Texas Study Concludes that Money Does Matter; Schools Need an Additional $226 to $408 Million

On March 4, 2004, researchers in Texas released a costing-out study that demonstrated that the amount needed on average to provide an adequate education as defined by state and federal standards is slightly below the current average amount per student the state already spends. However, they also conclude that more than 400 school districts will require an additional $226 million to $408 million to reach the level of adequacy as defined by the study. The research team from Texas A& M University also reported to the Joint Select Committee on Public School Finance that the results of the study suggest a strong relationship between resources and student outcomes - in other words, money does matter when trying to boost student achievement.

The study, completed in six months, calculated the amount of funding necessary for the state's more than 1000 school districts to satisfy state and federal standards. The report defines an adequate school district as having:

55% of its students passing state achievement tests in math and reading;

average percentage of high school students passing at least one advanced placement course; and

average percentage of students receiving a score of 1110 on the SAT or 24 on the ACT.

The study did not consider the cost of transportation, facilities, food services, and revenue for debt service.

The authors conclude that at least $6,172 to $6,271 per student is needed to provide an adequate education. The current average expenditure per student is $6,503. The researchers also found that special categories of students require additional funding support beyond the average base cost per student, such as:

low-income (additional $1,960);

English Language Learners (additional $1,248);

special education students with less severe disabilities (additional $3,695);

special education students with more severe disabilities (additional $5,306);

high school students (additional $4,001).

Methodology

This is the first major study commissioned by a state government which utilizes the statistical modeling or econometric approach to costing-out analysis. The authors of the study cite both the diversity of Texas' student population and the wealth of reliable education data as factors in their decision to use a cost function analysis or econometric approach. This methodology analyzes student performance levels resulting from education spending, varied for different characteristics of districts, students, schools etc., to calculate the estimated cost necessary to reach a defined level of achievement.

The cost function analysis is also used to measure the "efficiency" of school districts and their ability to achieve the best possible outcomes with the level of resources provided. The study calculated the average level of inefficiency to be 7% among school districts in Texas.

In a related study, researchers also determined that the Texas Cost of Education Index (CEI) must be updated to account for differences across the state in the costs of hiring and retaining staff and teachers.

The majority of previous costing-out studies have used the Professional Judgment and Successful Schools methodologies.

A number of critics have voiced concern that the study utilized a very low definition of what is a minimally adequate education, noting that although a 55% passing rate on state standardized tests meets state and NCLB requirements, 64% of the state's students passed the tests last year. Some commentators also noted that the study only considers costs for the math and reading portions of the Texas Assessment of Knowledge and Skills (TAKS), and not the cost of preparations for other sections of the exam. Furthermore, they remark that the study also does not cost out programs to reduce the number of dropouts and utilizes only the number of students who receive free lunch as an indication of poverty, without consideration of students who qualify for reduced-price lunches.

According to the Dallas News, attorneys for the plaintiffs in West Orange-Cove Consolidated ISD v. Nelson, the Texas school funding adequacy case scheduled to begin trial in late July 2004, also rejected the findings of the costing-out study and the standards used by the research team.

Prepared March 10, 2004