Lawmakers Look at Tying School Funding to Performance

Should Texas fund public schools based on their academic performance rather than just giving them a certain amount of money per student? As that idea appears to take hold with conservative lawmakers who want increased accountability, some school officials fear a badly designed program would sap funding from poor, struggling schools or fail to consider the challenges individual schools face. 

At Lt. Gov. Dan Patrick’s direction, state senators on Wednesday will begin exploring how best to go about tying funding to performance, with the upper chamber’s education committee set to take testimony from several entities — including for-profit companies — that have designed such systems.

School officials are highly wary of the concept, which was among several education-related interim charges Patrick announced late last year.

It’s far from the first time lawmakers have scrutinized the bang for the buck of the public education system, which is the state’s second-largest expense after health and human services. But they have stopped short of connecting funding to individual school performance. 

Now is the time, said state Sen. Paul Bettencourt, a Patrick ally who is pushing for a transition to some type of performance-based funding system. The Houston Republican says he is keeping an open mind about what exactly it would look like.

“I think that in the 21st century we should be looking at other markers of success besides just showing up,” said the Senate Education Committee member.

Along with standardized exam scores, Bettencourt said, performance could be measured by things like administrative costs and graduation rates. He said other states have enacted such systems, but he could not specify one he’d like to mirror, saying he is still in the information-gathering phase.

The timing is particularly right given a recent state Supreme Court ruling that found the state’s school funding system to be byzantine but constitutional — albeit minimally — and urged the Legislature to overhaul it, he said.

The decision “clearly leaves open the door for something new,” he said. (State representatives also are studying changes to the state's school finance system.)

Officials from the more than 600 school districts on the losing side of the recent ruling have decried the decision, which they fear marks the end of the court’s long-held role in forcing state lawmakers to make the politically difficult and complicated decisions of increasing public education funding or improving funding distribution methods. The system already is underfunded and inequitable, favoring property-wealthy districts, they say.

“Until the Legislature addresses that effectively, to me it seems premature to be talking about funding based on performance,” said Elgin schools superintendent Jodi Duron. “We’ve got to get the other right first.”

Duron fears how her district — a small, property-poor district with mostly low-income students — would stack up under a performance-based system.

Under one of the proposed systems called the Texas Smart Schools Initiative — spearheaded by former comptroller Susan Combs — Duron said Elgin is grouped in with large, wealthy suburban districts like McKinney and Richardson that “look absolutely nothing like us.”

Duron's district also shows up as a peer for Eanes, a wealthy, high-performing West Austin district that “generates more revenue for their tax dollars than we do in Elgin,” she said. “On top of that, their foundation can raise $2 million to just turn over to the district for staff ... I mean, it’s no wonder that we’re going to be rated very poorly on a system like this.”

School officials opposed legislation enacted in 2009 requiring then-Comptroller Combs to identify school districts and campuses that “use resource allocation practices that contribute to high academic achievement and cost-effective operations.” The Legislature has since cut off funding for the Financial Allocation Study for Texas, or FAST, program. But Combs has used her leftover campaign cash to underwrite a related data project administered by Texas A&M University that seeks to help Texans identify which public schools are making best use of their tax dollars. 

Lori Taylor, director of A&M’s Mosbacher Institute for Trade, Economic and Public Policy, who oversees the initiative and is scheduled to address the committee Wednesday, said the system matches districts with 40 peers, so in some cases dramatically different districts show up in the same group.

“Maybe we need to think about not having 40 matches,” she said, confirming the system is a work in progress.

On Wednesday, “I’m going to talk to them about how it’s crucially important to make fair comparisons among school districts,” she said.

That “means taking into consideration the differences in demographics, the differences in size, the difference in labor costs,” she said. “That is what we’re doing with our project and we’re not going to claim it’s perfect, but it’s a whole lot better than what else is out there.”

The for-profit education accountability companies testifying Wednesday are The Woodlands-based Education Resource Group and Cincinnati-based KnowledgeWorks. ERG is no stranger to the Legislature. 

Texas Smart Schools is based entirely on exam scores — at least for now, Taylor said — which could become a sticking point as parents and school officials continue to push for the Legislature to overhaul standardized testing.

“We have long lost confidence in our state assessment and accountability system,” said Duron.

Stuart Snow, the associate superintendent of business and financial services for Cypress-Fairbanks schools near Houston, said he believes some kind of performance-based funding system is inevitable given the dominance of conservative Republicans in the Legislature. He's trying to convince other school officials to at least offer input into what the policy might look like.

“It hasn’t been well-received,” he added.

Republican lawmakers often point to Cy-Fair as an example of a district that performs well despite receiving little state money. Snow says that while he understands the apprehension of lower-performing districts, he thinks having some kind of performance component in the state's public school funding system could be beneficial and fair, as long as it isn’t the only basis for receiving funds. It could be a pot of incentive money doled out to high performers, for example, he said. But the system shouldn’t penalize low performers and it should — as does the current system — account for students who are disabled or are learning English, who are more expensive to educate.

“We always ask for additional money but we need to be able to show how that correlates to academic performance, and I think that in most cases we’re able to do that,” he said. “I think every community wants to know and deserves to know — particularly with their tax dollars — that the school district is using their money wisely.”

Disclosure: Texas A&M University has been a financial supporter of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.