but criticized the Board of Education for choosing to make the changes slowly.
"Hawai'i's move to a weighted student formula takes an important step forward in creating a rational system for resource allocation across Hawai'i's schools," said the report dated June 19.
"However, the relatively slow pace of the proposed phase-in will substantially dampen these efforts in the short term. First-year funding is expected to be only marginally more rational than current funding."
The report also found serious challenges to implementing the formula, including high levels of poverty, the failure to put the best teachers in the highest-need schools and what it called an underfunded education system.
The report is by Bruce D. Baker, associate professor from the Institute for Policy and Social Research at the University of Kansas, and Scott Thomas, associate professor from the Institute of Higher Education at the University of Georgia.
The state's "weighted student formula" being used for the first time with the school year that begins July 27 — albeit in a form limited to 10 percent the first year — allocates money to schools based on enrollment and uses a system of assigned "weights" to add money to students with extra needs, such as those who speak English as a second language.
The formula will take money from some schools and give to others.
"The trick is to be able to drive more money where it's needed most while not substantially taking away money from others," said Baker, reached last week at the University of Kansas.
MORE MONEY
This is where Hawai'i's formula has generated considerable concern. Some schools were scheduled to lose hundreds of thousands of dollars before lawmakers allocated an extra $20 million to assure that no schools would lose money under weighted formula financing this first year.
"If some have to gain a lot, then some have to lose a lot and that's clearly what exists now," Baker said. "If they want to fund on a need basis without anyone losing, then they need a whole lot more money."
Ultimately, for the best outcome for students, Baker said, "it depends on how much more they're willing to put into the system."
A year ago another independent study by the Chicago-based accounting firm Grant Thornton LLP said Hawai'i's $2.2 billion-a-year public school system needed an additional $278 million annually to be financed adequately.
Lawmakers are responding. In an attempt to catch up, especially with long-overdue repairs and maintenance, legislators this year increased funding dramatically, giving more than half the state's $600 million surplus to the DOE. That included $20 million legislators added to the weighted formula to make up funding cuts schools expected to suffer.
But the DOE can't count on receiving that additional money again next year.
CONCERNS LINGER
The conversion to a new way of allocating money to schools is one of the most substantial changes to the state's public education system in decades but it has generated widespread concern about fairness and the sustainability of small, primarily rural, schools under the formula.
This new report was sought by the Board of Education to help evaluate the formula and the weighting system.
However, a committee considering changes to the formula says there's not enough time to incorporate the Baker/Thomas recommendations and finish its work on time. Instead, they'll leave that analysis for the next committee a year from now. The Legislature mandated an annual evaluation.
"We can look at the recommendations but I don't know if we can change the whole direction of the ship because of the report," committee chairman Bruce Coppa said last week. "We've taken a lot of issues and tried to address them, and we're not going to throw all our work out the window because of that report."
Committee member Carl Takamura urged the group to listen to the report's concerns about weights being too low for poor and ESL students.
"I think that's kind of significant," said Takamura, executive director of the Hawai'i Business Roundtable. "What spurred the weighted student formula was that whole issue."
Too slow or too fast?
Despite the report's criticism about not moving fast enough, one BOE member is calling for going even slower in continuing with any formula, noting that schools could still have autonomy in spending even without a final formula.
"Let's slow down and do a better job at creating a fair formula," said Garrett Toguchi, who chairs the BOE's committee on finance.
"In the meantime, let's strengthen the decentralization part. If principals have more autonomy over spending they would still be able to make changes. ... Unless the new committee can come up with something that says 'here's the cost of educating a student,' then I would be very cautious about moving ahead with the (current) formula as it looks."
Agreeing with that is William Ouchi, a professor of corporate renewal at the University of California Los Angeles who is a strong proponent of weighted student funding and provided one of the philosophical cornerstones for changes in the Hawai'i system as a consultant to Gov. Linda Lingle.
"The plan they put forward was put forward in haste," he said of the current formula, when reached by phone in Los Angeles.
"I don't know of any experts they consulted. I don't think they did as thorough a job as they should have. What happened was they put forward a plan not sufficiently developed and when people objected and saw the things needing to be remedied, they had no choice but to pull back."
OBSTACLES REMAIN
In their report, Baker and Thomas caution that the schools face many challenges in implementing a weighted formula, including:
"The poverty rate in Hawai'i's public schools is higher than it would otherwise be," the report notes, "forcing a situation where already relatively impoverished schools are being asked to forfeit resources that will be redirected to even more impoverished schools."
Hawai'i's beginning teachers make $36,500, but the state average of $45,450 is slightly less than the national average teacher salary of $46,500 in 2004, according to a survey by the American Federation of Teachers. However, that does not take into consideration Hawai'i's high cost of living.
Baker and Thomas also said the state needs to look more closely at the distribution of its best teachers. They recommended creating incentives to get top teachers into high-need schools and giving principals greater latitude to offer salary bonuses and incentives for teachers in certain fields or with certain qualifications.
COMPARING WEIGHTS
In expanding on their concerns that the weights are too low for poor students and those who aren't native English speakers, the authors compared the Hawai'i weights to those used in other states and to studies showing what it costs to achieve effective gains among these students.
For instance, in looking at the ESL issue, Hawai'i gives each of those students a weight that results in an extra $809 in budgetary allowance — compared to studies that show it costs from $2,400 to $3,800 per pupil to see gains in the performance of these students.
For poor students, who receive an additional weight that amounts to $429 per year, the authors say studies have shown that students only show gains if the range of funding is 2.7 to 6.6 times higher than that, or between $1,160 and $2,830 per student.
"Cost studies done in other states tend to suggest (disadvantaged students need) 60 to 100 percent higher than the average child, which is a lot bigger than the weight they've (Hawai'i) thrown on the formula," Baker said.
'POLITICAL MINEFIELD'
Baker cautioned that the difficult exercise of applying weights to school funding can become a political battlefield. This philosophy has been around since the 1920s, he said, but is more easily applied among districts where schools are relatively uniform, such as in big cities like Seattle and Houston.
"Every district can come up with a reason why they need a weight, and then if they can make the best argument they end up with the best adjustment. As soon as you start to shift like this then you're going to realize who feels they're being disadvantaged. It becomes a political minefield."
That's already happening in Hawai'i. Amid concerns that small schools would be disproportionately penalized by the formula, the Legislature responded with an additional $20 million to make whole all the schools that were losing money.
Now, with a second Committee on Weights considering creating a basic "foundation" grant of between 18 percent and 25 percent of the budget that would go to each school regardless of size, large schools are complaining they would be shortchanged under that proposal.
Some principals worry that the formula is pitting one school against another.
Waipahu High School principal Pat Pedersen told the committee that under a 25 percent foundation grant, the Leeward schools would lose $12.3 million, with the Waipahu complex alone losing $4 million. Waipahu High would lose $1 million.
Instead, Pedersen recommended a foundation grant of 10 percent to 12 percent.
"Small schools can be helped without killing large schools, complexes and districts," she wrote.
The Baker/Thomas report suggested creation of a reasonable cost adjustment for small, remote schools.
Ouchi suggested around $250,000 for elementary schools; $300,000 for middle schools and $500,000 for high schools.
Bob Campbell, the DOE's project manager for the weighted student formula, welcomed the Baker/Thomas report as yet more eyes looking at the state's attempts to redistribute education resources in response to student need.
"It just gives us more information," he said. "The (new) Committee on Weights is addressing some of these issues as well. This sheds a little more light on areas that need to be considered again."
Campbell said he agrees with the perspective offered by committee chair Coppa, who said: "This was a first step and there was no sense it was all going to be done in one year. ... There would be further adjustments and tinkerings."
Reach Beverly Creamer at bcreamer@honoluluadvertiser.com.
