The Evolution of Adequacy Historically, states have focused on how to allocate funding across school districts. Calculating revenues and how they are distributed to school districts are complicated issues and difficult to understand. Recently, the focus has changed from equity to adequacy and over the past 30 years, state courts have played a significant role in shaping education finance policy. Legal challenges to finance formulas have been brought in 45 of the 50 states (Smith & Pettersen, 2002). Many of the early cases centered on “equity.” Equity was defined as funding every child throughout the state in an equal manner (Smith & Pettersen, 2002). Alabama changed its funding distribution method in 1995 to accomplish this type of equity. Known as the “Foundation Program,” the funding scheme dictated the distribution of state dollars equitably on a per pupil or per teacher basis to every district in the state (Whitney, 1998). In a report released by Public Affairs Research Council of Alabama (PARCA), Williams (2006) reported that a foundation program tries to do three things:
1. Define the components of an adequate K-12 education and the cost of providing them to ensure that every student, no matter where he or she lives, has an adequate educational opportunity.
2. Encourage an appropriate level of local tax support for every public school system to promote local ownership and to recognize the benefits of good schools to the community.
3. Distribute state funds in a way that meets these objectives so that everyone pays a fair share of the burden of supporting high-quality public schools throughout the state. Alabama’s Foundation Program was established to combine both state and local funds to support the standard educational program defined by state laws. These resources are made available to every local school system, in the following way: First, the resources necessary for the standard program are calculated. In Alabama, these are defined in terms of numbers of teachers and other professionals, plus amounts for their salaries and fringe benefits, five types of classroom instructional support and other operating expenses. These components are then summed to determine the allocation to each school system for the cost of the foundation program. Second, a minimum level of local tax support is required for every school system. The idea is that the local community should pay a fair share of the cost of the foundation program. In Alabama, every school system must contribute 10 mills of local property tax support to the foundation program. This produces more local funds per student in some school systems than in others, primarily because property uses and values vary across the state. Third, the local share is subtracted from the defined cost of the foundation program. The remainder is paid by the state.
The subtraction is larger for school systems in communities that have the ability to raise large sums locally. This means that the state pays a smaller share of the cost of the foundation program for such “wealthy” systems, and a larger share of the cost where local taxing capacity is low. The subtraction therefore helps to ensure that the foundation program is affordable in every community across the state (Williams, 2006). PARCA’s report (Williams, 2006) on Alabama’s Foundation Program validated the benefits of this method of funding schools. Prior to the adoption of the Foundation Program, the state distributed its funds to school systems with very little consideration of local tax capacity. The Budgeting Process In the budgeting process, the State of Alabama requires that the state superintendent develop a budget proposal for consideration for the State Board of Education.
Once adopted, the budget is submitted to the Governor, who then makes it part of the budget proposal that is presented for approval to the Alabama Legislature. The legislature can approve it in whole, or they may choose to modify various segments of the proposal. The budgeting process has become increasingly complex. As states attempt to establish some form of equity in school funding, many factors complicate the process. Differences in local tax capacity continue to allow some school districts to provide more services than others. The addition of standards and a means of measuring whether a district has met those educational standards have heightened the awareness of a need for adequacy. The connection of standards to funding further adds to the complexity of the budgeting process.
