A New Postsecondary Funding Model – A Positive Step for Future Investments, but Details and Transparency Matter

| by Perry Papka, Senior Policy Director |

The Kentucky State Senate this week passed Senate Bill 153, sponsored by Senator David Givens, establishing a new, comprehensive funding model for Kentucky’s public postsecondary education institutions.  The legislation is an outgrowth of recommendations made in December of last year by the Postsecondary Education Working Group and would tie a significant portion of state support for both 2-year and 4-year institutions to performance metrics.

What could this new approach mean for future investment?

Properly structured and adequately funded, a new comprehensive funding model represents an opportunity to move toward a more transparent and accountable system of postsecondary education – better ensuring that Kentuckians have access to affordable, high-quality postsecondary education.

This approach can be a positive step to help close persistent attainment gaps and be a vehicle to support additional investments in postsecondary education – investments that are undoubtedly necessary to reach the state’s educational goals. 

This can also be the first step Kentucky needs to more effectively link decisions and policies on state appropriations, student aid, and tuition to better define the expectations of institutions and students.  Lack of transparency in how postsecondary education is financed, and how the varying financial components interact, ultimately leads to less effective and efficient use of public resources and makes it more challenging for Kentuckians to reach their educational, economic, workforce, and civic potential.

What does Senate Bill 153 actually do?

Calls for renewed accountability for the state’s investment in postsecondary education are not new. Over the last three budget cycles, the Council on Postsecondary Education (CPE) has proposed some level of performance funding for institutions based on either achievement toward targets and goals or shares of degrees produced. All of these proposals applied only to new funding requests, and with budget reductions of 18.2% since 2008 – equivalent to $197 million – none of these proposals were adopted by the General Assembly.

The current state budget initiated the process to create a new, comprehensive funding model that would include performance metrics. As part of that process, the Postsecondary Education Working Group - comprised of institutional presidents, the Governor, and legislative leadership - provided formula recommendations for the new model on December 1, 2016 after meeting five times throughout the latter half of 2016.  The budget included a powerful incentive for this group to reach consensus - in 2018, 5% of funding ($43 million) must be allocated through the new model.  (The Prichard Committee provided feedback to the working group during the development of the funding model.)

 
Senate Bill 153 essentially codifies the recommendations of the Postsecondary Education Working Group, which all institutional presidents endorsed.  A new, comprehensive funding model would ultimately distribute 100% of allocable resources to postsecondary institutions via three major categories: 30% for campus operations, 35% based on student credit hours earned, and 35% based on student success outcomes represented by a set of performance metrics.  You can download our complete summary of the legislation for easy reference.

Can Senate Bill 153 be improved?

As with any legislation, details and transparency matter.  While Senate Bill 153 overall represents a positive step forward, certain elements would benefit from greater consideration and would provide CPE and postsecondary institutions clearer guiderails to follow during implementation:

• Weighting for Priority Populations - Additional weight for underrepresented student populations is critical to close the state’s attainment gaps and reach statewide attainment goals.  The working group’s recommendations would weight STEM-H degrees more heavily than priority populations for the 4-year institutions. Given the state’s need to close attainment gaps between diverse population groups, priority populations should be weighted equal to or higher relative to types of degree fields.
• Fields of Study Definition - STEM-H (science, technology, engineering, math, and health) degrees need appropriate classification and definition to align with the state’s employment and educational needs.  Helpful would be a STEM-H definition establishing the process by which degree fields are classified, and that also includes STEM educators in primary and secondary education to align with high demand for qualified K-12 teachers. 
• Implementation and Review of Comprehensive Funding Model -The formal review process established in the bill is critical to guard against unintended consequences, foster engagement, and ensure transparency.  To fully achieve these goals, the working group should be inclusive of other stakeholders such as students, business and civic leaders, and other public policy experts - including representation from the Kentucky Higher Education Assistance Authority (KHEAA) and the Kentucky Center for Education and Workforce Statistics (KCEWS).
• Transparency of Funding Model and Data  - To broaden public understanding and stakeholder engagement, the funding model and its data elements should be made publicly available by a date certain annually on CPE’s web-site – including definition and funding levels of non-formula mandated programs, specific formula adjustments related to cost and level and type of degrees and credentials, STEM-H degree field classifications and justification for inclusion, and data with regard to enrollment and distribution of priority populations.  This same level of public reporting should apply to any report and recommendations made by the working group every three years.
• Ambitious Statewide Goals - CPE’s target in the 2016-2021 Strategic Agenda of increasing Kentucky’s educational attainment to 58% by 2025 is laudable and inclusion by reference of the attainment goal adopted in the strategic agenda would enhance the funding model’s link to statewide goals.
• Respect for Institutional Missions – Given the unique missions assigned to institutions by the 1997 Postsecondary Education Improvement Act, concerns remain about unintended consequences related to how the research and comprehensive sectors are treated relative to one another – particularly with regard to affordability to students and families.  Guidance to the permanent working group to evaluate every 3 years should include - at a minimum – the effect of the model on key principles, including:
• Access – Ensuring educational opportunities remain inclusive of all Kentucky students.
• Affordability – Affordability is not explicitly addressed in the funding model, yet is a significant barrier for many students.  Understanding the impact of the new model on tuition, as well as state and institutional financial aid is critical to more adequately link the financial components of postsecondary education.
• Quality – Assessing quality presents significant challenges, but the review process should begin to consider potential measures - such as student learning and engagement – on which a future framework can be built.

(Learn more about performance-based funding in our report from the symposium we hosted in June of 2016 in partnership with the Kentucky Chamber of Commerce - Performance & Outcomes-Based Funding: Lessons for Accountable Investment for Postsecondary Progress in Kentucky.)

Kentucky Revenue for Schools, Four Ways

| Susan Perkins Weston |

Here are four quick ways to benchmark the revenue Kentucky puts into elementary and secondary education.

1. Kentucky State and Local School Revenue Compared To U.S. Average
Over the last 12 years, Kentucky has consistently funded schools at a level well below the national average. The dollar amounts have grown, though inflation has worked to reduce what schools can buy with the dollars.

2. Kentucky State and Local Revenue Adjusted for Inflation
This version gives a clearer sense of how the buying power of the available dollars have changed over the same set of years.

 

3. Kentucky State and Local Revenue As Proportion of U.S. Average

Here, we can see some slow movement closer to the national average, but with a recent setback. From 2002 to 2012, we edged upward from 77% of U.S. average funding to 82%, but 2014 (the most recent year available) has us slipping back to 80%.

4. Kentucky State and Local Revenue Ranking Among the 50 States
Finally, here’s how our revenue for schools has placed us compared to other states. We ranked:

• 42nd in FY 2002
• 41st in FY 2004
• 41st in FY 2006
• 41st in FY 2008
• 41st in FY 2010
• 36th in FY 2012
• 39th in FY 2014

A Note on Federal Dollars
The discussion above looks at the funding Kentucky governments provide for our Kentucky schools.   The federal government provides some further revenue, designated mainly for added services to low-income students and for a fraction of the added costs of serving students with identified disabilities.  For 2014, federal revenue to Kentucky schools was $1,202 per pupil.  That was $108 more than the national average of $1,094, with the difference happening mainly because Kentucky serves more students with the targeted kinds of needs. Combining local, state, and federal revenue, Kentucky schools had 82% of U.S. average revenue in 2014, and that combined school revenue placed us 38th of the 50 states.

Sources: Chart 1 figures are the sum of state and local revenue per pupil shown in the Census Bureau’s “Public Elementary-Secondary Education Finance Data” reports. Chart 2’s inflation-adjustments use the Bureau of Labor Statistics’ CPI Inflation Calculator.

New Accountability: SB 1 Amended in Committee

On Thursday, Senate Bill 1, sponsored by Senator Mike Wilson was approved by the Senate Education Committee with amendments in a committee substitute. On Friday, the bill passed the full Senate. House Committee consideration will be the next step.

Along with some smaller changes, the amendments:

• Removed a change to the arts-based high school graduation requirement  
• Deleted a requirement for the new accountability system to include a "band of schools" approach to school improvement
• Revised the rules for identifying schools for targeted support and improvement based on weak results for student groups

To reflect the amendments, the Prichard Committee has updated its bill summary. Key issues include:

• Standards for what students know and can do
• Assessments and approaches to meeting standards
• Accountability steps to ensure progress toward meeting standards
• Other changes (including certified staff evaluations, school council changes, and Department of Education changes)

You can download the complete summary here or the full bill in its current edition here.

Eight Charter Questions: Rep. Carney's HB 520

| Susan Perkins Weston |

Representative John Carney, chair of the House Education Committee, filed a new charter school bill on Friday. Using the eight questions from the Prichard Committee's Informational Guide, here's a summary of his legislation. A two-page version to print out is available here, and you can download a complete copy of the bill here.

SPECIAL NOTE
Charter schools created under this bill will be “bodies politic and corporate.” That will make them a type of government body, rather than private entities that could be classified as for-profit or nonprofit organizations.

WHAT STUDENT RESULTS WILL CHARTER SCHOOLS BE EXPECTED TO DELIVER?
 Each charter school will have annual student achievement targets that are in accordance with the state accountability system. Each charter contract will also include a performance framework that includes student academic proficiency and growth, achievement gaps, and college or career readiness at the end of grade 12, and also includes data on school operations and on student attendance, suspensions, withdrawals, exits, and continuing enrollment from year to year. Charter applications will include a plan for “using external, internal, and state-required assessments to measure student progress on the performance framework.”

WHICH PUBLIC SCHOOL REQUIREMENTS WILL BE WAIVED, AND WHICH REQUIREMENTS WILL CHARTER SCHOOLS HAVE TO FOLLOW?
Required:

• State assessments and school report card data reporting
• Health and safety laws (including vaccinations, emergency drills, criminal record checks, weapons rules, student seclusion and restraint rules)
• Civil and disability rights (including individualized education programs)
• Plans for identifying and serving gifted students and students who are academically behind “including but not limited to the school's plan for compliance with all applicable federal and state laws and regulations” on serving those students
• Financial audits and purchasing requirements under Kentucky Revised Statutes, Chapter 45
• KTRS retirement for certified personnel and CERS retirement for other employees

Not required:

• Free and reduced-price meals for low-income students (application must describe “the health and food services to be provided to students attending the school”)
• Student learning services, including primary talent pool, primary program, family resource and youth services centers, individual learning plans, college-level courses in high school, and class size caps
• State teacher evaluation rules, continuing contracts (tenure), and single salary schedule
• MUNIS accounting and 2% contingency reserve

Possible questions:

Will health requirements include physical activity in grades K-5?

Will disability rights include alternate diplomas?

Will public school laws on suspensions and expulsions apply?

Will all teachers have to be certified by the Education Professional Standards Board?

Will purchases be subject to the bidding and conflict of interest rules in KRS Chapter 45A?

HOW WILL STUDENTS BE ADMITTED OR ASSIGNED TO CHARTER SCHOOLS?
Students who wish to attend will be admitted. If the number wishing to attend exceeds the charter school’s capacity, preference will be given to students who already attend the school, their siblings, and students who live in the district where the school is located. Charter schools will also be allowed to give preferences to students who are eligible for free or reduced-price meals, who attend persistently low-achieving school, or whose parents are board members or full-time employees. At conversion charter schools, a preference will also be given to students who attended the school before the conversion. Remaining slots will be awarded by lottery.

WHO WILL AUTHORIZE CHARTER SCHOOLS?
Charter schools will be authorized by the local school board in the district where the school will be located or by a collaborative of local boards formed to set up a regional charter school.

The Kentucky Board of Education will hear appeals of rejected applications, with power to order further authorizer consideration and (on a second appeal) order the charter approved after determining that the decision “was contrary to the best interest of the students or community.” Charters authorized after appeal will have joint oversight from the authorizer and KBE.

WHO WILL BE ABLE TO APPLY TO RUN A CHARTER SCHOOL?
“Teachers, parents, school administrators, community residents, public organizations, nonprofit organizations, or a combination thereof” will be able to apply. Each charter application will include by-laws and initial members of the school’s board of directors, which must include two parents of students at the school and must not include employees of the school or educational service providers that will serve the school. The board will be sworn in after the application is approved.

If a charter school plans to contract with an education service provider, the planned terms of the contract will be included in the charter application. (The bill defines an education service provider as “"Education service provider" means an education management organization, school design provider, or any other partner entity with which a public charter school contracts for educational design, implementation, or comprehensive management.")

Conversion charter schools will be allowed when the local school board votes for the conversion or 60% of parents sign a conversion petition. Applications for schools controlled wholly or partly by religious denominations will be rejected.

Possible question: Will private schools be able to apply to become public charter schools?

WILL CHARTER SCHOOL NUMBERS AND ENROLLMENTS BE SUBJECT TO CAPS?
No.

HOW WILL CHARTER SCHOOLS BE CLOSED IF THEY DO NOT DELIVER?
A charter authorizer will be able to refuse to renew a charter school’s contract if the school:

• Fails to “meet or make significant progress toward” performance expectations
• Persistently fails to correct violations of its contract, the charter school law, or financial management standards
• Substantially violates material provisions of laws that apply to the charter school

There will be a formal process for hearing evidence for and against renewal, and decisions will be subject to appeal to KBE.

The charter authorizer will be able to revoke a charter school’s contract immediately if a violation threatens student health and safety.

Possible question: Will it be possible to revoke a charter (close it before the contract ends) for any reason other than threats to health and safety?

WHAT FUNDING WILL CHARTER SCHOOLS RECEIVE?
Charter schools will receive funds from the school district where each student lives, including a proportionate per pupil share of state and local funds except for those for transportation, capital outlay, and an administrative fee. That fee will be 3% for students from the district where the charter is located and 1% for students from other districts. Charter schools will also share in federal and state categorical programs in proportion to the eligible students enrolled at the school and follow reporting requirements for each of those programs.
Charter schools will be able to accept gifts, donations, and grants, so long as those funds are included in their annual reports and do not come with conditions that violate law or the charter contract.

Students who live in the district where the charter school is located will receive district transportation and the district will keep the funding allocated for transportation.

Charter school employees will receive state contributions for retirement, health, or life insurance on the same basis as other public school employees.

Virtual charter school applications will propose a funding level based on a detailed statement of the school’s costs.

Possible question: Will virtual charters be funded based on the costs listed in their applications or will they receive a proportionate per pupil share of all state and local funds?

Kentucky's accountability redesign is taking shape

| by Cory Curl, Associate Executive Director |

On Tuesday evening, the Kentucky Board of Education (KBE) discussed the most recent draft proposal for a new accountability and data reporting system for all Kentucky school districts and elementary, middle, and high schools.

This will be one of the most important policies that the Commonwealth of Kentucky sets for K-12 education. The Prichard Committee has been an active participant with KBE and other stakeholders in creating the new system.

The proposed accountability model will be how the state communicates ambitious goals for student learning, how it educates and empowers parents with information about schools, and one of the ways it provides education leaders and policymakers with data to make more informed decisions to improve opportunities for each student.

We hope that you will review and discuss the draft plan in your community. We will publish summaries and analysis of the draft over the next few weeks.

We believe that for the system to work effectively, it must drive outcomes in core subject areas, increase postsecondary readiness and provide every student opportunities to explore and perform in areas of interest. Additionally, the system must encourage ambitious goals for student outcomes to guide Kentucky to the top of national education rankings in the next ten years.

The Kentucky Department of Education (KDE) plans to release the final plan for public comment in March and to submit the final accountability plan to the U.S. Department of Education in September. So there is ample time to share your suggestions, concerns, and questions before the plan takes its final form. Your engagement is critical to the successful implementation of the accountability system.

For more background, see our earlier post Accountability Changes: Six Big Questions and view our webinars and fact sheets about several considerations for accountability systems:

• Career readiness (November 2016) 
• Chronic absenteeism (September 2016) 
• Well-rounded education (July 2016) 
• Equity (May 2016) 

Please also reach out to us at any time if you have questions or want to learn more.

Charter School Success for Kentucky's Students -- Is in the Details

| by Brigitte Blom Ramsey, Executive Director |
With the General Assembly back in session this week, pending legislation to allow for charter schools in Kentucky is top of mind for legislators and education advocates.  

For the past two years, the Prichard Committee has worked to ensure that Kentucky policymakers and citizens have access to facts and research about the potential impacts of charter schools on education in our state and on student outcomes (see our report Exploring Charter Schools in Kentucky: An Informational Guide (2014) and corresponding blog post What the Research Tells Us About Charter Schools & How That Informs Our Next Steps (2014)).

Now, given the near certainty of charter school legislation this session, it’s important that we all work to make charter schools a reliable “tool in the toolbox” of our public education system -  one that can be part of a clear overall strategy to increase student achievement and close achievement gaps. Kentucky’s improvement in education over the past 26 years is in the top quarter of all states.  Any charter school action (like any adjustments to our education system) should be entertained thoughtfully to ensure our public resources are  used to, not only maintain progress but to, quicken the pace of further improvement (see the Prichard Committee Policy Statement on Charter Schools in Kentucky (2016)).

Kentucky's leaders have learned a great deal in the last few months.

In late November 2016, the Kentucky Department of Education and Cabinet for Education and Workforce Development hosted a Kentucky Board of Education Special Meeting on Charters to learn from researchers who have studied the impacts of charter schools. The event included presentations from the Education Commission of the States, Center for Research on Education Outcomes at Stanford University, University of Kentucky, and the Prichard Committee. Researchers agreed on some common themes:

• Charters show the largest learning gains for low-income students and African-American students in urban areas, with less clear results for other student groups;
• High-quality charter schools with a trackrecord of success are realizing these gains for students; and
• Many charters that incorporate a ‘no excuses’, ‘whatever it takes’ model and attract teachers with that same mindset have achieved great success with educationally disadvantaged student populations.

As a result of the learning session with researchers, KBE issued a position statement on charter schools which expresses a preference for local authorizing with an appeal to the state Board, a focus on “at-risk and underserved students” and funding that doesn’t negatively impact overall funding for public schools.

In December 2016, we joined several Kentucky Board of Education members, including Ben Cundiff our host for the day (KBE member and Prichard Committee member), on a visit to two public charter schools in Nashville, TN -  East End Prep and Explore! Community School. KBE member Dr. Gary Houchens archived the visit in this post.

Our visit helped us see the faces of leaders, teachers, and kids behind the numbers in the 2015 Urban Charter School Study from Stanford’s Center for Research on Education Outcomes (CREDO). This study indicates that high-quality charter schools in cities such as Boston, Newark, Memphis, and Nashville have spurred strong learning gains among some of our nation’s most disadvantaged children.

Our visit also underscored the importance of an emerging issue we hear frequently in national meetings of education reform researchers and advocates – an issue that Kentucky will be wise to put at the forefront as we move forward:

• Instilling collaboration between public charters and traditional public schools, that engages and inspires community support, will be critical to ensuring all children are served well (Center for Reinventing Public Education (2016)).  Collaboration has been a hallmark of education policy in Kentucky for years and should be leveraged as a position of strength – allowing us to uniquely benefit from some of the most current research on charters.  

What happens in Frankfort over the next few weeks MATTERS.

Kentucky’s legislative framework to be shaped in the coming weeks can be the first step in building conditions for success, and aiming for the positive results charters have provided for some students. The broad parameters of the legislation, as well as the details, are still very much in play (see our bill summaries for HB 103 and SB 70).

Kentucky will likely be the 45^th state (including the District of Columbia) to approve public charter schools and, as many have noted before, we owe it to ourselves (in fact, our students) to learn and benefit from the successes and challenges in other states. For any legislative framework, we see four major issues as essential:

• Authorizers -- Researchers repeatedly point to the importance of authorizers who have been highly trained to support key principals and standards such as those outlined in the NACSA Quality Authorizing Guide (2015).  The Prichard Committee supports a moderate approach to initial charter legislation with authorizing by locally elected school boards and an appeal mechanism to the Kentucky Board of Education as a secondary authorizer. All authorizers should be trained in and required to adhere to nationally recognized standards for quality authorizing. 
• Accountability and oversight -- Charter school accountably is a key component of overall quality of the public education system. The Prichard Committee supports monitoring and oversight by the Kentucky Board of Education with strong renewal/closure standards and charter contract requirements with clear performance expectations for raising achievement and closing achievement gaps. 
• Enrollment -- Charter schools should not discriminate in the enrollment of students in any fashion. The Prichard Committee asserts that no student or group of students should be prohibited from enrollment on the basis of ability, performance, geography, socioeconomic status, race or ethnicity, and also that charter schools must provide free and reduced-price meals as well as services for students with learning differences.
• Funding -- Funding for charter schools should not diminish the resources currently available to school districts to educate and increase achievement for all students. Federal funding will likely be available to support public charters in Kentucky and, historically, states have been asked to outline their strategy for using charters to increase student achievement (USDOE Public Charter Program). The Prichard Committee supports the expression of an explicit, bold goal that seeks to increase student outcomes for all student groups in the Commonwealth and the investment of resources to achieve the goal.  

As citizen advocates for improved education in Kentucky, we are committed to working in partnership with educators, community and faith leaders, philanthropy, and the business community to ensure only exceptional public schools – public traditional schools, and public charters if legislation does indeed become law.  Our public education system should leave nothing to chance as we put each student in Kentucky on a meaningful path to academic and life success.

Ultimately, our success – as individuals and as a state - will be measured in the excellence and equity of the education our students receive and the deep engagement by parents and communities in the process.

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