Mike Falick's Blog

TEA Issues Final Rules on the Implementation of the 65% Rule: In the End, a Far Less Onerous Rule that Enhances Accountability and Transparency

The Texas Education Agency (TEA) issued its final version of the 65% Rule today.  A readers of this blog know, I am not a fan of this one size fits all approach (see prior posts on the 65% Rule here).  However, the TEA has done several things to make the rule implementation palatable.

On August 22, 2005, Governor Perry issued an Executive Order that required the TEA to mandate that school districts spend 65% of their budget "in the classroom."  While maximizing the funds spent on students' education is critical, the definition of "in the classroom" has been problematic.  The definition excludes items that districts are required by State and Federal law to provide to students.  (See this prior post for examples of these excluded mandates). 

Gov. Perry’s Executive Order refers to the definition used by the National Center for Educational Statistics (NCES).  Under this definition, the following are not included in the calculation of "in the classroom" expenditures: Administration, Plant Operations & Maintenance, Food Services, Transportation, Instructional Support, including Librarians, Teacher Training and Curriculum, Student Support, including nurses and counselors.

The TEA's new rule (.pdf) requires that as part of the school district's financial accountability rating, each school districts must answer the following indicator beginning in 2006-2007:

• Was the percent of operating expenditures expended for instruction more than or equal to 65%?(Functions 11, 36, 93, and 95)(see below for details on each Function code).

This indicator utilizes the restrictive definition propounded by NCES and is subject to a 3 year phase in - 55% for 2006-2007, 60% for 2007-2008, and 65% thereafter).

Each school district must also answer the following indicator beginning in 2006-2007:

• Was the percent of operating expenditures expended for instruction more than or equal to 65%? (Functions 11, 12, 31, 33, 36, 93, and 95)

This indicator allows districts to include counselors, nurses, and librarians in the determination of the percentage of funds expended on "instruction."  This indicator is not subject to a 3 year phase in.

Here's where the TEA made the implementation of this rule palatable.  Each of these indicators carries a weight of 3 points, i.e., a total of 6 points out of the 100 points that comprise the district's FIRST rating.  A copy of the new TEA FIRST Rating Worksheet effective August 2006 for the 2006-2007 school year is available here (.pdf). 

In addition, a district can avoid any negative consequences due to a failure to meet these indicators by simply publishing its check register on the district's website.  I am a proponent of this option regardless of the implications of the 65% rule as I believe doing so will promote increased transparency and accountability.

I also believe that the new rules further enhance transparency and accountability by requiring districts to report the following in the annual financial management report:

• a copy of the superintendent's current employment contract. The school district may publish the superintendent's employment contract on the school district's Internet site in lieu of publication in the annual financial management report;
• a summary schedule for the fiscal year (12-month period) of total reimbursements received by the superintendent and each board member, including transactions resulting from use of the school district's credit card(s) to cover expenses incurred by the superintendent and each board member. The summary schedule shall separately report reimbursements for meals, lodging, transportation, motor fuel, and other items (the summary schedule of total reimbursements is not to include reimbursements for supplies and materials that were purchased for the operation of the school district);
• a summary schedule for the fiscal year of the dollar amount of compensation and/or fees received by the superintendent from another school district or any other outside entity in exchange for professional consulting and/or other personal services. The schedule shall separately report the amount received from each entity;
• a summary schedule for the fiscal year of the total dollar amount by the executive officers and board members of gifts that had an economic value of $250 or more in the aggregate in the fiscal year. This reporting requirement only applies to gifts received by the school district's executive officers and board members (and their immediate family as described by Government Code, Chapter 573, Subchapter B, as a person related to another person within the first degree by consanguinity or affinity) from an outside entity that received payments from the school district in the prior fiscal year, and gifts from competing vendors that were not awarded contracts in the prior fiscal year. This reporting requirement does not apply to reimbursement of travel-related expenses by an outside entity when the purpose of the travel is to investigate or explore matters directly related to the duties of an executive officer or board member, or matters related to attendance at education-related conferences and seminars whose primary purpose is to provide continuing education (this exclusion does not apply to trips for entertainmentrelated purposes or pleasure trips). This reporting requirement excludes an individual gift or a series of gifts from a single outside entity that had an aggregate economic value of less than $250 per executive officer or board member; and
• a summary schedule for the fiscal year of the dollar amount by board member for the aggregate amount of business transactions with the school district. This reporting requirement is not to duplicate the items disclosed in the summary schedule of reimbursements received by board members; and
• any other information the board of trustees of the district determines to be useful.

Given what initially appeared to be a near complete erosion of local control, in my opinion, the TEA's final implementation of the 65% rule and the additional accountability factors is far less onerous than it otherwise might have been.  Indeed, I believe that publication of the district's check register as well as the additional publication requirements will enhance the public trust in its public education system.

[The Function Codes appear below]

Rod Paige, Former HISD Superintendent and Secretary of Education, Slams the 65% Rule

Add Rod Paige, former Secretary of Education under President Bush and former Superintendent for HISD, to the chorus of voices lambasting the restrictive definition of "in the classroom" contained in the 65% Rule as bad public policy.  In an op-ed piece appearing in today's New York Times, Secretary Paige says

The only drawback is that such laws won't actually make schools any better, and could make them worse. Yes, it's true that education financing is a mess and that billions are wasted every year. But the 65 percent solution won't help. The most likely outcome is that school officials will learn the art of creative accounting in order to increase the percentage of money that can be deemed "classroom" expenses.

More ominously, it will tie school leaders' hands at a time when they need more freedom to innovate. Things we should be stressing, like teacher training, online content to supplement lessons and after-school tutoring, would not fall under "classroom expenses."

Secretary Paige's solution

Instead of gimmicky fads, we need fundamental reforms. One good idea now picking up support is "weighted student funding." Under this approach, each child receives a "backpack" of financing that travels with him to the public school of his family's choice. The more disadvantaged the child, the bigger the backpack.

When that money arrives at a school, principals have freedom to spend them as they see fit. Does the school need to pay more to snag a top-notch math teacher? Are extra hours needed to allow for intensive tutoring? Principals would be able to allocate resources accordingly; accountability systems like No Child Left Behind give them strong incentives to make good decisions.

 

The Comptroller Weighs in on the 65% Rule: Blasts Proposed Implementation

Texas Comptroller Carole Keeton Strayhorn has issued a strongly worded letter to TEA Commissioner Shirley Neeley blasting the proposed implementation of the 65% Rule as "a huge unfunded state mandate."  She concludes her letter

Therefore, on behalf of educators, parents, and the school children of Texas, I ask you to recognize this for what it is -- bad policy -- and withdraw the proposed rule amendment.

As I have previously posted many times, my concern with the implementation of the 65% Rule is in the definition of "in the classroom" expenses, and I have advocated including all student support services, including counselors and campus leadership, in that definition.

The Comptroller's letter:

Comptroller Carole Keeton Strayhorn's Letter to Education Commissioner Shirley Neeley 

May 19, 2006

Shirley J. Neeley, Ed.D
Commissioner
Texas Education Agency
1701 North Congress Avenue, Suite 2-185
Austin, Texas  78701-1402

Dear Commissioner Neeley:

On March 30, 2006, I sent you a letter voicing my strong opposition to the Governor's so-called "65% Rule," and most particularly to the proposal to embed it in the Financial Integrity Rating System of Texas (FIRST), the school district financial accountability system I recommended in my 1999 report, Challenging the Status Quo (ED 4).

The TEA is Now Accepting Comments: How Do You Feel About the Proposed Implementation of the 65% Rule

The TEA has issued its proposal for implementation of the 65% Rule.  You can download the proposal here (.pdf).  The TEA's press release (.pdf) discusses the full impact of the proposed rule changes.  Public comment on the proposed implementation is being taken by the TEA for the next 30 days. 

If substantial changes to the proposed rule are not made, the rule will go into affect on July 16, 2006.  I believe substantial changes should be made, so I encourage you to take the opportunity to comment on the portion of the rule change dealing with the definition of "operating expenditures for instruction" (what I have previously called "in the classroom" expenses).  For more information on why this one size fits all approach is inappropriate, please see my prior posts on the subject.

Comments on the proposal may be submitted to Cristina De La Fuente-Valadez, Policy Coordination Division, Texas Education Agency, 1701 North Congress Avenue, Austin, Texas 78701, Phone: (512) 475-1497. Comments also may be e-mailed to rules@tea.state.tx.us  or faxed to (512) 463-0028.

The proposed rule includes teachers, librarians, extracurricular activities, and payments to Juvenile Justice Alternative Education programs.  The proposed rule excludes counselors, nurses, staff development, campus administration, and additional significant areas of student support services.

The TEA proposes to enforce the Rule through a new Indicator, Indicator 16, on school district's financial reporting.  Indicator 16 will include the following in the definition of “operating expenditures for instruction” that must exceed 55% in 2006-2007, 60% in 2007-2008, and 65% in 2008-2009.  Please note that the identification and definitions of each Function Code come from the TEA.

• Function Code 11 (Instruction: Activities that deal directly with the interaction between teachers and students)
• Function Code 12 (Instructional Media: used for resource centers, establishing and maintaining libraries and other major facilities dealing with educational resources and media)
• Function Code 36 (Co-curricular and extracurricular expenditures/expenses for school-sponsored activities during or after the school day that are not essential to the delivery of services for Functions 11, 20, and 30)
• Function Code 93 (Payments to fiscal agent/member districts of SSAs)
• Function Code 95 (Payments to juvenile justice alternative education programs) Object Codes 6112-6499 (Payroll Costs, Professional and Contracted Services, Supplies and Materials, and Other Operating Costs)

It is my opinion that serious consideration should be given to including the following student support service areas the definition of “operating expenditures for instruction”:

• Function Code 13 (Curriculum/Staff Development used to aid instructional staff planning, developing and evaluating the process of providing learning experiences for students)
• Function Code 21 (Instructional Leadership: managing, directing, supervising and leadership of staff who provide either instructional or instructional-related services)
• Function Code 23 (School Administration: directing/managing a school campus)
• Function Code 31 (Guidance/Counseling Services: assessing and testing students’ abilities, aptitudes and interests, counseling students with respect to career and educational opportunities and helping them establish realistic goals)
• Function Code 32 (Social Work Services)
• Function Code 33 (Health Services: providing physical health services which are not direct instruction)
• Function Code 34 (Transportation: student (pupil) transportation)
• Function Code 35 (Food service operation expenditures/expenses)
• Function Code 51 (Plant Maintenance/Operation: to keep the physical plant and grounds open, clean, comfortable and in effective working condition and state of repair)
• Function Code 52 (Security/Monitoring: for activities to keep students and staff surroundings safe, whether in transit to or from school, on a campus or participating in school-sponsored events at another location)
• Function Code 53 (Data Processing Services: whether in-house or contracted)

eSchool News's Scathing Analysis of the 65% Rule

The current issue of eSchool News has a very strongly worded article on the politics of the 65% Rule.  The article refers to a rather cynical memo by the leader of the group pushing 65%.  I have previously posted extensively about the 65% Rule and its inherent problems and lack of supporting data.  As currently envisioned, I don't believe this mandate will yield the improvements touted by those arguing in favor of  its implementation.  Indeed, I believe implementation using the 1980 definition of "in the classroom" will harm students when school districts are forced to reduce support services (counselors, librarians, transportation and security services, etc.) to meet this "one size fits all" arbitrary requirement.  A modernization of the definition would likely address many of these concerns.

The  memo referred to in the eSchool News article was discussed here, and you can download a copy of the entire memo here (.pdf). 

The Real Cost of Education in Texas: How an Education Dollar Relates to the Student

As we conclude the primary election season and prepare for the upcoming special session, I think this breakdown of the education dollar (prepared by Moak Casey & Associates)is extremely instructive and should play a major role in any future discussions about school district's efficient use of resources.  Please remember this the next time someone tells you with righteous indignation that only $0.50 of every dollar gets to the classroom.  (You can download Moak Casey's entire report Tracking the Texas Education Dollar - 2006 here (.pdf)).

The Denver Post Joins the Chorus: "65 Percent Solution is 100 Percent Wrong"

Today's Denver Post has an editorial that makes many of the same arguments against the implementation of the 65% Rule as an across the board, one size fits all approach previously discussed on this blog.  The Denver paper picks up on these 4 issues as reasons against the implementation of the 65% Rule as currently envisioned:

1. Bad for rural school districts that spend more on transportation costs
2. Exclusion of counselors from the definition of "in the classroom"
3. Differences in challenges for rural vs. urban districts
4. Loss of local control

For clarity on where your education dollar goes, I invite you to read this .pdf.  There aren't many private enterprises that operate with a mere 3% of their costs in administration.

Implementation of the 65% Rule in Texas: A Preview Provided by the Texas Education Agency

Every year in February, the Center for Reform of School Systems has its alumni retreat.  During yesterday's portion of this year's retreat, Lisa Dawn-Fisher, Director of the Foundation School Program for the Texas Education Agency gave a Power Point presentation (.pdf) on the 65% Rule that highlighted the direction likely to be taken by the TEA in implementing Governor Perry's Executive Order through its rule-making authority. 

Ms. Dawn-Fisher related that the TEA has been directed to use the National Center for Education Statistics (NCES) definition of instrution which excludes curriculum development, teacher training, librarians, counseling services, technology, nursing, social services, maintenance, transportation, and construction. 

She further stated that the Rule will be phased in over 3 years beginning at 55% in 2006-2007, then 60% in 2007-2008, and finally 65% in 2008-2009.  School districts that do not meet the 65% standard will not be penalized if the district's check register is published on the district's website.

The TEA will also propose reporting on the following (most of which are already required): the superintendent's employment contract, a schedule of reimbursements to the superintendent and school board members, a schedule of earnings by the superintendent from consulting or other personal services, and a summary of gifts to officers and board members exceeding $250 in value.

The TEA is also likely to propose an alternative plan that includes nurses, counselors and librarians with a phase in at 60% in 2006-2007, 65% in 2007-2008, and 70% in 2008-2009.

The new TEA rule will require school districts to report many expenditures already reported (i.e., expenditures on maintenance, construction, technology, counseling services, available fund balance) as well as additional reporting on expenditures for lobbying, consulting services, legal services, dues and professional development.

Finally, the TEA will propose this new Rule at the end of February or early March.  At that time, there will be a 30 day comment period.  I will post the Rule when TEA posts it along with information about where to send/post comments to TEA.

As a concluding thought, transparency and accountability are critical and welcome.  The difficult part about the implementation of the Governor's Order lies in the fact that it is based on input data (how are you spending your funds?) rather than student outcome data, which has historically been the State's role in defining accountability standards, and doesn't take into account the vast differences between the 1000+ school districts in Texas.  A one size fits all model of transparency and accountability on outcomes is welcome, but on inputs, is unlikely to yield the types of results that are desired.

The Dallas Morning News Joins the Chorus: The 65% Rule is "No Formula for Learning"

The Dallas Morning News has joined the rising cacophony of voices opposing the one size fits all approach represented by the 65% Rule.

The issue most have with the rigid application of 65% has to do with what is defined as "in the classroom." The DMN makes a good suggestion: Use the No Child Left Behind definition of instructional staff. After reviewing the NCLB definition, I agree....it's a good place to start. (Read this blog's prior posts on the 65% Rule here)

The Chron Takes Issue with the 65% Rule

Today's Houston Chronicle takes issue with what isn't included in the 65% Rule.  This follows a plethora of articles and and editorials questioning the wisdom of the 65% Rule, including an editorial in last Sunday's Seattle Times entitled "65-percent solution is 100-percent wrong," and a January 22 article in the Akron Beacon entitled "65-Percent Plan Fails Basic Math."  

I have blogged extensively about the inherent problems with the definition of "in the classroom" which is at the heart of the 65% Rule, including the fact that but librarians, guidance counselors, food service workers and school bus drivers are not included in the definition, and the Standard & Poors study that found no empirical evidence to support implementation of the 65% Rule.  However, the most obvious flaw in the rigid application of the definition currently proposed is established by this example, previously contained in my September 16, 2005, post:

As an example, transportation costs are excluded from the NCES definition.  The Equity Center makes the following analysis:

For a timely example, consider the impact of a $2 per gallon increase in the cost of diesel fuel for school buses. Not only must a district find away to come up with the extra $2 in actual cost (35% portion), it must also find an additional $4 to spend in the 65% portion to maintain the required ratio, for a total increase of $6 per gallon.  That would make $3.00/gallon diesel actually cost a total of $9.00, once the 65/35 ratio is maintained. This illustrates the inherent problem with restricting expenditures to a given ratio—a problem that certainly needs to be addressed.