Reviewing Wisconsin Cost Study Illuminates Costing-Out Complexities

Adding to the numerous education costing-out studies performed for state governments or independent organizations in the past year, a team led by Dr. Allan Odden of the University of Wisconsin-Madison released a cost study for Wisconsin’s K-12 public schools in March. The study, “Moving From Good to Great in Wisconsin: Funding Schools Adequately And Doubling Student Performance,” was prepared for a state policy task force that comprised policymakers, educators, and other state citizens and stakeholders, and it recommended a nine percent increase in school spending, one of the smallest increases recommended by an “adequacy” study in any state. Despite the auspicious title, the study never truly explores “doubling student performance.”

While the funding increase recommended in this study is relatively low, comparing the study to the 2002 Wisconsin cost study performed by the Institute for Wisconsin’s Future illuminates important complexities that exist in interpreting cost studies.

Studying Both Costs and Formulae

This 2007 Wisconsin study, using an evidence-based methodology, estimated the cost of the resources necessary to provide an adequate education to all students by applying the best research-based evidence about what strategies, programs, and resoruces improve student success. The study determined that, for the resources it examined, per pupil spending in Wisconsin would have to increase from $9,001 to $9,820. The increased spending would result (after a hold-harmless correction that would prevent school districts from receiving less state aid under the calculated formula) in a $786 million, or 9.2 percent, increase in total education expenditures.

The study is also broader than most adequacy studies, in that it also discusses implementation of the study’s recommendations in terms of revising the state’s school finance formula. A large section of the study is devoted to explaining Wisconsin’s financing scheme and how it should be revised to incorporate the study’s findings, in order to promote both adequate and equitable state aid.

Costing Out 100 Percent Proficiency?

One area of concern in the study – and an area of concern common to many costing-out studies performed in recent years – is the authors’ definition of what an "adequate education" comprises. The study says a key component of adequacy is allowing "all but the students with the most severe and profound disabilities... [to] perform at or above proficiency on [state] tests (with the proficiency standard calibrated over time to those of the NAEP)." Another goal is to have schools meet "the standards implied by the state’s accountability system, and the federal No Child Left Behind law, which further require improvement for [all] students." Though the authors never say it explicitly, they appear to be aiming for NCLB's target of 100 student proficiency by 2014.

This 100 percent proficiency target – particularly pegged to the extreme NAEP proficiency levels – immediately makes some of the study's findings suspect. Having 100 percent of students achieve proficiency on challenging state exams is - at best - “unrealistically high,” according to Robert Linn, co-director of the National Center for Research on Evaluation, Standards, and Student Testing. At worst, as Richard Rothstein of the Economic Policy Institute argues, the very concept is self-contradictory.

In the recent cost studies in California, for example, researchers explicitly stated they were not determining the cost of reaching 100 percent proficiency, as their research methods were not equipped to predict such an unprecedented level of student achievement. The conclusion that all schools - even with a somewhat more efficient distribution of resources - can ensure their students will reach 100 percent proficiency with a nine percent increase in funding rests on very shaky ground.

A Low Figure

The nine percent increase recommended in this study is lower than the figure recommended in nearly every other adequacy study done across the country. As William Mathis, a member of the board of directors of the American Education Finance Association, explained in a 2004 article in Education Week, cost studies in 13 of the 20 states where they had been performed up to that point recommended increases of 20 to 40 percent, with a median of 30 percent. Studies since then, particularly ones that have tried to factor in the demands of NCLB, have produced similarly high estimates.

The study’s figures are significantly lower than those recommended in a 2002 cost study done by the Institute for Wisconsin’s Future (IWF) and its update in 2004. Examining the difference between the two studies, reveals some of the difficulty in comparing cost studies. The IWF study’s final result – $11,121 per pupil – is not directly comparable to the new study because IWF’s study included transportation costs, which can be several hundred dollars per pupil, and debt service, which totals about $700 per student in Wisconsin. The new study does not include either of these costs.

While these adjustments decrease the apparent differences between the two studies, the new study’s estimate still appears low. According to Dr. Jack Norman, lead researcher on the IWF study and an expert on school finance in Wisconsin, the remaining difference between the two studies is mostly attributable to different estimates of the “base cost” of educating a student with no special needs. IWF estimated the necessary base cost at about $8,500 in 2005-2006, whereas Odden’s study estimates the figure at $8,050. The $450 per pupil difference in the base cost would result in a five percent difference in total spending.

While Norman generally agrees with many of the new study’s findings, he believes it has “underestimated the resources needed for middle- and high-school non-core subjects” by reshuffling many existing staff positions and reducing the number of teachers allocated to upper grades, particularly in non-core courses. In addition, Norman says the study’s numbers underestimate the resources “for small rural districts with their particular inefficiencies [and] for health insurance and other benefits.” The price tags of insurance and other benefits have skyrocketed in recent years.

Even while questioning some if its judgments, Norman believes that “Odden's adequacy cost-out is an important step toward long-needed comprehensive school finance reform in Wisconsin.”

The study also raises some interesting questions about the state of school finance across the country. Wisconsin is a relatively high-spending state, with above-average performance on NAEP and relatively low populations of English learners and children eligible for free or reduced-price lunches. Even though the recommended increase in the new study is low compared to many other cost studies, it still recommends a significantly increased investment in Wisconsin public schools. If Wisconsin needs almost ten percent more education funding to meet the needs of its students, how much more is needed in states across the nation that spend much less, seem to have lower achievement, and have larger populations of special-needs students?

Prepared by Matthew Samberg, April 11, 2007