The Honorable the Members of the Board of Regents


James A. Kadamus


Subcommittee on State Aid


Update on Education Finance Research Consortium and

Development of Regents State Aid Proposal for 2005-06


May 28, 2004




Policy Development


Goals 2 and 5






At your June meeting, I recommend two topics for discussion:


1.                  Professor Jim Wyckoff will provide an update on the Education Finance Research Consortium, including a synthesis of findings from the 2004 Symposium on School Finance and Organizational Structure.  See Attachment A.


2.                  Staff will initiate a discussion to reaffirm goals for the 2005-06 Regents proposal.  This proposal represents the second year in a seven-year proposal.  See Attachment B.


Attachment C provides a schedule of reports for developing next year’s proposal as.  It will be updated and provided each month to help keep track of progress and plans.







Attachment A



Symposium on Education Finance and Organizational Structure in New York State Public Schools: A Synthesis


David Monk and Jim Wyckoff, Symposium Co-chairs



The Education Finance Research Consortium, with support from the Wallace Foundation, convened a research symposium on Education Finance and Organizational Structure in New York Public Schools. The symposium addressed four interrelated components of providing New York’s school children with an opportunity for an adequate education: education finance, the teaching workforce, organizational structure and incentives, and data management.  Researchers participating in the symposium were selected for their expertise in these areas and represented a broad array of backgrounds and perspectives. Public presentation of the symposium policy briefs was March 5, 2004 in Albany.  A list of the authors and their policy briefs is attached.



The symposium was conceived against the backdrop of three important events:


  • New York has introduced high stakes exit exams accompanied by the introduction of learning standards tied to curricular changes and a revised accountability system.


  • Despite the serious fiscal constraints facing New York, significant new dollars have entered the system over the last few years.


  • Potentially most important is the New York State Court of Appeals decision in the CFE v. New York State court case.  The Court has given the State until July 30, 2004 to enact finance and management reforms to ensure that every school in New York City has resources needed to provide the opportunity for an adequate education, and to measure whether reforms actually provide this opportunity.   


These developments all prompt important questions about how New York State should develop school finance, organizational structure, incentive and accountability systems to most effectively meet the challenges of an outcomes-based approach to education and discharge its responsibilities to provide an adequate education to students throughout the State.  The symposium was designed to bring evidence and ideas on these topics. 


            This is a broad mandate.  We believe it is important to focus our attention on the questions and policies crucial to improving outcomes for New York’s lowest performing students.  It turns out the lowest performing students are concentrated in relatively few schools, located in a handful of districts, as Boyd, Lankford and Loeb document in their policy brief.  For example, 70 percent of students scoring at Level 1 on the 2002 fourth grade math exam are located in 20 percent of the schools (see Figure 1).  Seventy-five percent of these 480 elementary schools are in New York City and 14 percent are in the other Big Four cities.  The problem of very poor student academic performance in New York is overwhelmingly an urban problem and disproportionately a New York City problem.  It is also important to recognize that even though almost all of the low performing schools are in urban districts, fewer than half of all urban schools are in this lowest performing group.


            What do we learn from the policy briefs that would improve educational outcomes for New York’s lowest performing students?  We briefly summarize some of these lessons from each of the four components of the symposium.


Educational Finance

  • Several approaches have been employed to determine the cost of an adequate education, each with its own methodological strengths and weaknesses.  Downes found the cost function approach to be the strongest from a conceptual and methodological perspective.
  • These approaches differ in how they target resources.  For example, the Regents State Aid proposal and cost function estimates by Duncombe and Yinger target at least 50 percent of aid to New York City, while the Chambers geographic cost index and the AIR/MAP professional judgment analysis would allocate about 40 percent to New York City.
  • It is difficult to maintain a system of local finance of schools when the State increasingly defines the outcomes required of districts, and, in turn, the resources necessary to reach these outcomes.
  • Substantial disparities exist in the allocation of resources within schools in many large urban schools, and particularly in New York City. These disparities could be addressed if schools were the unit of financial accounting, rather than districts, thus allowing resources to be targeted to the places most in need. 


Teacher Workforce

  • Those schools with the lowest performing students also have the least qualified teachers, often have relatively low teacher compensation and likely have other working conditions that make them unattractive to qualified teachers.
  • To address these concerns, the policy briefs suggest differential salary or other compensation strategies and changes in working conditions targeted to improve the supply of teachers in shortage content areas to difficult-to-staff schools.
  • They also suggest hiring policies and practices that allow human resource departments to make offers for jobs at difficult-to-staff schools early.
  • Ballou, recognizing that it is often difficult for districts to implement controversial reforms, such as differential pay, suggests that the State target some of its aid to schools, or teachers with specific attributes, e.g., difficult-to-staff schools or subjects.


Incentives and Organizational Structure

  • Accountability systems have been shown to be powerful with beneficial effects, but are not a panacea.  They require resources, can easily get off track if communications break down, and are likely to have unintended consequences.
  • It is important to pay careful attention to technical details and come as close as possible to measuring actual value added along outcome dimensions that are truly important to the State.
  • Spillane argues that a firm understanding of how individuals make sense of policy changes can reduce the magnitude of the rewards and sanctions that are part of the accountability system. In particular, efforts are warranted to make relevant data available and understandable, to make implementation processes communal rather than solitary, and to allow for differences across curricular areas. Each of these facilitates the adoption of policy.  

Data Management

  • The way that data on various aspects of education are collected, analyzed and reported can have important effects on the performance of the system. For example, student assessment results are a powerful tool of change, but these data must be carefully constructed and reported so that teachers and school leaders understand how these data provide them with a tool to improve student outcomes.
  • To be of most use this data management system should provide feedback during the academic year in a timely fashion, allow the linking of data at the student level over time, and be consistent with results from other widely recognized exams such as the National Assessment of Education Progress (NAEP). 
  • Useful information systems are built upon a detailed understanding of the educational process and the goals for education. These will define the necessary information and the points at which information may be most useful in informing decisions.


Taken together these observations provide useful insights for policy.  They also highlight some longstanding dilemmas.  Several of the authors indicate the importance of differences between schools within large districts.  Others recognize the difficulty of defining problems so narrowly that resource disparities make equitable solutions difficult.  New York State has often focused on the district as the unit of financial accountability, but increasingly the school is the unit of performance accountability.  Is this a misalignment that increases the difficulty of increasing student performance?  If so, how can it be resolved? 


The other tension that exists in some of the policy briefs is that between affording local administrators the discretion and authority to determine how to address performance problems and the value of having the State apply a common set of requirements and policies across all districts.  For example, everyone recognizes the importance of increasing the quality of teaching, especially in low-performing schools.  Should superintendents and principals have the discretion to implement policies that take account of the local environment and only be held accountable for the student performance outcomes?    Alternatively, should the State impose uniform education and certification requirements?  The right balance of organizational structure and incentives remains an important issue.


Neither of these questions is resolved in the policy briefs, but they do highlight some important decisions that policy makers should consider regarding education finance and accountability.  Finally, data collection, management and dissemination can play an important role in facilitating improved student performance. These are topics where we believe more research is needed. 



Figure 1

Concentration of Students Scoring at Level 1 on 4th Grade Math Exam

(Schools ordering based on number of Level 1 students.)




Symposium on Education Finance and Organizational Structure in

New York State Public Schools



Educational Finance Panel

Thomas Downes, Tufts University. “What Is Adequate? Operationalizing the Concept of Adequacy for New York.”


Jon Sonstelie, University of California – Santa Barbara. “Financing Adequate Resources for New York Public Schools.”


Leanna Stiefel, Amy Schwartz, New York University & Ross Rubenstein, Syracuse University. “From Districts to Schools: The Distribution of Resources Across Schools in Big City School Districts.”


Teaching Workforce Panel

Donald Boyd, Hamilton Lankford, University at Albany, and Susanna Loeb, Stanford University. “Improving Student Outcomes: The Role of Teacher Workforce Policies.”


Dale Ballou, Vanderbilt University. “Improving the Teaching Workforce in New York Urban Schools.”


Organizational Structure Panel

Helen F. Ladd, Duke University. “Lessons from North Carolina's School Based Accountability Program.”


Jim Spillane, Northwestern University. “Policy in Practice: Where the Rubber Meets the Road.”


Data Management Panel

Sharon S. Dawes and Tony Cresswell, University at Albany. “The Information Dimension of Education Financing Decisions: Data Needs, Users, Strategies, and Systems.”


Richard Murnane and Nancy Sharkey, Harvard University. “Learning from Student Assessment Results: Opportunities and Obstacles.”







Attachment B






Regents Goal and Principles

Discussion Materials

for the

Regents 2005-06 Proposal on

State Aid to School Districts









State Aid Work Group

New York State Education Department

June 2004

The Context

            In December 2003, the Regents recommended that the State implement a new, multi-year approach to State and local funding of public schools designed to close the student achievement gap.  They proposed that 29 aids be consolidated into one foundation formula, distributed based on the cost of education, pupil needs, regional cost differences and an expected local contribution.  They recommended a seven-year period to phase into the new system with limits in losses and gains during this time.

            Each year, the Regents have documented in their annual report to the Legislature and Governor the strong relationship between student achievement and educational need.  The State Aid Work Group has further documented a relationship between spending, achievement and need.  As a result, the Regents focus has been to align resources to close the achievement gap in order to ensure that all students have the resources to meet State learning standards.

            The State’s highest court has required New York State to revise its school funding system by July 30, 2004 so that all students in New York City will receive the meaningful high school education to which the State’s Constitution entitles them.  At the time of this report, the State has not responded, although proposals have been advanced.  The balance of this report is a review of Regents goals and State Aid principles that underlie the Regents proposal, in order to reaffirm Regents priorities as we approach the second year of the Regents proposal.  Legislative action will be presented to the Regents when it occurs and implications for the Regents proposal discussed at that time. 

Regents Goal

The State's system of funding for education should provide adequate resources through a State and local partnership so that all students have the opportunity to achieve the State’s learning standards, including resources for extra time and help for students.


State Aid Principles

            Four principles underlie the Regents proposal and its overarching goal.  They include:

  1. Adequacy—Effective distribution across all districts will ensure adequate resources for acceptable student achievement.
  2. Equity—The State will equalize school funding in order to minimize differences among school districts in per-pupil spending on the foundation educational program as a result of differences in local fiscal capacity, pupil need and regional costs.   The State’s distribution of education resources in support of the foundation educational program should maintain comparable levels of local effort in school districts across the State.
  3. Accountability—The education system will measure outcomes and use those measures to ensure that financial resources are used effectively.  As part of the Regents goal that education resources will be used or maintained in the public interest, the Regents employ a two-prong strategy.  The Department will give greater flexibility to districts with acceptable student achievement and will encourage the most efficient and effective use of resources in districts not yet meeting State standards.
  4. Balance—The State should balance stability in funding and targeting aid to close student achievement gaps.  It should drive aid based on current needs, and use hold-harmless provisions to provide stability only for a reasonable period of time.

Regents Discussion

  1. Should the Regents continue to use the goal statement advanced with their 2004-05 proposal and stated above?
  2. Should the State Aid principles listed above continue to support attainment of the Regents goal?
  3. Which of the State Aid principles is most important?








May 2004

Special education funding

Schedule of reports for developing the 2005-06 proposal


June 2004

Update on State budget (as available)

Reaffirm proposal goals

Education Finance Research Consortium: Synthesis of school finance symposium and update on Consortium


July 2004

Compressed meeting (no item on State Aid)


September 2004

Assessing Progress: Reviewing legislative action in comparison with proposals (Regents, CFE, Zarb, etc.)

Proposal introduction or outline

Primer presentation on State Aid


October 2004

Meeting of Education Finance Advisory Group


October 2004

Update on local effort in support of education

Review proposal directions

Report on focus forums on special education funding


November 2004

Meeting of Education Finance Advisory Group


November 2004

Review draft of conceptual proposal


December 2004

Action on final proposal with the dollar amount recommended and the overall distribution of aid


January 2005 – April 2005

Legislative advocacy