Arkansas K-12 education finance series: Adequacy review findings and recommendations so far
This column is the third in a series examining Arkansas’s K-12 funding system and the state legislature’s biennial adequacy review process. The series aims to analyze how Arkansas got its current education funding system, how it works, and what components policymakers should improve to achieve a modernized education funding formula that is better for students and more amenable to education choice.
Highlights from 2024 adequacy reports so far
As detailed in earlier series installments, Arkansas is conducting a biennial adequacy review. A 2007 state Supreme Court ruling mandates that the legislature must regularly review the adequacy of the state’s K-12 funding system to remain compliant with Article 14 of the state constitution “to maintain a general, suitable and efficient system of free public schools.”
The Arkansas Bureau of Legislative Research (BLR) takes the lead in analyzing the state funding system. So far, they have published their findings in several rounds of reports and presentations, with the most recent tranche released in early June.
This commentary will highlight some of the key findings thus far. The first and second installments of this series already looked at some of the earliest publications about the review process. This entry will not cover the BLR report on student achievement trends, since the primary focus is on funding. The latest reports on teacher salaries will be examined separately in the next installment.
1. Funding system overview
Before examining allocation patterns for different funding streams, the BLR first details the assumptions underlying the Arkansas K-12 funding formula. The state funding formula, which includes the matrix foundation formula and other supplemental state grants, has been developed and updated over the years using recommended best practices from school finance consultants Odden and Picus.
The bulk of the state funding system goes into the matrix, which is ultimately the flat foundation dollar amount that all students receive. While informed by certain staffing assumptions, the matrix is a funding formula and not a spending formula. In other words, districts aren’t required to staff their schools or form budgets according to matrix inputs. Nonetheless, the BLR report notes from a recent survey of district superintendents that “71% said the matrix moderately or extensively guided staffing decisions.” Table 1 shows the breakdown of these cost assumptions in per-student terms.
Table 1: 2023 matrix input cost assumptions
2023 Matrix Items | Per Student Amt.* | |
School-Level Staffing | Classroom Teachers | $3,044 |
PE, Art, and Music (PAM) Teachers | $606 | |
Special Education Teachers | $424 | |
Instructional Facilitators | $366 | |
Librarian/Media Specialist | $124 | |
Counselor, Nurse, or Other Pupil Support | $366 | |
Principal | $211 | |
Secretary | $89 | |
School-Level Resources | Technology | $250 |
Instructional Materials | $197 | |
Extra Duty Funds | $70 | |
Supervisory Aides | $56 | |
Substitutes | $75 | |
District-Level Resources | Operations & Maintenance | $748 |
Central Office | $464 | |
Transportation | $321 | |
Total Matrix Amount Per Student | $7,413 |
Additionally, the report summarizes the state’s four major categorical grants and several other small supplemental funding streams.
The matrix has changed little since its initial adoption in 2003. Between 2005 and 2023, the assumed grade distributions, and staff ratios haven’t changed except for slight decreases in library/media specialist ratios, slight increases in PAM teacher ratios, and the addition of a secretary position for every 500 students. While the report doesn’t flag any overall issues with this structure, it does point out some flaws in how the Odden and Picus recommendations—which estimated costs for a prototypical school of 500 students—were adopted by the legislature to apply to a prototypical school district of 500 students. The BLR analysis also argues that matrix ratios for instructional staff might not provide sufficient funds for school districts to meet state class-size accreditation standards, especially for small districts and small schools.
2. Resource allocations
In keeping with the three major cost divisions in the per-student matrix amount, BLR divides its analysis of funding allocation and spending patterns into three separate reports: school-level staffing, school-level resources, and district-level resources. Each report compares matrix assumptions with actual school system spending in these areas. Importantly, many categories see higher spending than the matrix formula assumes because the matrix isn’t the only source of education funding. Highlights from each report are summarized below.
School-level staffing
Because school-level staff comprise the majority of matrix funds—$5,230 of the $7,413 amount—this report is the longest of the three. It examines how school system spending on all categories of school personnel compares with matrix school-level staffing assumptions. It also examines how spending levels on these categories vary by region, minority student population, and poverty (as measured by students participating in the federal free or reduced-price lunch program).
The report finds that current matrix assumptions regarding school-level staff—though simplistic in some areas—align with initial recommendations from 2003. The report notes that higher-poverty school systems tend to spend more per student on instruction, corroborating the allocation patterns noted in part two of this series. It also notes that districts in cities, with larger minority populations, and with higher poverty rates each generally spend more per student on special education.
Finally, the BLR report recommends consideration of grade-level weights for foundation funding, adopting special-education funding that more closely aligns with variation in student and district-level needs, and decreasing reliance on paraprofessionals for special education.
School-level resources
This BLR report examines school-level funds that generally aren’t full-time equivalent staff. The matrix assumes about $658 of the $7,413 per-student amount for these categories. For some of them—instructional materials, technology, substitutes—school systems tend to spend about twice as much as the formula assumes. On others—supervisory aides, extra duty funds—less is spent than the formula assumes.
In general, the report notes, best practices research on these cost categories is limited. It makes the case for adequate technology, quality materials so that teachers don’t need to prepare their own curriculum, and the importance of competitive pay for hall monitors and other employees who are supervising students.
District-level resources
The report examines matrix funds that aren’t school-specific, which includes operations and maintenance (O&M), transportation, and central office spending. These items comprised $1,513 of the $7,413 per-student amount in the 2022-2023 school year. On all three categories, school systems spent about twice what the matrix formula assumed. Charter schools spent about twice as much on central offices than school districts.
The BLR report also covers recent recommendations from Odden and Picus and national benchmarks for each category of district-level resources. It highlights that about 2,000 more orientation and mobility staff would be needed in the state to meet the official recommendations of the Commission of Public School Academic Facilities and Transportation. The BLR analysis also notes that Odden and Picus recommended in 2014 that the state use a transportation formula based on actual need, not a flat per-student amount as the matrix currently assumes.
3. Facilities funding
BLR reports that, between 2005 and 2023, the state has provided an average of $90 million annually, or about $1.7 billion total, to support major school construction projects. Over that period, the state covered about half of qualifying project costs. The state’s share increased after adopting a modified wealth index in 2021 which accounts for average local income. Still, many school facility projects don’t qualify for state assistance, meaning most facilities’ renovation, maintenance, and construction costs are covered locally. For reference, Arkansas school systems spent over $1.1 billion on capital and debt service costs in the 2022-2023 school year alone.
The report also highlights that, since the state facilities program began in 2005, payments have followed little to no discernable pattern based on district poverty rates or minority populations. Districts receiving the highest state facility payments usually have higher local property tax rates to service debt.
4. Funds outside of the matrix
The major state and local revenues outside of the foundation matrix were covered in part two of this blog series. However, this report also analyzed each funding stream separately, and some additional insights are noteworthy.
The Enhanced Student Achievement (ESA) grant, Arkansas’s revenue supplement for students from low-income families and the state’s largest categorical grant, totals more than $230 million. The report notes that the ESA grant has additional dollars for districts with concentrated poverty, creating funding cliffs between districts with modestly different poverty rates. It discusses past recommendations by state school finance consultants that Arkansas consider adopting a single poverty weight and potentially adding other poverty measures beyond qualification for the National School Lunch (NSL) program.
Both of these problems–the funding cliffs and using NSL program participation to measure poverty–were examined in a past Reason Foundation policy study. That study noted that sharp changes in state ESA funding resulted in districts with very similar poverty rates receiving substantially different allocations. For example, Lamar School District, despite having only a two percentage point smaller population of students in the federal NSL program, received half as much funding per student from the ESA grant as Dardanelle Public Schools. Additionally, the continued use of NSL participation to measure poverty in Arkansas is problematic because changes in federal policy over the last 15 years have caused more school districts to artificially label students as qualifying for NSL, even if they aren’t low-income.
Additionally, the BLR report notes that expenditures on items not considered in the matrix were considerable, totaling $2.1 billion in 2022-2023. About half of these expenditures come largely from local revenues to pay for facilities construction and bonds. The other half were expenditures on items including instructional aides, food services, and athletics.
Overall, the BLR analyses are thorough and provide excellent insight into the Arkansas K-12 funding system. The reports highlight that the matrix is simplistic in some places, especially as it pertains to differences in grade-level needs, special education populations, and transportation. The next installment of this series will examine the teacher salaries report and how the Literacy, Empowerment, Accountability, Readiness, Networking, and Safety (LEARNS) Act has impacted teacher pay statewide.
The post Arkansas K-12 education finance series: Adequacy review findings and recommendations so far appeared first on Reason Foundation.
Source: https://reason.org/commentary/arkansas-k-12-education-finance-series-adequacy-review-findings-and-recommendations-so-far/
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