foundation budget, net school spending, total per pupil expenditure, and teacher salaries
Financial investment in public education refers to how school districts finance education and ways in which they allocate those finances.
Why does financial investment in public education matter?
Education finance in the United States is characterized by large disparities in funding for K-12 education among schools, local school districts, and states. Historically, this is due to most states primarily relying on local property taxes as their main source of funding public education. Property taxes in turn are based on property values that are unequally distributed across school districts and states. As a result, it is harder for districts with small property tax bases to generate local revenue for schools than it is for districts with large property tax bases. To add to the problem, districts with students that have more needs are often the ones with the smaller property tax bases. Although federal and state governments attempt to offset the effects of low wealth and concentrations of students with high needs, significant disparities remain both within and between states.
A report by Education Trust shows significant educational inequity across the nation. Equity is measured in terms of the variation in per-pupil revenues among school districts in a single state. There is a nationwide disparity between high-poverty and low-poverty districts of $1,348 per student which is based on the difference between the top 25% and the bottom 25%. Education finance inequities are linked to varying school performance and academic achievement. The consequences of funding gaps are such that low funded public school districts can’t provide the proper materials, services, technology, quality teachers, environment, and overall adequate education students need to succeed. Studies have shown that 40% of the differences in achievement outcomes across the national sample of schools is attributed to the quality of schools[i]. Inadequate education has an impact on graduation rates: the dropout rate of high school students living in low-income school districts is six times higher than the rate of their peers from high-income families[ii].
How do we measure financial investment in public education?
The Public Policy Center measures investment in public education through net school spending and foundation budget, as well as total per pupil expenditure and teacher salaries.
Every year the state sets the foundation budget for all districts, which represents the minimum level of spending required. It is adjusted annually to reflect changes in enrollment, demographics, inflation, and geographical wage differences. Net school spending is the actual expenditure of a school district. It includes all funds expended by the School Committee including those outside the general fund, such as grants, private donations, and revolving accounts.
The state also determines each district’s minimum local contribution that is part of the foundation budget. Community’s property values and residents’ incomes determine the local property taxes share of the foundation budget. The rest of the foundation budget is funded by the state through Chapter 70 Aid. It is the Commonwealth’s primary program for distributing its portion of K-12 public education funding to the state’s 328 local and regional school districts.The Chapter 70 formula aims to ensure that each school district has sufficient resources to provide an adequate education for all of its students, taking into account the ability of each local government to contribute. The formula is designed to have an equalizing effect, with less wealthy districts receiving more state aid than wealthier ones.
Total per pupil expenditure is the overall amount of dollars spent per pupil, including teaching, maintenance, and administration. It is calculated by dividing all of district’s operating expenditures by its average pupil membership. Expenditures from all funding sources are included, with the exception of capital costs (such as the construction or renovation of buildings). Average pupil membership includes all students who receive services in the district’s schools, as well as those who attend out-of-district settings such as special education schools, charter schools, or other school districts to which tuition must be paid by the sending district.
Finally we will measure investment in public education through teacher salaries. Research confirms that teachers are crucially important to students’ success. In the McKinsey & Company report “How the World’s Best Schools Systems Come Out on Top”, high new teacher salaries were among the chief factors that differentiated top-performing school systems from their less effective counterparts. Therefore, it is an important indicator for how school districts are allocating funds for public education.
How is Fall River doing?
1.Proportion of foundation budget covered by local contribution: 19.64% (FY17)
According to a report by MassBudget, Massachusetts schools rely heavily on local funding sources, more so than most other states. This makes it more difficult to provide sufficient funding for public education for a city like Fall River, which has a residential property tax rate of 13.63% as of 2016. This rate ranks the city in 245th place out of 351 communities statewide, according to the Boston Business Journal. The median home value in Fall River is $232,500, while the state average in Massachusetts is $333,100. The average Massachusetts municipality contributes local revenue to fund an average of 57.23% of the foundation budget, while Fall River funds just 19.64%.
The following chart breaks down the foundation budget by the local contribution and Chapter 70 Aid by percentage. Fall River and four other districts are presented for comparison. It can be seen that Fall River heavily relies on state aid as compared to other school districts, which can have a negative impact when the state makes budget cuts.
2. Percent net school spending in relation to foundation budget: -0.03%
The chart below illustrates how much the school district actually spends as a percentage of what they are mandated to spend by state – Fall River currently spends 0.03% less than the amount required. While Fall River has spent over the foundation budget in fiscal years ’08, ’12, and ’13, since then it has spent significantly less, even below the foundation budget, whereas districts statewide spend an average of 23% more than their required budget. This shows that the district is unable to raise additional funds to invest into the schools above what is required.
3. Total per pupil expenditure: $14,076 (FY15)
Fall River spends $14,076 per pupil compared to $14,942 statewide.In the following chart total per pupil expenditure is graphed over six years for Fall River, New Bedford, and the state average. It can be seen that the spending for Fall River has generally increased and but has declined since fiscal year 2012.
4. Teacher salaries: $66,693 (FY15)
This chart portrays average teacher salaries over six years for Fall River, New Bedford, and the state average. Salaries have steadily increased, raising above the state average in FY10 but dropping back down in FY12.
How is New Bedford doing?
1. Proportion of foundation budget covered by local contribution: 16.08% (FY17)
According to a report by MassBudget, Massachusetts schools rely heavily on local funding sources, more so than most other states. This makes it more difficult to provide sufficient funding for public education for a city like New Bedford, which has a residential property tax rate of 16.49% as of 2016. This rate ranks the city in 136th place out of 351 communities statewide, according to the Boston Business Journal. The median home value in New Bedford is $206,900, while the state average in Massachusetts is $333,100. New Bedford uses local revenue to fund just 16.08% of its foundation budget, while the average Massachusetts municipality contributes 57.23% of local dollars toward their school district’s budget.
The following chart breaks down the foundation budget by the local contribution and Chapter 70 Aid by percentage. New Bedford and four other districts are presented for comparison. It can be seen that New Bedford heavily relies on state aid as compared to other school districts, which can have a negative impact when the state makes budget cuts.
2. Percent net school spending in relation to foundation budget: -1.31%
The chart below illustrates how much the school district actually spends as a percentage of what they are mandated to spend by state – New Bedford spends 1.31% less than required by the state. Districts statewide spend an average of 23% more than their required budget. This shows that the district is unable to raise additional funds to invest into the schools above what is required.
3. Total per pupil expenditure: $13,144 (FY15)
New Bedford spends $13,144 per pupil compared to $14,942 statewide. In the following chart total per pupil expenditure is graphed over six years for New Bedford, Fall River, and the state average. It can be seen that the spending has generally fluctuated over time. While per pupil spending for New Bedford was once above the state average, in recent years the level has dropped and remained below the state average.
4. Teacher salaries: $73,320 (FY15)
This chart portrays average teacher salaries over six years for New Bedford, Fall River, and the state average. Besides the jump that occurred in FY08, salaries have remained stable and are now around the same as the state average.
What’s being done to address financial investment in public education, and where can I learn more?
As the Standard Times outlined in a May 2013 article, Governor Deval Patrick succeeded in increasing Chapter 70 Aid, although with a lower hike than proposed. The governor also proposed requiring districts that are not meeting their target amounts to increase their local contributions. The article notes that the funding formula, which now steers money to lower-income cities and towns, still has not changed.
Massachusetts Budget and Policy Center works to inform the conversation around education funding in the state. It creates conversation about what has worked in the past, what has been successfully changed, and what still needs to be done. In its recent report, it was noted that “While school funding is more equitable than it was pre-Ed Reform, the state’s definition of spending adequacy, the foundation budget, may be well out of date. One likely pathway forward is conducting a comprehensive reevaluation of the state’s foundation budget.”
Data sources and methods:
All data was found on the Massachusetts department of Elementary & Secondary Education website. Specifically, it details school finance and district profiles, providing all relevant data.
- [i] Borman, G., and Dowling, M. Schools and Inequality: A Multilevel Analysis of Coleman’s Equality and Educational Opportunity Data. Teachers College Record: 2010, p. 112.
- [ii] McKeon, Denise. High School Attendance, Graduation, Completion, & Dropout Statistics. National Education Association: 2006.