Money, Schools and Justice

ITEM: In Oregon, budget crises led nearly 100 school districts to cut days from the 2002-2003 school year. Many may do so again this year. Portland officials have proposed raising the student-teacher ratio from 30:1 to 42:1.

ITEM: In Boston, 800 teachers have been laid off, the largest staff cuts in 20 years.

ITEM: Financially pressed school systems are increasingly turning to busing fees to raise money. Communities from New Jersey to Hawaii now make some students pay to ride the school bus. “It’s something that everyone is looking at,” said Mike Martin, executive director of the National Association for Pupil Transportation, an industry group.

ITEM: “The states’ most serious fiscal crisis in more than half a century has worsened to the point that more than a third of the states are moving to cut millions — in some cases billions — of dollars from public school budgets . . . with 85 percent of district budgets tied up in salaries and benefits, cuts fall heavily on the other 15 percent — teacher training, after-school enrichment, even bathroom cleaning contracts.” — Washington Post

Budget crises and belt-tightening will be the back-to-school themes in many districts this fall. A stagnant economy and the cumulative effects of years of state budget crises are squeezing school districts at a time when expectations and demands for improved school performance are at an all-time high. With states and districts reeling from the growing impact of the federal No Child Left Behind (NCLB) act (which one recent study projected could require a 30 percent increase in state education funding — a sum approaching $150 billion), the fundamental flaws in the way the United States finances public education are coming into focus as never before.

A Flawed System

Ever since the U.S. Supreme Court declared in 1973 in Rodriguez v. San Antonio that education was not a fundamental right guaranteed by the U.S. Constitution, equity advocates and public interest lawyers have fought a state-by-state battle against the “savage inequalities” of school finance systems, which deliver drastically different educational experiences to students from different class, race, and community backgrounds.

Typically, these inequities can be traced to wide gaps in per-pupil spending among districts, and to finance systems that rely heavily on unequal property tax bases as the primary source of funds for education. In many ways, these funding mechanisms simply mirror the growing race and class inequality that exists all around us in an era of huge tax cuts for the wealthy and spending cutbacks for just about everyone else. The National Priorities Project, for example, estimates that this year’s nearly $55 billion in tax cuts, given largely to the wealthy, could provide Head Start placements for more than 7.6 million children not currently served by the program, which is currently under attack by the Bush administration.

Given its deep roots, it’s not surprising that inequality in school funding has been hard to overcome, despite a growing number of high-profile court cases. Since the early 1970s, high courts in more than 30 states have issued decisions in school finance cases. About half have declared existing funding systems illegal or inadequate and have mandated a variety of corrective measures. In the remaining cases, courts have rejected the challenges, contending that the issue is a legislative matter, or they have narrowly defined the state’s obligation to provide education to all.

But even where courts have declared funding systems illegal, equitable solutions have been far from certain. As New Jersey’s Education Law Center has pointed out: “Law books are filled with wonderful paper victories which have never been implemented.” The New Jersey Supreme Court has declared the state’s finance system legally inadequate in various ways no less than nine times since the early 1970s, yet the state is still struggling to devise an equitable funding formula to meet the court mandates. Other states have similar histories of interminable litigation.

By themselves, court rulings have been insufficient to assure equity for several reasons. While glaring disparities in school funding may persuade judges to order reform, it has been almost impossible to prevent governors and state legislators from evading or limiting the impact of the court orders.

Restrained by separation-of-powers concerns and the prevailing conservative political climate, most courts have been reluctant to go very far in specifying remedies. The courts generally have given states wide latitude to proceed with half measures, sometimes promising further review if reforms prove inadequate. At times judges, governors, and legislators have engaged in prolonged, sometimes ludicrous institutional charades over how much inequality is permissible, while generations of school children remain trapped by injustice.

The Impact of Tax “Reform”

In some states, tentative steps toward equity taken under court pressure have been thwarted by the rising tide of anti-tax populism. California is a prime example. The state’s 1972 Serrano decision was one of the first rulings that required a state to correct massive inequities among districts in educational services. Some efforts were made to equalize spending by revising aid formulas and transferring some property tax revenues from wealthier to poorer districts. But these efforts were derailed by Proposition 13, a 1978 ballot initiative that capped property taxes in one of the opening rounds in the “tax revolt” that came to shape local, state, and federal tax policy in the 1980s and 1990s (and which, despite promises of relief to hard-pressed taxpayers, has succeeded primarily in swelling state and federal deficits, starving public services, and redirecting wealth upward). As a result of Proposition 13, California was forced to assume a greater share of local school spending, which did lead to a degree of greater “equity” among districts. But there was also a dramatic decline in spending on schools in California relative to other states. In the 1960s, California was fifth in per-pupil spending; by the end of the 1990s it was 30th, and well below the national average. Class size in California is now among the highest in the nation. Because of Proposition 13 and its offspring, support for California schools has tended toward “equalization” at a level that keeps them in a state of perpetual budgetary crisis.

When courts limit themselves to generalized orders for reform, the focus often turns to legislative and public debates about how educational equity should be defined and about what alternatives there are to funding systems based on property taxes.

The property tax issue is both a root problem and, in some ways, a diversion from the core issue of equity. Local property taxes still supply about 44 percent of all school funds. State support varies, but on average provides about 49 percent. The federal government’s share of education spending, which peaked at about nine percent in the 1970s, has dropped to about seven percent.

Since the distribution of property in the United States has never been more unequal, and since many communities have never been more segregated by race and class, it’s inevitable that schools heavily dependent on property taxes will be unequal. In fact, with more than 16,000 separate school districts, the reliance on property taxes functions as a sorting mechanism for class and race privilege, and allows pockets of “elite schooling” to exist within the public system. Any real chance of increasing and redistributing education resources requires fundamentally changing the connection between school spending and local property taxes.

To sever this link, however, will require a political, rather than strictly legal, strategy that will need to overcome several obstacles. In many respects, the existing system of funding education through local property taxes serves the agenda of the budget cutters and conservatives who currently dominate state and local governments. When local communities must assume growing fiscal burdens for schools by more heavily taxing local residential and commercial property, it creates a strong budgetary pressure for austerity. When local school budgets are presented like sacrificial lambs to hard-pressed local taxpayers, (who never get to vote on tax abatements for real estate developers or whether the Defense Department should build another aircraft carrier), the budget process for schools becomes driven not by what schools and children need, but by how to keep the tax rate flat. Add to this the fact that only a fraction of the local population generally has children in the schools, and an even smaller fraction (about 15 percent) usually votes in budget referendums, and you have a system that works well to undercut, not sustain, quality education.

F actor in the growing racial divide between those most likely to vote in local elections and the public school population, and you have a system that regularly keeps communities divided. The reliance on property tax funding for schools, then, works at one level to create inequality, and at another as a vise to squeeze local budgets. For these reasons, there are many interests who want to keep it.

Nevertheless, there is still a growing effort to consider alternatives to funding based on local property taxes. This effort is fed by court orders, heavy local tax burdens, and the ongoing national debate about education reform. One set of fiscal reforms is geared to “recapturing” or redistributing property tax revenues from richer districts to poorer ones. Another seeks to replace property taxes with other taxes — usually sales taxes — and have the state assume a larger fraction of overall school spending. Still another set of proposals involves redefining state aid formulas so that fewer funds go to districts as “flat grants” regardless of need or local wealth, and more through “foundation formulas” which guarantee a base level of funding for each student and which are calculated in ways that promote greater equalization.

The problem is that no particular financial mechanism, in itself, guarantees either equity or quality in education. It’s true that relying on some taxes, like property and sales taxes, tends to be regressive, while progressive income taxes are more fair ways to raise revenues. But choosing a particular funding mechanism does not assure that adequate funds will be available.

One danger in the move to reform existing funding systems is that states will adopt new ones that will still deliver inadequate or inequitable levels of education. In fact, a number of states have adopted new formulas promising better, more secure funding, only to cut or modify them once the higher costs became clear. If the controlling motivation is a desire to cut property taxes or hold down educational spending, rather than promote quality and equity, it may not matter what fiscal mechanism is chosen to do the job.

Another response to court challenges has been to try to define what a “thorough” or “adequate” education means, and then peg funding formulas to the cost of providing those elements. Here again, debate persists over what level of educational services the state is obligated to provide for all.

Neighboring States, Different Outcomes

This tension is reflected in two key court cases in the neighboring states of New York and New Jersey. These landmark legal battles illustrate why the legal front is but one part of the struggle for equitable school finance.

The Abbott decision in New Jersey is arguably the single most progressive school funding ruling in the history of school finance cases. It is the product of more than 20 years of litigation and advocacy by New Jersey’s Education Law Center and includes at least 10 separate state Supreme Court rulings. It has also prompted countless evasive maneuvers by legislators and governors who have resisted the court’s decisions and mandates.

Essentially, the New Jersey court ruled that the state’s system of school funding, which relies heavily on unequal property tax bases in nearly 600 separate districts, denied children in the state’s urban areas equal access to the “thorough and efficient” education guaranteed by the state constitution. The Education Law Center documented gross inequality and pressing need in urban districts, and the court established unequivocally that it was the state’s obligation to redress this inequality in its public schools.

Where Abbott really blazed new ground was in the standard it set for this equity mandate. Throughout the long years of litigation, the court had repeatedly pressed the New Jersey Depart-ment of Education (DOE) to define and itemize the essential elements of a “thorough and efficient” education. Repeatedly, the DOE and successive administrations avoided this request, fearing that a generous definition would obligate them to provide such services to poor districts. At the same time, the department was wary of defining too low a level of education services for fear that this would open up a Pandora’s box in New Jersey’s middle-income and wealthy districts, which would then be forced to justify to angry taxpayers expenditures above some state-defined minimum. A large gap between a state-defined minimum and the prevailing practice in most New Jersey districts (which collectively averaged among the highest per-pupil spending levels in the nation) would also call attention to the very inequality the state court was seeking to address.

Frustrated by the DOE’s evasions, the state court ultimately took as its standard the level of spending in the state’s richest and most successful school districts. Arguing, plausibly, that these districts obviously knew what it took for kids to succeed educationally, the court ordered the state to raise the spending level of the state’s poorest districts to the average level of the 100 richest. And, citing deeper social problems and years of deprivation, the court directed the state to compensate by spending money in poor districts above and beyond parity for regular educational programs. Abbott remains, as the Education Law Center declared, “the first decision in the 20-year history of school finance reform to establish an equality standard for the allocation of education resources to poor urban children.”

By defining equity as equivalency in per-pupil spending with the richest districts, plus additional spending to compensate for greater need, the New Jersey Supreme Court defined equity at the highest levels of spending. Moreover, the court’s decision was phrased in striking language that made clear the implications of the social problems it was addressing: “The fact is that a large part of our society is disintegrating, so large a part that it cannot help but affect the rest. Everyone’s future is at stake, and not just the poor’s,” wrote the court.

This extraordinary decision opened up a new era of reform in New Jersey’s urban districts. Several billion dollars in new funds have been allocated in the five years following the 1998 Abbott ruling for court-ordered investments in early childhood programs, whole school reform initiatives, supplemental health and social services, extended day and summer programs, a massive program of school construction, technology upgrades, and other improvements.

To be sure, struggles over the implementation and effectiveness of the Abbott mandates continue. The state continues to resist full funding of all Abbott programs. Some reform initiatives, like the use of “whole school reform models,” have been fitful and uneven, while others, like steps towards universal preschool enrollment, class-size reduction, and facilities upgrades, show extraordinary promise. Another significant long term issue is that while Abbott addressed funding equity for poor urban districts, it did not fix the state’s overall school finance system. More than 400 so-called “middle districts” remain squeezed by property tax formulas and the state budget crisis. Poor rural districts have had little success gaining access to Abbott levels of support. Unless remedies are found for these problems, sustaining Abbott formulas may be difficult as urban, suburban, and rural districts are pitted in competition for an inadequate pool of funds.

Gold Standard

Nevertheless, Abbott remains the “gold standard” for school funding equity cases. While Abbott levels of funding for poor districts have been in place for less than five years (as compared with perhaps 100 years or more of separate and unequal funding arrangements), Abbott is already showing signs that real equity in school spending is a necessary — if not sufficient — condition for effective reform.

But if Abbott set an equity standard for the education of poor children in New Jersey, other courts have responded quite differently. Just next door in New York, the Coalition for Fiscal Equity (CFE ) mounted a broad campaign of public engagement and advocacy in support of a legal challenge to the state’s school funding system. That system delivers more than $1,000 per pupil less to New York City’s 1.1 million students, 84 percent of whom are students of color, than it delivers to other districts in the state. (See page 31 for related article.) The CFE won a round in January 2001 when a New York judge ruled that the school funding formula was “inequitable and unconstitutional,” and failed to meet the state’s constitutional guarantee of the right to a “sound basic education.”

But in a striking reversal, a state appellate court overturned that finding and held that the state was obligated only to provide “the skills required to enable a person to obtain employment, vote, and serve on a jury” and that these skills are “imparted between grades eight and nine.” In other words, a “minimally adequate” middle school education was sufficient to meet New York legal requirements. “Society needs workers at all levels,” the Appeals Court wrote provocatively, “the majority of which may very well be low level.” The state and its experts argued that while poverty and related family crises could be reliably identified as the source of unequal educational achievement, New York schools were not obligated to address these needs in their school programs.

In June, the state’s highest court of appeals overturned the appellate court’s ruling, rejecting the “eighth grade” standard and reinstating the lower court’s guarantee of a “sound basic education.” It found that as a result of New York state’s school funding system, “tens of thousands of students are placed in overcrowded classrooms, taught by unqualified teachers and provided with inadequate facilities and equipment . . . The number of children in these straits is large enough to represent a systemic failure.” The court gave the New York state legislature until July 2004 to craft a plan that would provide a “sound basic education” to all students.

This latest ruling was a clear victory for equity advocates. But it also left large loopholes for the legislature and the governor (who staunchly opposed the challenge to the state’s funding system) to evade its implications. Unlike Abbott , the New York decision did not specify the educational programs or spending levels required to deliver the “sound basic education” it said students were entitled to receive, explicitly leaving that determination to the legislative process. This ensures an extended political (and perhaps additional legal) struggle, in the midst of perpetual budget crisis, to turn the court’s decision into real educational equity.

Seeking New Strategies

Because different state courts have reached such different conclusions about what constitutes legal equity in school funding, states have been implementing finance systems that vary widely, from those applying an equity standard to those based on a minimal one.

The divergent court decisions reflect the underlying limitations of a state-by-state process. Even when a legal challenge succeeds, it usually produces a court ruling that is turned over for implementation to a state legislature dominated by politicians who generally don’t represent those on the short end of school spending.

While legal advocates have made important progress toward narrowing some educational inequities and raising key issues, more substantial progress may depend on finding new strategies. Along with legal challenges, aggressive public organizing that mobilizes broad constituencies, clarifies issues, and debates proposed solutions is critical to building the kinds of coalitions and political pressure needed to force action.

Even where it suffers setbacks, a strategy of public coalition building is likely to promote grassroots activism and coalesce a progressive constituency for school change on a range of issues that includes funding.

Over the long term, it will be necessary to open up other fronts in the campaign for funding equity that reach beyond state borders. To really make good on promises of educational equity and excellence will take tens of billions of dollars over many years, the kinds of sums that have been poured into the military for decades. For example, the $87 billion that Bush requested for the next year of the Iraq war could pay the salaries of more than 1.6 million new elementary teachers. It is also equal to the combined budget deficits in all 50 states for fiscal 2003-04.

Federal reports have documented a need for more than $110 billion in construction and renovation of K-12 facilities alone (and such capital costs, while far greater in poorer areas, are often not even included in the per-pupil expenditures that are generally the focus of equalizing efforts). Only a national effort could generate the necessary funds.

Meanwhile, the United States continues to trail other economically developed societies in educational investment. A 2002 report from the Organization for Economic Coopera-tion and Development, for example, showed that, measured as a percentage of GNP, the United States was tied for twelfth among industrialized nations in the amount of public dollars spent on education. Federal funds for local schools dropped to their lowest post-World War II levels in the 1980s, and have risen only slightly since, according to the Digest of Education Statistics.

Finally, the federal government’s willingness to support educational equality has been waning since the Civil Rights era. Increasingly, federal courts have ruled that “separate and unequal” educational programs, in themselves, are not illegal, unless conscious, deliberate “intent to discriminate” can be proved. Combined with persistent inequalities in school finance, this legal doctrine nourishes the existence of a dual school system, in which students of color systematically attend schools with less funding in segregated settings. This has prompted some legal experts to consider a new equity challenge in the federal courts.

“Of all developed countries, only two systematically have spent less money educating poor children than wealthy children,” noted Paul Tractenberg, a founder of New Jersey’s Education Law Center. “One is South Africa [under apartheid]; the other is the United States.” Tractenberg argues:

In the federal courts, now it’s clear that de facto segregation alone doesn’t violate the federal constitution. And it’s clear that unequal funding by itself is not a federal constitutional violation. But if you put the two together, aren’t you creating a situation which wouldn’t have even satisfied the standards of Plessy v. Ferguson [the historic 1896 U.S. Supreme Court decision that set a standard of “separate but equal”]? So how could it satisfy a body of contemporary law that is presumably more demanding in these terms than Plessy was? The question is whether the federal courts might be made to view this issue differently than they did in the past.

New legal pressure on the courts to make the federal government give tangible substance to promises of equality through greater investment in schools could eventually open up the federal treasury to equity advocates. But like state legal strategies, such success would also likely depend on broader public campaigns to reorder the nation’s social priorities. That, after all, is what equity in school funding is ultimately all about.