School Choice Meeting Summary - Oct. 22, 2012


Commissioner Stephen Bowen: Today we’re looking at how the funding law works. Jim Rier runs the finance and operations team for the Department, and he will be joining us to explain that aspect of the school choice bill. That will be the bulk of this meeting.

If you take a look at our sheet, I went through and filled this out based on the last meeting. But I do have a couple of question marks in place.

We’re looking at the goal of the model. Our obligation under the law is to propose to the Legislature a public choice model that addresses these issues.

For transportation, our goal is to make sure it’s as minimal of a barrier as possible. We talked about funding, which will be bulk of this meeting today. Down the road, we could look at other states?how they make school choice happen, funding-wise? We need to provide clarity around who is responsible for providing special education services to students. We also need to look at the impact of school choice on school programming.

What do we need to know? We do have districts that operate in a choice environment. Districts deal with that in different ways. There’s a certain amount of competition among getting kids into their schools and targeting programs for kids.

We should talk about the impact on property tax payers. We said the goal should be to minimize the effect on property tax payers.

If we change the residence of that student, that student is now going to school in a community that the family doesn’t live in. Now the school board does programming for a student that isn’t from its district. Is there a local governance issues there? We haven’t dug into that as much as we should. We can look at other models and other states around how they deal with the governance issue.

Committee Member: Number nine on our chart: local control issues. That student’s protection is governed by state and local policies. This came up at our school board meeting because we went over the new policy on restraints. We need to focus on this.

My second question: the state loosened up its rules on technical schools being able to offer academic courses. Why can’t we infuse more money at schools like that so we can offer courses that aren’t at local high schools so that students from sending schools could go there? They could take their academic courses at the technical school to cut down on travel time and expenses.

Commissioner: We do have a task force on early college. We’ve talked about whether CTE can play more of a role here. Can you provide that student with her high school courses while she’s there? I know a lot of that work is being done.

Any thoughts on the matrix? We can just keep this as a working document and come back to it at the end of the meeting.

With that, I will turn it over to Jim Rier, who heads up School Finance and Operations for the Department, to discuss funding questions around school choice.

With LD 1854, we did come to the committee with a proposal that mirrored how allocation follows the student with superintendents’ agreements, currently.

Jim Rier: We have a very short time period to grasp all of the areas we want to look at, but I hope this encourages you to look at this material and ask questions in a future meeting.

Let’s look at some very specific calculations to see how the funding world works. This is a specific example of a student who went from one unit to another and how the calculations work. We’ll look at the timing of these funding movements because they don’t all happen right when the student arrives.

I decided to use Cape Elizabeth as an example. I want to give you an idea of the components involved. There are two major parts of that funding law?two very separate calculations that go on.

In Cape Elizabeth, the calculated cost per pupil is $7,383. Base EPS (Essential Programs and Services) per pupil that we are generating for Cape Elizabeth is a cost predication for the Cape. It’s very specific and unique to Cape Elizabeth and has nothing to do with how capable they are of paying it.

On the first page, it’s calculating the cost of teachers, librarians, etc. and arriving at a salary number. This is going to predict the salary required in Cape Elizabeth?a very specific number.

The objective on the first page is to arrive at these per pupil amounts. There are variables around teacher experience and education level.

Commissioner: We don’t see what the school districts spend and then give them some percent of that amount. The formula takes all of these factors into consideration and gets to a number that says what it should cost you to send a kid to school. The formula figures out what it should cost, and then the state pays a chunk of that.

Jim: On first page, we’re just looking at the basic needs of each student. Teachers only?salary and benefits?are $550 million, say.

On the second page, we start to provide for school districts with students with different levels of need, based on student populations, weighted counts, and free and reduced lunch. We provide 15 percent more for them. That’s not a lot of students in Cape Elizabeth because less than 4 percent qualify for free and reduced lunch.

I purposely didn’t want to go into a lot of detail with these forms. I just wanted to be able to show you the level of depth we go into here to define the cost of education per student, per school.

On the third page, here are allocations provided for gifted and talented students. There’s also special education, transportation, etc.

This same calculation goes on in every school district in Maine. Required contribution varies a lot from one unit to another.

There are lots of districts that don’t commit what EPS suggests.

Committee Member: With the other support costs, how does the state derive what’s the appropriate amount to spend on office supplies, for example?

Jim: We would have had research collected before this amount was calculated. Most of these have not been adjusted since research has been initially provided. The law requires the research institute to come back and relook at those costs to see how well their number is responding to what the schools are actually spending.

Commissioner: We get some sense of “where does the money go?” when looking at these districts. This research was by law. Every year they look at three to four elements to see if their calculations are in line with what schools are actually spending.

Jim: To move any one of those costs redistributes funds, and they’re hesitant to do that because somebody wins and somebody loses. The state’s not going to produce more money to add more funds?it’s just going to redistribute.

If you take a look at the student enrollment sheet, fiscal responsibility guide, you’ll see that out of 186,000 students in Maine, 185,000 are in that category of resident of school unit.

Those 9,000 students that go to schools paid by resident SAUs, for the most part, will have had choice for a very long time.

Superintendents’ agreements are an opportunity that some students or parents will seek, which will allow a student to attend a different unit even though their district may operate a school.

About 1,500 students in Maine had taken superintendents’ agreements by last year’s Oct. 1 count.

Committee Member: School units could enter into agreements now. Are there any that you know of that have entered into school choice on their own?

Commissioner: There wasn’t a requirement in that bill for school districts to tell us. But if a student isn’t attending school in their resident district, we need to know about it.

Jim: We would know about it because we would keep track of the student.

Commissioner: If there was a kid placed out of district, that information has to come to us somehow. We would need to know that kid moved. It would be reported on their counts.

Jim: Under this model, if you move a student to Cape Elizabeth, it will increase Cape’s allocation for K-8 students. If you add one student that doesn’t require extra services, it changes the allocation. According to this worksheet, if we add one student, Cape’s allocation is going to go up by roughly $7,500. It’s going to increase the operating allocation, etc. The local expected contribution is fixed, though. That’s not going to change. If I don’t change the required local allocation, the subsidy is going to go up by $7,500. It has nothing to do with how rich or poor the town is. The allocation increase is going to transfer to subsidy. The sending school district’s subsidy decreases by $7,500, and the receiving school’s subsidy increases. It’s going to change the allocation. The net result is an increase of $7,500. That $7,500 has moved.

Committee Member: If Cape spends $10,000 on a student and Gorham spends $7,000, and Gorham sends a student to Cape, where’s the $3,000 difference? I think Cape will have to pick up the other $3,000.

Commissioner: We have to look at the marginal cost of adding a single new student into that school system. Is it really going to cost them more than $7,500 for this one extra kid to go into this school?

Committee Member: What would the impact be on the local taxpayer?

Jim: Gorham’s state subsidy is going to go down by $7,500. The subsidy will be reduced.

This is exactly what happens when students move from one town to another, whether there is choice or not.

Committee Member: In that example, though, kids entering and leaving schools is often equalized. I often gain 100 students but also lose 100 students. That’s not always the case. Over time, through superintendent transfers, we take in more than we leave, by about 50 percent.

Jim: I don’t believe school choice is going to mean mass exodus from one place to another. It’s hopefully going to happen because it’s in the best interest of the student.

Committee Member: It isn’t as open enrollment as it appears. I can’t open enrollment if my school is full and I have eight trailers.

Jim: Under the open enrollment that was in last year’s bill, a school might not decide to do open enrollment.

Commissioner: If you got to this intra-district enrollment policy, and the districts sit around the table to discuss it, then they can figure out, “This is what we start to do with school construction.” Does it make sense to build a regional high school that is going to serve a larger community?

Jim: Let’s look at a unique case: the Wells-Ogunquit calculation CSD, funding law.
There are only about half a dozen of these types of cases. Let’s say a student were to move to Wells-Ogunquit from Sanford. You can see that Sanford’s EPS rate is lower than Wells-Ogunquit. Driven by economic conditions, etc., it’s about $6,900 vs. about $7,400. If a student moves from Sanford to Wells, allocation in Wells will increase by $7,400.

Let’s look at required local contribution. In a unit like this, the EPS will be $13.8 million, and will go up by $7,400. The required local contribution is $13.8 million. They have no state subsidy in Wells. Therefore their local contribution is going to go up by $7,400. They would have to contribute all of that. There is no change in state subsidy for them. They are one of these few districts that have minimum state allocation/subsidy. They get a portion of the special education allocation on page three. A unit like this has a lot of fiscal capacity, and thus no state subsidy.

If a student moves from Sanford to Wells, the allocation moves with them, but there is no subsidy associated with that student. That is an issue, though not very widespread. There aren’t very many?all on the coast such as Mount Desert Island, Boothbay Harbor, Kittery, etc. that would be in this category.

Commissioner: So it would save the state money because we don’t have to pay for the kid to go to Sanford anymore. And we don’t have to pay for them to go to Wells-Ogunquit, either, because Wells gets no subsidy from the state.

Jim: The extra money, in all likelihood, will still get redistributed to other schools.

Committee Member: Then there will be no incentive for Wells to be part of this. What would be their incentive?

Commissioner: They may want a program that they have to have more kids in it. But no, Wells wouldn’t be doing this because they’re going to get more money?because they’re not.

Jim: There are other reasons for them to open enroll. Hopefully other factors drive the decision, beyond financial reasons.

Committee Member: What about if a student with disabilities moves from high-receiving district to low-receiving district. Does the percentage of what the state is paying change because of that?

Jim: The special education model would take days to explain. The actual cost could be higher. It would all come in subsidy.

Commissioner: You don’t want districts to be discriminatory. You don’t want a school to get into open enrollment and start taking basketball players. But could Auburn offer a Latin class if they had more students? By itself, Auburn may not have enough kids to create a class, but regionally, could they create a program? Or maybe it’s an alternative school they want to build?a specialized school inside the district. Auburn alone doesn’t have the kids to make this work, but they might if they work with other schools.

Committee Member: That’s not really school choice, what you’re describing.

Commissioner: It is because it’s providing more learning opportunities for kids, which is our goal. We are trying to structure that in some way.

Jim: In general, this allocation movement and its subsidy happens over time. A student who had a superintendents’ agreement in September of this year?nothing will change in the first year of that superintendents’ agreement. Nobody’s subsidy printout changes that year. It’s a year behind.

The proposal we made for choice will have a purposefully accelerated account. Instead of just receiving half, the unit where the student is attending will receive the full amount.

Commissioner: The account lags. We’ve talked about this before. We try to at least advance that a little bit. How do you deal with that movement of money? You have the kid, but you don’t have the money. The next year, you still get half and half. It’s in phases. How do we address that timing issue?

Committee Member: The cost of transportation for school choice kids really is not the cost of what we’re currently paying for transportation within the town.

Jim: The state allocation can’t be any less than 90 percent of what you spend.

Committee Member: If there is something about the money that we can predict will cost more, by its nature, then let’s look at it. I know the state isn’t anxious to spend more money, especially on transportation, when they could be spending more money on teachers or something else. Do you really want to reallocate more of that funding on transportation?

Judith Berg, member of the public: The tuition program has a different method for deciding how much money will follow the child. Are there other methods that I don’t know about for how the money follows a child?

Commissioner: We set the funding each year based upon law. Now, George Stevens Academy?we can’t charge. That calculation is done completely different than EPS allocation. At the high school level, that average becomes the limit. George Stevens can’t charge any more. Special education costs aren’t included in that. I would also argue that the charter school movement of funds is different but not that different.

If a student went from Cape Elizabeth to Thornton Academy, we have a separate calculation. If they went to the charter school, that connects back to this number. It’s two different models. Judith’s question is, is there a third model?

Judith: What about the Maine School of Science and Mathematics? How is that done?

Commissioner: It’s completely state-funded. They submit a state budget each year. There are miscellaneous costs, GPA. It’s all in there, along with the Baxter School, etc.