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State auditors suggest new ways to track effectiveness of funds allocated to high-poverty schools

Staff from the Office of the Legislative Auditor reported to members of the state House Education Finance committee on Wednesday.

Jody Hauer, left, and Judy Randall
Jody Hauer, left, and Judy Randall, with the Office of the Legislative Auditor, presenting the Compensatory Education Revenue report on Wednesday.
MinnPost photo by Erin Hinrichs

On Wednesday, members of the state House Education Finance committee convened to hear the findings of a state audit on a large bucket of state funding for public schools.

It’s called compensatory education revenue, and it’s intended to help schools pay for the educational needs of students who do not meet performance standards appropriate for their age. These dollars are generated by students who qualify for free-and-reduced-price lunch — an indicator of poverty, which correlates with low student achievement. The state formula also takes the concentration of these students at individual school sites into consideration.

Typically, schools invest this revenue into programming, staffing, interventions and other expenses at the school sites serving the bulk of students who generate it. But districts can reallocate up to half to fund initiatives elsewhere in the district. 

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In the fiscal year 2018, the state allocated $551 million in compensatory education revenue to schools across the state. And last year state lawmakers decided that it’s time to assess whether or not that large investment — year after year — is actually having an impact. 

State statute requires that districts determine whether compensatory revenue increased student achievement. But after digging into this particular state education revenue stream, state auditors with the Office of the Legislative Auditor came back short on answers. 

“Expecting school districts to report on that impact — of one funding stream, isolated, out of all things that happen in a school — is unrealistic,” Judy Randall, deputy legislative auditor, told legislators Wednesday. “As a result, we are recommending that the Legislature eliminate this reporting requirement.”

Coming from the body that’s “all about accountability,” this recommendation may seem a bit unusual, she said. “But we think there is a better and more meaningful way to get accountability on how schools use these funds.”

Prompted by this audit request last year, the state Department of Education has already enacted data reporting changes that will add clarity around what, exactly, schools are spending their compensatory education dollars on. Beginning in the 2020-21 school year, the department will collect more detailed expenditure data. 

State statute allows for 12 broad uses of compensatory education revenue, ranging from additional staffing to lower student-to-teacher ratios and extended school days to all-day kindergarten programs, remedial instruction, staff development and added student support services. 

Based on survey data collected by state auditors, school districts and charter schools said they put the bulk of these dollars toward hiring additional teachers or teacher aides. 

However, to get at the level of accountability the state had hoped for — in requiring districts to report on the impact of the compensatory education dollars they spend — districts would have to invest a whole lot more time and money than most have available. They’d also have to establish control groups of low-income students — a nonstarter since it would raise a number of ethical questions.

Instead, state auditors recommended that the state require school districts to report whether programs funded with significant amounts of compensatory education revenue align with research-based best practices. 

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For instance, summer school — when done well — has proven effective at improving academic outcomes. Effective programs have certain attributes, including a minimum duration of six to eight weeks and a strong emphasis on attendance, complete with efforts to monitor and incentivise attendance. 

In addition to recommending a shift in accountability measures tied to compensatory education revenue, state auditors have suggested fixes on the calculation end, to better account for qualifying students whose families don’t self-identify through the free-and-reduced-price lunch program and for influxes of qualifying students from one year to the next. 

In reacting to the auditors’ findings, Rep. Cheryl Youakim, DFL-Hopkins, raised concerns about districts that opt to reallocate compensatory education dollars generated by low-income students on programs or staffing outside of the school sites those students attend. “I’ve heard frustrations from staff, when they see the need in their school and they’re the ones generating the income, yet they don’t feel they are getting their ‘fair share,’” she said.

Chair of the House Education Finance Division, Jim Davnie, shown during Wednesday's hearing.
MinnPost photo by Erin Hinrichs
Chair of the House Education Finance Division, Jim Davnie, shown during Wednesday's hearing.
It’s a concern shared by members of Educators-4-Excellence in Minnesota, says Shannon Mitchell, the nonprofit’s managing director of external affairs. Teacher members really began to focus on access to funding and resources in schools in 2016, as both the Minneapolis Public Schools district and the St. Paul Public Schools district began running significant budget deficits. 

“What we heard, over and over, as we started to home in on that issue was that teachers that were working in schools that had high concentrations of students in poverty, and that were serving students of color, really felt they had fewer resources at those schools,” she said. 

That showed up in a lack of classroom supplies, like Kleenex boxes and markers. But also in less obvious, but more significant, areas like teacher salary distribution — a measure of years of experience. 

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At the very least, Mitchell says the findings of the audit were validating.

“When we went searching for answers, we could not answer the question of: 

Is this money being spent on the students that are generating it? And to what extent is it benefiting them?’” Mitchell said. 

“We’ve seen examples of when districts get that money sometimes it’s used in more of a general fund sense,” she said, offering the example of  “lowering class sizes across the board, often times in oversubscribed schools, which can have more affluent student populations. “So if there isn’t some sort of accountability mechanism, that would be concerning to us.”