school-level resource allocation in urban public schools || resource equity in the chicago public...

Resource Equity in the Chicago Public Schools: A School-Level ApproachAuthor(s): Ross RubensteinSource: Journal of Education Finance, Vol. 23, No. 4, School-Level Resource Allocation inUrban Public Schools (Spring 1998), pp. 468-489Published by: University of Illinois PressStable URL: http://www.jstor.org/stable/40704039 .

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JOURNAL OF EDUCATION FINANCE 23 (SPRING), 468-489

Resource Equity in the Chicago Public Schools: A School-Level

Approach1 By Ross Rubenstein

recent years, a number of large urban school districts have begun efforts to decentralize important decision making authori-

ty from the central district office to the local school level, giving greater control over budgeting and management to school staff and parents. Mirroring this approach, school finance researchers are increasingly examining resource allocation issues at more micro- levels, such as schools and classrooms. In analyzing funding equity, however, much of the focus has remained at the district-level. While district-level analyses are particularly appropriate for examining systematic relationships between funding levels and district tax bases, they can obscure important resource disparities that may arise between schools within a single district. These issues may be especially critical in large urban districts serving diverse student populations and many students with special needs.

This study seeks to help fill this gap by examining resource allocations at the school level in the Chicago Public Schools. Specifically, this article investigates the equity of school-level resource allocations in the Chicago Public Schools (CPS) for the 1994-95 school year, the sixth year following the passage of the Chicago School Reform Act. In order to better understand the intra- district distribution of funding to schools, the article summarizes the results of quantitative analyses of CPS school-level budgets. Because of the inherent difficulties in measuring value-laden concepts such as equity, this article uses a variety of methods and mea-

1. This paper was made possible by funds granted by the Andrew W. Mellon Foundation. I thank Catherine Clark, the reviewer for this volume, for helpful comments on a previous draft. The state- ments made, and views expressed, are solely those of the author.

Ross Rubenstein is an Assistant Professor of Public Administration and Urban Studies in the School of Policy Studies and the College of Education at Georgia State University.

[468]



Resource Equity in the Chicago Public Schools 469

sures to examine school-level equity and to point out limitations in the available data.

The next section of this article provides context for the study by briefly reviewing the history and effects of the Chicago School Reform Act of 1988 and by describing the data used in the analyses. The third section analyzes the equity of school-level funding. The final section presents conclusions and issues raised by the analyses.

Background and Context

Chicago Schools and Reform The Chicago Public School system presents an especially good

opportunity to explore resource allocation at the school-level for two reasons. First, since 1989 the schools have been in the midst of an unprecedented decentralization of management and budgeting authority away from the central district office to the local school level. Second, the district reports an uncommon level of financial data at the school-level, facilitating detailed analysis of the distribution of resources to schools.

The CPS is the third largest public school system in the United States, with over 400,000 students enrolled in 555 schools during the 1994-95 school year. The majority of elementary schools serve students from pre-kindergarten through 8th grade, while high schools typically include 9th through 12th grades. Middle schools are uncommon, although some do exist. The system serves an eth- nically diverse student population, with 50 percent African- American, 35 percent Latino, 13 percent White, and 2 percent Asian students in 1995-96. The system also serves a much higher proportion of students from poverty and students with limited proficiency in English (LEP) as compared to other districts in Illinois, indicating that students in Chicago may tend to have greater educational needs those in the rest of the state. Students in the CPS also perform less well, on average, than those in other Illinois districts. For example, the four-year graduation rate was 63.7 percent in Chicago, as compared to over 83 percent for the rest of Illinois, and the rate of chronic truancy was 4.7 percent in Chicago as compared to 1.3 percent for other Illinois districts.2

The school system is dependent on the local tax base for the

2. Chicago Public Schools, "Student Profile," Chicago Public School Home Page (1997). <http://www.cps.kl2.il.us/geninfo/studentprofile.html>



470 Journal of Education Finance

majority of revenues, receiving approximately 56 percent of revenue from local sources, 30 percent from the state, and 14 percent from the federal government in 1996-97. Expenditures are concen- trated at the school level and over 93 percent of CPS employees work directly in schools.

Over the past several decades, the school system has faced many of the problems often found in large urban districts. Responding to the array of pressures on the system, the Illinois State Legislature in December 1988 passed the Chicago School Reform Act of 1988 (RA. 85-1418), one of the most extensive recent attempts to decentralize decision-making in a public school system in the United States. The Act's primary focus was "to make the individual local school the essential unit for educational gover- nance and improvement," with primary control over school func- tions placed "in the hands of parents, community residents, teachers, and the school principal at the school level."3 Among the Act's fundamental components was the establishment of Local School Councils (LSCs) - consisting of six parents, two community repre- sentatives, two teachers, and the school principal - at each school site, with a student member added in high schools. The LSCs have "major decision making power" over principal evaluation and selection, budgeting, and the development of school improvement plans,4 leading to important changes within schools across the city. For example, Hess reports that after two years, 41 percent of the city's schools had new principals, due to deaths, retirements, pro- motions, and LSC decisions.5

Along with this increased responsibility, schools received sub- stantial new discretionary funding from Illinois' State Chapter I program. The Chicago School Reform Act contains three provi- sions regarding Chapter I funds:6

1. funds must be distributed based on a school's enrollment of low-income students;

2. funds should be spent primarily on instructional expendi-

3. Illinois P.A. 85-1418 (1988).

4. John Q. Easton and Sandra L. Storey, "The Development of Local School Councils," Education and Urban Society 26 (1994): 220-37.

5. G. Alfred Hess, Jr., "School Based Management as a Vehicle for School Reform," Education and Urban Society 26 (1994): 3-17.

6. Anthony S. Bryk and others, A View from the Elementary Schools: The State of Reform in Chicago (Chicago, IL: Consortium on Chicago School Research, July, 1993), 2.



Resource Equity in the Chicago Public Schools 47 1

tures at the school level; and 3. use of the funds should increasingly come under the

receiving school's discretion. For the first several years of reform, continuing fiscal crises

resulted in these compensatory funds being spent primarily to keep schools' base programs intact.7 By the 1993-1994 school year, these discretionary funds amounted to $491,000 in the average elementary school and $849,000 in the average high school.8 By 1994-95, State Chapter I funds no longer replaced base funding but had become truly supplementary. Data Sources

The data used to analyze equity patterns across Chicago elementary and high schools come from 1994-95 line-item school- level budgets for every public school in Chicago, provided by the Chicago Panel on School Policy.9 Budget data include only expen- diture items budgeted at the school-level, which represent approximately 73 percent, or $2.1 billion, of the total annual budget.10 Non school-level items (which the CPS lists as "citywide school services," "school service centers," and "central service center" expenditures) account for slightly over 27 percent of the district's nearly $2.9 billion budget.

The budget data set consists of over 157,000 budgeted line item expenditures for each school in the CPS.11 Each line-item consists of over 20 pieces of information that include numeric identifiers as well as descriptions of the sources and uses of each budget item. The descriptors allow the data to be broken out in various ways to facilitate analysis by source of revenue.

In preparing the data, the possible distinction between a school and its physical location was noted. Many schools in the CPS include child-parent centers that may be physically separated from the main school building. The CPS considers these centers part of

7. Hess, "School Based Management as a Vehicle for School Reform."

8. Todd Rosenkranz, "Reallocating Resources: Discretionary Funds Provide Engine for Change," Education and Urban Society 26 (1994): 264-284.

9. The Panel is an independent research organization studying the finances and reform efforts of the CPS.

10. Chicago Public Schools, 1994-95 School Budget (July 1994): 80-81.

1 1 . Data on actual expenditures rather than budgeted expenditures were not available for this analysis. Although actual expenditures might be preferable, officials in the Chicago Public Schools Office of Management and Budget have stated that budgeted 1994-95 data closely reflect actual expenditures.




the main school and individuals associated with the centers vote for the school's LSC. For these cases, budget and enrollment data for the annex or center are combined with the data for the main school to create aggregated school data. All analyses in this article use this aggregated school data set. For individual analyses some outliers may be deleted and these are noted as appropriate.12

The CPS accounting system maintains almost one hundred separate revenue funds based on the sources and purposes of the moneys received. In 1994-95, only 18 of these funds contained allocations, with the majority of resources reported in a small number of large funds. Almost half of the system's total allocations (49.7 percent of total allocations, 55.4 percent of school-level allocations) come from the General Fund, which contains state and local tax levy money used to provide general and special education services. The district maintains separate smaller funds for revenues from specific sources such as State Chapter I money (12.6 percent of school level funding), federal Title I money (7 percent of school level allocations), and other funding sources, as well as certain uses such as buildings and teacher pensions. While the General Fund supports the day-to-day operating expenses associated with each school's regular educational program, it also contains money for special programs, such as special education and a court-mandated desegregation program. The CPS allocates the majority of General Fund money based on schools' total student populations, while special education and desegregation allocations are based on specific student needs and characteristics.13

Equity in the Distribution of School Resources

The unusual level of detail in the Chicago budget data permits the separation and aggregation of the data for a variety of within- district equity analyses. Since equity typically focuses on the resources available to schools rather than the way in which schools allocate resources, these analyses focus on different combinations of revenue (funding) sources. Several additional analyses focus on schools' budgeted expenditures.

12. Two outlier elementary schools have been removed from the analyses of the total budget and General Fund Budget per pupil. In each case, the excluded schools listed per-pupil expenditures at least 40 percent higher than all other schools in the district. For the high school analyses, one school funded almost entirely by non-General Fund sources was removed from the General Fund analyses.

13. See Chicago Public Schools, 1994-95 School Budget, or more recent volumes for additional information on allocation procedures.




Conceptual Basis and Measures Most studies of equity in school finance focus on the district as

the unit of analysis, typically comparing districts within a single state. Equity is also a concern, though, at the school-level, particularly within districts. Because schools, unlike districts, generally do not have individual tax bases or taxing authority, resource disparities based on differential ability to pay may be unimportant in intra- district analyses.14 Focusing on districts as the unit of analysis implicitly assumes that all schools within a given district receive the average level of funding, but wide intra-district disparities may exist. Therefore, even if states distribute resources equitably across districts, the distribution of funds across schools could remain inequitable unless attention is paid to within-district allocation for- mulas and procedures. The use of school-level data to examine intra-district equity could have important policy implications for the distribution of resources from districts to schools, an area often overlooked in school finance generally, and in studies of equity specifically. This study explores two of the equity concepts applied to school finance by Berne and Stiefel,15 horizontal and vertical equity.

Horizontal equity, defined as the equal treatment of equals, may not be as critical within districts as it often is between districts. One would expect that formulae used to distribute funds from the district to local schools would be based primarily on school registers, resulting in equal per capita allocations across schools (ignoring, for the moment, student differences). Uni variate dispersion measures such as the Gini coefficient (which measures how far the actual distribution of resources is from a perfectly equal distribution), the McCloone index (which examines the distribution of resources to schools below the median per-pupil funding level), the coefficient of variation (which examines the variance in per-pupil funding across schools), the range (which highlights differences between the highest and lowest spending schools), and the standard deviation (which measures dispersion around the mean spending level), can quantify disparities across schools in different types of funding.

14. Robert Berne, Leanna Stiefel and Michele Moser, "The Coming of Age of School-Level Finance," Journal of Education Finance 22 (1997): 246-254.

15. Robert Berne and Leanna Stiefel, The Measurement of Equity in School Finance (Baltimore, MD: Johns Hopkins University Press, 1984); Robert Berne and Leanna Stiefel, "Measuring Equity at the School Level: The Finance Perspective," Education Evaluation and Policy Analysis 16 (Winter, 1994): 405-421.




Vertical equity - the appropriately unequal treatment of unequals - is of special concern in intra-district analyses. Particularly in large urban districts, schools serve students with a variety of different needs, for example students with disabilities, students from poverty, and students with limited knowledge of English. Policy makers have devised a number of special aid programs to provide additional funds to schools enrolling students with special needs. Analysis of vertical equity focuses on whether schools with greater proportions of such students receive more funding from special aid categories (specifically, state Chapter I, federal Title I, and special education funds), and receive greater total funding, than do schools with lower proportions of such students. This article uses regression analysis to examine the relationship between school-level spending and student poverty. Horizontal Equity in the CPS

Since some schools may serve large numbers of students with the special needs mentioned above, total funding per student is unlikely to be equal across schools. These special needs are typically funded through categorical or reimbursable funds rather than through the school's base funding. Therefore, base funding per- pupil, rather than total funding, is the most relevant object of analysis for examining horizontal equity. Because the Chicago budget data have no clear definition of "base" funding, this article aggregates the data in several ways in order to examine horizontal equity.

Table 1 contains summary statistics for four budget aggregates for Chicago elementary schools. All measures are pupil weighted so that students in smaller schools are not counted equally with those in larger schools. The first column presents the total budget per pupil, which includes all revenue sources divided by school enrollment. The second column lists per pupil measures for all school-level resources from the General Fund only. The third column also examines General Fund allocations only; however, all money budgeted for providing special education services is excluded. The fourth column (on the far right) presents perhaps the best estimate of "base funding": General Fund resources with special education and desegregation funds removed. Since schools use special education and desegregation allocations for special programs outside the school's "core program," it is useful to examine General Fund allocations with these moneys removed in order to approxi- mate the schools' base funding levels.




TABLE 1 School-Level Budgets per Pupil

Chicago Public Elementary Schools Pupil Weighted Summary and Dispersion Measures

1994-95

Total Budget General Fund General Fund General Fund Per Pupil* Budget Per Budget Per Pupil Budget Per Pupil

Pupil** Without Special Without Special Education Education and

Desegregation Mean $5,068 $2,727 $2,058 $1,778 Median 4,974 2,540 1,949 1,756 Maximum 10,147 6,899 4,995 2,868 Minimum 3,286 1,692 1,396 1,226 Range 6,861 5,207 3,599 1,642 Standard deviation 1,031 735 450 214 Coeff. of variation .19 .27 .22 .12 McLoone index .875 .871 .896 .924 Gini coefficient .102 .138 .111 .065 Number of schools 461 461 463 463 Number of pupils 301,762 301,762 302,402 302,402

*Outliers Eliminated: Total budget per pupil > 11,000 **Outliers Eliminated: General Fund budget per pupil > 9,000

Reading from left to right, the objects of analysis become increasingly more narrow. Removing the special funding sources substantially reduces the overall funding level from a mean of $5,068 for the total budget to a mean of $1,778 for "base funding." The dispersion of funding levels across elementary schools also narrows considerably as shown by the range, the standard deviation and the coefficient of variation. Other measures presented in the table indicate that the distribution of base funding is more horizontally equitable than that for the total budget. For example, the McLoone index is 0.924 for base funding as compared to 0.875 for total budget, while the Gini coefficient falls from 0.102 to 0.065, meaning that base funding is more nearly equal across schools as compared to total funding.16

Comparing column 1 to column 2 in Table 1 illustrates the importance of resources apart from those supplied by the general

16. The Gini coefficient and McLoone index are both measured on a scale from zero to one. For the Gini coefficient a value of zero represents perfect equality across all units. For the McLoone index, a value of one indicates that all units below the median receive the median funding level.




tax levy in Chicago. Nearly half of total resources in the average school come from funds other than the General Fund. It is also worth noting that the increase in horizontal equity between total funding and base funding is not constant as the object of analysis becomes increasingly narrow. Surprisingly, the distribution of General Fund resources appears to be less horizontally equitable than the distribution of total funding. For example, comparing the total budget to the General Fund budget, the coefficient of variation rises from 0.19 to 0.27,17 the McLoone index falls from 0.875 to 0.871 and the Gini coefficient rises from 0.102 to 0.138 (Figure 1). These results indicate that non-General Fund resources (which include state and federal categorical money, lunchroom, building, and other operating funds) are, to some degree, distributed in inverse relation to General Fund allocations. Removing special education funds and desegregation funds, the distribution becomes progressively more equal, which might be expected since special education and desegregation funds would be expected to be unevenly distributed across schools.

Table 2 presents horizontal equity measures for all Chicago public high schools. The measures are more consistent with expec- tations and the changes are smaller than in the elementary schools. Comparing the total budget to the General Fund budget, the data show that the General Fund makes up a larger share of total funding (60 percent) in high schools than in elementary schools (54 percent). Consequently, high schools receive a smaller share of their funding from categorical revenue sources. This may be a reflection, in part, of the smaller number of high school students who sign up for a free or reduced-price lunch, which is necessary in order to become eligible for compensatory funding. Differences in the number of students eligible for special education services may also account for some of the difference. The section on vertical equity further explores the distribution of categorical funds.

Again, Table 2 shows that funding becomes consistently less dispersed and more horizontally equitable as the object of analysis becomes more narrowly defined. As the object of analysis moves from total funding to base funding, the changes in the dispersion and equity measures are much smaller for the high school population than the same changes for the elementary school population. For example, for elementary schools the standard deviation ranges

17. The coefficient of variation is calculated as the standard deviation of per pupil funding divided by mean per pupil funding.



Resource Equity in the Chicago Public Schools All

Figure 1

MEAN FUNDING PER PUPIL BY SOURCE AND GINI COEFFICIENT

CHICAGO ELEMENTARY SCHOOLS $6,000 ,

-*-p5 r ou

$5,000 ^$5,068/^ ^V °12

o.i' ' 01

$4,000 ' '

' >, 0.08

$3,000 ' ',

■^2 727 ^ 0.065

^V!<^^ 0.06

^^.^$2,058 $2,000 *^

" ■*1'778 0.04

$0 -I 1 1 1 U

Total General GFw/o GFw/o Budget Fund Special Special Per Per Ed Ed and Pupil Pupil Deseg

-•-Mean - ♦- Gini coefficient




TABLE 2

School-Level Budgets Per Pupil Chicago Public High Schools

Pupil Weighted Summary and Dispersion Measures 1994-95

Total Budget General Fund General Fund General Fund Per Pupil Budget per Budget Per Pupil Budget Per Pupil

Pupil* Without Special Without Special Education* Education and

Desegregation*

Mean $5,097 $3,063 $2,633 $2,510 Median 4,934 3,008 2,605 2,453 Maximum 9,445 6,768 5,532 5,415 Minimum 3,842 2,465 2,137 2,056 Range 5,603 4,304 3,395 3,359 Standard deviation 834 426 335 326 Coeff. of variation .16 .14 .13 .13 McLoone index .898 .927 .927 .943 Gini coefficient .089 .066 .061 .060 Number of schools 63 62 62 62 Number of pupils 99,047 98,578 98,578 98,578

* Outliers eliminated: Per pupil budget < $100

from $1,031 to $214, while for high schools it ranges from $834 to $326.

The horizontal equity measures also show greater consistency across objects for the high schools than for the elementary schools, although the absolute levels are not substantially different. For high schools, the McLoone index rises from 0.898 for the total budget to 0.943 for base funding, while the Gini coefficient falls from 0.089 to 0.060 (Figure 2). Thus, for high schools the measures show a greater degree of horizontal equity for the General Fund budget than for the total budget, while for elementary schools the opposite is true. For both populations, base funding appears to be more equitably distributed than other funding.

Comparing high schools to elementary schools, the measures indicate a slightly more equitable distribution of funds for high schools than for elementary schools. For the total budget and, in particular, for the General Fund allocations, the equity measures differ substantially between high schools and elementary schools. The McLoone index for the General Fund budget for high schools is 0.927 as compared to 0.871 for elementary schools, while the Gini coefficient is 0.066 for high schools and 0.127 for elementary




Figure 2

MEAN FUNDING PER PUPIL BY SOURCE AND GINI COEFFICIENT

CHICAGO HIGH SCHOOLS

$6,000 , ,- rO.09

N. 0.08

$5,000 M & N.

' N^ooœ °07

' *"^ - «^^ "♦" 0.061 $4,000 ' «^^ "♦" ♦0.06 0.06

'. $3,063 005

$3,000 ■ - ^^_ ^^_ ^^"^^^ $2,633

^^^^1 0.04 « $2,510

$2,000 0.03

0.02

$1,000

0.01

$0 ' 1 1 1 I-O

Total General GFw/o GFw/o Budget Fund Special Special Per Per Ed Ed and Pupil Pupil Deseg

-■-Mean - ♦- Glnl coefficient




schools. The differences are smaller for base funding, but the distribution is still somewhat more equitable for high schools.

There may be a variety of explanations for these differences. First, there are many more elementary schools than high schools; therefore, differences between schools may be greater.18 Student characteristics may also be more heterogeneous in elementary schools than in high schools due to dropouts or high school magnet programs; therefore funding may also be more dispersed across schools. While non-General Fund sources appear to compensate for funding differences in elementary school General Fund allocations, no compensation appears to take place for high schools since General Fund allocations are more evenly distributed.

The analyses above describe the horizontal equity of various funding sources for the Chicago Public Schools. It is also worth briefly examining the equity of the uses of these funds. This section uses two measures of the uses of funds, the instructional budget per pupil and the average pupil-to-teacher ratio. The largest component of instructional expenditures consists of teacher salaries and benefits, but the category also includes expenditures for other instructional personnel and for instructional materials. The pupil-teacher ratio is constructed by dividing the total enrollment in the school by total full time equivalent (FTE) teacher positions. Certain classes or programs - for example, special education classes - may have pupil-teacher ratios that differ substantially from the median. Data are not available to measure these within-school variations, however.

Table 3 presents statistics for the instructional budgets per pupil and pupil-teacher ratios for elementary and high schools. Differences between elementary and high schools are relatively minor. High schools average $68 more per pupil for instruction, but also average 1/5 of a pupil more per position (16.71 versus 16.51). The slightly higher pupil-teacher ratio is unexpected given the higher overall level of funding for high schools and the higher instructional expenditures per pupil. This finding is especially sur- prising given differences in the structure of high schools as compared to elementary schools. High schools generally offer a wider range of course offerings than do elementary schools. Therefore, one might expect to find more teachers per pupil in high schools in

18. Some form of Tiebout sorting may occur, producing school populations which are internally homogeneous but very different from each other. This type of sorting may be less likely to occur in high schools because there are many fewer high schools from which to choose.



Resource Equity in the Chicago Public Schools 48 1

TABLE 3

Instructional Budgets and Teachers per Pupil Chicago Public Elementary and High Schools

Pupil Weighted Summary and Dispersion Measures 1994-95

Elementary Elementary High Schools: High Schools: Schools: Pupils Instructional Schools:

Instructional Per Teacher Budget Per Pupil Pupils Per Budget Per Pupil Teacher

Mean $3,174 16.51 $3,242 16.71 Median 3,114 16.70 3,145 16.84 Maximum 9,959 24.46 5,223 21.00 Minimum 2,138 5.88 2,632 7.31 Range 7,821 18.58 2,591 13.71 Standard deviation 575 2.48 410 1.91 Coeff. of variation .18 .16 .13 .12 McLoone index .895 .868 .922 .899 Gini coefficient .090 .088 .069 .065 Number of schools 463 463 63 63 Number of pupils 302,402 302,402 99,047 99,047

order to provide these additional courses.19 The difference in spending may be explained in part by exam-

ining Table 4 which compares average teacher salaries for high schools and for elementary schools. Average teacher salaries are constructed by dividing total teacher salary expenditures in each school by the number of FTE teacher positions. The salaries listed do not include fringe benefits.20 The table shows that average teacher salaries are $2,566 higher in high schools than in elementary schools, a statistically significant difference. Thus, it appears that high schools employ slightly fewer, higher paid teachers per pupil as compared to elementary schools, possibly due to higher degrees of specialization and training among high school teachers.21

The horizontal equity measures show a higher degree of horizontal equity among high schools than among elementary schools

19. Data on special education enrollments in elementary and high schools could help to identify a possible cause of this pattern.

20. Although information on teachers' pension payments is available, costs for employee medical insurance are not separated by employee type. Therefore, teacher benefits cannot be fully separated from benefits for other employees.

21. A weakness of the data in this study is that school-level information on teacher experience and education is not available. Teacher salaries are primarily determined by experience and education levels, however.




TABLE 4 Difference of Means: Average Teacher Salary

Chicago Public High Schools and Elementary Schools (Independent Samples f-test)

Mean St. Dev. N t-statistic Mean Difference

HIGH SCHOOLS $40,745 $1,772 63 9.55 $2,566* ELEMENTARY SCHOOLS 38,179 2,031 463

* p=.0l

for both instructional budgets and pupil-teacher ratios. The differences are especially pronounced in the Gini coefficient, which is much lower for high schools.

Vertical Equity in the CPS Vertical equity focuses on the fair treatment of unequals. In this

analysis, the concept of "unequals" is operationalized to focus on students with greater educational needs. Since the educational programs for these students may cost more than programs for "average" students, vertical equity calls for additional resources to be spent on students with special needs. Although all students differ in their individual needs, policy makers and researchers typically identify three broad (often overlapping) categories of students who may require additional resources: students with physical or learning disabilities, students from low-income households, and students with limited proficiency in the English language. The first group of students is eligible for special education services, while the other groups of students are eligible for additional "compensatory" funding from the state and federal governments.

No data on the number of students eligible for special education services, or on allocations earmarked for providing bilingual services, are available for these analyses. Therefore, the vertical equity analyses focus on the proportion of students within a school who are from low-income households.22

The vertical equity analyses use bivariate and multiple regression analysis to assess the size, strength, and direction of the rela-

22. To the degree that special education and bilingual allocations overlap with basic funding, the lack of data on students receiving these services may bias results regarding the allocation of basic funding.




tionship between school characteristics (the percentage of students from low-income households) and specific funding sources. The regressions are weighted by the number of pupils in the school relative to the average enrollment for all elementary or high schools.23

Specifically, the equations use State Chapter I per enrolled pupil (CHAPI) and federal Title I per enrolled pupil (TITLI) as the dependent variables, while the independent variable in both equations (LOWINC) represents the percentage of students eligible for free lunch or receiving public aid per school:

CHAPI = a + blLOWINC + e

TITLI = a + blLOWINC + e, where e is the error term.

The purpose of the analyses is to examine the relationship between funding and the percentage of students from low-income families. Vertical equity calls for a positive relationship between these variables, meaning that per pupil categorical allocations increase as the percentage of special needs students rises. The appropriate amount of extra funding that schools serving these students should receive requires a value judgment and is not addressed here.

As shown in Table 5, the relationship between State Chapter I per pupil and the percentage of students receiving free or reduced price lunches is positive and statistically significant for both elementary and high schools.24 It is worth noting that the R2 for these equations are 0.578 and 0.453, indicating that the independent variables explain slightly more or slightly less than half of the variation in the dependent variables.25 Since the district allocates Chapter I funds based on school poverty, one would expect (or hope for) a strong relationship between free lunch counts and Chapter I funding.26 In 1994-95, the Chapter I allocation amounted to over $800

23. This method gives greater weight to large schools without changing the n of the data set.

24. Although these analyses use all Chicago schools in 1994-95, the data may be viewed as a sample of the population of public schools in the United States, or as a sample of Chicago schools over time. Therefore, statistical significance is of interest in examining the relationships presented here.

25. These per pupil amounts are based on schools' full enrollments. Thus, this finding does not show that schools with higher concentrations of students from low-income households receive more funding per Chapter I-eligible student (concentration effect).

26. The State of Illinois distributes Chapter I funds to districts based on census poverty data. The Chicago Public Schools distributes funds to schools based on the number of students in each school eligible for free or reduced price lunch.



ARA Journal of Education Finance

TABLE 5 Results of School Level Regression Analyses

Categorical Funds per Pupil as Dependent Variables

ELEMENTARY HIGH SCHOOLS ELEMENTARY HIGH SCHOOLS SCHOOLS State Chapter I SCHOOLS Federal Title I

State Chapter I Dollars Per Pupil Federal Title I Dollars Per Pupil Dollars Per Pupil Enrolled Dollars Per Pupil Enrolleda

Enrolled Enrolleda

Constant 180.96* 139.38* 84.67 -114.76 (20.48) (53.57) (100.25) (115.25)

Percent Low 6.06* 5.24* 5.95* 4.29* Income (.24) (.74) (1.12) R2 .578 .453 .078 .159 N 463 63 334 44

Regressions weighted by school enrollment divided by average school enrollment

*p=.01 aSample includes only schools receiving Title I funds

per eligible pupil.27 Table 5 also presents the results of regression analyses examin-

ing the relationship between federal Title I funding and student poverty. These estimates reflect the more complex methods used to distribute Title I funds as compared to state Chapter I funds. Since Title I includes a threshold (i.e, schools below a certain level of student poverty are not eligible), the equations include only schools receiving Title I funds. For these equations, as in those for state Chapter I, the signs on the coefficients are positive and the relationship is statistically significant.

Table 6 presents multiple regression analyses using the four previously defined budget aggregates (BUDG) as the dependent variables, with the previously defined variable representing the proportion of students from low-income families (LOWINC), as well as total school enrollment (ENROLL), as the independent variables, with linear form:

BUDG = a + blLOWINC + b2ENROLL + e, where BUDG represents one of four different budget aggregates.

The purpose of these equations is to examine whether Chapter I and Title I funds are truly supplementary or whether these funds

27. Calculated using the number of students from low-income families divided by Chapter I allocations.




TABLE 6 Results of Regression Analyses

Per Pupil Funding as Dependent Variables

Total Budget General Fund General Fund General Fund Per Pupil Budget Per Pupil Budget Per Pupil Budget Per Enrolled Without Special Pupil Without

Education Special Education and Desegregation

ELEMENTARY SCHOOLS Constant 5,813.21*** 4,831.34*** 3,283.66*** 2,219.76***

(225.00) (163.13) (88.10) (44.18) Percent Low 5.79** -14.25*** -9.74*** -2.55*** Income (2.36) (1.71) (.93) (.46) School Enrollment

-1 57*** -1.18*** -.55*** -.30*** ¿146) ¿11) (.06) (.03)

R2 .204 .306 .316 .240 N 463 463 463 463

HIGH SCHOOLS Constant 6,129.60*** 3,641.61*** 2,979.93*** 2,734.42***

(476.40) (324.94) (276.41) (271.86) Percent Low 3.43 -1.75 -1.84 -1.08 Income (5.38) (3.67) (3.120 (3.07) School Enrollment -.69*** -.25*** -.12* -.09

(.11) (.08) (.06) (.06) R2 .421 .161 .060 .031 N 63 63 63 63

Regressions weighted by school enrollment divided by average school enrollment ***/7=.01 **/?=.05 *p=.10

Standard error in parentheses

appear to simply compensate for lower funding from other sources. Although the relationship of interest in these analyses is between student poverty and funding, the equations include school enrollment as an additional independent variable since larger schools may achieve economies of scale that lower their per-pupil costs.28 The results shown in the top portion of the table suggest that while elementary schools receive additional categorical funding as the percentage of students from poor families increases, these schools receive a lower level of resources (measured in dollars) from the General Fund. The result is a weak, though positive, relationship

28. While per-pupil costs may be lower in larger schools, student outcomes may suffer. See David H. Monk, Educational Finance: An Economic Approach (New York: McGraw Hill, 1990), 401-410 for a review of research on economies of scale in schools and school districts.




between total funding and student poverty. This pattern is not entirely unexpected given the results of the

horizontal equity analyses, which showed that for elementary schools, the General Fund budget was the most unequally distributed of the four budget aggregates examined. Table 6 provides additional detail, indicating that the inequality in the distribution of the General Fund may be to the disadvantage of students from low- income families. While determining the magnitude of the additional resources that low-income students should receive requires a value judgment, few would assert that schools serving large numbers of such students should receive lower funding than schools with fewer poor students. Therefore, the findings from these regressions indicate that the distribution of dollars from the General Fund to elementary schools may be vertically inequitable. The findings for base funding are similar, though weaker.

The results of the high school analyses, presented in the lower

TABLE 7 Results of Regression Analyses

Pupils per Position as Dependent Variables

Total Pupils General Fund General Fund General Fund per Position Pupils per Position Pupils per Pupils per

Position Without Position Without Special Education Special Education

& Desegregation

ELEMENTARY SCHOOLS Constant 16.73*** 10.42*** 17.72*** 21.97***

(.530) (.685) (.701) (.624) Percent Low -.027*** .030*** .036*** .024*** Income (.006) (.007) (.007) (.007) School Enrollment .003*** .006*** .005*** .004***

(.000) (.000) (.000) (.000) R2 .185 .329 .224 .171 N 463 463 463 463

HIGH SCHOOLS Constant 14.94*** 11.79*** 14.49*** 15.58***

(1.10) (1.12) (1.33) (1.39) Percent Low -.012 .015 .023 .028* Income (.012) (.012) (.015) (.016) School .002*** .002*** .001*** .001*** Enrollment (.000) (.000) (.000) (.000) R2 .410 .447 .256 .173 N 63 63 63 63

Regressions weighted by school enrollment divided by average school enrollment ***p=.01 **/7=.05 *p=.10 Standard error in parentheses




portion of Table 6, illustrate somewhat different findings than those for elementary schools. The table shows that all four budget aggregates have weak relationships with student poverty. Only the equa- tion using total budget as the dependent variable (column 1) shows a relationship approaching statistical significance, while the other three equations find no relationship. Combined with the earlier regressions using Chapter I and Title I allocations per pupil as the dependent variables, these equations indicate that high schools receive greater categorical funding as the percentage of low-income students rises, but that other funding bears no relationship to student poverty.

A complicating factor in these analyses is the manner in which the district distributes funds to schools. Most General Fund allocations are distributed as positions rather than dollars. Chapter I and Title I funds, though, are allocated as dollars. Therefore, the appar- ent lower funding levels from the General Fund to elementary schools with higher levels of poverty may reflect the lower cost of the teachers employed in these schools. If more educated and more experienced teachers, who earn higher salaries, are more likely to work in schools with less poverty, schools with higher levels of poverty will be likely to employ less experienced, less educated and, consequently, lower paid teachers. Tables 7 and 8 explore this hypothesis by examining the relationship between poverty, teacher position allocations, and average teacher salaries.

Table 7 presents the results of elementary school regression models measuring the relationship between the percentage of free lunch-eligible students and pupils per teacher position from each budget aggregate. The equations again include school enrollment as an additional explanatory variable. Although the position variable is specified as pupils per position in order to reflect a "class-size" estimate, the ratio does not measure actual class sizes since not all teacher positions are located in classrooms. Because of the specifi- cation, a positive coefficient indicates a higher pupil-teacher ratio. The results in Table 7 show that, for elementary schools, differences in teacher positions received are extremely small. For the total budget, schools have slightly more positions as poverty increases, but receive slightly fewer positions from the General Fund. Although the differences are statistically significant, they are also extremely small. The results are very similar for the high schools.

Table 8 presents the results of bivariate regressions using average teacher salaries as the dependent variable and the percentage of free lunch-eligible students as the independent variable. As expected, the equations show a significant negative relationship between average teacher salaries and student poverty. Together with the



48 R Journal of Education Finance

TABLE 8 Results of School Level Regression Analyses

Percent Free Lunch Eligible Students as Independent Variable

ELEMENTARY SCHOOLS HIGH SCHOOLS Average Teacher Salary Average Teacher Salary

Constant 38,961.50*** 43,160.70*** (427.10) (1009.52)

Percent Low Income -9.45* -34.01** R2 .008 .075 N 463 63

Regressions weighted by school enrollment divided by average school enrollment ***/7=.01 **/?=.05 *p=A0 Standard error in parentheses

analyses of teacher position allocations and dollar allocations, these results paint a fuller picture of the relationship between student poverty and the distribution of resources to schools in the CPS. Both elementary and high schools tend to receive approximately equal position allocations per pupil from the General Fund, regard- less of poverty level. Despite the relative equality of position allocations in elementary schools, schools with higher levels of poverty tend to hire lower-paid teachers as compared to schools with lower levels of poverty.29 These differences in teacher salary help to explain the negative relationship between General Fund dollar allocations and poverty described earlier. Although the high school analyses also reveal a negative relationship between teacher salaries and poverty, this difference does not appear to translate into sys- tematically lower dollar allocations.

Summary and Conclusions This article represents an initial attempt to assess equity at the

school-level in the Chicago Public Schools. As such, it often raises as many questions as it answers. However, it is possible to draw some conclusions.

Despite the Chicago school reform's emphasis on increasing the equity of school funding, this analysis presents a mixed view of the success of that goal. It should be noted, however, that this study takes a cross-sectional approach, examining resource allocations for a single year, and therefore cannot assess whether equity has

29. Under the Chicago reforms, principals have the authority to select teachers based on merit rather than seniority.




improved or worsened over time.30 The distribution of base funding for both high schools and ele-

mentary schools is horizontally equitable to some degree. Not surprisingly, horizontal equity decreases as various special and categorical funds are included in the analysis. The findings regarding vertical equity are somewhat less clear, though. In Chicago elementary schools, different patterns of resource distribution emerge depending upon the object used in the analysis. For example:

• The distribution of General Fund dollar allocations for the elementary schools appears to be vertically inequitable because schools with higher levels of student poverty receive lower funding per pupil;

• Analysis of position allocations indicates that the distribution of General Fund resources to elementary schools is not strong- ly related to poverty;

• These analyses reveal another area of possible vertical inequity by showing that schools with higher levels of student poverty tend to employ lower-paid teachers.

In the elementary schools, the strong positive relationship between categorical funding (Chapter I and Title I) and student poverty appears to be largely offset by the strong negative relationship between dollar allocations from the General Fund and student poverty (Table 6). Further analysis reveals, though, that the salaries of the teachers employed in high-poverty schools, rather than district-to-school allocation patterns, may largely explain this result.

Decentralization efforts, such as those in Chicago, are often viewed as a way to increase school-level productivity and efficiency by allowing those closest to students to make important decisions regarding funding priorities and strategies. While improving the efficiency of educational spending is a worthy and, indeed, vital goal, researchers and policy makers must not overlook issues of equity. If schools are to be held accountable for their outcomes, districts must ensure an equitable distribution of the resources necessary to achieve those outcomes. Moreover, as schools increasingly gain greater control over their resources, including the staff employed in the school, intra-district patterns of inequity may begin to emerge. As the analyses presented here demonstrate, school resources consist not just of dollars, but of the personnel and materials purchased with those dollars. The distribution of these resources across schools must be explicitly examined if districts are to supply a "level playing field" that allows all schools to continu- ously improve.

30. See G. Alfred Hess, Jr., Restructuring Urban Schools: A Chicago Perspective (New York: Teachers College Press, 1994), 209-225, for a longitudinal analysis of Chapter I funding.



school-level resource allocation in urban public schools || resource equity in the chicago public...

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