Three national school finance experts hired by the State to review the Report on the Cost of an Adequate Education in New Jersey found numerous, serious problems with the methods and cost determinations in the Report, many of which had been previously identified by education stakeholders, advocates and parents. In the face of this criticism, Education Commissioner Lucille Davy recently indicated that the NJ Department of Education will make “adjustments” to the cost study, but presented no specific proposal or timetable. Thus, it remains unclear whether NJDOE will address the study’s significant problems.

The cost study was performed in 2003 by John Augenblick, a Denver-based consultant, and NJDOE staff. The NJDOE kept the study secret for over three years, and only released the Report, which summarizes the results of the study, in December 2006. The cost determinations presented in the Report were roundly criticized at public hearings following its release.

In response to the criticism, the State hired Allan Odden from the University of Wisconsin, Lawrence Picus of University of Southern California, and Joseph Olchefske of the American Institutes of Research to review and provide comment on the Report. Each expert submitted written comments , and Odden wrote a final summary of the individual reviews.

Odden served as special master for Judge Michael Patrick King in the Abbott v. Burke case, recommending the specific supplemental programs and reforms for New Jersey’s high poverty urban schools adopted by the Supreme Court in the 1998 landmark Abbott V ruling.

The most serious criticisms by Odden, Picus and Olschefske of the December 2006 Report include:

• The Report does not present the basis for its recommendations. Odden expresses difficulty in understanding the basis for educational inputs and cost determinations in the Report, noting that the source material from the 2003 study was not available. Because of the lack of background information and data, the experts could only make "assumptions" about the Report’s cost recommendations.
• The Report fails to identify needed and effective programs and strategies. Odden comments on the apparent lack of consideration of educational programming in the Report, in contrast to the deliberative process used to develop the current school funding law – the Comprehensive Educational Improvement and Financing Act (CEIFA) -- and the Abbott supplemental programs and reforms. Odden notes that both CEIFA and Abbott "provided great detail on educational programs and strategies including supplemental strategies, in schools, the resource needs of those strategies, and their costs. Odden further notes that the Report "provides no discussion of the educational programs and strategies underlying those staffing recommendations, so it is unclear how the staff levels were determined or what strategies they could be used to deploy."
• The Department’s base cost is likely far too low. The Report recommends a "base" or "foundational" per pupil cost that is close to the amount spent almost 10 years ago. Both Odden and Picus expect any new base cost would at least reflect inflation levels, which they calculate would increase the base cost by $2,700, or to $11,200 per pupil.
• The Successful School District (SSD) approach applied standards far below national norms. Odden and Picus each found that the SSD approach presented in the Report - which resulted in a base cost estimate about equivalent to the estimate developed by panels of "professionals" assembled by the Department in 2003 – identified more than two-thirds of the school districts in the state as successful. This standard of "success" is far too low, and much lower than those used in cost studies performed in other states.
• Input from educators was lacking. The lion’s share of expenditures occur at the school level. Yet, both Picus and Odden point out that the Department consulted few school-based personnel in reaching its resource and cost determinations. Only 12 out of 40 people included on the 2003 "professional" panels were school-based personnel, and only two were teachers. Odden also criticized using a panel comprised solely of Department personnel, a practice not used elsewhere.
• Considerable changes since 2003 are not accounted for. Picus raises concern that the the costs in the Report do not take into consideration new, costly mandates, especially those required under the federal No Child Left Behind Act and Abbott rulings.
• The needs of low-income children were not fully addressed. Odden and Picus agree the Report gives too little consideration to the program requirements of Abbott, and the needs of students in the state’s highest poverty districts. Olchefske further recommends that additional resources be provided to districts with the highest concentrations of poverty in recognition of the additional challenges involved in providing a high quality education.
• The weights for low income students are inconsistent and inadequate. All three experts agree that the extra costs, or "weights" for low income students should apply to students who are eligible for reduced-price lunch, as well as free lunch. Picus expresses further concern that these weights are insufficient for large districts with the high poverty concentrations.
• Teacher salaries are too low. Odden and Picus agree that the study incorrectly used a lower median teacher salary, instead of the more accepted practice of using average salaries to develop the base cost. Odden also points out that the recommended daily rate for substitute teachers of $100 per day was at the level he recommended for Arkansas, a state where teacher salaries are far lower.
• The methods used to adjust for geographic price differences are outdated. Picus expresses doubt that the method in the Report adequately represents regional price differences in New Jersey today.
• Key educational resources are underestimated. Absent from the Report are important educational inputs, such as instructional facilitators (teacher coaches), alternative schools, and secondary level gifted and talented programs. Compared to his own estimates, Odden also found the educational models provide far too little money for professional development for teachers.
• Key programs are missing. Odden and Picus point out that, although the Report seems to indicate that full-day kindergarten and preschool programs for low income children will be provided, cost estimates for these essential programs are not included.
• Special Education. The Department did not ask the experts to review the costs for special education in the Report, so it remains unclear whether these costs are adequate.

The critique Odden, Picus and Olseflske raise many of the same concerns identified by Margaret Goertz of the University of Pennsylvania in comments submitted to the NJDOE on January 18th . Dr. Goertz, a leading school finance expert who has written extensively about school funding in New Jersey, found "significant" flaws in the NJDOE study, and called for additional study to address those flaws.

In a meeting with education stakeholders on April 25th, Education Commissioner Lucille Davy indicated that the NJDOE will work throughout the summer to 1) correct the flaws of the Department's study that undermine the public's confidence in the cost figures; and 2) resolve technical and policy questions related to the funding formula itself. The Commissioner also indicated that stakeholders would be involved in the process. Finally, the Commissioner restated her intention of having the Legislature enact a new funding formula by the end of 2007.

ELC and other education stakeholders and advocates have been calling for further study to correct flaws and address critical issues that were not addressed in the prior study. Legislation has been introduced in the Senate and Assembly -- A4060 and S2619 -- that would direct further a study to ensure education costs are based on conditions and needs of actual New Jersey school districts and address the educational needs of low income children and children with disabilities and other special needs. The bill has been released from the Assembly Education Committee.

For more information about the expert reviews or ways to work with others who are concerned about the funding formula, contact Lesley Hirsch at ELC, lhirsch@edlawcenter.org.

Prepared: April 27, 2007

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