Cost Study Finds NCLB Underfunded in Virginia

In 2004-2005, Virginia's school districts spent $62 million more than the federal government provided to implement NCLB. On September 21, 2005, Virginia released two cost studies on NCLB, the fulfillment of the legislature's requirement in 2005 that the state Board of Education examine the cost impact of NCLB at the state and local levels. These studies had a narrow scope, examining only the administrative costs of implementation and not the costs of raising achievement. The studies in Virginia are part of a multi-state effort, coordinated by the Council of Chief State School Officers (CCSSO), to analyze the costs of NCLB. Virginia is the fourth state of over a dozen in the CCSSO NCLB Cost Consortium to release a report.

The CCSSO initiative is two-pronged: states identify the costs of NCLB to the State Education Agency, and the Local Education Agencies, or “school divisions” in Virginia, determine their own costs.

The CCSSO contracted with nationally known school finance experts to develop a framework that the states could use for defining the activities of implementing NCLB and their associated costs. The Consortium agreed to use seven major components for costing out NCLB requirements:

Standards and Assessments

Accountability

Technical Assistance

School Choice and Supplemental Services

High-Quality Educators

NCLB Data Management

Administration of NCLB and Title Programs

Each component is divided into Areas, which are further divided into Tasks, and Tasks are broken down into Activities.

State-level Costs

Virginia took a three-tiered approach to determining state-level costs. The first tier consisted of the total budget for both personnel (e.g. benefit rates) and nonpersonnel (e.g. contracts, grants, training activities) services; the budget was based on the fiscal year 2004-2005 budget, projected out for three fiscal years through 2007-08. Eliminating non-NCLB costs from this budget produced Tier II. Tier III's budget was based on the activities that the Department of Education would never have undertaken except for NCLB requirements, revealing the new costs of NCLB.

The report identifies the new NCLB costs as approximately $20 million per year. Assuming a 3% increase in federal monies each year, federal revenues would cover the new NCLB costs projected for the 2004-6 and 2006-8 biennia by a modest margin, the report concludes. However, the authors emphasize that their conservative methodology did not include all costs that could be documented or reasonably projected; furthermore, the figures presented in the report represent estimates, not precise expenditures or revenues. In addition, unanticipated needs or quickly-rising costs of compliance could easily eliminate the small surplus.

School District Costs

The school finance experts conducted the study of the school division costs, with projections extending through 2007-08. The study defines the cost of NCLB as the value of the resources – both time and money – school divisions in the state need to accomplish three tasks: implement accountability practices, meet any new, NCLB-specific requirements, and administer all aspects of the law.

The report examines eight school divisions, representing the eight administrative and geographic regions of the Commonwealth of Virginia. A number of themes common to the eight divisions emerged from the information collected. While the data disaggregation required by NCLB enables school divisions to focus better on closing achievement gaps, according to the report, NCLB testing and AYP reporting requirements force all school divisions to divert scarce resources from other activities. Additionally, communication about NCLB to the surrounding communities contributes a set of unquantifiable costs for divisions.

The study extrapolated the costs found in the eight divisions to the other divisions across the state by applying regression analysis. In doing so, the report finds that the division costs associated with implementing NCLB are estimated to be between $238 million (2003-2004 school year) and $267 million (2007-2008) per year. This represents a local dollar per pupil figure per year of between $204 and $219. When compared to total projected federal revenue for the time period of the study, the authors find a shortfall ranging from $52.80 per pupil in the first year to $53.04 per pupil in the fourth year.

Thus, the study finds that Virginia 's local costs of implementing NCLB are underfunded.

Prepared by Katherine Lu, September 26, 2005