School Finance and Business Administration

School Finance and Business Administration

School Finance and Business Administration

Dr. Stephen J. Furtado

EDLE 665

Carol McMillan

December 10, 2005

In 1994 the Massachusetts Education Reform Act was enacted as Chapter 70 of the General Laws. The purpose of this law was to provide the necessary funding to districts to provide a quality education to students. The formula utilized was quite complex and incidentally, flawed for it did not anticipate the dramatic increase needed from state funds. The formula was based on three parts: establishment of funds from the state to provide “an adequate” education; contribution from cities and towns based on their sources of revenue; and the use of state funds to fulfill any other necessary monies. The review of the Ed. Reform Act asked that the formula to determine educational aid to cities and towns become a needs-based formula. The formula is not a revenue sharing program and it focuses on funding needs that are documented. From 1993 to 2000 the funding for Chapter 70 increased by more than 1.4 billion. Obviously, it would be unrealistic to believe that the state could continue to fund education at this rate. Also, Chapter 70 funding would have to contend with other educational areas (such as bilingual education, early education programs and special education) as well as other non-educational state funding needs.

The enrollment of a school district is a key factor in determining the school district’s Foundation Budget and Chapter 70 state education aid. The enrollment is determined the previous year on October 1st. Any student enrolled in the district by October 1st will be accounted for in the budget for the following year. The Foundation Budget represents the minimum amount a district must spend to provide an adequate education. This calculation is imperative because it also determines the amount of Chapter 70 state aid given to a district. The Foundation Budget formula was revamped and implemented in 2002. The Foundation budget is based on school and district’s performance instead of by assumptions of class size, teacher salary and other factors.

The five district budgets selected for review are Avon, Boston, Milton, Randolph and Dedham. The selected districts vary in size from 534 students to 64,524 students, thus allowing for a view from different vantage points. Of the five selected districts, only one, Boston, is considered to be an urban environment. Each district has different challenges and each brings different issues into the budgetary picture. However, each district is a part of the Commonwealth of Massachusetts, and as such is a part of the public education budget. Each district will be reviewed for the following information: per pupil spending for regular education costs and special education costs, state aid, personnel, and capital funding during school year 2003.

Per Pupil Spending – Regular Education

Per pupil spending (PPS) is the amount of money allotted per student for books, supplies, materials and teacher salaries. In the town of Avon the student enrollment was 534 students and the PPS was $6,957; in Milton the student enrollment was 3,479 and the PPS was $6,962; in Dedham the student enrollment was 2,866 students and the PPS was $7,190; in the town of Randolph the student enrollment was 3,768 and the PPS was $5,949; and in the city of Boston the enrollment was 64,524 students and the PPS is $7,445. One notable aspect is the difference in the amount of money spent per student in Randolph and Milton. While both towns have a similar enrollment, Milton clearly spends almost $1,000 more per student. This can be due to the amount of aid that the town contributes to the educational budget which is customarily based on property taxes. This is also true in the city of Boston, which uses a different formula to contribute to the educational budget – in Boston the tax base is computed in a different manner for the majority of the funds for education are not from the property tax. Of all the districts reviewed Boston has the highest PPS and Randolphspent the lowest.

Per Pupil Spending - Special Education

Special education cost is the amount of money allotted per student for students who receive services under Chapter 766. In the town of Avon the special education enrollment was 14% of the district population and the PPS was $14,479; in Milton the special education enrollment was 16.3% of the district’s population and the PPS was $11,351; in Dedham the special education enrollment was 18.0% of the district’s population and the PPS was $15,441; in the town of Randolph the special education enrollment was 19.7% of the district’s enrollment and the PPS was $11,148; and in the city of Boston the special education enrollment was 19.6% of the district’s population and the PPS was $16,485. Clearly from the numbers represented, Boston has an inordinate amount of students who receive special education services. For instance, in Avon approximately 73 students receive special education services, but in Boston 12,300 students receive special education services. While Avon spends $14,479 per student this is a small portion of their budget because of the total number of students enrolled. In Boston, where $16,485 is spent per student,this becomes a significant part of the budget based upon the number of students enrolled. Another significant aspect is between Milton and Randolph, (who have a similar enrollment), is that they spend almost the same amount of money for each special education student. This is significant because there was a $1,000 difference in spending for regular education spending. Another interesting note is the fact that the percentage of students receiving special education services in each district does not differ that greatly. Again, of the five districts reviewed Boston spent the most on PPS and Randolphspent the lowest.

State Aid – Chapter 70 Aid

Chapter 70 Aid is the amount of money the state contributes to a district to ensure that students will receive an adequate education. However, this is not the only money that districts use to fund education. Districts have the ability to use a variety of funding sources, some based on voter approval – others are budget expenditures, to fund the public education in their district. In the town of Avon the district received $712,769, in Milton the district received $4,024,758; in the town of Dedham the district received $3,817,342; in the town of Randolph the district received $11,260,936; and in the city of Boston the district received $205,643,453. The towns of Milton and Randolph have similar enrollments, but there is a 7 million dollar difference in the amount of Chapter 70 aid. This is due partially to the amount of funds calculated in the formula that each town would need in order to provide an adequate education. This is also due to the amount of money each town is required to contribute to the education budget. The town of Milton is required to spend at least (approximately) 4.5 million dollars more than the town of Randolph. The city of Boston received almost a quarter of a billion dollars in Chapter 70 aid but was required to contribute over one third of a billion toward the education budget. This is considerably less than what the other four districts are expected to contribute. Based on the complex formula utilized by the state, each district is required to contribute varying amounts toward educational costs.

Personnel

Personnel costs focus on the amount paid to teachers in each district. Teacher salaries vary based on the level of education of the teacher (amount of advanced degrees), the presence of bargaining unions and contracts negotiated. In the town of Avon the average teacher salary is $45, 604, the salary total is $2,052,196 and the student/teacher ratio is 12.6 to 1; in Milton the average teacher salary $53,310, the salary total is $13,545,957 and the student/teacher ratio is 14.8 to 1, in the town of Dedham the average teacher salary is $53,142, the salary total is $12,334,206 and the student/teacher ratio is 12.4 to 1; in the town of Randolph the average teacher salary is $48,469, the salary total is $13,934,730 and the student/teacher ratio is 13.6 to 1; and in the city of Boston the average teacher salary is $63,988, the salary total is $282,895,858 and the student/teacher ratio is 11.7 to 1. On the surface it would appear that Boston is a district where many teachers would want to teach based on the salary and the student teacher ratio, but one must take into account that the numbers are often skewed. For example, by union contract, a regular education teacher has a student/teacher ratio of 28 to 1, however a special education teacher typically has a student teacher ratio of 8 to 1 and included in this formula is a host of specialists (Art, Health, Music educators) that change the actual number of students being educated in a classroom at any given time. One of the most important things to remember is that the student/teacher ratio is based on the total number of teachers divided by the total number of students. Another interesting aspect of personnel across the five districts is the fact that highly desirable towns, such as Avon, Dedham and Milton, do not offer competitive salaries. This is due to where these towns decide to allocate their spending within the public education of the district. Some districts choose to spend their education dollars on things other than salary. One such expenditure is computer and technology. For example, Milton has 3.5 students percomputer, Dedham has 3.2 students per computer, where Boston has 8.1 students per computer. This is a clear example of one district, - Boston, spending more in salary than on technology (also this speaks volumes about the teacher’s union and its priorities).

Reviewing the budgets of 5 districts is very enlightening for one gets a clearer picture of how the priorities, realistic and unrealistic, impact the allocation of funds and more importantly how difficult decisions regarding funding are made. As an administrator, it is probably easy to get “bogged down” with the realities of your own school, but I believe it is important to understand the “big picture” for many administrators fail to realize they are merely small fish in a large pond. However, this is not to say that the small fish is insignificant, for the small fish is a part of the whole. One must try to gain an understanding of how the entire budget mechanism works, to truly appreciate the small, yet significant, role each school and each district plays in this production of a state educational budget. When reflecting on this process I realize how race, social economic status, property and taxes impact each community not only socially and politically, but educationally as well. Education budget have far reaching effects on the stability of each community and it is of tantamount importance that we all realize that there is truly an inverse relationship between the two.