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Start over on school aid, economist says

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By DON WALTON / Lincoln Journal Star

Friday, Jul 27, 2007 - 12:04:31 am CDT

It takes a diagram that looks like  nuclear doomsday to chart the state’s school aid formula.

And 138 pages to translate the behemoth into an algebraic expression.

At the end of a year of tracking the beast, Greg Hayden believes it’s time to scrap the complex tangle and just start over.

Story Photo
(photos.com)

“We need to get better measures of need,” says the University of Nebraska-Lincoln economics professor.

For the last 50 years, economists have demonstrated the No. 1 determinant of a country’s economic growth and welfare is educational prowess and achievement, Hayden says.

“We’ve got to adequately educate all our students,” he says.

“We need to find out the financing needs (and) seek fiscal equity.”

What the state relies on now is a formula cobbled together over the past three or four decades.

Within it, Hayden says, are components, or sets of components, repeated in many different places and many different ways.

“The same component, or set of components, may be added, subtracted, summed with components of other districts, serve in a numerator, serve in a denominator, and serve as a multiplier or multiplicand in different places in the formula,” Hayden says.

Whoa! Time out. Multiplicand: the number that is, or is to be, multiplied by another.

Today’s complexity “inhibits understanding, discussion and deliberation,” Hayden says.

The best way to overcome that probably is to begin anew, he says.

State Sen. Ron Raikes of Lincoln, chairman of the Legislature’s Education Committee, says he’s open to change, but only if it results in improvement.

“If it’s cumbersome now, what is something that is better?” he asks.

“As I read (Hayden’s work), there is no effort to make a positive contribution. I would hope to see something useful policywise, but I don’t see it. It seems sort of cynical to me.”

Much of the detail that has been added to the basic equalization structure of the state aid formula was included “mainly in an effort to try to be fair,” Raikes says.

“If short is good,” he says, “I suppose we could simply divide the money by the number of schools.”

Tim Kemper, director of finance for Lincoln Public Schools, says the formula’s complexity reflects the challenge of “achieving a policy goal that might be complex to achieve.”

However, Kemper says, “scrutiny should be welcome (and) if we could redesign it to make it work better, we all should be interested.”

School aid may be simple in concept, he says, but it’s not simple to measure needs or achieve equity or balance policy goals with political realities.

“So many dynamics,” Kemper says.

In addition, he says, “things change,” and the aid formula has been modified over the years to reflect that reality.

State aid to schools was first approved by the Legislature in 1967. Tears filled the eyes of Sen. Jerome Warner of Waverly as the program he had championed for four years finally gained 39-7 approval 40 years ago last week.

The aid formula has undergone a myriad of changes over the years, many of them enacted since Warner’s death in 1997. Raikes was appointed to fill Warner’s seat in the Legislature and promptly picked up the challenge of shepherding the school aid program through a period of dynamic change.

Many of the alterations since 1967, Hayden says, were designed to “turn this knot or adjust this screw.”

The cumulative result, he says, has been “a tremendous differentiation and elaboration of the state aid formula,” especially during the last 30 years.

In the late 1970s, Hayden translated the school aid formula into an algebraic expression in less than a single page. The 2006-2007 formula covers 600 pages when fully expressed, 138 pages in Hayden’s abridged version.

What has emerged over time is a system of “beliefs and values used to make decisions and fight about,” Hayden says.

His study draws no conclusions on whether the distribution formula is fair.

Starting over allows “those kind of questions to be asked,” Hayden says.

“You can’t look at equity until you look at the formula.”

No doubt some school districts are gaming the system now, he says, gaining additional state aid through  assertive application of a formula that gives more weight to factors like school district wealth and parental poverty and students with limited English proficiency.

The Omaha and Lincoln school districts presumably may be best at that because they hire professional staff to assist in identifying, measuring and counting a range of factors, Hayden says.

“We need to simplify the system so the state can answer questions of equity and fairness,” he says.

Reach Don Walton at 473-7248 or dwalton@journalstar.com.


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whatever wrote on July 27, 2007 4:54 am:
" It isn't likely their are enough intelligent and fair people in State and Local government to even begin to tackle the school aid formula. And when one of the major players is Ron Raikes you can COUNT on anything new to be completely unfair to anyone outside of Lincoln Public Schools. "
Douglas Novak wrote on July 27, 2007 7:11 am:
" Amen. Absolutely no one, including Greg Hayden knows how this formula works. He is right about starting over and the basic concept of State Aid needs to be questioned. The State mandates the operation of the school systems and they should pay for it from State Income Tax dollars. It is ridiculous that property taxes fund our schools when equity does not necesarily mean cash flow for the individual property owners. The state inomce tax form is an accurte measure of cash flow and tax paying ability. The basic concept of state aid is flawed. I believe all school employees should be state employees for standardized pay and benefits and as state employees this would shift 80% of school expense the state genereal budget and off of property taxes. Too radical? Maybe, but it is definitely a solution to high property taxes. "
not true wrote on July 27, 2007 8:02 am:
" I know how the state aid formula works just by watching a few Education Committee hearings. It's really not that difficult to understand. And, Mr. Novak, I'm afraid what you are talking about is not a tax savings but a tax shift. Sure your property taxes might be lower, but you'll make up for it with other taxes or other programs will lose money. "
Taxpayer wrote on July 27, 2007 8:14 am:
" I agree with Douglas. I have said for years that we would not need state aid if the teachers were state employees. Their salaries would come from state dollars and let local property taxes pay for buildings and other cost to run our LOCAL schools. If this can't be done then simply send each school the same amount of dollars per student. No special circumstances, no minority issues,etc. "
Craig wrote on July 27, 2007 8:25 am:
" The formula is so complex that no one on the School Board understands it either. A few years ago, the Board was convinced they had to levy at the top amount because the State Aid formula would reduce state dollars if they dropped the local levy. With dire warnings that the reduction would reduce state aid the following year, they succumbed to intense political pressure (mainly from LIBA) and reduced the Levy. The next year, they were shocked to learn that State Aid went up. For years and years, because they did not understand the system, they levied at the highest amount possible thinking they would lose state aid if they did. (Of course, a cynic might argue that they understood the system and used public confusion to levy more than they needed to, either way, that argument no longer holds water thanks to the people at LIBA who corrected their misunderstanding of the State Aid Formula.) "
Power Hungry Senator wrote on July 27, 2007 8:35 am:
" Raikes will never scrap the current formula. He may add to it, but he won't simplify it. He loves to keep everything so complicated that no one truly understands it. That is his method for every piece of legislation that he introduces. Just look at how many pages LB 126, LB 658, LB 1024, & LB 641 were. There ought to be a limit on the number of pages long a bill can be. Good grief 600 pages!!!!!!!!!!! "
Terry wrote on July 27, 2007 8:47 am:
" Here's a clever formula: x = State Aid Dollars, y = Number of School Children. Divide x by y and allocate that amount to the school that child attends, be it Public, Private, or Home School. What could be more fair? But as long as Ron Raikes is in the Legislature, you'll never see any improvement. Look at the "equity and equality" from his masterpieces, Forced Class I school consolidation, and the debacle of the OPS money grab from surrounding districts. “If short is good,” he says, “I suppose we could simply divide the money by the number of schools.” That's the only thing Raikes has ever said that makes sense, and of course I'm sure in his pompous, arrogant way, he was being sarcastic. "
ted wrote on July 27, 2007 9:03 am:
" When the superintendent of LPS got a raise to $238,000 per year I could not believe it. She earns more than almost all other superintendents in the country for a district her size. School districts twice her size get paid much less. This abuse of property tax money has got to stop. "
tortis wrote on July 27, 2007 9:27 am:
" Here's an idea. let the state pay teachers salaries only, no benefits no frills, just salaries, so when a teacher is hired the school board will only be able to suggest that such and such teacher may or may not fit their system with the State being the final say. Let the State pay the cost of books and materials per student only equally with no difference for handicap etc. let the handicap people receive equal distribution according to their handicap, from the state. Let the curriculum be set by the state equally with all schools having the same curriculum, let the local schools decide for themselves how much they will spend on extracurricular activities but do not allow any state money to go toward that, let the local communities decide what type of buildings they will have but let no state moneys go toward that. Let the local communities decide how many activities they will have but do not let any state money go toward that, in other words, have two separate ways to fund schools the state provides the money for the education of students and the locals provide the extras if they want them. eliminate school boards because they will not need to meet and discuss things as the State will run the schools because the money for the education of students will come from the state, and the extras will come from the local communities, Building will not be payed for by the state and utilities will not be supported by the state, just the education of its teachers and students. Teachers will be answerable to State officials and state inspections. We will not need administrators because the state will run the system, thus eliminating the high paid salaries of administrators, since all schools will be the same all programs will be the same. Transportation will be up to the local communities and the State will not have any part of its funding. Control of these areas will be totally local and withing the Laws of the State as to roads and travel. The State will be in control of the Health insurance and benefits of the teachers it hires and will be responsible for the firing and hiring of its people and their benefits, however benefits for these people will be the same state wide. The retirement system of the State will be the retirement system for the people the State hires. Maintenance will be up to the locals as they will be in charge of the buildings and people who care for the buildings. There will be no need for board meetings as the state will have determined all of the outcomes of the school district. Local committees will oversee extras and pay the extras. This will allow for school system funding to be on an equal basis with no discrimination among cities or towns and boards will no longer have a need to exist. "
former teacher wrote on July 27, 2007 9:55 am:
" The state aid formula to schools is a sacred cow. It IS complicated, it IS NOT equitable, it DOES need to be changed. Will it happen? Not in this lifetime. Hey, Terry, I totally agree--Sen. Raikes was absolutely being sarcastic. Why would the head of the education committee want to do anything that works for the betterment of schools? Look at his record and you can see that he doesn't give a hoot about what is best for students. If he did he'd get his hind end past NW 48th street and north of I80 and see what is really happening in our schools across the state. We've got great teachers out there who aren't getting paid the wages they deserve and school districts who are trying to compete the best they can on the limited resources they have. Our students are so lucky to have dedicated teachers who work for peanuts and administrators who do amazing things with small budgets and still keep our state among the best in the nation. "
Rhonda wrote on July 27, 2007 10:51 am:
" I almost love Terry's idea, I really think that the children that are in private schools and home school should be considered, However, Here is a something to think about. Since some parents choose to send kids to private schools let them pay for it, along with home school, in our district we get several children from families who send their special needs children to public school yet send the rest to private school or home school, is that fair to the district under the current formula, I think not. The cost per child goes up yet the oeverall enrollment that is used for state aid remains the same. I think the fairest way to divide state aid is count all the children in the district, if a parent makes a choice to send their children to private school or home school so be it but the school district should not be punished when it comes to state aid like it is today under the current system. "
Jim wrote on July 27, 2007 11:36 am:
" Well "Tortis" I like your plan but it is almost as boggled as today's formula. First you say to get rid of school boards, but then say have local commitees to run buildings and extra activities, isn't that what the school board somewhat does today....? You also say the state pay just salaries only no benefits, then come back to say that the state handle the health ins and benefits, so which is it. You claim that all schools will have the same programs yet you say it is up to the local town which extra activities they have and to pay for them, well that right there changes each and every school, some may have basketball some may chose not to, so who sets the extra activity policy since the board is gone and there is no admin to run it, thats right you have a local commitee to do that, so whats the diff. I think there is a simple way to fund schools, some just want to make it a lot harder then it needs to be. I say take the total amount of state aid and divide that by the number of students and that is the amount the district gets period. If a district has 200 students in it then they get 200 X's the amount allowed per student. If the parents chose to home school or send their child to a private school then to bad they pay for it, the district still gets the money. That would help those districts that get the special needs children from a family that send the rest of the kids to private school or home school. "
Sean1 wrote on July 27, 2007 11:47 am:
" All I see is the results of the present formula: huge amount of money in, equals extremely few rocket scientists coming out of LPS. "
Hidden Agenda wrote on July 27, 2007 12:07 pm:
" Greg Hayden was a supporter of David Hahn for Governor and wrote an article praising Hahn's proposal to DOUBLE state aid to schools. The current state aid formula is too complicated to be useful. Now there's a penetrating glimpse into the obvious. Who needed a study to know that? The question is -- what to do about it. "
Nina wrote on July 27, 2007 12:21 pm:
" I agree with 'former teacher.' But, gee - think of all the accounting staff that might be out of a job if they didn't have 60 pages of formulas to decipher for each school district in the state each school year! Professor Hayden is an excellent public watchdog, I surmise. "
Lisa Tucker wrote on July 27, 2007 12:45 pm:
" This is not too complex to get a GENERAL IDEA, it's a social fabric matrix, otherwise know as a FLOW CHART. Geesh All it does is show the the direction and substance of x (people, money, etc). Households supply people to schools (workers,students: probably distinguished by different colors). Money is supplied from households through taxes, then on to an appropriation committee then onto our schools. No wonder the people who get voted into office can't do their job, they're voted by YOU. I'll give you guys a break, the reporter probably doesn't know it either and I'm not a teacher. STAY IN SCHOOL!!!!! "
Dear Rhonda wrote on July 27, 2007 1:00 pm:
" Do you also think that parents of special needs children should pay more? Private and home schools are not as well equipt to educate special needs kids. Those parents are doing the best that they can for their kids. Should they be penalized? They already pay taxes for public schools, just like you, and pay tuition for the private school. "
Jean wrote on July 27, 2007 1:25 pm:
" Sen. Raikes does an outstanding job as chair of the Education Committee. He truly thinks outside of the box and does that is best for the student regardless of what you all are saying. Nebraska will regret voting for term limits as we continue to lose such experienced, hard-working senators. "
Old Guy wrote on July 27, 2007 1:37 pm:
" So, everyone, how do you pay for the special needs student that has a full time paraprofessional because of physical or mental disabilities? Do you take money away from all the other students for the extra salaries involved because of federal and state mandates about equal education and equar opportunities for special needs students? The system is not as easy to fix as everyone would like to believe because there are so many different factors that go into funding. Does it have to be this complicated? Probably not. "
HRH The Prince of Wales wrote on July 27, 2007 1:48 pm:
" The current state aid to schools beneift western Nebraska. When will the Legislature finally see that western Nebraska is nearly dead. You need a simple formula that this: Find out what the average cost is to eduucate 1 child, lets say it is $10,000 then the state will give each district half that amount or $5,000. Then the local school district must generate the rest. This would allow tax rates to drop as valuations increase. One thing people forget is that the more valuation a school district gets the less in state aid they recieve. So when you see huge increase in property value you all asume the district is just spending that much more, and they are not, for every 1.00 they can get from property taxes, the state decreases their aid by $1.00. This will also require that small schools start to consolidate into bigger ones. Either the Legislature address this, or the courts will. Also when will you people in Lacaster County, Lincoln and eastern NEbraska wake up and see Western Nebraska is screwing you big time! "
tortis wrote on July 27, 2007 2:04 pm:
" Jim: you are right I meant not to include benefits locally but have the state provide benefits, as to the extra curricular, I meant the town board could make the decision if it wanted to have a building for basketball and a football field and pay for the lights, band, and other extras. Communities would be different that's true but the state would not be funding their difference, and if a town decided they did not want a building for basketball or for football or bands etc, then that community would not have them. As to the special needs person, I already covered that and said the state would send the amount of money to that district that it would need to meet the educational needs, not the physical needs, but the educational needs and programs it would need to be equal with other students in the state all decided upon by the state not the local, the building needs for that person or persons would be determined by the local town board and not the school, therefore there would be no need for school boards and for that matter committees because those committees would be up to the local town boards, in this way all things would be equal in the school but the town would be different, and local funds would be generated by the communities to do their own thing and the state would not have anything to do with it, such as providing the building for basketball, football field or band, etc, and the lighting and transportation for same, and the transportation for the school would be each local communities responsibility not the state, as of now the state mandates that a child living farther than so many miles from school must be either payed for their arrival and departure from that school or bus service. This would get the state out of bus service to districts and would make the town board be responsible for transportation. So each community would need to decide if they wanted transportation or not. With each school getting equal amounts for each student in the state there would be no division and the state would provide the materials for each student then there would be no discrimination for any student to receive education in the state and the state would monitor all students to maintain a strict level of compliance in the area of funding, any deviation would be either put to the parent or the local community through their local town board. School boards would no longer exist and towns would no longer have funds coming from the state to run their athletic programs, or their extra curricular, and that is the way it should be and should have been forever. We allowed transportation because rural schools were asked to merge with town schools and the transportation issue arose, now most schools are town based and school should not be paying for transportation, if the town wants to then the town board needs to decide to pay for that. We simply have too many administrators doing duplicate work that the state does anyway and that is an extra cost we can no longer afford, however, if the local community wants to have someone double check what the state is doing then they would have the right to do that only then the local town board, or council would need to fund that process. This would eliminate all administrators and keep only the principals for the school and the principals would be hired by the state as well as the teachers and benefits etc. would be provided by the state and not the locals so each teacher would be payed equivalent to state standards and state requirements and raises would be determined by the governor and not the NSEA. "
Chef wrote on July 27, 2007 2:48 pm:
" Many have missed the point that Dr.Hayden's work is brilliant. It is a sound and fundamental starting point. His work over the decades has stood out and has contributed greatly to this state where high level research goes overlooked and disregarded. Hayden would be just the person to assemble a team to go to the next phase of generating option for Nebraska's future State Aid options. "
whatever wrote on July 27, 2007 2:57 pm:
" It's just crap that Western Nebraska takes advantage of Eastern Nebraska in school funding. As far as school consolidation, if you are even half awake and reading a newspaper even once a year you know that school consolidation is going on as a natural process each year, the state and the courts do not need to "step in". And if you use the "average cost" formula as suggested by a poster you can be sure western Nebraska will benefit greatly as it costs more to educate a child on average in LPS and OPS than it does in many smaller school districts. And in general students perform better in smaller schools than larger ones, i.e. a greater return on investment. And let's not talk about the school lunch fiasco and how it appears that our large urban and eastern neighbors seem to routinely screw their more honest and western neighbors over with what seems to be bogus "padding of the numbers" to suck from the public trough. Raikes and his treachorous allies will have a hard time gathering support for change, but then again for Raikes it's not about doing what's best for all of Nebraska's children it's all about Raikes. "
gulag wrote on July 27, 2007 4:29 pm:
" It will be a cold day before residents give up their school boards and defer entirely to the state for their students educational needs. That is a Stalinist and Hilteresque method of the STATE completely controlling the education of the children and contrary to what a free people and free society are all about. "
HRH The Prince of Wales wrote on July 27, 2007 4:49 pm:
" To Whatever: I do read the paper, and I believe that when the state wanted to consolidate schools, everyone through a fit. And yes, Western Nebraska does take advantage of Eastern Nebraska. Look at this simple figure that even you might be able to understand: Lets pick school A that is in Western Nebraska and School B in Eastern Nebraska. Lets say that they are the same size and it costs the same to run. Now, lets take a look at their valuation numbers. Since farming is big in Nebraska lets look at 1 acre of dry ground. In Eastern Nebraska that 1 acre would be valued around $1700 in Western Nebraska that same acre would be valued at $500, now because ALL schools are under levy lids both schools can only levy at 1.05. That School A in Western Nebraska will get $5.25 while School B will get $17.85 Since we agree that both schools will cost the same, where is school A going to get the rest of thier money? HMMM, the State of Nebraska, in the form of TOESSA aid. Thats a fancy word to say western Nebraska is poor so they need more school aid. and since 80% of Nebraska's income and sales taxes are collected in Eastern Nebraska its safe to say, The eastern folks are getting riped off. "
Whatever wrote on July 27, 2007 7:25 pm:
" Fact; much of the Sales Tax Revenue in Lincoln and Omaha is driven by Western Nebraska, football games UNL, Creighton enrollment etc is made up in a great degree by students from Western Nebraska. They spend "western" earned dollars in this part of the state. It's not all eastern dollars and eastern taxes that make up the 80%, not by a long stretch, nor is it just Nebraska sales tax dollars. And NO we don't agree that all schools cost the same. Cost per student Lincoln Public Schools $7,821, Omaha Public Schools, $7,617, Millard, $7,021, Kearney, $6,849. This is just a few. Last year Lincoln Public Schools received over 47 million in State Aid. Had their costs been in line with a school district like say Kearney much of the aid would not have been necessary, if any at all. The 47 million figure comes from the Journal Star of July 16th. The JS also reported that 26 percent of it's students qualified for free school lunches. Sounds like Lincoln has it's own poverty problem because that figure doesn't include reduced lunch prices. I think even the simplest of minds can get their head around these figures. School Consolidation, it's happening all the time. In a lot of cases it makes sense, but in a lot of cases it doesn't. This should be an issue left up to the local boards. Living in a rural area and speaking to parents of other school districts that have consolidated you can be sure they aren't stupid. They see the writing on the wall and make the best decisions they can based on the logistics involved and the center of the student population. If a person is a strong advocate of school consolidation just watch the millions of dollars in legal fees if LPS tried to organize all of Lancaster County into one school district. You would have hate and discontent from Gage and Saline County on the South, Seward on the west, Otoe and Cass on the east and Saunders and Butler in the North. The ramifications would be absolutely astounding. "
AndyO wrote on July 27, 2007 8:22 pm:
" Any recommendation from Hayden should be taken with the proverbial grain of salt. To him, anything not solely in the hands of the bureacracy, and liberal institutions, is considered "unfair". Hayden has said that things were "great" in the 1970's, and much worse now. This includes but is not restricted to his view of education. He's an embarrasment as an economist. No such "economics" is taught by him, just his biased view of every matter. He states there is "no truth", except for the matter of fact statements from him that free markets don't work, global warming is caused by humans, and on and on. The source of the expert opinion in this article, Hayden, is the real problem. "
JD wrote on July 27, 2007 8:25 pm:
" I agree with Ted. My former city, population 1.2 million the superintendent gets $189,000 and has been there for a number of years. I just read that 2 days ago and thought, good grief, and the super. in Lincoln gets $238,000 plus the huge auto expense to drive in Lincoln??!! And I'll guarantee her health insurance and pension would make mine look like peanuts. Not only that, the schools gets 45% of the property tax. I belive LPS gets 65% if I read right. The two schools LPS wants to close would make my former city think they were in heaven if they had them. I'll also guarantee all of my former citys' schools are twice as old or more than any in Lincoln!! I also agree with "Taxpayer". It doesn't take a rocket scientist to figure out why Lincoln is nearly the highest taxed state in the U.S. I also agree teachers should be paid by the state income tax. "
Terry wrote on July 27, 2007 11:29 pm:
" His Highness and I have tangled before on his elitist idea that anything west of Emerald is a burden on the rest of the state. He refuses to accept the fact that it's rural Nebraska that PRODUCES income. What's left in Lincoln and Omaha that export anything? Almost all manufacturing has left. The biggest employers in the eastern part of the state are STATE GOVERNMENT, EDUCATION, and "service based industries," like insurance, telemarketing, and banking. None of these "industries" could survive if it weren't for someone producing a tangible product that could be sold, exported and taxed. Anyone who has tried to sort through Chapter 79 of the State Statutes knows what a mess it is, and knows that it's the large, urban school districts who benefit at the expense of ALL taxpayers in the state. HRH is dead wrong in his statement that "the more valuation a school district gets the less in state aid they recieve." Quit parroting propaganda from the NSEA and the other "education" groups in the state and look up the information on the Dept. of Ed web site. In the same year, LPS works the system for 30+ million dollars in state aid, and all of the 10+ school districts in Cherry County, with less than 50% of the property valuation of Lancaster County reap less than $50,000. Who's screwing who? "
Jas wrote on July 29, 2007 8:33 am:
" Good thing Lincoln and Omaha have all of those State-owned irrigated school sections in Western Nebraska. Just another example of how Eastern Nebraska is continually propped up by Greater Nebreaska. "
chili wrote on August 17, 2007 1:22 pm:
" To whatever: Schools don't pad their numbers to receive more free lunch/reduced price lunch funds. The amount of $$ schools receive for those programs is based on forms filled out by parents, not by schools. If there's any padding going on, it's not by the schools. Sounds like many of you need to actually attend a board of education meeting to understand how school funding works. I am neither a school employee nor a school board member, but i am a tax paying parent. I attend most school board meetings, ask questions and learn. But don't whine that some schools are getting more than your school.... My school district will receive a whopping $47,000 in state aid this year. And, yes, we were penalized a few years ago with a state aid reduction because our general fund tax levy fell below a certain level (94 cents, I believe). But if that's all the money we needed in the GF to operate our school, so be it. We shouldn't be rewarded with more state aid if we have the valuation locally to operate our school (Class C-1 size) with a general fund levy below $1.00. "

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