New partnership between a county and school system

As far as I know, most school districts in North Carolina are not "independent" ones; instead, they get direct funding from county governments along with other sources of revenue. NC school districts however may retain their authorities in education decision-making independent of county governments. 

North Carolina NBC affiliate WNCN-TV (6/17, Hall) reports that Wake County and the county's public school systems are considering a new partnership, in which the county would take responsibility for the building and maintenance of school facilities, "if the schools receive more funding to focus on student achievement." 

Without further financial details, the report is confusing to me in many ways. I wonder how exactly it will change the local funding mechanism and what are the incentives for both county and school districts to participate. 

Paul Lingenfelter's work on higher education

On April 25, Dr. Paul Lingenfelter, Executive Director of SHEEO, delivered a great speech on "funding public higher education" in the Public Budgeting and Finance section of WSSA 2008, Denver. Before I get his agreement to share the presentation file, you can click here to read many of his articles, speeches, and presentations.

Financial struggles for New York schools

New York's Post Star (4/13, Aquije) reported on the financial struggles faced by school officials in many local districts as enrollment and available funds dwindle, "while the budgets and numbers of teachers" swell. "Education officials point to various obligations that drive budgets...higher, even when enrollment sinks." Those obligations include teachers' health benefits and retirement, the rates of which usually rise each year, and salaries, which "are the largest expense for any school budget" -- accounting for about 80 percent of school budget, these personal costs are extremely hard to decrease without cutting jobs. Schools also incur expenses through state and federal mandates that require special education programs, the purchase of environmentally friendly cleaning supplies, and annual audits. (Courtesy of ICMA Newsletter.)

Intermediate School District in Minnesota

Just like Michigan, the state of Minnesota has intermediate school districts (ISD), which may be less known by many people. Michigan ISDs are considered a type of local governments, with theirs own property tax levy and governing bodies, and their responsibilities in "coordinating independent school districts." For Minnesota ISDs, I have yet to find out whether they are individual local governments as well or simply function as consortiums or partnerships of their member districts. 

As an example, Minnesota ISD 287 was created by thirteen area districts (Bloomington, Brooklyn Center, Eden Prairie, Edina, Hopkins, Minnetonka, Orono, Osseo, Richfield, Robbinsdale, St. Louis Park, Wayzata, and Westonka) to "provide educational services and programs that complement and support their own programs." These services may include Administration, Special Education, and Teaching & Learning.

Videos about Education Finance in Minnesota

From Website of Minnesota Senate Office:

• Video of Capitol Reports (Saturday, June 02, 2007; 00:28:32)
  

Education funding is always the top priority for state lawmakers when they set the state’s budget. According to the biennial 2007-2009 budget, about $13.7 billion dollars over two years will be directed towards early childhood through high school education programs. Host Jannell Trobec interviews House Education Finance Chair Mindy Greiling and Senator David Hann about the new funding initiatives.

• Video of Capitol Reports (Saturday, October 13, 2007; ?)

School districts across the state are seeking support from voters to increase education funding through their property taxes. Students, teachers and administrators in the White Bear School District offer their perspective on the status of education funding in Minnesota. Plus, Assistant Senate Majority Leader Tarryl Clark and Education Commissioner Alice Seagren talk about past and future state efforts to fund our public schools.

Data of local finance and education performance, North Carolina

1. North Carolina County and Municipal Finance Information
   
2. NC Schools Data and Statistics
   
3. Public School Clearing House
   

Research fundings for UMN

Public universities nationwide are facing budget difficulties due to dwindling financial supports from state governments. One major strategy for them -- other than tuition hike -- is to beef up external research fundings, which not only raise the all-important prestige of academic reputation but also bring additional "overhead" money to support the operation.

In the latest annual report issued by the National Science Foundation, UMN had $595 million in research expenditures in 2006—up from $549 million in 2005, an increase that move the U from 10th 9th among public universities in those expenditures.

The NSF counts research support from five source categories: business and industry (B&I), institutional funds, state and local support, federal support, and "all other sources." The University is "going across the board" to beef up all of them ("Research on the rise"), with B&I in top priority.

Charter school: flexibility vs accountability

According to Atlanta Journal-Constitution (1/8, Stepp), Marietta City Schools became the second metro-area school system [in Georgia] that decides to petition the state to become the state's first charter school systems." Georgia law allows entire school districts to convert to charter status. Once approved as charters, the districts would be exempt from federal mandates under the No Child Left Behind Act, as well as state requirements for teacher credentials, class sizes and instructional time, etc.

[In exchange, these districts should be held accountable for producing certain results, which are set forth in each school's charter. Some studies have shown that in general charters school perform better than traditional school districts, but there are controversies about funding issues and the difficulty of accountability.] No wonder that "there is a natural level of apprehension" among some parents, the report said.

Federal funds for higher education

Higher education in US is primarily the responsibility of state governments. The federal government nonetheless plays an important role as well, through direct support for research or facilities or through grants and loans made to students.

• Land-Grant Colleges and Universities
  

Through the Morrill Land-Grant Acts, first established before the Civil War (1862) and then extended in 1890 and on, federal government created 106 Land-Grant colleges (mostly public) who received federal lands which, or the proceeds from which, was to be used toward establishing and funding public services, which originally include "agriculture and the mechanic arts" and was later extended to other outreach services.

• Federal support for students
  

During the Great Depression, federal aid to students reached its peak in 1937 when 11% of all students nationwide received an average of $12 per month for undergraduates and $20 per month for graduate students as part of the National Youth Administration's work-study program.

After WWII, the Serviceman's Readjustment Act of 1944 covered tuition as well as subsistence for returning veterans (commonly referred to as GIs or G.I.s) to have postsecondary education, which provided a new revenue stream for colleges and universities.

The first general available student loan through federal government was created in the late 1950s, through the National Defense Education Act. The legislation was sought to promote access to higher education to increase the technological capacities of the US, in response to the launching of the first satellite by the Soviet Union. Now called Perkins Loans, these loans were funded by providing capital directly to colleges, which in turn lent the money to students at highly subsided rates.

In 1965, the passage of the Higher Education Act created the student grant and loan programs targeted at the nation's neediest students, and provided direct funding for college libraries, historically black colleges and universities, and a number of smaller, specialized program. The legislation still functions today, although many changes have been made through its reauthorizations every five years. Initially, Pell Grant, the foundation grant program, was established only for poor students, and it provided more than 80 percent of the cost of attendance at a typical public, four-year program. The grant opened up to all students in 1978 but reiterate its income limits in 1992.

Another important milestone in federal funding for higher education students was the passage of the Taxpayer Relief Act of 1997. The legislation created the Hope and Lifetime Learning tax credits for college tuition. Shifted from spending programs to tax subsidies, the new incentives move major beneficiaries away from the neediest college students and toward middle-and upper-income students.

• Federal support for research

Federal support for research was generally tightly coupled with national priorities. In WWII, federal expanded funding for higher education, mostly for research in support of the war effort, which slowed down with the close of war.

In 1965 the Department of Defense represented 24 percent of all federally sponsored research at higher institutions. It dropped to approximately 1o percent of the total in the 1970s, when more research funding was shifted to energy-related research when the nation faced an energy crisis due primarily to the OPEC oil embargo. The percentage recovered in the 1980s to 15 percent, when the focus turned back toward military research as the Reagan administration created new defense initiatives. In 2000, the military research dropped again to less than 8 percent of the total, when research spending for the Department of Health, Education, and Welfare raised to 44 percent from just 26 percent in 1965.

Federal research dollars also bring with them support for indirect costs, which may include library operations, plant maintenance, repair and operations, administrator salaries, and the costs of managing sponsored research on the campus. In recent years, universities (especially research-oriented ones) are increasingly active in competing for federal grants. Not only do they want the money to support research, they have increasingly relied on the indirect cost to partially support daily operations when they get much less money from states.

The private-public gap in higher education

Albert Carnesale, who used to be the provost of Harvard University and then Chancellor of UCLA, wrote in The Chronicle his concern about the private-public gap in higher education -- the gap in finance as well as in quality of research.

Private universities tend to have much larger endowments which generate consistent stream of annual revenue. For instance, Harvard has more than $20-billion endowment. Assuming about 5 percent investment return, the endowment generates about $55,000 each year per student. Standford University has an endowment of about $10-billion, which translates to more than $25,000 per student each year. In contrast, UCLA, which has about a student body twice the size of Standford, only has a $1.5-billion endowment, with an annual payout less than $2,000 per student. [UMN has about 2 billion endowment at 2006.] Some may say that most part of endowment belongs to restricted asset, and so the figure does not translate directly into general education support. But it suggests that private universities get much richer resources for scholarships and fellowships, endowed chairs, research support, construction and renovation, and equipment purchases.

On top of the endowment difference is the huge gap in private-public tuition, which directly affect the level of funding for students. Harvard and Stanford charge about $30,000 per year for undergraduates. For UCLA, the out-of-state tuition is about $20,000 while in-state students pay only about $7,000 -- meaning that the state provides about $13,000 for them. [Likewise, UMN charges about $8,000 in-state annual tuition and about $20,000 for out-of-state students.] So, even counting the state support UCLA's per student direct funding is about a third less than that available to typical private institutions.

To make things even worse, in recent years state governments have significantly reduced higher-education appropriations. Only about 15 percent of UCLA's budget now comes from the state, as does just 9 percent of the University of Colorado System's. [In 2004, UMN receives about 25 percent of its operating funds from the state. For all Minnesota state colleges and universities, the percentage is 40% in 2003.] Decreased funding from states force public institutions to be more dependent on tuition and other sources of revenue.

How can public esearch universities narrow the resource gap?

One model is to follow the examples of the Universities of Michigan and Virginia. Both accept about 40 percent of out-of-state students who pay a much higher tuition comparable to what they would pay at private universities. However, many are concerned that this solution would not serve the best interest for state residents.

Another option is to "privatize" some professional schools that are well demanded in the market. Some universities, such as U Michigan and U Virginia, have privatized their law and business schools, which receive no state money but can charge market rates.

A final possibility that is widely discussed recently is "higher fee, higher aid." In such a model, universities would charge higher tuition, more comparable to but still less than the average fees of private institutions across the country. Meanwhile, they still receive state funding, which would be used to subsidize state students, with the highest subsidies going to the students with the lowest incomes. In this way, the fluctuation of state support will change the level of student subsidy, but not directly undermine the quality of education.