Commission on Education Finance, Equity, and Excellence

Minutes

June 23, 2000

The Commission on Education Finance, Equity, and Excellence held its second meeting of the 2000 Interim on June 23, 2000, at 1:00 p.m. in the House Appropriations Room in Annapolis, Maryland. The following members were present:

Dr. Alvin Thornton, Chairman
Mr. Joseph F. Anderson, III
Senator Michael J. Collins
Delegate Jean B. Cryor
Secretary T. Eloise Foster
Dr. Nancy S. Grasmick
Ms. Anntoinette M. Hatton
Delegate Anne Healey (for Delegate Carolyn J. B. Howard)
Senator Barbara A. Hoffman
Mr. William Middleton
Ms. Elizabeth K. Moyer
Senator Robert R. Neall
Ms. Carolyn Y. Perkins
Ms. Marilyn J. Praisner
Delegate Howard P. Rawlings
Dr. G. William Troxler

Dr. Thorton called the meeting to order and made opening remarks. He announced that a consultant had been hired by the State to assist the Commission. The consultant is Dr. John Augenblick of Augenblick and Myers, located in Denver, Colorado. Dr. Thorton asked if any Commission member wished to amend the agenda and, hearing no response, turned to Kathleen Boucher from the Department of Legislative Services for a discussion of the Commission's schedule/work plan for the 2000 Interim.

Ms. Boucher stated that the schedule/work plan was modified to address the concerns that were discussed at the Commission's May 24 meeting. As requested by the Commission, meetings have been scheduled on Mondays and Fridays and meeting dates do not conflict with the national legislative conferences that are being held during the interim. Ms. Boucher noted that four new hearings have been scheduled for November 2000 to allow the Commission to gather public input on the Commission's first draft of its findings and recommendations.

Ms. Perkins noted that the August 31 meeting might be a difficult day for the Commission to meet, as it falls right before Labor Day weekend. Ms. Boucher responded that the staff had looked at that issue and proposed August 24 as an alternative date. Senator Hoffman mentioned that she will be unable to attend the July 10 meeting, as she will be attending the annual conference of the Education Commission of the States. Ms. Boucher noted that the July 10 meeting was originally scheduled as a back-up date for Dr. Augenblick to make his initial presentation; however, Dr. Augenblick's presence at today's meeting made the July 10 meeting unnecessary.

Dr. Thorton suggested that the August 31 meeting be moved to August 24 and that the July 10 meeting be canceled. The Commissioners indicated their assent to his suggestion. Dr. Thorton then introduced the consultant, Dr. John G. Augenblick. Dr. Augenblick introduced himself and outlined his agenda. He said he was a 5th and 6th grade teacher for three years at the beginning of his career. He next attended teacher's college at Columbia University. He eventually became the Director of Education Finance for the Education Commission of the States. In 1983, he started his consulting firm, Augenblick and Myers. Dr. Augenblick said his firm's clients are mainly state-level groups and that his firm has worked for Kentucky, New Hampshire, Ohio, Louisiana, Colorado, and other states.

Dr. Augenblick outlined his presentation. He said he intended to focus on three areas: (1) characteristics of good school financing systems; (2) trends in school funding; and (3) recommendations for Maryland. He referred the Commission to a document in the briefing books entitled "How Do You Know a 'Good' School Finance System When You See One?". He asked the Commission to think about whether Maryland follows these principles.

Dr. Augenblick explained the points listed on the document. At #2, Dr. Augenblick said the question really asked if wealth was considered. He also said the Commissioners must ask whether the allocation of the State is sensitive to individual school districts. Dr. Augenblick moved to #3 and explained that the issue is whether there is a variation between counties in per pupil spending. If a variation exists, are the differences explained primarily by need or by the county's tax effort. Senator Hoffman asked Dr. Augenblick if his premises were only true if all jurisdictions have enough funding. She explained her question using, as an example, Baltimore City's tax effort versus its tax capacity. Dr. Augenblick responded that, while adequacy of funding is an emerging issue, his discussion was focusing on equity issues.

Ms. Praisner asked how need is defined and asked what the impact is if the cost of a need varied in different areas of the State. Dr. Augenblick responded that needs versus wants have to be defined. He also said that some states have addressed the issue of price differences in various areas of the state but that most states choose to just live with price differences without addressing them specifically because dealing with the issue can be cumbersome.

Dr. Troxler asked Dr. Augenblick to clarify the word sensitive in Point #2. Dr. Augenblick explained that the sensitivity described in #2 relates to a correlation or relationship between the amount of funding that a school district receives and the school district's fiscal capacity and tax effort. Dr. Augenblick noted that, under one approach, school districts could receive the same amount of money per student. He said this approach was insensitive to local fiscal disparities.

Dr. Augenblick moved on to explain Points #4 and 5. Under Point #4, Dr. Augenblick said the principle was to make sure that all school districts have the same opportunities to spend their money. He said that, under Point #5, local school districts decide how to spend their money but the state is responsible for monitoring the results of the local school districts' spending.

Delegate Rawlings asked what other states are using as accountability models. Dr. Augenblick responded that other states are using standards-based models of reform. He said this model requires that the state set educational standards and the local school districts are required to meet the standards.

Delegate Rawlings asked how other states are holding the local school districts accountable. Dr. Augenblick explained a series of steps that states typically use to monitor the local school districts. He said that the state will usually set up time limits for the local school district to meet the standards. Then, the state will scrutinize the local school district's efforts to meet the standards. Next, the state will provide assistance to local school districts when local efforts are failing to meet the standards. The state might allow children to move to another school if their school is found to be underperforming. Finally, the school may close. Delegate Rawlings expressed concern that accountability has been approached with too much rhetoric and not enough action. He said Maryland has a good accountability model and that he intends to focus on accountability during his tenure on the Commission.

Dr. Augenblick moved on to Point #7. He said the Commissioners should consider whether all expenses are considered in the funding formula. He said that not all money needs to be allocated according to need, but he also said that the portion not allocated according to need should not exceed 10%-15% of the total funding. Ms. Praisner said that 10%-15% seems too generalized. Dr. Augenblick responded that he believes a 10%-15% range is a reasonable standard. He went on to explain the remainder of the principles listed on the document.

Ms. Perkins, referring to Points #2 and 3, asked Dr. Augenblick to define tax effort. Dr. Augenblick responded by saying that tax effort relates tax collections to total property wealth. In Maryland such a comparison would also include income taxes and income wealth.

Delegate Rawlings said that we can conclude that Maryland has a good system. He asked why we needed the assistance of the consultant. He also said that he understands why we may need help in the area of adequacy of funding. Dr. Augenblick responded by saying that, while Maryland's general structure may be good, it could be improved.

Ms. Perkins said that she would like the document and the points contained therein to be Maryland-specific.

Delegate Healey asked how the formulas can be adjusted to address issues that have arisen since the formulas were created. She used as an example jurisdictions that are witnessing an upsurge in the mobility of their students. She asked how these school districts can be held accountable for meeting educational standards when many students are coming into and leaving the schools in the middle of the school year. Dr. Augenblick responded that needs change over time and the Commission would have to address the changing needs. He also stated that his presentation today was intended to merely outline his approach to the issue of education finance.

Dr. Troxler urged that an eleventh item should be added to the list. He said that the formulas and the systems need to be comprehensible to the electorate. He asked Dr. Augenblick if Maryland's system is more or less complicated that other State's systems. Dr. Augenblick said that Maryland's system is actually more comprehensible than the systems of many other states.

Dr. Grasmick, the Superintendent of Maryland schools, asserted that all of the points listed must be calibrated against educational standards.

Dr. Augenblick next asked the Commissioners to turn to a document in their briefing books entitled "Trends in the Structure of School Finance System". He said that states are starting to focus on new ways to develop foundation level financing. He explained that the new focus is how to set the formula based on how much money the school needs rather than on how much money the state has budgeted. He said that states are looking at ways to adjust the base level financing to include unique costs. Senator Hoffman asked if Dr. Augenblick was now addressing the issue of adequacy in state education finance. Dr. Augenblick responded that, yes, he was addressing adequacy.

Dr. Augenblick moved on to Point #3 and said that many states are looking at a second tier of state aid, designed to provide less wealthy school districts additional aid. Dr. Augenblick stated that some states, such as New Hampshire and Michigan, were looking at or had already instituted a state property tax. He said many states have considered performance-based fiscal incentives for schools performing exceptionally well. Finally, he said that states are starting to evaluate their financing systems on a regular basis.

Dr. Augenblick turned to a third document in the briefing books entitled "Alternative Approaches that Could be Used to Determine a Base Cost Per Pupil Figure for Use in a 'Foundation' Type of School Finance System." He noted that the professional judgment approach is input-driven, and he explained the premise to the approach. Senator Hoffman expressed concern over the use of the word prototype. Dr. Augenblick said that all prototypes have to be adjusted for particular states. Ms. Praisner queried whether it is appropriate to make a comparison between the variables of other states and Maryland.

Dr. Augenblick explained the other four approaches and the Commission members expressed a number of concerns. Senator Hoffman asked how individual special needs are accounted for under the theories. Dr. Augenblick responded that all of these approaches are used to evaluate base level financing. He said that any formula would have to be adjusted to account for individual needs.

Delegate Healey stressed that some school districts are much larger than others and that, after a certain point, a large school district loses the economy of scale. She asked Dr. Augenblick how he would reconcile this dilemma. Dr. Augenblick explained that the number of students in a school district is one characteristic that may require a funding adjustment. He said that some states use a backward J curve to adjust for the number of students in a school district.

Dr. Augenblick noted that he had provided a list of questions relating to educational financing in a document included in the briefing books entitled "Some Things to Think About in Determining a Uniform Base Cost Figure and a Series of Need-Based Adjustment to it for Use in a School Finance Distribution Formula."

Dr. Augenblick proposed that the Commission consider three items in its work. He said the Commission should look at: (1) equity; (2) adequacy (what is the rationale for Maryland's base level funding figure); and (3) all of the individual programs. He expressed particular interest in funding for special education and at-risk students.

Ms. Praisner asked about transportation financing. She expressed concern that the formula is inadequate to respond quickly enough to changes in the districts. She also expressed her concern that there is such a great variation in the cost of doing business throughout the State.

Dr. Thorton introduced John Rohrer, from the Department of Legislative Services. Mr. Rohrer addressed the time limitation imposed by statute on the Commission and his concern that the Commission may need to prioritize its goals. Dr. Thorton stated that the Commission may wish to seek an extended mandate to look at the issue of adequacy.

Delegate Rawlings asked what the revenue source would be if the Commission determined that more money is needed. He asked whether the funding would derive from economic growth, and, if so, whether the Commission would use currently available growth predictions or some other revenue projection.

Delegate Rawlings also expressed concern that the funds currently available to school districts are not being used efficiently. He stated that, in some areas of the State, two comparably sized school systems may have radically different numbers of staff. Dr. Thorton stated that the issue of accountability covers both academic performance and fiscal efficiency.

Senator Hoffman requested that the public hearing questions be modified to reflect the statutory limit on state financing of education. She said that, without that understanding, all of the questions would be directed to the need of each district for more money.

Senator Neall stated that he was aware of two definitions of joy in the context of school financing: (1) how much money his district receives in relation to all the funding available in the State; and (2) how much funding his district receives relative to other individual districts. However, he stated that Commission members needed to put parochial concerns aside in order to deal with important issues relating to school finance that relate to all of the children in the State. He asked Dr. Augenblick if he had completed a best-practices analysis on a national level. He noted that adequacy and equity issues are specific to each district. He also noted that the current Maryland school financing system is cumbersome and unproductive. Senator Neall stated that he hoped that Dr. Augenblick would help keep the Commission focused on the important task at hand. He also urged the Commission members to work together to do the right thing for the children of Maryland.

Mr. Rohrer turned the Commission's attention to a list of questions that had been developed by the Commission's staff to help focus testimony at the upcoming hearings on salient issues. Mr. Rohrer stated that in Area 1: Equity, Question #5 may not be applicable to Maryland. Mr. Rohrer also stated that question #6 in the same area is an important question. He proposed that in Area 1, question #5 be deleted and question #6 be retained.

Dr. Grasmick turned to Area 2: Adequacy/Accountability and stated that the Commission's role is not to investigate the state accountability program, but rather to investigate how much funding is necessary to achieve accountability. She proposed that Question #5 in that section be deleted. The Commission agreed that it has not been charged with evaluating the merits of the Maryland School Performance Assessment Program or other aspects of the State's accountability system. Rather, the Commission's task is to determine how funding can be used to support the current accountability standards. Dr. Thorton noted that the Questions #5 and #6 under Area 2: Adequacy/Accountability would be deleted.

Dr. Troxler requested that, under Area 1, in Questions # 1 and #2, the phrase "what do you think..." be eliminated. He stressed that questions eliciting philosophy are counterproductive. He suggested that the Commission substitute questions asking for a list of elements contained in a good school financing system. Ms. Perkins urged the Commission to ask the public to delineate under Area 3: Formula Structure, in Questions #1 and #2, what items, in their opinion, form basic support. Delegate Cryor stated that a question relating to the role of the private sector would be appropriate. The Commission indicated its agreement to adding such a question.

Dr. Thorton introduced Dr. Robert A. Kronley, from the Southern Education Foundation, to present its report "Miles to Go: Maryland".

Dr. Grasmick then spoke about the State's accountability system. She proposed questions relating to instructional capacity and teacher development. She said that instructional capacity can be judged by deficiency and the deficiencies can be either inherent or the result of inadequate resources. She questioned how the State knows which higher educational institutions are properly preparing the State's teachers.

Dr. Grasmick stressed that children have greater intellectual capacity than schools capitalize on. She said the bottom line included four premises: (1) there must be accountability for academic performance; (2) the State must evaluate the success of programs: (3) any system of accountability must include all children; and (4) any system must take instructional capacity into consideration.

Delegate Rawlings asked Dr. Grasmick how the State addresses union contracts that are inconsistent with educational goals. Dr. Grasmick stated that she would like to see legal impediments lifted so that the State can intervene when a union contract is inconsistent with educational goals. Dr. Grasmick introduced Dr. Barbara Dezmon, from the Maryland State Education that is Multicultural Advisory Council. Dr. Dezmon presented a paper entitled "Equity in School Finance: Funding and Effects".

Dr. Grasmick, John Rohrer, and Tom Lee (formerly from the Maryland State Department of Education and currently Deputy Secretary for the Maryland Department of Budget and Management) presented information relating to disparities among school systems. Dr. Grasmick stated that Maryland is 17th in the nation with respect to equity among school districts and 38th in the nation with respect to adequacy of funding. Mr. Rohrer asked the Commission if it intended to look at the issues of disparities within school districts (as opposed to among). After some discussion, the Commission agreed that time constraints would probably not permit this type of analysis.

Dr. Thorton noted that the next meeting of the Commission is a public hearing that will be held at Montgomery College in Germantown on July 6, 2000. He stated that staff would work with Dr. Augenblick in the coming weeks to develop a task order for an equity analysis as well as a task order relating to Dr. Augenblick's review of issues relating to funding for special education and at-risk students. Dr. Thornton noted that the issue of adequacy would be addressed in more detail at future meetings. Dr. Thornton adjourned the meeting at 5:00 p.m.