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School Finance Reform Update and Look Forward

School Finance Reform Update and Look Forward

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School Finance Reform Update and Look Forward

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  1. School Finance Reform Update and Look Forward Jennifer Priddy, Office of Superintendent of Public Instruction

  2. Overview • Financial Context for School Districts • Finance Reform • Funding Formula Revision • QEC Recommendations for New Funding • Next Steps in Finance Reform • Near-term Finance Outlook • 2010 and 2011 Legislatures • Impact on 2011-12 school year

  3. How much of basic education do levies subsidize? Financial Context

  4. Of $6.6 Billion in State funds, $5.14Billion is Driven Through a Single Formula Learning Assistance I-728 1. District Enrollment Pupil Transp. 2. Staff Ratios Bilingual 3. Salaries &Benefits SpecialEducation 4. Operating Costs (NERC) = State GeneralApportionment for Basic Education Levy Equalization Gifted

  5. Factors That Contribute to the Crisis #2 Districts do not have enough staff to provide ample opportunity to all students and keep the district running #3 Districts heavily subsidize compensation costs #4 Districts heavily subsidize basic operating expenditures Costs increase faster than state revenue and faster than local revenue 1. District Enrollment 2. Staff Ratios 3. Salaries &Benefits 4. Operating Costs (NERC) = State GeneralApportionment for Basic Education

  6. Factor #2 (Instruction): Districts Hire More Instructional Staff Than Are Funded by the State 92% of 2,770 Local-Funded Staff are Teachers In addition to the staff depicted here, federal funds and I-728 are used to employ staff.

  7. Factor #2 (Classified): Districts Hire Many More Classified Staff Than Are Funded by the State 43% of 2,735 Local-Funded Staff are Facilities Maintenance Personnel; 36% are School Office Personnel

  8. Factor # 3: Levies Subsidize Compensation Costs

  9. Additional Instructional Salaries • Total value is $711.1 million (not including National Board Bonus) • Not all of this is paid for by levy • Title I and IDEA support the additional salary of the staff employed on these programs • Same for I-728, LAP, TBIP • Basic and Special Education and CTE must be covered by levy, $608.8 million • Includes associated mandatory benefits

  10. Factor # 3: Levies Also Subsidize Increases

  11. Factor # 3: Annual Percent Increase in the Cost of Staff has Doubled

  12. Factor # 3: Additional Salaries Increased an Average of 9.6% Annually During Prior 5 Years School Year (Source: LEAP)

  13. Additional Salaries = TRI + Supplemental Salaries • TRI: Additional compensation associated with additional time (district- or teacher-directed), additional responsibilities, or incentives • All teachers in a district; typically education and experience drive amount • Supplemental Salaries: Coaching stipends, vocational leadership, department chair, curriculum committees, mentoring for students and/or other teachers, National Board bonuses • Some teachers; dependent on position/requirements • State has little data to quantify each

  14. Example Factors Driving Increases in Additional Salary National Board Challenging School Bonus and many more teachers qualifying Increase in extra duties (new curriculum adoptions) Higher or more frequent class size overload pay New incentives (seniority incentive) State COLA applied to TRI schedule COLA above state COLA

  15. Additional Salary is 18.7% of Base Salary 18.7% 17.5% 15.6% 15.2% 13.7% 14.5% 13.0% 11.9% Statewide Average Full Time Teacher Salaries with Additional Salary as Percent of Base (All Programs, Outliers Excluded, Minimal Activities Coaching) 11.8% 11.2% 11.5% 10.9% 9.9% 10.5% School Year (Source: LEAP)

  16. Compensation Dynamics and the Financial Crisis • State does not pay for enough instructional; class sizes are too high with too little support • State does not pay for enough classified staff • State does not pay for the full cost of Basic Education Classified and Administrative staff salaries • Cost of COLAs on the differential between State-funded and Actual Salaries is Significant • State does not pay for basic education-related TRI/Supplemental Salaries 72% of levy expenditures are for compensation costs, all of which increase faster than levy revenue

  17. Additional Salaries are an Increasing Share of Levy/LEA Revenue

  18. Factor #4: Districts Spent $500 Million More on NERC Than the State Funds 18-yr cycle 8-yr cycle

  19. Factor # 4: Nearly 13% of Districts Will Spend Nearly 100% of Their NERC Allocation on Utilities and Insurance Alone

  20. Pupil Transportation is Heavily Subsidized by Local Funds

  21. Levy Expenditures are Largely Basic Compensation State compensation changes and decisions impact this base also.

  22. New Funding Formulas are Designed and Ready for Adoption Funding Formula Revisions

  23. ESHB 2261 Set Us on the Path of Formula Revisions • Elements of an expanded “Program of Basic Education” and the funding to support it are phased-in and intended to be fully implemented by 2018 • This legislation includes the following: • Increased Instructional Hours • Enhanced High School Diploma requirements • New Transportation Funding Formula • All-Day Kindergarten added to “basic education” • Funding allocations and reporting on expenditures will use a prototypical school model • Governor vetoed: • Designation of Early Learning for disadvantaged students as “basic education” • Highly Capable safety net structure

  24. What is a Prototypical School Model? • Given a school of a certain size and demographic mix, what programs and services does this school “require” to provide students opportunity to meet standards? • Hours of instruction • Numbers and type of teachers (including course load assumptions) • Early childhood to K-12 articulation • Hours/days of professional development • Counseling, social/health and other support services • Based on Elementary of 400 students; Middle of 432; High School of 600 • Translate these resource assumptions and extrapolate to actual district and statewide enrollment

  25. Funding Formula Technical Workgroup Recommended the Details • OFM convened 14 members representing the WEA, PSE, WSSDA, WASA, AWSP, the Legislative Evaluation and Accountability Program Committee, and eight school district or ESD business officers (WASBO) from across the state • July – December 1 • Recommended the details of the funding formulas and the translation from the current formula to the new • QEC has recommended adoption of the translation that the FFTWG designed

  26. “Crosswalk” Takes Current Law Formula Below and… Per 1,000 Students • 49 Certificated Instructional Staff (CIS) (K-3) • 46 CIS per 1,000 (4-12) • 16.67 Classified Staff • 4 Certificated Administrative Staff (values above represent the Basic Education Act funding level, some values are enhanced in the operating budget (K-4 CIS and Classified))

  27. Translates Old Funding Levels into the New Structure

  28. FFTWG Approach • State funding translated into prototype categories proportionally based on how districts deploy those resources • We know districts buy more staff than the state funds • Assumed extra staff are peanut-buttered across the system, not selectively levy funded • Not perfect, but leaves less room for fiddling

  29. How Did FFTWG Calculate Class Size? • We know students and teachers; either display very low class size or assume planning time in the calculation • Crosswalk assumes 45 minutes of planning time for elementary teachers; 60 minutes for secondary teachers: results in percent of student instructional day • But, what is the student instructional day? • Crosswalk 5.6 hours elementary; 6 hours secondary • 13% planning time for elementary; 17% secondary • But, all teachers need planning time • State will assume it must “buy” 15.5% more elementary teachers and 20% more secondary teachers in order to have a teacher in front of all students at all times and give all teachers planning time

  30. Student Instructional Hours • Ends 30-year debate about what the state is paying for: • 1,008 hours elementary • 1,080 hours secondary • Means that the ESHB 2261 defined instructional hour goal is already being met • Does not mean that the state can implement Core 24 without more funding

  31. How Did FFTWG Approach Categoricals? Extra hours of instruction per week: • Class size of 15 • $0 for materials (but formula is defined) • $0 for central administration (but formula is defined) • Associated teachers are allocated full benefits and planning time (e.g., not extra contract time) • Additional work to define additional needs of older ELL and beginning ELL • Hold harmless for discontinuation of LAP concentration factors

  32. How Did FFTWG Approach Small School/District Factors? • Leave the current formulas alone, what we have today works just fine • Silent re: adoption in Basic Education Act

  33. How Did FFTWG Approach Central Administration and Support? • Central office support is a function of how many staff a district employs, not a function of how many students a district educates • Central office is a mix of classified employees and certificated instructional employees • The current allocations for CAS and CLS were divided between school-level staff, district-wide support, and central support • Remaining central support staff are then calculated as a percent of all other current state funded staff

  34. What is Complete? New Formula and Crosswalk for: • Staffing at: • Basic Education Act, • Operating Budget, and • I-728 levels • Categorical program (LAP, TBIP, Gifted) • Materials, Supplies, Operating Costs • State-assumed Planning Time • State-assumed Instructional Hours

  35. Formula Revisions: Progress to Date Official FFTWG Crosswalk is Complete • Modeled at state, district and school level • Cost neutral (less $3 million) • Tweaks occasionally since FFTWG report 12/1 • http://www.ofm.wa.gov/k12funding/report.pdf • HB 2776 and SB 6760 adopt new formula • Senate, perfectly mirrors FFTWG but also increased funding for utilities and insurance • House, perfectly mirrors FFTW and fully funds NERC/MSOC as a second step

  36. Why Go Through This? Transparency • We know class size • We know I-728 doesn’t move us very far • We know CTE class size is not really 19.5; it isn’t that different from high school • We know how many staff districts can afford to provide to a school • We know that planning time is “basic” • We know how much time districts can actually provide to struggling students and ELL • We know the state-paid curriculum adoption cycle

  37. New Formula Operational for 2011-12 School Year • 2010 Legislature: • Agree and adopt the specifics of the new formula in law • Appropriate the resources for Cal • Cal re-programs the apportionment systems for the new formula • 2011 Legislature adopts operating budget for the 2011-12 and 2012-13 school years with the new structure

  38. The New Funding Formula is Cost Neutral; Must Have Improved Funding Quality Education Council Recommendations

  39. QEC January 2010 Recommendations • Do not decrease funding in 2009-10 • Adopt Crosswalk/Baseline • 3-year phase-in of Transportation, beginning 2011-12 • 3-year phase-in of MSOC/NERC, beginning 2011-12 • 7-year phase-in of Full-day Kindergarten • 5-year phase-in of K-3 Class Size to 1:15, beginning 2011-12 • 3-year phase-in of Early Learning for at-risk 3&4 year olds, beginning 2011-12 • Other recommendations in report: http://www.k12.wa.us/QEC/default.aspx

  40. Workgroups • Levy: starts a bit earlier and finishes sooner • Compensation: • Senate, starts 1 year earlier, finishes sooner • House, start-date is same, finish sooner • Formula: continues and re-convened periodically by OFM

  41. 2010 Bills • HB 2776: Codifies QEC recommendations • Early Learning in separate legislation • SB 6761: Does not reflect QEC recommendations • FDK, yes • Pupil Transportation, no • NERC, partial utilities/insurance in SB 6760 • K-3 class size, no

  42. Next Steps Must Address Staffing Levels and State-Funded Compensation Next Steps in Finance Reform

  43. How Many Staff Should the State Allocate for Student Support? • Librarians • Counselors • Nurses and Social Workers • Instructional Specialists • School Office • Technology

  44. How Much Should the State Fund for Facilities Maintenance? • Goal for facilities maintenance supplies has been defined by QEC • Goal for facilities maintenance staff has not been addressed by QEC • How much is the state funding per square foot? • How does this compare to state facilities? Washington community colleges and universities? Schools nationally?

  45. How Much Should the State Allocate for Categorical Programs? • Is 1.5 hours per week for struggling students, 4.8 hours per week for ELLs, and 2.2 hours per week for gifted students the appropriate number of hours? • What hours of extra instruction, or other program models, are successful? • What funding level in this formula would drive enough money to implement proven models? • What are the implications of this data for accountability?

  46. Grades 4-12 Class Size • Are these class sizes the state’s funding goal for 2018? Or does the state think that lower class sizes are necessary to meet our student achievement goals? • When the state adopted its learning expectations, what class size was assumed? • How does the state reconcile funded class size, funded assistance for struggling students, and learning expectations that are increasing? • What are the implications of the state-funded class size level on compensation?

  47. Lots of Work Beyond Funding Values A cohesive funding structure will include: • Improved teacher compensation system • Improved levy system (lid and/or equalization) • Improved classified/administrator salary allocations • An accountability system • A schedule of funding phase-in between now and 2018-19

  48. Compensation Questions for Future Legislatures Classified and Admin Salary Allocations • What state allocation level and method is the state’s responsibility? • Should there be a differential allocation by region? Teacher Compensation • What salary structure should the state deploy? • What salary level should the state set as its responsibility; for what components of salary? • Should there be a differential allocation by region?

  49. New Funding Must Start in 2011-12 and Will Likely Only Hold the System Steady Near-term Financial Outlook

  50. 2009 Legislature • State deficit for 2009-11 biennium, totaled $9 billion • $3 billion in ARRA total • Impact on schools • 75% reduction in I-728 • No COLA • Use of federal stimulus for General Apportionment, I-728, and LEA • Cut $337.3 million from schools for 2009-10 SY • Cut $368.2 million from schools for 2010-11 SY