Financing Rural and Small Schools: Issues of Adequacy and Equity.

79 Pages·2007·0.82 MB·English

DOCUMENT RESUME
ED 314 225
RC 017 315
AUTHOR Honeyman, David S.; Ancl Others
TITLE
Financing Rural and Small Schools: Issues of Adequacy
and Equity.
ERIC Clearinghouse on Rural Education and Small
INSTITUTION
Schools, Charleston,
,:.
SPONS AGENCY
Office of Educational Research, and Improvement (ED),
Washington, DC.
PUB DATE
Jun 89
CONTRACT
RI-88-062016
NOTE
79p.
AVAILABLE FROM
ERIC/CRESS, Appalachia Educational Laboratory, Inc.,
P.O. Box 1348, Charleston, WV 25325 ($11.50).
Information Analyses
ERIC Information Analysis
PUB TYPE
Products (071)
Reports
Research/Technical (143)
MF01/PC04 Plus Postage.
EDRS PRICE
DESCRIPTORS
Capital Outlay (fol Fixed Assets); Consolidatcd
Schools; Educational Equity (Finance); *Educational
Finance; Educational Policy; Educational Trends;
Elementary Secondary Education; *Finance Reform;
*Financial Policy; *Resource Allocation; *Rural
Schools; Rural Urban Differences; Small Schools;
*State Aid; State School District Relationship
ABSTRACT
This monograph investigates issues related to the
financial support of rural schools. The first section describes
various state formulas and the methods used to distribute funds to
rural schools. It considers questions about the adequacy of funding
adjustments based on sparsity and the relationship of such
adjustments to equal educational opportunity. It also synthesizes the
current research on the status of school facilities. This section of
the discussion details tht relationships among wealth, ability to
pay, and the maintenance and capital expenditure problems that rural,
small (and usually poor) school districts face. The second section
describes some of the legal challenges relevant to rural and small
schools currently before the courts. At the heart of these challenges
is the inability of existing finance formulas to address adequately
the needs of rural education. These challenges are compared to
similar challenges brought by urban schools. The third section
discusses state and local support mechanisms and details efforts by
some states to make the tax base more responsive to rural education
needs. It considers issues involved in reclassification and
reassessment of property, including relevant economic concerns of
primarily agriculture-based economies. Conclusions and
recommendations include discussions about consolidation and school
reform as related to equal educational opportunity. (Author/TES;
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Reproductions supplied by EDRS are the best that can be made
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from the original document.
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FINANCING RURAL AND SMALL SCHOOLS: ISSUES OF ADEQUACY
AND EQUITY
by
David S. Honeyman
University of Florida
Gainesville, FL
David C. Thompson
Kansas State University
Manhattan, KS
R. Craig Wood
University of Florida
Gainesville, FL
ERIC Clearinghouse on Rural Education and Small Schools
P. O. Box 1348
Charleston, WV
25325
June 1989
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This publication was prepared with funding from the U. S. Department of
Education, Office of Educational Research and Improvement, under
contract
no. RI-88-062016.
The opinions expressed herein do not necessarily reflect
the positions or policies of the Office of Educational Research and
Improvement or the Department of Education.
The ERIC Clearinghouse on Rural Education and Small Schools is operated
by
the Appalachia Educational Laboratory (AEL), Inc.
AEL serves as the
Regional Educational Laboratory for Kentucky, Tennessee,
Virginia, and West
Virginia.
AEL is an Affirmative Action/Equal Opportunity Employer.
ERIC/CRESS at AEL
Post Office Box 1348
Charleston, West Virginia
25325
800/624-9120 (outside WV)
ACKNOWLEDGEMENTS
An earlier draft of this monograph was reviewed by Sandra
Orletsky of the Appalachia Educational Laboratory, Todd
Strohmenger of ERIC/CRESS, Margaret Phelps of the Rural
Education Research and Service Consortium at Tennessee
Technological University, and James Fox of the Office of
Educational Research and Improvement, United States Department
of Education.
The latter reviewer provided an extensive
critique that the authors found to be particularly helpful.
Craig Howley and Patricia Cahape (both of ERIC/CRESS) did the
copyediting and designed the cover, respectively.
H1FY89
i
TABLE OF CONTENTS
EXECUTIVE SUMMARY
1
INTRODUCTION
3
Practical Benefits of Good Education
4
Providing for Equal Educational Opportunity
4
Rural, Small, and Poor Districts
6
SECTION ONE:
STATE FINANCE FORMULAS:
SPARSITY, ADEQUACY, AND CAPITAL
OUTLAY
9
State Finance Formulas
9
Flat Grant Programs
11
Full State Funding Plans
12
Formula EqLalization Plans
12
Combination Programs
17
Sparsity Adjustments and Questions of Adequacy
18
Sparsity Adjustments
19
Adequacy
23
Provisions for Capital Outlay and the Condition of School Facilities
26
Capital Outlay and Debt Limit Provisions
27
The Condition of School Facilities
30
Rural Facilities Study
32
Discussion
34
SECTION TWO: LEGAL ISSUES AND FINANCING OF RURAL AND SMALL SCHOOLS
37
.
. .
Urban Versus Rural Issues
38
ii
An Urban Challenge
38
A Rural Challenge
42
Discussion
46
SECTION THREE: TAXATION AND PROPERTY TAX REFORM
49
State Support
49
Local Support:
Property Taxes
50
Determining the Local Share
51
Property Wealth and Income:
One Example
51
Revenue Variation and Tax Rates
53
Discussion
55
Local Support:
P:operry Assessment
56
One Example
Appraisal:
56
SECTION FOUR:
CONCLUSIONS
61
Consolidation
61
Reasons and Prospects for Consolidation
62
Equal Educational Opportunity
64
Reform Initiatives and Equal Educational Opportunity in Rural
Schools
65
The Urgent Need for Solutions
67
Recommendations
71
REFERENCES
73
iii
EXECUTIVE SUMMARY
Rural educators across the United States are aware of many problems
that affect the successful operation of their schools.
Critical problems
concern school finance, and this monograph investigates issues related to
the financial support of rural schools.
In the first section, the discussion describes various state formulas
and the methods used to distribute funds to rural schools.
It considers
questions about the adequacy of funding adjustments based
on sparsity and
the relationship of such adjustments to equal educational opportunity.
It
also synthesizes the current research on the status of school facilities.
This section of the discussion details the relationships
among wealth,
ability to pay, and the maintenance and capital expenditure problems
that
rural, small (and usually poor) school districts face.
The second section describes some of the legal challenges relevant
to
rural and small schools currently before the courts.
At the heart of these
challenges is the inability of existing finance formulas
to address
adequately the needs of rural education.
These challenges are compared to
similar challenges brought at the other extreme--by urban
schools.
The third section discusses state and local support mechanisms
and
details the efforts some states have made
to make the tax base more
responsive to the needs of rural schools.
It considers issues involved in
reclassification and reassessment of property, including
relevant economic
concerns of primarily agriculture-based economies.
Conclusions and recommendations contained in this monograph
include
discussions about consolidation and school reform
as related to equal
educational opportunity.
The recommendations include the following:
2
1. States should fund fully the formulas and
programs already in
existence.
They should evaluate the impact of their
formulas and
their sparsity adjustments under full-funding allocations.
2. States should evaluate the effectiveness of
current capital outlay
provisions to determine if current funding levelsboth
from state
and local sources--are adequate for
current and future needs, with
respect to maintenance and replacement of existing
facilities and
the need for new construction.
3. Rural school districts, preferably in
concert with one another,
must develop effective lobbying strategies.
As their influence in
the legislative process diminishes in
many states, rural
communities must communicate a unified
concern for the survival of
the rural school.
3
INTRODUCTION
Most people believe they understand public education.
When they were
children, after all, the vast majority of citizens rode school buses;
ate
countless school lunches; learned to read, write, and do math in public
schools; took part in extra-curricular activities; and ultimately became
productive adults in our society.
As adult voters, our citizens often pass
judgment on provisions that fund public schools.
This participation is
only proper, since economic support for schools comes from the
taxes paid
by them.
At the same time, the American public--and many of the policymakers who
govern them--know much less about public school finance than they would
care to admit.
Perhaps this lack of understanding contributes
to the
financial plight that confronts rural and small school districts,
many of
which operate in impoverished communities.
In such districts, a low level
of funding makes difficult the delivery not only of
a "thorough and
efficient" educational program but an appropriate,
contemporary one as
well.
This monograph--written especially for policymakers and for
those in
leadership roles in rural school districts--considers the related
problems
of fiscal equity (for taxpayers) and equal educational
opportunity (for
students) in rural school districts.
It considers the alternatives with
which the problems have been addressed, and makes three simple
recommendations based on those considerations.
4
Practical Benefits of Good Education
Many studies of the economic effects of education maintain that
expenditures (the actual costs) for public education
are an investment in
society as a whole and the individual in particular (see for example,
DeYoung, 1989; Summers, Bloomquist, Hirschl, & Shaffer, 1988).
Analysis of
these financial outlays documents countless productive outcomes, such that
investment in education by local and state governments results in long-term
economic benefits.
A high level of educational attainment is associated
with lower crime rates, higher standards of living, better medical
care,
and greater economic productivity (Cohn, 1979; Haveman & Wolfe, 1984;
Rosenfeld et al., 1589; Summers et al., 1988).
Most such studies conclude that where education is not well-supported
financially, communities suffer disadvantages that
are not easily or
effectively overcome without improvement in their base of human
resources
(for example, Rosenfeld, Bergman, & Rubin, 1989; Summers et al., 1988).
Improved educational services are often cited as the critical element in
plans to address these disadvantages, especially in rural
areas (see for
example, Hobbs, 1987; Nachtigal, 1982; Summers et al., 1988).
Providing for Equal Educational Opportunity
The unaided ability of local school districts to offer
necessary
educational services varies greatly from district to district.
District
wealth often varies by a factor of three in a given state.
In a few
states, available data reflect a hundred fold difference in the ability of
poor versus wealthy school districts to fund public education (Verstegen,
1988).