Here’s a comment left by Larry on the School 0.5 post that got me thinking about school finance:

Interesting post. But what puzzles me is why Philadelphia spends more per pupil then Henrico County SD, VA, yet Henrico is able to do 1:1 laptops, theme-based high schools, and distance learning.

Turning to some expenditure data reveals that Henrico spends: $8,223 per student (total expenditures) which comes out to be $4,166 per student (instructional expenditure).
link to SchoolMatters Data

Philadelphia spends: $12,761 per student (total expenditure – also over $1,000 more than the state average). Their instructional expenditure is roughly the same as Henrico’s – $4,779 per student.
LInk to SchoolMatters Data

In other words, Philly gets more money per student, but spends roughly the same amount on instruction. It seems to me that Philly has the money to do 1:1 (Federal revenues per student alone come out to be $1,750) but is instead spending it in other areas. Looking at SchoolMatters shows that only 56% of the expenditures are in instruction (lower than the state average of 62%) while 15% are in operations (compared to 11% state average). Looks like operation costs are eating up that extra funding.

SchoolMatter’s analysis of return on spending show some ineffencies as well. Philadelphia has a 4.6 RoSI while Henrico has a 14.1 RoSI

Philly: Link to SchoolMatters’ Data

Henrico: Link to SchoolMatters’ Data

Just curious about why Philly thinks it can’t do a 1:1 intitaitve. What is it doing instead?

I started writing as a response, but this quickly got long enough to be a post… here’s my response:

a) thanks for such an amazing resource.

b) Here are some observations I have about the differences between Henrico and Philly. Some of these issues may point to the difference in the communities, some of these may be very telling to answer your question about what is Philly doing with its money… some may not, I don’t know.
– As you say, one area that may be of interest in the S&P data is that Henrico has 90% of its instructional spending on teachers whereas Philly spends 81.7%
– That may also deal with how, given the differences in climate in the areas (i.e. Philly’s crime rate is probably much higher), that SDP has to spend more money on non-teaching assistants, school police, etc…
– And I do find it amazing that Philly distribution of staffing is 55.3% on teachers, 5.6% on admin and 39.1% on support – and looking at how those support staff shake out, I’m guessing most are NTAs and climate managers, etc… by contrast, Henrico is 62.2%, 10.5% and 27.3%. SLA is, not counting food service and school police, which I believe are factored centrally by S&P, is 9 teachers, 1 principal, 1 program coordinator (I’ll count as admin), 1 librarian, 1 counselor, 1 sys admin, 1 secretary, which is 60%, 13%, 26% which is much closer to Henrico. I’d also, after all the budget cuts that have been made in the past two years, love to see the FY07 stat here. But even if it’s gone down, that might not be a good thing. An urban district with a lot of challenges to its population may need more money spent on support staff.

c) Also, I’m not sure how to factor regional costs… I went to CNN’s Cost of Living calculator just to get a basic sense of regional differences in money, and $10,000 in Philly is the same as $8,488 — which is, ignoring every other stat, essentially the cost of the computer right there and more. (A laptop is a four year amortized expense, which means even for an Apple laptop, the cost is only about $400 per student per year in high school.) There may be some differences in cost of living vs. cost of running a district, but I think it’s a statistically significant enough difference that it needs to be factored in. (And this affects the way we should look at the city-to-state comparison too. The eastern part of the state is much more expensive than the western. That same comparison between Philly and Henrico yields an even bigger difference when you compare Philly and Pittsburgh as the $10,000 in Philly is the equivalent of $7,573 in Pittsburgh. The really interesting comparisons are between Philly and the surrounding suburban districts, several of whom spend double what Philly spends per student.)

d) This is a loaded piece, and it gets to the heart of school funding, but Henrico has 38.6% of the general population w/ at least a BA, Philly has 26.8% (and I’d love to see how that percentage shakes out in the district population), and Henrico has 28.9% of its population classified as economically disadvantaged whereas Philly has 71.1%. There’s a long, large argument about how that does affect spending, performance, etc… and I’m not going there… I’m just pointing out a difference in the communities.

e) For some reason we spend $2,267 per student on payments to other districts. I don’t know what that is. Yikes.

f) To your point — the Henrico district spent $241 per student on equipment. SDP spend $26.

g) Something that really troubles me, because I think it speaks to where the money goes, and I wish my background in finance was stronger, because I have a feeling that this stat is crippling, but I’m not exactly sure how to read this.

In 2004, our debt payment as a percentage of our operating budget was 98.3% of our operating budget as compared to 7.4% in Henrico. The interest was 8.3% in Philly as opposed to 2.8% in Henrico.

That year, we spent $709 on interest per student whereas Henrico spends $109. I have a STRONG feeling that one of the crippling pieces of our debt is that the debt services that SDP did a few years ago has come due and that $709 is now much more. I just looked at the SDP budget for FY07 (thank gawd for PDF seaching), but as near as I can figure, just from 05-06 to 06-07 (and I know it’s going to be higher next year), there was a $30,000,000 increase in debt service obligations. (PDF found here: http://www.phila.k12.pa.us/offices/cfo/ ) In 06-07, there was $173,000,000 taken from the general fund to cover the payment. That’s around $1000 a kid. And I think it’ll be higher this year. Ow.

In the end, there’s a question to whether or not the notion of economies of scale apply in big districts. I’d love to see some research around the question of whether or not a big district is more expensive to run per student than a small district. There’s probably some curve that applies, but I don’t know it.

Moreover, I’d give my eye-teeth for SDP to be at that 2004 funding level without the debt-financing steps that were taken to get us there. In the two years I’ve been here, we’ve absorbed (or are in the process of absorbing) $180,000,000 worth of cuts, and I don’t know what happened before last year as far as exact numbers, but I know cuts were made. The history of financing and SDP is troubled to say the least. The last ten to fifteen years are a case study in and of themselves. Wikipedia has a pretty good explanation of what’s gone on here in the past ten years: http://en.wikipedia.org/wiki/School_District_of_Philadelphia#Takeover_by_the_state

My sense of things is that a significant part of the budget hole that was there in 2001 was covered by Paul Vallas through debt servicing, reserve account spending, budget cuts and the sale of under-utilized buildings. In every speech I’ve seen Mr. Vallas give to the principals over the past two years, he’s said some version of "We’re going to bring the test scores up, we’re going to show the city and state how we have improved, and then, we’ll make the case for our money." I think he did a pretty amazing job of creatively financing his reform ideas for several years, but I don’t think it’s possible to mask the same budgetary issues that were there in David Hornbeck’s time with creative financing anymore. Now, in the context of a $2 billion dollar budget, it’s very possible to disagree with individual decisions — I’m pretty public on my disagreement of the increasing role of for-profit testing companies in school curriculum and assessment and Philadelphia and many other districts are using companies like Kaplan in increasing roles — but overall, Paul Vallas gave SDP time and hope, two things it didn’t have before him.

Now, four and a half years into his tenure, the test scores are up, but the underlying budgetary issues have not gone away. We have been told that if he raised the test scores, the money would follow. The scores have gone up, and the time has come for the money from the city and state to follow. For the 07-08 budget, just to argue that a balanced budget is possible, there’s going to be $100 million in cuts and the district is asking for $83 million in added state and city funds. The $100 million in cuts (which is part of the $180,000 I referenced earlier) is crippling, and what makes me frustrated and angry is that we have to ask the city and state to give us $83 million just to mitigate the damage done over the past ten (more?) years.

I know this entry goes beyond the question of "Why can’t Philly go 1:1," but the issues of school funding in Philadelphia is just such a complex beast that I don’t know how to answer the question without looking at the larger picture.

I’ve been grappling with how to write about this… because there’s no good way. It’s really difficult to take part in the School 2.0 discussion right now as the School District of Philadelphia is dealing with such difficult issues. I’ve had a lot of the long-time SDP people tell me that this is the worst they’ve ever seen it.

And what worries me is that the promise of School 2.0 when combined with the realities of the funding issues facing our cities is that we run the risk of of making the gap between suburban and urban schools even worse. Right now, a MacBook program for 120 students will cost around $165,000 a year (I subtracted out the cost of the individual textbooks we don’t buy.) For a school with $20,000 in per pupil spending, it’s doable. For most city schools, it requires major grant funding to be able to do it.

Despite funding from sources like PA’s Classrooms for the Future, sustaining technological innovation in underfunded districts is a tough trick. My big hope is that SLA can really show that 1:1 programs are worth funding in our cities. My big fear is that the funding is not sustainable nor is it replicable. I feel very confident that SLA has done well enough, has justified the expense enough, that we will have laptop funding for the next few years, but more than ever, living through this budget crisis in Philly has convinced me how necessary it is to have a domestic version of the OLPC laptop that we can deploy in the US. If I could run a laptop for $400 per person (with no software licensing costs later on) instead of $1500, then the funding nut is a lot less difficult to crack.

But there’s more than just looking at technology… as I saw article after article in the Philly papers on the violence in our schools, I just was struck by how far away this ideal of School 2.0 can feel. Too many of our students in Philly are in facilities that are in need of repair. Too many of our students are in schools where the adults spend so much time trying to worry about keeping everyone safe that I can’t imagine having the ability to focus on instruction. (Ask yourself, how well could you teach if every time you saw someone go by the door, you were wondering someone was going to walk in and disrupt your class?)

Now, I must also say that I’ve been in a lot of schools in Philadelphia, and I’ve generally seen safe schools where the kids seemed pretty pleased to be there…. and high school attendance numbers certainly bear that out, because attendance is up from last year. But let’s also be clear — if teachers are getting attacked, if there is even one school where there are fires started on a regular basis, then we have some major problems. These schools have lost security guards and non-teaching assistants, and those key losses will affect your building. The district needs more money, badly.

The latest round (now several years old) of contract negotiations did result in a raise for teachers, although it still leaves Philly as one of the lower paying districts around, but to my knowledge the city and state did not kick in any extra money to cover the larger personnel costs. How can they leave our city underfunded? And how will school reform — the ideal of School 2.0 — take root if so many people in the district are just trying to protect their schools, not reform them?

And that’s the most insidious piece of the puzzle — and perhaps it is my main idea — if all schools and school administrators do is fight the battles around the budget, then we’ve lost the idea of innovation because the time just isn’t there for it.

I’ve met just about every senior level staffer in SDP. They are good people. I’ve been really impressed with Paul Vallas every time I’ve spoken with him. These are good people who care about kids. But until the politics of education funding are seriously challenged and reformed, then we dance on the edges, with most schools unable to make the changes necessary to reform their schools. In many of these schools, some kids have sensed that and are determined to undermine the very safety of the building. We can be disappointed — we should be. But we must find a way to take our frustation to the state. We have to put our children in front of the politicians so that they can ask one simple question — "Why won’t the state fund our schools?" We must do it standing behind Mr. Vallas in full-throated support, and we must make sure that we change the story in the media such that those who will not fund our schools are made to feel ashamed.