Commission on Education Finance, Equity, and Excellence

Minutes

June 7, 2001

The Commission on Education Finance, Equity, and Excellence held its first meeting of the 2001 interim on Thursday, June 7, 2001, at 1:00 p.m. in the Joint Hearing Room, Legislative Services Building, Annapolis, Maryland. The following members were present:

Dr. Alvin Thornton, Chair
Mr. Joseph F. Anderson, III
Delegate Paul Carlson
Senator Michael Collins
Delegate Norman H. Conway
Delegate Jean B. Cryor
Secretary T. Eloise Foster
Dr. Nancy S. Grasmick
Delegate Sheila E. Hixson
Delegate Carolyn J. B. Howard
Ms. Elizabeth K. Moyer
Senator Gloria Lawlah
Mr. William T. Middleton
Ms. Elizabeth K. Moyer
Senator Robert R. Neall
Ms. Carolyn Y. Perkins
Ms. Marilyn J. Praisner
Mr. Walter Sondheim, Jr.
Dr. G. William Troxler
Mr. John F. Wagoner

Chairman's Opening Remarks

Dr. Thornton began the meeting by asking for review and approval of the Commission's agenda. After the Commission approved the agenda, Dr. Thornton provided a brief summary of steps that led to the Commission's decision to contract with Augenblick & Myers (A&M) last fall to conduct an adequacy study using the professional judgment approach and a second adequacy study using the successful schools approach. He also noted that Management Analysis and Planning, Inc. (MAP) had completed an adequacy study, on behalf of the New Maryland Education Coalition, using the professional judgment approach.

Dr. Thornton made the following statement to the public regarding the results of these three adequacy studies:

"The Commission on Education Finance, Equity, and Excellence is charged with developing recommendations to improve Maryland's school finance system. As part of that charge, the Commission must make an effort to identify the appropriate level of funding necessary to assure that students have adequate resources to meet the State's high performance expectations. Last year, the Commission hired Augenblick & Myers, Inc. to estimate the cost of meeting Maryland's performance standards using a successful schools approach and a professional judgment approach. Today, the Commission will receive the results of these studies.

The Commission will also receive the results of a study conducted by Management Analysis & Planning, Inc. (MAP) at the request of the New Maryland Education Coalition. MAP used the professional judgment approach to estimate an adequate level of school funding.

The adequacy studies to be presented today have numerous similarities. However, they also have significant and critical differences. Therefore, it is not possible to compare the results of these studies without further analysis. For example, the costs of transporting students are included in one analysis, but not in the others. One study assumes that the resources currently available for students with special education needs are adequate; while the other two studies estimate the cost of providing adequate resources to special education students. Different methodologies are employed to quantify the costs of serving "at risk" students. While two studies use pupil weights for "at risk" populations, the other study identifies a statewide supplemental cost. Different assumptions are made about teachers' salaries and benefits. The studies may not be consistent in their treatment of non-public special education expenses, student enrollment counts, or retirement costs. These and other factors must be assessed before relevant comparisons can be drawn.

Staff will work with the Commission's consultant over the next several weeks to analyze the data and develop valid comparisons. Until this work is complete, the Commission, the Department of Legislative Services, and the Maryland State Department of Education advise that no valid comparisons can be made of the adequacy studies presented today.

The Commission will continue its review and discussion of the adequacy studies on July 12, 2001."

Ms. Praisner stated that she hopes that, on July 12, the Commission will clarify the "gaps" that exist between current spending and the results of adequacy studies.

Overview of Fiscal 2002 State Education Aid

Mr. Mark Collins, Policy Analyst, Department of Legislative Services, presented a document entitled "Overview of Fiscal 2002 State Education Aid." Mr. Collins noted that Exhibit 1 of the presentation document outlines the direct State aid that is to be provided to local school systems in fiscal 2002. He noted that the fiscal 2002 budget includes an increase of $190,314,681 over fiscal 2001. Mr. Collins noted that Exhibit 2 of the presentation document outlines State expenditures toward the Baltimore City Remedy Plan in fiscal 2002 (totaling $55,327,877). Mr. Collins stated that the fiscal 2002 budget includes $6 million in new money to support continued implementation of the new high school assessments and $5 million to subsidize the cost of textbooks in private schools.

Summary of Legislation Relating to Education Funding Enacted in 2001

Mr. Collins then presented a document entitled "Summary of Legislation Enacted in 2001 Relating to Education Funding." Mr. Collins noted that the most significant piece of education legislation enacted in 2001 was Senate Bill 719, which was introduced on behalf of the Commission to implement the recommendations that were set forth in the Commission's interim report issued in December 2000.

The final version of Senate Bill 719 extends a variety of categorical funding streams until the end of fiscal 2003 (totaling $252.6 million in fiscal 2003). This bill also mandates that the fiscal 2002 State budget include certain minimum amounts for academic intervention and support services ($19.5 million), special education ($11.25 million above the $70 million base), teacher mentoring grants ($6 million above the amounts mandated by the sunset provisions that were extended in Senate Bill 719), the early grades initiative ($19 million), Judy Hoyer Early Child Care and Education Program ($11,625,000), and reconstitution-eligible schools ($9.8 million). Senate Bill 719 also establishes an intensity factor to be used in the distribution of new funds for academic intervention and support services ($7.5 million). As enacted, Senate Bill 719 does not mandate any funding for full-day kindergarten. However, the $19 million that is included in the fiscal 2002 budget for an early grades initiative is also mandated by Senate Bill 719 for fiscal 2003 and can be used to fund full-day kindergarten. Finally, Senate Bill 719 extends the sunset date relating to the State/local cost share for the Prince George's county construction program until the end of fiscal 2003.

Mr. Collins noted that other legislation enacted this year changes the State/local cost share for the Baltimore City school construction program and creates a Tax Amnesty Program, under which the potential exists for nine local school systems to obtain a share of $8 million.

Ms. Praisner requested that the Commission be updated during the 2001 interim on federal legislation relating to education.

Augenblick & Myers -- Review of Prior Work

Mr. John Augenblick, President, A&M, briefly reviewed the work that was completed by A&M during the 2000 interim for the Commission. With regard to the adequacy issue, Dr. Augenblick noted that the overriding goal in conducting the adequacy studies was to develop an understanding of the "order of magnitude" of the difference between current funding and the amount that is needed to meet State standards. He stated that the studies should not be used to develop "exact" numbers to be used in modifying the current finance system -- but rather to provide an understanding of the general parameters of the gap. The results of the adequacy studies completed by A&M are set forth in a document entitled "Calculation of the Cost of an Adequate Education in Maryland in 1999-2000 Using Two Different Analytic Approaches" (June 2001). Senator Lawlah expressed concern that certain factors relating to the success of schools, such as the education level of parents, income of parents, and wealth of the community, are not accounted for in the studies. Dr. Augenblick stated the studies try to account for these factors by developing adjustments (e.g., per pupil weights) for student with special needs.

Professional Judgment Study Conducted by Augenblick & Myers

Mr. John Myers, Vice President, A&M, reviewed the theory behind "standards-based systemic reform." Mr. Myers noted that Maryland, like many states, is implementing a "standards-based" approach as a part of the effort it is making to improve student performance. The standards-based approach requires a state to specify its expectations for student performance, develop procedures to measure how well students are meeting expectations, and hold providers of education services accountable for student performance. The logic of this approach also implies that a state will assure that sufficient resources are available to school districts, so that they can reasonably be expected to meet state standards. In effect, this means that a state's foundation level should reflect the per student spending that is needed for students without special needs to meet state performance standards.

Mr. Myers stated that, in essence, the purpose of conducting adequacy studies, in the context of standards-based educational systems, is to develop a: (1) base cost figure that can serve as the foundation level in a foundation program; and (2) set of adjustments to the base cost that attempt to consider the most important, uncontrollable factors that affect the cost of providing education services in different school districts (e.g., the number of students needing special education services, the number of low income students, and the number of students with limited English proficiency (LEP)).

Mr. Myers stated that adequacy studies are not intended to be used to determine the particular types of programs that are offered by schools. Mr. Myers reiterated the theory behind the concept of determining "adequacy" of funding is that the state's role is to establish performance expectations, measure how well schools and districts are doing, assure that they have adequate resources, give the districts wide flexibility in how to use those resources, and hold them accountable for not meeting expectations. Mr. Myers stated that, in some sense, if the state required schools and districts to spend funds in a specific way, it could only hold them accountable for doing so, not for the performance of students. Mr. Myers noted that there is one condition under which it would be appropriate to require districts or schools to spend funds in a particular way. If a district or school, having received an adequate amount of revenue, is unable to meet state expectations, it may make sense for the state to require the district or school to change the way it spends funds to be more consistent with the resource components of prototype schools in the professional judgment study.

With regard to the professional judgment study conducted by A&M, Mr. Myers stated that A&M met with seven teams of people in order to identify the resources that prototype elementary, middle, and high schools would need in order to expect that, given statewide average demographic characteristics, students would be able to meet the State standards. In effect, the teams created a prototype school district of 30,000 students (31% of whom were from low income families, 13.5% of whom were enrolled in special education programs, and 2% of whom required LEP services) in which there were 40-50 schools with between 500 and 1,000 students. Each prototype school was assigned specific numbers of staff as well as a specific array of technology, a set of supplementary programs related to full-day kindergarten or extended day/year, and other resources including supplies and materials.

The performance standards used to guide the work of the panels are set forth on page 71 of the A&M report. Tables 2 and 3 of the A&M report describe the personnel requirements identified by professional judgement panelists. Table 4 identifies technology needs specified for the prototype schools. Table 5 identifies other programs and support services specified for the prototype schools. Tables 14 through 16 provide a comparison of the resources identified for the prototype schools in Maryland and the resources identified for prototype schools in professional judgment studies conducted in other states. With regard to Table 14, Ms. Perkins inquired as to why there are gaps for some of the personnel figures for several of the states. Dr. Augenblick stated that different methodologies were used in the adequacy studies conducted in other states and Table 14 reflects these different methodologies.

Delegate Carlson inquired as to how the staff resources specified for the prototype schools translated into number of students per class. Mr. Myers referred Delegate Carlson to Table 3, which lists number of personnel per 1,000 students. Ms. Praisner inquired as to the assumptions that were made about the types of special education students attending the prototype schools. Mr. Myers stated that the panels were told to assume that 13.5% of the students had special education needs, with 9.5% of these students having less serious disabilities (e.g., learning disabilities) and 4% having more serious disabilities.

Dr. Augenblick stated that the costs for the various resources specified for the prototype schools are set forth in Table 6A. He also reviewed the manner in which costs were assigned to each of the specified resources. Dr. Augenblick noted that the study used statewide average salaries for personnel resources, but also adjusted these statewide average salaries by 1.56% to reflect cost-of-living differences in surrounding states. Information relating the development of this 1.56% adjustment to salaries is set forth in Table 6B. Dr. Augenblick also noted that, in costing out the price of personnel specified by the prototype panels, he assumed that the cost of fringe benefits was 34.5% of the respective salary levels.

Mr. Myers reviewed the methodology for establishing district wide ("central office") costs for the prototype schools and summarized the per student costs of prototype elementary, middle, and high schools. The district wide costs are set forth in Table 7, and the per student costs are set forth in Table 8.

Dr. Augenblick directed the Commission to Table 9, which summarizes the 1999-2000 total per student cost (excluding transportation) and "base" per student cost for elementary, middle, and high schools and for all schools combined. The total per student cost for all schools combined is $10,557. After deducting the cost of serving students with special needs (LEP, special education, and low income), A&M obtained a "base" per student cost of $6,699.

Using the resources identified by the prototype panels in the professional judgment study, A&M determined that the additional cost of serving students with special education needs is $7,570, and the additional cost of serving low income students is $8,500. A&M made an assumption that the additional cost of providing services to LEP students would be equal to the base per student cost of $6,699. From these excess cost figures, A&M developed average pupil weights of 1.13 for special education students, 1.269 for low income students, and 1 for LEP students. Dr. Augenblick noted that the 1.269 per pupil weight for low income students was extraordinarily high when compared to pupil weights that have been used in other states (which range between 0.25 and 1).

Successful Schools Study Conducted by Augenblick & Myers

Mr. Justin Silverstein, Associate, Augenblick & Myers, presented the results of the successful schools study to the Commission. At the outset, he noted that the theory behind this study was very different than the theory behind the professional judgment study. The goal of this study is to determine the cost of providing services to schools that already meet the State's performance standards. Specifically, the goal is to determine a "base" per student cost that reflects the cost of educating regular students. This is done by obtaining all of the spending data relating to the selected schools and then "backing-out" the costs associated with serving students with special needs (LEP, special education, and low income students). He stressed that A&M did not seek to use the results of this study to develop adjustments to the base cost to reflect the needs of LEP, special education, and low income students (i.e., pupil weights). However, he noted that these adjustments can be developed using other resources, such as the professional judgment study conducted by A&M and research conducted on the national level.

The methodology used by A&M in implementing the successful schools approach in Maryland is outlined in pages 19 through 23 of the A&M report. This methodology involved the collection of spending data from the 59 schools that were selected to participate in the study as well as supplemental information from all of these schools relating to outside contributions of time, money, and materials. Table 11 sets forth the per student spending for the selected schools. Table 12 indicates that the base per student cost for the successful schools is $5,707. Table 13 sets forth the types of outside contributions of time, money, and materials that were made to schools that were selected for participation in the study. Table 13 also states the monetary value of these resources.

Comparison of the Two Studies Conducted by Augenblick & Myers

Dr. Augenblick stated that, given the different methodologies used to conduct the professional judgment and successful schools studies and the different theories that support these two approaches to studying adequacy, it would be almost impossible to make meaningful comparisons between the specific resources (e.g., number and types of staff and programs, etc.) that were specified for the prototype schools and the specific resources available to successful schools. However, he did make some general comments about a few superficial comparisons. He noted that there does not appear to be a big difference in the number of teachers available in prototype schools as compared to the schools selected for participation in the successful schools study. He noted that the cost of salaries in successful schools was higher than the cost of salaries in the prototype schools -- probably reflecting the fact that teachers in the selected schools are more highly trained and experienced. He noted that the professional judgment panels specified that staff should have an additional ten days of professional development. Dr. Augenblick estimated that this amounts (roughly) to approximately $200 per student. He noted that the prototype schools included extra administrative staff beyond what he expected would be found in the selected schools.

In the end, Dr. Augenblick suggested that the base cost figure developed using the successful schools study could be used as a "floor" to help evaluate appropriate funding that should be provided (by the State and local governments) through Maryland's foundation program and the base cost figure developed using the professional judgment study could be used as a "ceiling" when evaluating appropriate funding that should be provided (by the State and local governments) through Maryland's foundation program.

Ms. Praisner stated that she had many questions about the reports but that she had not yet had a chance to fully read all of the reports. She stated that she would provide staff with written questions prior to the next meeting of the Commission. She also expressed concern that people would use the results of the adequacy studies in a "prescriptive" way -- i.e., to suggest that certain types of resources or programs should be mandated at the State level. She stated that the studies needed "warning labels" that provided guidance as to the appropriate use of the results. Dr. Augenblick agreed that it is critical for people to understand that the results of the adequacy studies are not prescriptive and should not be used to support efforts to mandate particular types of services.

Ms. Praisner noted that Dr. Augenblick used a "cost-of-education index" to adjust the base cost obtained using the successful schools approach. She stated that she would provide information relating to a broader cost-of-living index developed for Maryland.

Delegate Cryor noted that 11 of the 59 schools selected for participation in the successful schools study are in or contiguous to her district. She expressed concern that the study did not measure some of the important factors that relate to the performance of these schools. She cited as examples: parental involvement in schools; education levels obtained by parents; and the financial means available to many parents. Dr. Augenblick explained that he attempted to deal with this issue by developing a survey to collect data on contributions of time, money, and materials that were made directly to schools. He noted that the survey was not designed to collect information on the specific factors identified by Delegate Cryor. However, A&M developed adjustments to the base cost figures developed under both approaches to reflect additional funding that is needed to assist students with special needs.

Dr. Thornton encouraged members of the Commission to submit written questions to Commission staff prior to the next Commission meeting and noted that efforts would be made to provide answers to these questions at the next meeting.

Professional Judgment Study Conducted by Management Analysis & Planning, Inc.

Mr. David Jackson, Chair, New Maryland Education Coalition, introduced Dr. James Guthrie, President, Management Analysis & Planning, Inc., and stated that Dr. Guthrie would brief the Commission on the results of the professional judgment study conducted by MAP on behalf of the New Maryland Education Coalition. The results of the adequacy study conducted by MAP are set forth in a document entitled "A Professional Judgment Approach to Determining Adequate Education Funding in Maryland" (June 5, 2001).

Dr. Guthrie began his discussion by stating that several key principles guide his work in education finance. First, he stressed the importance of identifying expectations for student learning. Second, he noted that it is not fair to ask schools to meet standards unless they have the resources to do so. Third, he noted that it is important to provide sufficient resources so that all students can meet a state's performance standards. Fourth, he stated that research indicates that it is critical to spend money on students when they are young. Fifth, he stated that it is important to adjust education funding to compensate for the special needs of at-risk students.

Dr. Guthrie briefly reviewed the methodology used by the MAP prototype panels. He stated that MAP worked with 22 panelists for approximately 20 hours during a three-day period in February. MAP created three teams from these 22 panelists. The teams were first asked to identify resources needed for prototype schools with statewide average characteristics of low income students, special education students, and LEP students and the same enrollment characteristics used for the A&M professional judgment study. The teams used the same performance standards used for the A&M professional judgment study. The teams were then asked to identify whether any additional resources would be needed to serve the needs of prototype schools in a "high poverty district" -- i.e., 68% low income students, 89% minority students, and .2% LEP students. MAP panelists were instructed to assume that facilities, technology, and teacher salaries were adequate.

Dr. Guthrie stated that each of the three teams identified different sets of resources for the first level of prototype schools (i.e., schools with statewide averages of LEP, special education, and low income students). The per student cost of the resources identified by Team A was $9,313. The per student cost of the resources identified by Team B was $7,461. The per student cost of the resources identified by Team C was $9,215. Teams A and B added additional resources when asked whether any additional resources were needed to serve prototype schools in a high poverty district. The per student cost of the additional resources identified by Team A was $288. The per student cost of the additional resources identified by Team B was $281. Team C, however, stated that no additional resources were needed to serve prototype schools in a high poverty district.

Dr. Thornton asked Dr. Guthrie why MAP did not "back out" the costs associated with serving students with special needs from the per student costs developed by MAP so as to develop a base cost for regular students.

Ms. Praisner inquired as to how MAP costed out the resources needed to serve special education students in the prototype schools. Dr. Guthrie stated that MAP panelists assumed that 13.5% of the students in the prototype schools needed special education services (9.5% with less severe disabilities (e.g., learning disabilities) and 4% with more severe disabilities). The statewide average cost of providing services to these types of students was included in the total cost of providing specified resources to the prototype schools.

Joint Discussion of Adequacy Studies

Dr. Thornton invited Dr. Augenblick and Dr. Guthrie to sit at the witness table together to answer questions regarding the three adequacy studies. Dr. Augenblick began the discussion by asking Dr. Guthrie to advise the Commission as to how it could use the per student cost figures developed by MAP in the allocation of State aid. Dr. Augenblick noted that the A&M study developed a base cost for regular students as well as adjustments (pupil weights) for students with special needs. Dr. Augenblick noted that the per student cost figures developed by MAP were not adjusted to determine a base cost for regular students or adjustments for students with special needs. Dr. Guthrie stated that he felt that State aid should be allocated generally as follows: (1) a block grant for pre-K; (2) a block grand for K-12; (3) a cost-of-living adjustment; and (4) a teacher salary block grant.

Senator Neall engaged in a discussion with Dr. Guthrie about the importance of measuring performance and ensuring accountability in the school finance system. Dr. Guthrie stressed that, in general, the State should not prescribe particular programs or services unless school systems fail over time to meet the State's performance standards. He reiterated that the State's role, in a state that has implemented standards-based systemic reform (like Maryland), is to set performance standards, to measure whether schools are meeting these performance standards, and to hold school systems accountable for meeting these standards. In general, the role of the local school district is to choose the types of programs that will be implemented in that particular district to obtain the State's performance standards. Dr. Guthrie noted that, if a school system fails over time to meet the State's performance standards, the State role changes, and the State should consider mandating that the school system implement particular programs.

Dr. Augenblick asked more specifically whether Maryland should use the per student figures obtained by MAP or the base cost and adjustment figures developed by A&M in determining how to allocate State aid. Dr. Guthrie stated that he would recommend using the MAP per student figures for allocating State aid to elementary schools but, for middle schools and high schools, State aid should be allocated using a base cost for regular students with adjustments for students with special needs. Delegate Conway stated that it is important to provide flexibility in State education funding.

Planning for 2001 Interim

Dr. Thornton advised the Commission that the next meeting is scheduled for July 12, 2001, at 1:00 p.m. At that meeting, the Commission will continue its review of the three adequacy studies, including further discussion of how the: (1) three studies can be compared to each other (if at all); and (2) Commission can use the results of the adequacy studies to inform the Commission's consideration of changes to Maryland's school finance system. Dr. Thornton handed out a list of other potential meeting dates for the 2001 interim. These dates include: August 23, September 6, September 20, October 4, October 18, November 1, November 15, and November 29. Meeting dates for the 2001 interim will be finalized at the July 12 meeting of the Commission.

Several members of the Commission inquired as to whether the Commission would hold public hearings during the interim. After discussion, the Commission agreed to hold four regional hearings prior to the issuance of the Commission's draft of its final report. All of these hearings will be held on the same night, and the Commission will be split into four groups for the purpose of covering each of the hearings. The Commission also decided to hold one hearing in Annapolis after the issuance of the draft of its final report. The dates for these hearings will be finalized at the July 12 meeting of the Commission. Mr. Sondheim recommended that an outline of discussion topics be prepared to guide testimony at the public hearings.

The meeting was adjourned at approximately 4:30 p.m.