Citation
Fiscal equity

Material Information

Title:
Fiscal equity an analysis of discretionary funds in elementary schools
Creator:
Garcia, Genevieve Helen
Place of Publication:
Denver, CO
Publisher:
University of Colorado Denver
Publication Date:
Language:
English
Physical Description:
vii, 197 leaves : forms ; 29 cm.

Subjects

Subjects / Keywords:
Education, Elementary -- Finance -- Colorado -- El Paso County ( lcsh )
Education, Elementary -- Finance ( fast )
Colorado -- El Paso County ( fast )
Genre:
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Thesis:
Thesis (Ph. D.)--University of Colorado at Denver, 1993. Administration, curriculum, and supervision
Bibliography:
Includes bibliographical references.
General Note:
Submitted in partial fulfillment of the requirements for the degree, Doctor of Philosophy, School of Education and Human Development, Administration, Curriculum, and Supervision.
Statement of Responsibility:
by Genevieve Helen Garcia.

Record Information

Source Institution:
University of Colorado Denver
Holding Location:
Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
28863465 ( OCLC )
ocm28863465

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FISCAL EQUITY: AN ANALYSIS OF DISCRETIONARY FUNDS IN ELEMENTARY SCHOOLS by Genevieve Helen Garcia B.A., University of Northern Iowa, 1970 M.A.( University of Northern Colorado, 1973 A thesis submitted to the Faculty of the Graduate School of the University of Colorado at Denver in partial fulfillment of the requirements for the degree of Doctor of Philosophy Administration, Curriculum, and Supervision 1993

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This thesis for the Doctor of Philosophy degree by Genevieve Helen Garcia has been approved for the School of Education by Alan Davis

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1993 by Genevieve Helen Garcia All rights reserved.

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Garcia, Genevieve Helen (Ph.D., Administration, Curriculum, and Supervision) Fiscal Equity: An Analysis of Discretionary Funds in Elementary Schools Thesis directed by Professor Paul Bauman ABSTRACT This exploratory study examines and evaluates fiscal equity as it is impacted by amounts of discretionary funds available to elementary schools. Eighteen schools in El Paso County, Colorado, were studied. The main objectives of the study were to determine the amounts of money available to building principals through discretionary funds, to discover what factors account for these differences, and to assess the effects of the potential differences created by discretionary funds on the educational programs and services. The research design included both quantitative and qualitative methods. Data were collected from personal interviews with principals from diverse schools representing both "Rich" and "Poor" neighborhoods. The quantitative data describing the relationships in dollars generated and discretionary funds were analyzed using independent samples iv

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t-tests, regression analyses, Pearson correlations, and scatter plots. Key findings of the study included: 1. There were differences in amounts of discretionary funds in elementary schools within a district. 2. There were differences in amounts of discretionary funds among elementary schools within the county. 3. There were minimal differences in amounts of per-pupil funds that districts allocate to elementary buildings for instructional supplies and equipment. Differences were found in allocations of dollars by various districts for supplies and equipment throughout the county. 4. Differences in amounts of discretionary funds were primarily affected by: the number of students in the building, the socio-economic level of the neighborhood, and the setting of the school, either urban or suburban. Secondary factors affecting amounts of discretionary funds were fund-raising efforts of building principals, influential or active parent groups, the amount of time spent on fund-raising by students, and district policies dealing with fund-raising. v

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This study suggests that discretionary funds impact the balance of fiscal equality found in elementary schools within El Paso County. Inequities in the quality of education are reflected in supplies and equipment that can be purchased. Perceptions of principals, teachers, and parents are also affected by these inequalities. Discretionary funds add to the disparities between rich and poor schools. This abstract accurately represents the content Paul Bauman vi

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ACKNOWLEDGEMENTS In appreciation and gratitude, I thank the following people who have helped me to complete this thesis and this degree: To Paul Bauman, the chair of my committee and my advisor, who was always there with encouragement and a reminder that there were no easy answers. To David Melendez and Michael Martin, committee members who provided support. To Alan Davis who unlocked the secrets of these statistics. To my parents Arthur and Helen Luhring, who instilled in me very early the value of education and a love of learning. To my friend and mentor Ray E. Kilmer, who taught me about school finance and that "life is not fair." To Dallas H. Strawn, whose encouragement and constant reinforcement kept me going. To my son Ted Garcia, whose unconditional faith reminded me that I could finish this degree. To my husband Vic Garcia, who never complained about paying tuition, whose technical assistance was vii

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invaluable, and whose love and support made me believe in myself. Many of us in the doctoral program from the Department of Education have thanked Russell w. Meyers. I, too, have Russ to thank for seeing me through my program from the beginning, almost to the end. viii

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CONTENTS CHAPTER 1. FISCAL EQUITY: AN ANALYSIS OF DISCRETIONARY FUNDS IN ELEMENTARY SCHOOLS 1 Introduction ....................... l Rationale for the Study ..... 3 Statement of the Problem ............ 9 Purpose of the Study ....... lO Research Questions ................ ll Definition of Terms .............. 12 Significance of the Study .... 13 Originality of the Study ........... 14 Limitations of the Study ..... lS Organization of the Study .......... l7 SUltiiilacy ... 18 2. REVIEW OF THE RELATED LITERATURE ON SCHOOL FINANCE ........... ... 19 The Court Rulings on School Finance ........... ................. 20 Changing Policies of State Finance ............................ 31 Private Financing of Public SChools ............................ 37 ix : .. :\

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Partnerships ................ 3 9 Grants ......................... 40 Fund Raising ........... Foundations ................. 44 Colorado Finance Legislation ... 46 s u.mmc;tcy 51 3. RESEARCH METHODS AND PROCEDURES ... S3 Introduction ....................... 53 Research Problem ................. S3 Research Questions .......... S4 Research Design .................. ss overview ........................ 55 Design of the Study ........ 57 Selection of Participants .......... 61 Data Collection .................. 64 Analysis of the Data .......... 68 Question one .................. 68 Question Two .................... 70 Question Three ........ 76 S u.mmacy 7 7 4. FINDINGS OF THE STUDY ........... 79 Introduction ................... 7 9 X

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Question One ....................... ao Summary ......................... 8 6 Question Two 8 7 Quantitative Data ............. 87 Summary of Quantitative .Analysis ....................... 100 Qualitative Data .............. 102 Summary of Qualitative Data .... 113 Question Three ................... 114 Qualitative Data ............... 114 Summary of Qualitative Data .... 122 Summary ........................... 123 5. SUMMARY, CONCLUSIONS, IMPLICATIONS, AND RECOMMENDATIONS .............. l26 Summary ........................... 126 Literature Review .............. 127 Findings of the Study .......... 131 Conclusions ....................... 141 Implications ...................... 144 Recommendations .................. 151 APPENDIX A. Reports of Discretionary Funds by District ....................... 155 xi

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B. Graphs of Per Pupil Funding by District ....................... 16 4 C. Discretionary Fund Comparisons per Building .......................... 17 4 D. District Allocations for Supplies and Equipment .................... 17 7 E. Per Pupil Funding Comparisons by County ............................ 180 F. El Paso County Free or Reduced Lunch Percentages by District ..... 183 G. Districts Sampled in El Paso County, Colorado .......................... 186 H. Qualitative Interview Questions .. l88 I. Semi-Structured Interview Guide .. l90 BIBLIOGRAPHY ............................. 192 xii

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CHAPTER 1 FISCAL EQUITY: AN ANALYSIS OF DISCRETIONARY FUNDS IN ELEMENTARY SCHOOLS Introduction The study of school finance and the issue of equitable educational funding have been challenging legislatures, frustrating educators and providing a basis for litigation throughout the United States of America. Should the accident of geography determine the quality of science instruction a child receives, whether he has an opportunity to learn to play the violin, whether her first grade class will have twenty students or thirty-five? (Wise & Gendler, 1989, p. 14) These questions were first asked about the legality of the denial of equal educational opportunities by Arthur E. Wise in 1967. In his 1967 book Rich Schools, Poor Schools: The Promise of Egual Educational Opportunity Wise asks the question: "Is denial of equal educational opportunity constitutional?" (Wise & Gendler, 1989 p 0 14) 0 It is understood that the quality of education is not totally dependent on dollars. There are examples of schools that are not effective in the use of their generously allocated dollars and those that use their limited resources to the maximum

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benefit of the students they serve (Wise & Gendler, 1989). Money does not buy everything; there are good schools in poor districts, bad schools in wealthy districts. But by commonly accepted standards, it is clear that resources do affect educational quality (Wise & Gendler, 1989, p. 17). The broad question of equity of educational funding has been traditionally studied on the state level dealing with inequities at the local level. This is because the responsibility for funding our nation's schools is not mentioned in the United States Constitution but rather is delegated to the individual states and to local school districts. A series of court cases beginning in the late 1960s have forced state legislatures throughout the country to reform their finance systems and obtain equal fiscal resources (Wood & Ruch, 1986). Lawsuits in 36 states challenging the constitutionality of states' school finance legislation show us that educational equity is not an isolated issue (La Marte, 1989). The State of Colorado's finance system was tested in 1982 in the case of Lujan v. The Colorado State Board of Education. The Colorado Supreme Court "held that the system barely met constitutional standards" 2

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(LaMorte, 1989, p. 10). With the 1988 passage of The Public School Finance Act, reforming the previous law of 1973, another lawsuit, The Hafer Suit of 1987, was prevented (LaMorte, 1989). This research study examines the attempt at equity brought about by Colorado House Bill 1341 (1988) in relation to a more specific issue of equality of school funding within the district level, that of equity between individual elementary school buildings and among elementary schools within a single county in the State of Colorado. The Rationale for the Study House Bill 1341, which became Colorado's School Finance Act, has been controversial since its inception in 1988. The law was designed to equalize the funding of public schools across the state by bringing low spending districts to the mandated average within their size and setting category over a period of four years (Public School Finance Act of 1988). House Bill 1341 was passed to reduce the wide disparities in expenditure levels per pupil within Colorado's eight designated categories (Colorado Department of Education, 1989). The eight 3

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setting categories were established to divide the 176 school districts in Colorado into similar units using the following criteria: *population size and density *geographic size and population sparsity *regional economic relationships *location of economically important cities or towns within districts *cost of living factors *presence of communities of interest (Colorado Department of Education, 1988, p. 36). The unique characteristics of Colorado's 176 school districts were the basis of the guidelines for the setting categories which impact the expenses of school districts and the cost components for each district. A description of the eight setting categories in Colorado are as follows: CORE CITY -large enrollment declines over the past twenty years, high concentrations of low income students, high concentrations of students with special needs (that is, special education, compensatory education, vocational education), and total pupil enrollments in excess of 40,000. Total districts = 1 (Denver Public Schools). DENVER METRO -primarily suburban in character, contain a more homogeneous pupil population with generally smaller number of special needs youngsters. These districts are headquartered within the populous portions of the Denver/Boulder Consolidated Metropolitan Area (CMSA). Total districts= 13. URBAN-SUBURBAN -This category comprises the state's major population centers, along with their immediately surrounding suburbs, 4

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outside of the Denver metropolitan area. These districts represent population centers, including the suburban areas, in excess of 30,000 that have economic ties. Total districts = 16. OUTLYING CITY -These districts have population centers in excess of 7,000 persons, within which most children attend school. Total districts = 12. OUTLYING TOWN -Districts with population centers of between 1,000 and 7,000 persons, reflecting some centralization of district population. Total districts = 44. RURAL -Rural districts do not contain an incorporated population center of at least 1,000, indicating a sparse and widespread population. Total Districts = 55 RECREATIONAL -Districts containing major recreational developments that impact property values, community income, and other cost of living components are classified in this category. Total Districts = 6. SMALL ATTENDANCE -Included are districts that are rural in nature and have pupil enrollments of less than 150 students. Total Districts = 29. (Fukuhara-Bryan, 1989, pp. 3-4) The criticisms of H.B. 1341 have focused on the availability and equity of funding for school districts of various sizes, populations, and geographic locations of the 176 individual districts in Colorado (Anderson & Stevens, 1991). Policies from the Colorado Department of Education, rules and regulations from the State 5

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Board of Education, and mandates from the State Legislature direct districts to precisely fund certain categories of the budget (Public School Finance Act of 1988). One such budget category is the line item of Instructional Supplies or student supplies and equipment, labeled as the 400 and 500 series, which must now be funded with an average of at least $111 per full time equivalent (F.T.E.) student. An F.T.E. student is one who is enrolled in the school full time, counted in the state's October 1 membership, and receives full funding from the state of Colorado Department of Education. The following allowed expenditures in these categories include: textbooks, library books, periodicals, teaching supplies, field trips, staff development and audiovisual materials (Public School Finance Act of 1992). Although districts must budget $111 per F.T.E. student, and auditors can accurately assess these expenditures in the district budget, significant additional sources of income at the building level may be available to principals that may also be used for purchasing supplies and equipment. The discretionary funds in this study do not come from 6

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the district budget, are not allocated from state and or local taxes, and are not subject to the scrutiny of the state auditor (Colorado Department of Education, 1988). The following are examples of these sources of additional revenues: school picture profits, building use fees, soda machine profits, PTO/PTA fund-raisers, grants, donations, and foundation gifts. These dollars are all obtained outside the state funding formula and may be used in addition to the $111 per pupil as defined in The Finance Act. Dr. Dan Stewart, the Assistant Commissioner of The Colorado State Department of Education, The Office of Management Services, reported in an interview that the Colorado Department of Education does not examine these additional dollars when reporting per pupil expenditures at the district level nor do the buildings publish this discretionary money to the districts. Although these funds are not hidden, according to the personal interviews with elementary principals, it was found that many administrators are reluctant to discuss these additional resources. The reluctance may be due to the fact that the principals of these buildings are aware of the 7

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inequities brought about by these discretionary funds. This and other reasons for their concerns will be fully explored in the qualitative interview analysis in Chapter 4. These additional moneys may be available at each elementary building site and are individually controlled at the discretion of each principal within the district. The differences in the amount and the availability of these funds may be due to the entrepreneurship of the building principal, the resourcefulness of the Parent Teacher Organization (PTO), other parent groups in the elementary school, or other unknown variables. Another factor affecting these funds could be the socio-economic level of the school's neighborhood. All of the above mentioned factors may work together to generate discretionary funds (Berlin, 1991). Regardless of their origin, these additional sources of revenue, when available, are accumulated in building activity accounts or individual bank accounts. The funds are commonly used to enhance 8

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funding for programs, supplement curricula, purchase additional supplies and materials, finance field trips and after-school enrichment, and or fund teacher inservice at the buildings. As previously indicated, these added expenditures are in addition to the district budget and are not funded by dollars allocated from the state through the district budgets (Davidson, 1985). Every additional dollar of revenue, every extra piece of equipment or other supplies, and especially every hour of class time per student, multiplied per week means educational opportunities for these children that receive these added values from discretionary funds. Statement of the Problem Equity between and among elementary schools is embedded in the basic premise that children are entitled to equal and equitable educational opportunities despite the inequity of the assessed valuation of the neighborhood in which they live. This definition of "fiscal neutrality" was seen as the most important factor used by the courts in assessing the legality and constitutionality of state finance systems (Barro, 1988) and therefore is 9

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a key factor to the significance of this research study. In addition to the funds that schools receive from state finance allocations derived from state and local taxes there are also other funds available to elementary principals. These discretionary funds are used to supplement district and state allocations which are mandated for purchasing supplies and equipment, to fund field trips or enrichment activities, or to enhance educational programs at the individual schools. The Purpose of the Study The purpose of this study is to examine and evaluate fiscal equity as it is impacted by the amount of discretionary funds available to elementary principals. This preliminary study will focus on eighteen selected building principals in El Paso County, Colorado. The main objectives of the study are to determine the amounts of money available to elementary principals through discretionary funds, to discover what factors account for these differences, and to assess the effects of the potential differences created by discretionary funds 10

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on the educational programs and services for students in El Paso County, Colorado. The study is not designed to focus on the principal's role as an entrepreneur in earning additional money, nor is the study designed to uncover improper or inappropriate spending at the building level by elementary principals. However, these factors will be described or acknowledged to the extent they affect equity within a district. Although this is a preliminary study of equity at the elementary school level, the issue has implications of inequities throughout the state and at various other levels of education as they impact educational opportunity for students in Colorado. Research Questions This study investigated three main questions: 1. What differences exist in the amounts of money available to elementary principals to supplement district budget allocations? 2. What key factors account for differences in discretionary funds available between schools within districts? 11

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3. What are the effects of the differences of equity on educational programs and services for the students? Definition of Terms The following terms are defined to maintain consistency and avoid misunderstanding throughout the study: 1. Discretionary funds -those funds which are derived from other than traditional district and state allocations and are available for use by the building principal. 2. Fiscal neutrality -the standard that holds that the quality of a child's schooling shall not be a function of wealth, other than the wealth of the state as a whole. 3. Funded pupil count -full-time equivalent of pupils eligible for state funding (Colorado Public Expenditure Council, 1991). 4. Instructional supplies and materials -expenditures which include, but are not limited to, supplies, textbooks, library books, periodicals, warehouse inventory adjustments and other supplies 12 --------mnn-----------------------------

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and materials (Colorado Department of Education, 1988). 5. "Poor Schools" -schools identified by the district administrator as having the highest percentage of children eligible for the free or reduced lunch program in that district. 6. "Rich Schools" -schools identified by the district administrator as having the lowest percentage of children eligible for the free or reduced lunch program in that district. 7. Setting Category -The division of the state's 176 school districts into eight units based on population size and density, geographic size and population sparsity, regional economic relationships, location of economically important cities or towns within districts, cost of living factor, and presence of communities of interest (Colorado Department of Education, 1988). Significance of the Study The importance of educational equity has been a leading issue in Colorado and across the country as demonstrated by the fiscal statutes and the legal cases seen throughout the last two decades (Wise & 13

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Gendler, 1989). These statutes and court cases have linked fiscal equality to the ability to provide an equal educational opportunity as documented by the literature on school funding. The implications of the court orders and the literature on school finance suggest that if equity is important and if states are looking at the equality of non-discretionary funding, the discretionary funds at the school level may also have significant effects on the dollars available to educate each student. Therefore, these dollars could affect the equity of school funding in the State of Colorado, as demonstrated in the nine districts and by the eighteen buildings examined in El Paso County, Colorado. Originality of the Study The verification of the originality of this study was conducted by the researcher through both personal manual searches and computer searches. The computer searches were done through The Colorado Alliance of Research Libraries, The CARL System, Inc. Dissertation abstracts were also examined from The University of Colorado and The University of 14

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Northern Colorado. Computer networks were also utilized from The University of Colorado, The University of Northern Colorado, and The University of Arizona libraries. Searches were conducted using the ERIC (Educational Resources Information Center) index. Information was personally examined from the Educational Research Services in Arlington, Virginia, and the Arizona State University, Arizona Educational Information System, 11The Gold File.11 No research study was found which deals with the inequities caused by additional discretionary funds available to elementary school principals. It is therefore assumed by the researcher that this study will provide new information that will be of value to the educational community in the study of school finance and financial equity. Limitations of the Study There are potential limiting factors to this study of fiscal equity between elementary schools within a district and among elementary schools of El Paso County, Colorado. 1. The study was conducted in only one county, one setting category, and nine school districts in 15

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Colorado. The results may therefore be generalizable only to other similar districts, counties, and communities. 2. The use of the inferential statistics implies a random sample which was not used in this study. The results cannot provide clear evidence that the findings may be generalized outside this sample and must be interpreted with caution. 3. The sample schools identified by superintendents and or business managers may or may not be the most diverse in socio-economic status or the ability to generate discretionary funds. Consequently, the extreme differences in socio-economic status may not be an indicator of a neighborhood's ability to raise additional discretionary funds. 4. All data were collected from accounts that are not audited and are subject to a certain amount of error or differences in accounting or inconsistencies in posting dollars within specific categories. However, accounts are recorded by 16

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building principals or secretaries and are consequently as accurate as the integrity of the administrators. Organization of the Study The study of fiscal equity within a district and a county is outlined in Chapter 1. Colorado's School Finance Act was examined as were the eight setting categories within the law. The research questions were listed and the importance of the study was addressed. A glossary of terms specific to this study was provided for clarity. The limitations of the study were presented as well as the significance and the originality of the study. The organization of the thesis was also included in the chapter. Chapter 2 is a review of the related literature dealing with school finance, court cases, policies of school finance, and fund-raising as they are relevant to the purpose of this study. The methods and procedures used in the research design are presented in Chapter 3. Chapter 4 describes the results of the research and reports the analysis of the data collected. 17

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Chapter 5 includes the summary, conclusions, and recommendations of the study. Summacy This study investigated the presence and the extent of inequities between two elementary schools within each of the nine districts in El Paso County, Colorado, created by the existence of discretionary funds. In addition, the study described the variety of sources of discretionary funds available and the differences in non-line item funds that can be used for instructional supplies and materials by comparing all of the eighteen elementary schools studied. The study described the uses of the revenues, in addition to supplies and equipment, that are available to principals outside of state controlled or mandated categories but not authorized through state and local taxes. Finally, the study investigated the effects that the generated revenues have on the possible expansion of instructional programs, increase in availability of supplies and equipment, and enhanced educational opportunities for the children of the schools in El Paso County, Colorado. 18

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CHAPTER 2 REVIEW OF THE RELATED LITERATURE ON SCHOOL FINANCE The question of equality or equity issues caused by using property taxes as a basis for funding schools, has been apparent since public education began in Massachusetts in the 1600s (Wickert, 1985). The problem of equal education has historically centered around the single issue of desegregation, when in 1850, Justice Shaw of Massachusetts, set forth his doctrine of "separate-but-equal" and Sarah Roberts was forced to attend The Smith Grammar School for Negroes in Boston in the case of Roberts v. City of Boston in 1850 (Alexander, 1980). Not until Brown v. the Board of Education of Topeka, Kansas (1954) did the nation seek protection for equal education under the Fourteenth Amendment when the United States Court decreed that "separate-but-equal facilities are inherently unequal" in Brown v. Board of Education, 1954 (Alexander, 1980, p. 463). In the past 30 years, the Equal Protection Clause of the Fourteenth Amendment has been used to expand the 19

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rights of students to a financially equal educational opportunity (Alexander, 1980). This chapter addresses the issues of financial funding of public schools from several aspects of the related literature. The first issue is that of the court rulings on educational funding during the past 25 years. Highlighted are several cases having significant impact on the study of educational equity from the point of view of school finance. The second section deals with the changing policies of state educational finance as the mandates from the courts are addressed. The third section discusses the literature related to the issues of fund-raising, alternate sources of funding, and private financing of public education. The final section deals with the changes in Colorado school finance legislation and the specific aspects of the law which were intended to bring about equity through reform. The Court Rulings on School Finance The Supreme Court of the United States has never defined a standard of fiscal equity in education. The Court has supported a wide latitude 20 -------""""rm' ____________________________

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of judgements at the state level. For example, the Supreme Court upheld the decision of a federal district court in 1968 in Mcinnis v. Ogilvie (later in 1969 as Mcinnis v. Shapiro), in the state of Illinois. The lower court had decreed that "since standards for evaluating education needs and costs did not exist" (Augenblick, 1980, p. 8), the issue was not justiciable (Augenblick, 1980; Guthrie, 1983; La Marte, 1989). The courts held in their first basic case dealing with educational funding that the Illinois state statute was neither "arbitrary nor unreasonable and reflected a rational policy consistent with the Illinois Constitution" (Wood & Ruch, 1986, p. 22). Although the plaintiffs did not win the decision, the precedent was set that the courts would not rule on the premise of "equal protection need for equal spending" (Guthrie, 1983, p. 212). Another strategy must be addressed with the courts. The principle of "fiscal neutrality" was introduced into the litigation of school finance. In the late 1960s California was the scene of a highly publicized educational finance reform case. John Serrano, a resident of Southern California sued 21

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state administrative officers to obtain a higher quality of public education for his son, Anthony (Guthrie, 1983). In 1971, the California case of Serrano v. Priest brought national attention to equity in funding of public schools (Augenblick, 1985). In that case the California Supreme Court ruled that the California State Treasurer, Ivy Baker Priest was:responsible for the unequal spending on education in that state. The differences in spending per student were found to be $595 per pupii in Baldwin Park as compared with $1,244 per pupil in the rich Beverly Hills District (Guthrie, 1983). The courts found for the plaintiffs and agreed that the quality of education must not be a function of the local school district's taxable wealth (Alexander, Connelly, & Salmon, 1984). This principle of "fiscal neutrality" sent the California legislature back into session to rewrite a school finance law that would meet the equal protection demands of the courts. The judges wrote the following: We have determined that this funding scheme invidiously discriminates against the poor because it makes the quality of a child's education a function of the wealth of his 22

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parents and neighbors (Wise & Gendler, 1989, p. 15). The courts ruled.that the state system of funding both elementary and secondary public schools violated the Fourteenth Amendment of the United States Constitution and the state's equal protection clause (Alexander et al., 1984). The California system of financing education relied heavily on the abilities of raising local property taxes which varied substantially among the districts of the state (Wood & Ruch, 1986). No longer would district spending be a condition of the individual wealth of the district but it would now be dependent on the overall wealth of the state. Senate Bill 90 would ensure equal spending and narrow the gap to be equal within a band of $100 (Guthrie, 1983). The ruling was issued in 1971 and was known as Serrano I, but was immediately challenged by wealthier districts in the state of California (Alexander et al., 1984). The legislature had been ordered to make modifications in the system of state funding, which it attempted to do, but in the Serrano II decision in 1976, the court once again ruled for the plaintiffs to declare that the 23

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inequities still existed. A very complicated legislative mandate called "Assembly Bill 65" was enacted to bring millions of dollars to obtain greater equity to California's education system (Guthrie, 1983). At the same time, but in a different part of the country, the courts were hearing the class action suit of several Mexican-American families from the Edgewood Independent School District, an urban district in San Antonio, Texas (Long, 1983; Wise & Gendler, 1989). In 1973, the federal court ruled in favor of the plaintiffs stating that the equal protection clause and the principle of fiscal equality were violated by the state finance system (Wise & Gendler, 1989). In the only finance case to ever reach the United States Supreme Court (Natale, 1990a), the Supreme Court ruled in 1973 on the Texas case of San Antonio Independent School District No. 1 v. Rodriquez. In a defeat for the plaintiffs and advocates for equal funding, the Court held that the concept of fiscal equity was an issue to be settled in the state courts and that education was not a fundamental right under the United States Constitution (Alexander et al., 1984; LaMorte 24

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1989). The Texas finance system was not shown to fail to provide children with opportunities for obtaining at least the basic minimal skills (La Marte, 1989). In the late 1970s, educational funding controversy continued in such states as New Jersey in Robinson v. Cahill where the courts ruled to reform the New Jersey system of financing education to be more "thorough and efficient" (Goertz, 1983). In this case, it was the taxpayers who brought suit against the public school finance system (Wood & Ruch, 1986). The basis for the suit dealt with the constitutional language "thorough and efficient," "adequate," and "general and suitable." The State Constitution was criticized for not defining these terms to include judicially manageable standards (La Marte, 1989). The New Jersey Supreme Court mandated that the legislature rewrite its finance system, but the legislature failed to act. The court then declared that education was a fundamental right and a new system was finally forced into place three years later in 1975 (Wood & Ruch, 1986). New Jersey's public education funding is still in 25

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turmoil with yet another lawsuit in place in the New Jersey Supreme Court (Natale, 1990a). The New York case of Board of Education, Levittown Union Free School District v. Nyquist brought attention to the consideration of the "municipal overburden" argument for financial equity (McCarthy, 1982). The plaintiff in this case was the state's largest school district, Levittown Union Free District #1, whose lawyers argued that the state finance system was unconstitutional because it did not consider the extra burden of costs in operating schools in the city (Guthrie, 1983). The New York Court of Appeals overturned two lower court decisions contending that cities choose to offer more services to the public. They also found that the city schools did not violate the Fourteenth Amendment because the average per pupil expenditures were in excess of all other states but two (Wood & Ruch, 1986). This case was a reminder that education was not a fundamental right in the state of New York (Wood & Ruch, 1986). In the state of West Virginia, the courts developed reform in the state's financial system on the basis of "fundamentality, equal opportunity, and 26

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equal protection" in Pauley v. Kelly (Thompson, 1990). The 1979 case brought attention and moral outrage to litigation on educational funding (Thompson, 1990). In its ruling the court cited the "sorry conditions in the Lincoln County Schools" (Alexander et al., 1984). Education was ruled to be a "fundamental interest" when the case was retried in the State Supreme Court. The West Virginia school finance system was ruled unconstitutional because of the lack of equal protection and access to a thorough and efficient system of schools (Wood & Thompson, 1991). In another controversial issue dealing with wealthy versus poor districts in Texas from the Equity Center, an instrumental group representing 200 poor school districts in Texas, brought the suit, Edgewood v. Kirby (Natale, 1990a). The 1987 landmark decision in Edgewood Independent School District v. Kirby, was the same battle ground fought in the San Antonio v. Rodriguez case of 1973. The plaintiffs, 67 public school districts in Texas, sought to prove violations in the finance system under the state's Constitutional equal protection clause, the education clause, the equal rights 27

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amendment, and the uniform taxation clause (Wood, Thompson, Bass, & Camp, 1989). The defendants in the case were the state of Texas, the commissioner of education, the state board of education, the governor, the comptroller, the attorney general, and at least 48 other school districts in Texas (Wood et al., 1989). The previous ar.gurnents stated that there were discrepancies because of local abilities and although these were unfortunate, the state mandated "local control" which is held dearly in the state. In Edgewood, the myth of local control was discredited with evidence stating that the state now controls administrative detail such as school board training, bus routes, recording of grades, as well as curricular issues such as textbook adoption, times devoted to specific subject areas, and content in high school and elementary course offerings (Wise & Gendler, 1989). The court found "glaring disparities" between wealthy and poor districts and ordered the state legislature to restructure its educational finance system, as education in the state of Texas is considered a "fundamental right" (Wood et al., 1989). This case was also based on the argument that denying equal educational 28

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opportunity violates children's rights to equal protection under the law (Wise & Gendler, 1989). The cases of the Council for Better Education v. Wilkinson and Rose et al. v. Council for Better Schools were bought about by 66 plaintiff school districts in 1985 (Barwick, 1989). On June B, 1989, the Kentucky Supreme Court found that the entire system of public education was unconstitutional (Thompson, 1990). In the following ruling the court concluded: The overall effect of appellants' evidence is a virtual concession that Kentucky's system of common schools is underfunded and inadequate; is fraught with inequities throughout the 177 local school districts; is ranked nationally in the lower 20-25 percent in virtually every category that is used to evaluate educational performance; and is not uniform among the districts in educational opportunities (Thompson, 1990, p.958). The system was "inadequate, inequitable, and unequal so as to be inefficient under the Kentucky Constitution and the Fourteenth Amendment" (Thompson, 1990, p.957). The courts not only found that the finance system must be rewritten, it also mandated that the legislature provide a system of efficient schools. Their next act was to define 29 -------OTnftlOI ____________________________

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such a system using seven basic skills to be required in evaluating educational performance and eight criteria to define an efficient system of public schools (Alexander, Brock, Forgy, Melton, & Watson, 1989). To carry out the mandates of the courts, the legislature passed an increased tax package of 25 percent for public schools which was to be signed by the governor in 1990 (Barwick, 1989). Current trends in school finance litigation seem to continue. Momentum is building for additional suits and more adjustments to state finance systems (Natale, 1990b). The long and expensive court battles are to be questioned when considering the benefits of court decisions recommends Kent McGuire, a consultant to the Education Commission of the States (Natale, 1990b). There are no guarantees that the courts will find in favor of the defendant or that the legislature will then restructure finance systems (Natale, 1990b). The changes that have come about in policies in school funding are reviewed in the next section of the literature review. 30 -------IITI1ft'llll _____________________________

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Changing Policies of State Finance The concept of school finance is rooted in the philosophy that each state governs the education of its children. Education or schooling are words not mentioned in the United States Constitution (Guthrie, Garms, & Pierce, 1988). The power given to the states was delegated to local school districts which are now responsible for decision making in the nation's 15,000 school districts (Barton, Coley, & Goertz, 1991). Expenditures for schools make up approximately 7 percent of the Gross National Product, the total of all goods and services produced annually in the United States (Guthrie et al., 1988). Within the United States, states vary as to their average spending on education. For example, New Jersey spent an average of $8,439 per student on education, the highest in 1989-1990. Utah, the lowest spending state, spent $2,720 per student (Educational Testing Service, 1991). Wyoming spends the most of any state as a percentage of personal income (7.8 percent). New Hampshire spends the least (2.9 percent) (Educational Testing Service, 1991). The national average of educational dollars spent to 31

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personal income is just under 4 percent. Colorado spends just about the national average at 4.1 percent (Guthrie et al., 1988). Policy regulating school finance has changed over the past 25 years. The state constitutions authorize legislatures to maintain a system of "uniform" schools or provide a "thorough and efficient" system of education (Barton et al., 1991). Changes in school finance policy beginning in 1970 were derived from the way in which states fund public education to achieve these goals. The reliance on local property taxes brought about inequities because the property tax base is not distributed equally across school districts {Odden, 1990). Since 1971, reforms of 35 state finance laws have shown these characteristics: 1. Revamping of school finance formulas, spending more state funds to property poor, lower spending districts; 2. Increasing the overall state role in funding schools; 3. Increasing state funding for special needs student programs; 32

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4. Increasing aid for the extraordinary needs of large urban districts; 5. Initiating reforms such as education taxes, spending limitations, restructuring local fiscal control over tax rates, and curbing increases in expenditures per pupil (Odden, 1990). These reforms have been mandated because of court decrees that have been lengthy, complicated, and costly (Colvin, 1989). In the 1970s the courts focused their attention on unequal property tax bases, resulting in a district's ability to raise revenues (Odden, 1992). The courts' solution was to force the enactment of "guaranteed tax bases," giving all districts a minimum tax base mandated by the state. The era of "Restructuring" of the 1980s focused on school improvement, excellence, and restructuring and not on fiscal equality (Augenblick, Gold, & McGuire, 1991). Most states which had gone through earlier litigation were now in the process of devising new approaches to finance (Augenblick et al., 1990). The court decisions in Arkansas, Kentucky, Montana, New Jersey, and Texas sent these legislatures back to their state congresses to 33

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rewrite systems of finance to replace those that were declared unconstitutional (Odden, 1992). Decisions in these states focused not on unequal ability to raise revenue but on unequal expenditures (Odden, 1992). Educational reforms in the mid 1980s also forced states to fund the needs of special education students. This included students with physical as well as mental disabilities and also bilingual education programs (Barton et al., 1991). Because of the attention drawn to education by the 1983 A Nation at Risk, increases in funding were generated to improve schools (Augenblick et al., 1991), to upgrade curriculum standards, raise teacher training requirements, and expand student competency testing (Barton et al., 1991). All of these additional restructuring efforts eroded the gains made in additional funding (Barton et al., 1991). Litigation has come to the 1990s again with fourteen new cases pending in states not including those that are continuing in Montana, Kentucky, Texas, and New Jersey. New school finance systems are designed to overcome the problems of unequal revenue and unequal expenditures. Revised systems 34

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from the 1970s and 1980s are now being challenged again and the legal issues have not changed. Disparities in educational expenditures resulting in unequal educational opportunities are still the focus of lawsuits (Barton et al., 1991). Other issues new to the 1990s are those of restructuring, student outcomes, limited resources, competition from other state programs, and tax limitation proposals. Together these make the outlook for school finance all but positive. The federal government has cut back on support for all domestic services, including education. Federal grants fell 8 per cent between 1980 and 1989. This policy of "fend for yourself federalism" is represented in proposed budget cuts of 14 per cent for 1991-1994 (Augenblick et al., 1991). The call for "America 200011 has given our nation educational goals to be obtained in the next 6 years. Large disparities in resources must be addressed relating to student outcomes and educational productivity (Odden, 1992). The states are seeing school finance structures linked to educational objectives, proficiencies, and student performances (Odden, 1992). 35

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Restructuring schools and education are the basis of educational reform. Site-based decision making, the strategy of decentralization, will allow the professionals at the school level to make the decisions (Odden, 1992). Financial rewards for school success, student achievement, or increased attendance could provide incentives in restructuring and reform (Augenblick et al., 1991). Other social programs which fight for the public dollar in addition to education are health care and correctional services. The rapid growth in the aging population along with the inflation in medical services have forced an increase of 33 cents of each $100 of personal income in 1976 for health care for the aged to 61 cents in 1989 as reported by the United States Health Care Financing Administration (Augenblick et al., 1991). The cost of spending for corrections has also doubled in the same period of time. The cost of constructing a prison cell is $50,000 and the average cost of maintaining a prisoner for one year is $25,000 (Augenblick et al., 1991). These and other social programs compete for the scarce tax dollar and 36

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resulting depletion of public funds, resulting in less available resources for public education. The following section of the literature review focuses on alternate means of the funding of public education by foundations, private funding, and fund-raising activities to finance our nation's schools. Private Financing of Public Schools Jonathon Kozol, in his book Savage Inegualities (1991), discusses six schools which have been abandoned by all but a few teachers, their die-hard administrators, the hopeful students, and the weary parents. These schools are found in the poor and rundown sections of East St. Louis, Chicago, New York City, Camden, Washington, D.C., and San Antonio (Kozol, 1991). All comparisons of funding equity, equality of educational opportunities, and of adequate resources for a child's education arise from the debate over school finance (Harp, 1992). In each of the six examples of inequities in funding, there is mention of parents raising additional funding for their children's education. Examples of such volunteerism and benevolence cited 37

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by Kozol are seen in varying geographic areas as follows: New York The district can't afford librarians, the principal says, but P.S. 24, unlike the poorer schools of District 10, can draw on educated parent volunteers who staff the room in shifts three days a week. A parent organization also raises independent funds to buy materials, including books, and will soon be running a fund-raiser to enhance the library's collection (page 94). New York The principal, a relaxed, unhurried man who, unlike many urban principals, seems gratified to have me visit in his school, takes me in to see the auditorium, which he says, was recently restored with private charitable funds ($400,000) raised by parents (page 125). New Jersey -Three years ago, we are told, parents in Princeton raised $187,000 -from outside sources -so that the choir and orchestra could travel to Vienna to perform in concert (page 164). California -Meanwhile, for the children of the rich and very rich in California, there is still an open door to privileged advancement. In the affluent school districts, tax-exempt foundations have been formed to channel extra money'into the local schools (page 221). Fund-raising, foundations, and the private funding of public schools have become big businesses. With the lack of tax allocated funding, the scarcity of state dollars, and the increased costs of state and federally mandated programs, principals are being asked to do more with less 38

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(National Association of Elementary School Principals, 1991). Principals are challenged to write federal or state government grants, seek business partnerships, call on communities to become a line item in municipal budgets, and convince parent volunteer groups to instructional supplies and materials instead of their traditional supplemental donations (National Association of Elementary School Principals, 1991). Additional funds called partnerships, grants, fund-raising, or foundations are now being advocated for public schools to bypass the stalemate of property taxes and help procure additional moneys. Partnerships In restructuring the educational systems of many districts, businesses have been asked to join in a partnership to help the public schools. Although not a new idea, the extra burdens of lack of resources have forced more schools to go to businesses for help. In Durham County, North Carolina, the school/business partnership has proven very successful. There is now a full-time business liaison who coordinates all contacts with local 39

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businesses and lobbies for funds using sophisticated public relations techniques (Coble, Gardiner, & Habit, 1988). As a result, the school district has received $300,000 in funds, free use of business facilities, and thousands of hours of free volunteer labor (Coble et al., 1988). So successful are businessjschool partnerships that the state of North Carolina allocated $750,000 to foster similar adoption programs throughout the state. Although there are many documented success stories with these partnerships, the pitfalls according to the North Carolina District are that wealth is not evenly distributed. Businesses want to get back something in these partnerships. Often there is a potential morale problem when employees believe the company's efforts are not helping "their" children (Coble et al., 1988). Grants In Elgin, Illinois, grant writers have brought $36 million to the school system in the past six years (Johnston & Kolbusz, 1987). In an article written specifically as a "how-to" for those interested in writing grants, Johnston and Kolbusz 40

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have given many suggestions for teachers and administrators for gaining additional moneys for their schools. Hired as a Director of Grants and Assessments, Kolbusz shares many suggestions for successful grant writing. Again, many school districts find this means of providing alternate sources of funding very worthwhile. The authors point out that school districts are already pressed for time and grant writing takes many hours, often with little payoff. Many school districts cannot afford to hire a full time grant writer; many who do are already wealthy enough to support this position. Schools who must use staff members, teachers, and or principals to do the research and grant writing are asking for additional hours of demanding and aggressive work (Johnston & Kolbusz, 1987). Fund-raising Among the most familiar and well known of all alternative sources to supplement educational allocations is fund-raising. Traditionally, a Parent Teacher Association (PTA) function, the National PTA now focuses on parent education, advocacy for children, and volunteerism. The 41

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organization is not one of fund-raising, according to Winnie Slusser, regional president of the PTA. It is their philosophy to go to other local businesses to ask for funds for the schools. There are concerns over the fact that many children are being asked to conduct fund-raising activities. Going door-to-door to sell candy is an unsafe and improper use of children {Slusser, 1983). Proponents of fund-raising activities agree that fund-raising can solve immediate concerns for capital. They also contend that it teaches students about teamwork, money management, self-confidence and reliability (Cramer, 1983). Again, fund-raising has become an enterprise in itself (Natale, 1990b). According to Gary Marx, the associate director of the American Association of School Administrators (AASA), there are concerns about safety, equity, and propriety (Natale, 1990b). In Oklahoma, a young girl was murdered selling fruit door-to-door, a school in Walnut, California, makes approximately $200,000 a year from weekly bingo games, and professional fund-raising companies offer trips to Disneyland as rewards for those students who secure 42

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the most sales and then take from 40 to 60 percent of the proceeds (Natale, 1990b). Successful fund-raising suggestions, along with precautions for choosing a company to work with are being presented to teachers, parents and students (Cramer, 1983). Principals must be precautionary consumers when it comes to contracting with fund-raising companies. Of the $104 billion that are collected in the name of charity, one percent is found to be fraudulent, according to Nathan Weber, a spokesman for the trade group representing commercial fund-raisers (Natale, 1990b). The President of the National PTA, Ann Lynch stated the following: It's a case of the rich getting richer and the poor getting poorer. Generally, in fund-raising, you're causing great inequity. It's the more affluent, well-to-do districts -the ones with a good tax base anyway -that are most able to do fund-raising (Natale, 1990b, pp. 17-18). Many school administrators agree that fund-raising does have a positive side in teaching students about sales, bookkeeping, and inventory; but Dr. Samuel Sava, the executive director of National Association of Elementary School 43

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Principals, says he discourages any fund-raising done by children, for safety and philosophical reasons. Kids should not be responsible for going out and earning basic materials. The school system -the community -should provide for the education of the children (Natale, 1990b, p. 19). Foundations Education foundations are privately operated, nonprofit organizations established to assist public schools. In her research study on the effects of fund-raising by local education foundations upon fiscal and program equity in selected public school districts in California, Judith Adams found that there are significant additional funds available to schools through local foundations (Adams, 1991). Her study reported that additional funding through foundations enabled schools to support expenditure choices not available or not possible in nonfoundation districts (Adams, 1991). In many cases foundation funds may supplement or supplant general fund obligations which make more money available to support education in the district (Adams, 1991). 44

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Critics of foundations argue that the use of tax-exempt groups to raise money for schools serves to undermine the Serrano decision in California. High wealth districts will raise more money than the low wealth districts (Clay, Hughs, Seely, & Thayer, 1985). "Friends" groups broach the question of whether it's fair for some schools to raise additional money when others are not (Natale, 1990b). To help smooth out the differences, a Chicago District is organizing a citywide foundation to distribute the grants to schools from the philanthropic organizations (Natale, 1990b). In a perfect world, schools wouldn't have to scramble to raise money to buy computers or outfit the band or refurbish the playground. But the reality is, it's often easier to marshall 200 first graders and a truckload of candy than to squeeze additional funds from the local, state, or federal government (Natale, 1990b, p. 20). The changing policies on the national level affect the funding of education on the state level and affect Colorado. Changes in the economy, litigation in other states, taxpayer reform, educational restructuring and the need to seek alternate sources of funding have played a part in 45

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the structuring of Colorado's school finance history. The concluding section of the review of the literature identifies specific issues of the Colorado Finance Act as it relates to funding of the schools. Colorado Finance Legislation The cases from the initial section of this chapter addressed fiscal equity among districts from the viewpoint of the local taxpayer and from the perspective of representatives of the students seeking equality of educational opportunity. The preceding sections dealt with the changes in philosophy and policy of the nation on the issues of school funding and the creative ways to support the private funding of public education. The final section of the literature review will address the specific history of the State of Colorado and the changes seen in the financing of education. Since 1877 Colorado has provided financial aid for elementary and secondary students in the state. Beginning in 1937, state tax revenues were used to support the public schools (Schomp, 1984). In 1973 46

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the State Legislature passed the Public School Finance Act of 1973, a law that would decrease the reliance on local property tax for the financial support of public schools. In 1977, only four years later, the law was challenged in the courts. A group of 68 students, representing all children living in the state of Colorado in school districts which are property poor, filed a suit against the state known as The Lujan Suit. The suit claimed that the school finance system violated the education clause of the state constitution. The suit also claimed that the due process and equal protection clauses of the state constitution and the equal protection clause of the Fourteenth Amendment of the United States Constitution were also violated (Alexander, Connelly, & Salmon, 1984). The Denver District Court found the State Finance Law unconstitutional in 1979, but in 1982, the Supreme Court of Colorado reversed this ruling. In a 4-2 decision, the high court held that education is not a fundamental right under the Colorado Constitution and that the school finance system was rational (Alexander et al., 1984; Schomp, 1984). Although the courts heard the plea from the poor districts in 47

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the state, they did not order equity in The Lujan Suit of 1977 (Schomp, 1984). The Colorado Supreme Court refused to strike down the state's finance system, in Lujan v. Colorado State Board of Education, stating that the Finance Act of 1973, "barely meets constitutional standards" (Long, 1983, p. 483.) The court also found that property wealth did not create a suspect classification (Connelly & McGee, 1987). The Hafer Suit (1987) dealt with inter-district fiscal equality by raising the issue of the structure of Colorado's educational funding and pointing out the need to clarify the meaning of the language of the State Constitution, "a thorough and uniform system" of public education. Because of the threat of the Hafer Suit and other political forces, the Colorado Legislature enacted House Bill 1341 which later became The Public School Finance Act of 1988 (R. E. Kilmer, personal communication, March, 1991; LaMorte, 1989). In 1988 the Public School Finance Act was enacted to distribute moneys based on a new methodology of funding according to the Equity Study of the 1988 School Finance Act, prepared by the 48

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Colorado Department of Education. The following are the primary goals of the Act: a. establish a financial base of support for public education that is adequate for the delivery of educational services to children enrolled in public schools in accordance with the constitution and laws of the state of Colorado; b. create a formula for establishing the financial base for the support of public education that accurately responds to the financial needs of school districts in providing educational services to children and that is based upon concrete and understandable components; c. create a formula for determining the state and school district financial responsibilities for the support of public education; d. continue to leave decisions on expenditures of moneys received under this Act as a matter of local control, except with respect to moneys received for instructional materials and supplies, instructional capital outlay, capital reserve, and insurance reserve; e. improve financial equity among school districts in providing educational services to children enrolled in public schools; f. improve equity among property tax payers in school districts by moving toward a uniform property tax levy for the support of public education; g. limit the future growth of and reliance on the property tax for the support of public education; h. improve equity among school districts in financing capital projects and in financing 49

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instructional supplies and material for public education; and i. create a mechanism which better recognizes the effects of enrollment trends in the funding of public education. (Colorado Department of Education, 1989, pp. 35-36). The Finance Act of 1988 specifies the expenditure of a district three year average of $111 per full time equivalent (F.T.E.) student as a minimum for instructional supplies and equipment. These expenditures are to be used for supplies, textbooks, library books, periodicals, warehouse inventory adjustment, and other supplies and materials. Other purposes include transportation for pupils to and from instructional activities, maintenance and repair of equipment, and staff development (House Bill 92-1063, 1992). The most recent copy of the Revenues and Expenditures Report of 1990 prepared by the School Finance Unit of the Office of Management Services in March of 1992, shows discrepancies in this dollar amount. Variations in the expected average expenditures of the Instructional Supplies and Materials category for the state's 176 districts fall between a low of $80.40 per pupil in Greeley District #6 in Weld 50

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County to $555.90 per pupil in Arickaree R-2 in Washington County (Colorado Department of Education, 1992). These differences could be due to the requirement that this fund average $111 over a three year period or to the fact that different school districts report expenditures of supplies and equipment in different fund categories. The discrepancies are also due to the fact that it often takes more money to educate a student in a small school district than in a larger one. This principle of economies of scale is one of the reasons behind the State's philosophy of funding the eight setting categories with unequal operating revenue per pupil (D. Stewart, personal communication, June, 1992). However, other inequities in funding this category of supplies and equipment still exist because of discretionary funds. These differences will be examined further in this paper relating alternative sources of funding and studying El Paso County in particular. Surnmacy In reviewing the research on school finance, educational funding, and fiscal equality in 51

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education, the primary unit of analysis has been district level resources. Studies exist dealing with the equality of educational opportunity for children and taxpayer's equity (Berne & Stiefel, 1984) but research studies examining the effects of discrepancies at the individual building level were not found. The level of analysis used for this study was the individual elementary school; and the issue examined for study was the additional, non-line item budget amounts that are identified as discretionary funds. From the extensive review of the related literature available, there was no research study found that focuses specifically on the study of discretionary funding at the building level. Coupled proportionately with the minimum state mandate of $111 per student, discretionary money available at the building level could be a significant factor in providing greater educational opportunity for students. 52

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CHAPTER 3 RESEARCH METHODS AND PROCEDURES Introduction The ability of building principals to collect and to use additional funds for supplies and materials, for enhancing educational opportunities, for purchasing equipment, and for providing staff development has not been addressed in the literature dealing with financial equity among and between elementary schools. The related literature on school funding describes equity based on district level funds available through state and local tax levees. Research Problem This study was designed to examine and to evaluate the amount and effect of discretionary funds at the building level. Chapter 3 describes the research procedures used to conduct this study. 53

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Research Questions The major focus of this study was to determine the existence of discretionary funds in 18 elementary schools in El Paso County, Colorado, and to determine the effects of these funds on the educational opportunities for the children in the selected schools. The three main questions that were examined in the study are as follows: 1. What differences exist in the amounts of money available to elementary principals to supplement district budget allocations? 2. What key factors account for differences in discretionary funds available between schools within districts? 3. What are the effects of the differences of equity on educational programs and services for the students? 54

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Research Design Overview This study was designed to gather quantitative and qualitative data in order to determine the amounts of discretionary funds available to elementary principals. Data were also collected to determine the factors which account for differences in available discretionary funds and the effects which these differences may have on educational programs and services. The data were collected at individual school sites because these funds are not monitored or reported by principals to the central office of the district or to the State Department of Education. Therefore, the unit of analysis is the elementary school. Data were collected from a group of eighteen elementary_ principals. The principals were specifically selected to examine the greatest diversity in socio-economic level which included two schools from each of the nine districts in El Paso County, Colorado, having more than one elementary school. Data for the study were obtained from ledger sheets, taped interviews and field notes, and 55

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information from the 1991 October Count from the Colorado Department of Education. Data from the calendar year 1990-1991 were chosen for the study to insure uniformity. Data were not collected during the 1991-1992 year because the State of Colorado converted to a July 1st to July 1st budget year with the interruption of a six month Transitional Fiscal Year in 1992. Therefore, the calendar year 1990-1991 was the most recent year in which complete data were available. Interviews were conducted during the winter and the spring of 1992 to insure the greatest amount of accuracy as possible for the study. At that time, building principals had recently closed their accounts for the 1990-1991 school year. This provided accurate and easily accessible data. The quantitative data included the dollar amounts of each discretionary fund available to the principal during the academic calendar year 1990-1991. Both quantitative and qualitative information were gathered for this study. A structured interview format was designed to be administered to each of the 18 elementary principais selected for the sample of the study. 56

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The sensitivity and the political ramifications of publicizing the data obtained from this process necessitated using confidential interviews. To insure confidentiality of the data, each district was assigned a number from one to nine and each school was assigned a letter A or B. Care was given not to assign the same number to the school district that is used in the official name and number by the State of Colorado for El Paso County. Letter A was assigned to all schools designated as the "Rich Schools" and letter B was assigned to the "Poor Schools," the ones that each individual district recognized as having the highest percentage of children eligible for free or reduced lunches. Design of the Study The design of the methodology was based on answering the three major questions in the study and is described after each research question. Because of the nature of the study, a combination of descriptive, quantitative, and qualitative data collections was used. 57

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Question One: What differences exist in the amounts of money available to elementary principals to supplement district budget allocations? For the first research question, quantitative data were collected. Structured interviews were conducted with the 18 building principals. Building budgets were examined, and records of the district allocations as reported to the State Department of Education were reviewed. Quantitative comparisons were made in the percentage of funding differences between schools within districts and among the nine districts in El Paso County. All sources of discretionary funding were examined and compared with the alternate school in the same district. Descriptions of these funding sources were listed as were the exact dollar amounts reported by the building principals. Question Two: What key factors account for differences in discretionary funds available between schools within districts? Data collected during the structured interviews with the same principals provided a description of the most instrumental factors accounting for variations in available funds. The information included data concerning the role of the principal, 58

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the participation by the teaching staff, the involvement of the students in fund-raising activities, the aggressiveness of a volunteer fund-raising chairperson, and the socio-economic status of the neighborhood. The socio-economic status was based on the building percentages of those children eligible for free and or reduced lunches according to the federal guidelines. These data were also utilized to discriminate the differences of the effects of the socio-economic factors on the ability of the school's neighborhood to raise additional funds for the schools. Also considered were the ethnic percentage of the neighborhood, the age of the building itself (15 years or older considered as "Old" and less than 15 years considered as "New"), and the setting of the elementary school (either "urban" or "suburban"). A combination of these factors may influence the availabilities of the building principal to have access to additional funds. Both quantitative data and qualitative descriptors were used to answer the second question. 59

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Question Three: What are the effects of the differences of equity on educational programs and services for the students? Qualitative data supplied by the principals were used to answer this critical question. The first discussion was the review of the amount of differences in available funding. Also collected during these interviews were data which described the additional assets and the educational opportunities for which these funds were used to provide for the students in each of the selected buildings. These data generated information which described the principals' perceptions of the differences in the quality of education provided for the students due to these discretionary funds. The focus of the interview questions used to gather the data explored the impact of the discretionary funds on these educational leaders as they dealt with the effects on the education of the students in their buildings. The uses of the additional funding to purchase supplemental supplies, equipment, classroom materials, educational opportunities, and staff development practices were also described in detail in the qualitative narration of the data. 60

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Selection of Participants The data base examined in this study was El Paso County, Colorado, which contains 15 different school districts. These 15 districts range in student population size from 30,000 students in Colorado Springs District #11, to 33 students in Edison District #54JT. Of these 15 districts, only 9 have more than one elementary school, a comparison needed to examine the differences between elementary schools within the same district. Two principals from within each of the nine school districts in El Paso County were interviewed and data were collected comparing the two extremes of different socio-economic levels of elementary schools within that district. The schools were selected in this way in order to focus on the range of fund-raising abilities and to assess equity issues within a district between selected elementary buildings. Principals selected for the study were identified by the central office administrators as being the principal of either the most or the least affluent neighborhood school, thus indicating the greatest amount of diversity in socio-economic levels of the district. All of the 18 principals 61

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specifically selected agreed to participate in the study. The identification of the two schools from which data were generated was provided by the district superintendent or the district budget director's information relating to the free and or reduced lunch counts of the individual buildings. The criterion of the number of children eligible for the free or reduced lunch program was chosen for the indicator of socio-economic differences due to consistent mandates structured in the guidelines from the Secretary of the United States Department of Agriculture and the federal government's requirements for minimum yearly income. This information is also used for monitoring and regulating the recipients of Food Stamps and Aid to Families with Dependent Children according to the El Paso County Department of Social Services. A total of 18 schools, 2 from each of the 9 districts with more than one elementary building, comprised the scope of the study. Table 3.1 lists the schools specifically selected for the study by the extreme differences in the socio-economic level of the students as reflected in the eligibility for the free or reduced lunch program. 62

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Table 3.1 Percentage of Students Eligible for Free or Reduced Lunches District School A School B 11Rich Schools11 11Poor Schools11 1 5 % 19 % 2 5 % 41 % 3 19 % 34 % 4 2.3% 13.2% 5 4 % 86 % 6 53 % 60 % 7 19 % 27 % 8 40 % 66 % 9 12 % 53 % The study makes direct comparisons between the two selected buildings within a district and among elementary buildings within El Paso County, Colorado. The study did not extend beyond the El Paso County boundaries. Using this sample from El Paso County reduced the variables that might have influenced the study and provided selected schools with comparable baseline data such as cost of living, income and sales taxes, and per pupil expenditures. All 9 school districts identified for the study are located in the Urban-Suburban Setting Category, those which comprise the state's major population centers along with their suburbs, excluding the Denver Metro area. These population 63

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centers are characterized as having 30,000 people or more (Colorado Department of Education, 1988). Data Collection Data were collected by conducting structured interviews with the 18 identified building principals during the winter and spring of 1992. Contacts were made to the nine districts' central-office personnel to determine the neighborhoods which would be as diverse as possible in their abilities to raise additional funds in the elementary schools as seen in their eligibility for free or reduced lunches according to the federally mandated guidelines. Discussions were held with either the superintendent of the district, their designee, the business managers, or financial directors of the district to select the sample schools to be examined in the study. Before the actual interviews with the selected principals were conducted, telephone calls to these administrators were made in order to confirm their willingness and permission for participation in the study. The phone calls also served to introduce the general purpose of the study. Additionally, the 64

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required data from the individual accounts and categories were described and requested. Appointments for the interviews were made which were most convenient for the participants. Guarantees of confidentiality and anonymity were also given at the time of the initial telephone call. The interviews of the 18 elementary principals were conducted in two distinct parts. The first part of the interview was the quantitative section which focused upon describing the precise dollar amounts of discretionary funds available to the principal in his or her particular building. A worksheet (see Appendix A) was prepared to provide and outline the types of fund-raising activities that are typically found in elementary schools. In addition to this, the quantitative framework of the interview also suggested major categories of discretionary funds that are usually available to principals. As the interviews progressed, it became apparent that other sources of discretionary revenue might also be available and used by the principals to purchase supplies, materials and equipment. Moneys were also found to be spent on educational 65

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programs such as outdoor education, after-school enrichment, and staff development in the buildings. Categories were then added to the possible financial sources used both for purchasing supplies and equipment and for enhancing and supplementing programs. Follow-up calls were then made to all principals to verify that these funds were or were not available in their buildings. These phone conversations insured that all types of available funding opportunities were consistently evaluated in each of the 18 schools. Dollar amounts were rounded to the nearest whole dollar. All amounts and categories were again verified and agreed upon by the interviewer and the principal. In many cases, data from building secretaries or central office budget directors were also used to verify actual amounts of money earned. At this point in the interview, information was also received as to the percentage of students in the building who were eligible for the United States Department of Agriculture's Free or Reduced Lunch Program. These data were obtained from the principal or in certain cases had to be obtained from the district's Food Service Coordinator. 66

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Although this information is confidential on an individual, per pupil basis, the overall numerical data is open to the public. Other information documented at this time included the size of the student population as verified by the 1990 October Count and submitted to the state; the relative age of the building, newer than 15 years or older than 15 years; and the setting of the building, either urban or suburban. The information verifying the ethnic count of each individual building was received from the Colorado Department of Education, Office of Management Services. The qualitative phase of the data collection consisted of individual personal interviews lasting from one to two hours with each principal. The interviews were taped with permission of each participant and then carefully transcribed. Each participant was reminded of the confidentiality of their identity. The interviews were conducted in such a way that neither the interviewer nor the participant mentioned the actual name of the building, the district, or their own names in the interview. If specific identifications were mentioned, the names were deleted in the 67

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transcriptions of the taped interviews. As with the quantitative data, districts were identified only as a number from one to nine, and buildings were identified as either A or B. This anonymity was an important component and helpful to the study because participants were willing to be candid and honest in their analysis of the differences and effects of the amount of discretionary funding available to them. Most participants expressed strong concerns for equity and described their perceptions of educational equality openly. Analysis of the Data Question One What differences exist in the amounts of money available to elementary principals to supplement district budget allocations? To answer the first question of the research study and to determine the precise amount of dollars available to building principals, the amounts of discretionary funds were organized into three different visual displays. The first reports are the spreadsheets of each of the nine district's discretionary funds, listed by School A and School B. School A, the "Rich School," was always listed 68

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as the school with the lowest percentage of children eligible for free or reduced lunches; and School B, the 11Poor :school," was consistently the school with the highest percentage of children eligible for free or reduced lunches. The chart shows the sources of all income, the total of the income, the amount of the district's allocated line-item funds for supplies and equipment, and the number of students or total full time equivalent students as reported in the attendance count of October 1, 1990 (see Charts #1 through #9, Appendix A). The first set of graphs report the raw data, the amount of per pupil discretionary funds available to the principals in each of the two schools. These graphs compare the dollars available for instructional supplies and equipment, supplemental programs, and staff development in the 1990-1991 school year (see Appendix B, Discretionary Funds per Student #1 through #9). The second set of graphs shows the raw data, the total :amount of discretionary funds in the building C:see Appendix C, Discretionary Funds per Building #.1 through #9) This distinction is necessary to show the advantages in the dollar 69

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amounts available to principals when the total student population in the building is used to fund the supply and equipment category on a per building amount as compared to the per pupil funds available for expenditures. The tables indicate the differences in discretionary funds in the building level budgets. The data from each of the eighteen selected buildings were also combined to report county averages and to indicate a mean in per pupil available resources. The mean at the building level was also reported. Additionally, average differences were reported by comparing data gathered at the building level and the district levels of spending in the instructional supply category. Question Two What key factors account for differences in discretionary funds available between schools within districts? The quantitative data, the actual dollar amounts of discretionary funds, were compared with the key factors accounting for the raising of the funds. A matrix of information including available funds, the number of students in the building, the 70

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socio-economic level as reflected by the number of students eligible for the free or reduced lunch program, and urban or suburban building location was generated to answer the research question relating specifically to the key factors accounting for the additional funds. Other information examined were the ethnic make-up of the students in the building and the relative age of the building itself. Independent sample T-Tests, multiple regression models, Pearson product moment correlation coefficients, and scatter plots were the statistical procedures conducted. These analyses were used to establish the significance of the relationships between the amounts of discretionary funds available to elementary schools and the size of the population of the school, the socio-economic level as seen in the percentage of children eligible for free or reduced lunches, the ethnic make-up of the elementary school population, the relative age of the building, and the setting of the school. The following null hypotheses were tested: Hypothesis One: There is no significant relationship between the size of the population of 71

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the school and the amount of discretionary funds available to the building. Hypothesis Two: There is no significant relationship between the percentage of children eligible for free or reduced lunch and the amount of discretionary funds available to the building. Hypothesis Three: There is no significant relationship between the percentage of ethnic minority children and the amount of discretionary funds available to the building. Hypothesis Four: There is no significant difference in the amount of discretionary funds available to new schools (newer than 15 years) or old schools (older than 15 years). Hypothesis Five: There is no significant relationship between the setting of the building (urban or suburban) within districts and the amount of discretionary funds available to the building. These data were statistically analyzed by hypothesis to discover significance by using MYSTAT, 2.1, a statistical analysis program. For Hypothesis One, the relationship between the number of students in the building and the amount of discretionary 72

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funds available was tested using a Pearson correlation coefficient and a scatter plot. Hypothesis Two was tested using an independent samples t-test comparing high and low socio-economic levels of the neighborhood as indicated by the percentage of children eligible for free or reduced lunches and the amount of discretionary funds available to the school. This t-test compared school pairs within the nine districts. A scatter plot was also used to show the relationship between the amount of discretionary funds available per building and the percentage of children on free or reduced lunches. A multiple regression analysis was used to predict the amount of discretionary funds by the number of students on free or reduced lunches by controlling the school size. Hypothesis Three was tested using an independent samples t-test comparing the percentage of children of ethnic minority and the amount of available discretionary funds in the school pairs within each of the nine districts. A scatter plot was also used to show the relationship between the amount of discretionary funds available per building and the percentage of ethnic minority children in 73

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the building. A multiple regression analysis controlling the population of the building was used to predict the amount of discretionary funds by the percentage of children of ethnic minority. Hypothesis Four tested the relationship between the amount of discretionary funds available to new schools (newer than 15 years) and old schools (older than 15 years). An independent samples t-test and a matrix showing the relative age of the building were used to analyze this relationship. Hypothesis Five tested the relationship between the amount of discretionary funds available to schools in a suburban setting and schools in an urban setting within the nine districts. An independent samples t-test and a matrix showing the setting of the school buildings were used to analyze this relationship. The qualitative component of the research study describes the key factors that account for the differences in discretionary funds in each school to answer the second research question in the study. Each of the taped interviews was carefully transcribed and then the data were analyzed using the approach of discovering the significant factors 74

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by "Open Coding" as described by Strauss and Corbin (1990). This method of analyzing qualitative data is described by Strauss and Corbin as "the process of breaking down, examining, comparing, conceptualizing, and categorizing data" (1990, p. 62). Data: were grouped into categories describing each factor that accounts for a significant difference in the schools' ability to have additional funds for instructional supplies and equipment. Each interview was recorded and analyzed by research question. The analysis included a count of the number of times specific categories were mentioned. For example, the number of times the principal credited his or her own initiative to the fund-raising in the building, the number of times a parent volunteer appeared as a significant factor, or the number of times the policies of the district's board of education played a role in fund-raising. Question Three What are the effects of the differences of equity on educational programs and services for the students? 75

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The effects of these differences in funds on the equity of educational programs and services for the students were examined using the qualitative data from the study. Using the same process of "Open Coding," as recommended by Strauss and Corbin, 1990, the interviews were analyzed again, categorizing the number of times the principal described additional instructional supplies and materials purchased. For example, the purchase of library books, computers, art or music equipment; the enhancement of a child's education through supplemental programs such as after-school enrichment and.outdoor education; or performing arts programs were all identified. These data were then categorized and recorded along with the perceptions of the building principal concerning the education benefits of these additional opportunities for the students of the school. A narrative description of each finding is presented at the end of each research question to summarize the comparative data collected. 76

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Smmacy The research for this study was designed to describe the amount of discretionary funds available to elementary principals in El Paso County, Colorado. The study was also designed to assess the factors accounting for these funds as well as to identify the effects of these additional funds on the educational programs and opportunities for students in the selected buildings. The 18 principals participating in the study included 2 building principals from each of the 9 school districts in El Paso County, Colorado, which have more than one elementary school. Schools represented the extreme differences in socio-economic levels of the district as identified by reports from eligibility of students in the free or reduced lunch program sponsored by the federal government. Data were descriptive, quantitative, and qualitative and were used to compare actual dollar amounts of available funds. Perceptions of equity of available resources to be used to purchase instructional supplies and equipment and supplemental programs and services for the 77

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individual buildings selected were also described. All data were analyzed to determine the significance of each finding to the three research questions of the study. 78

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CHAPTER 4 FINDINGS OF THE STUDY Introduction Chapter 4 reports and discusses the findings of the research study in relation to the inequities of the additional funds available to elementary principals through the use of discretionary funds. The study included 18 principals from within nine districts in El Paso County, Colorado. Following the recommendations from district superintendents and business managers, the schools were divided into two categories, those found in high economic neighborhoods, identified as "School A,11 and those within low economic neighborhoods with less abilities to raise additional funds, identified as "School B.11 The 1990-1991 calendar year was chosen as it represented the most recent year having complete data available for the study. The organization of this chapter follows the design of the research study. Each of the three 79

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research questions will be answered using the analysis of the data collected through the quantitative methods and qualitative interview procedures. A narrative summary of the findings follows each of the research questions presented. Question One What differences exist in the amounts of money available to elementary principals to supplement district budget allocations? Data were collected to show the amount of discretionary funds available for the 1990-1991 school year. Comparisons were made between the raw data of discretionary funds available on a per student basis and the total amount available to the building. The differences examined by Question One are presented in three steps. The first step identifies any differences in dollars that the districts allocate to individual buildings on a per-pupil basis to be expended for Instructional Supplies and Equipment. Comparisons were made between the two selected schools within the districts and among the 9 districts within El Paso County. The second step compared the total amount of discretionary funds that are accrued per building. Again, comparisons were made between 80

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schools within a district and among districts within the county. The third and final step was to examine the total amount of discretionary funds per pupil. The population was based on the October count of 1990. Differences were compared between amounts of dollars per student within each district pair and per pupil dollars among the 18 selected schools within the county. Although there were differences in the amounts of dollars that the individual districts allocated to the elementary schools, they were minimal. There were no measurable differences between allocations to the building principals for the supplies and equipment categories. Only two of the 9 districts surveyed varied in the amount of dollars allocated by the district budget director, and those two were within $4.00 of each other. Table 4.1 presents the district funds allocated to each selected school. 81

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Table 4.1 District Allocation of 400 & 500 Accounts District 1 2 3 4 5 6 7 8 9 School A $96.00 $77.47 $96.00 $154.00 $75.00 $86.50 $111.00 $110.00 $93.33 Minimum = $75 Maximum = $154 Mean = $99 School B $96.00 $78.99 $96.00 $154.00 $75.00 $86.50 $111.00 $110.00 $90.00 Standard Deviation= $23.79 % Difference 0% 1. 96% 0% 0% 0% 0% 0% 0% 3.57% Differences do exist among districts in the amount of dollars that each of the nine districts allocated to their elementary schools as seen in Table 4.1. There are minimal differences is the amounts that districts allocate to their elementary schools within that district. As presented in Table 4.2, the total amount of discretionary fund dollars at the buildings ranged from a minimum of $4,086 to $40,000 with the mean amount of $14,962. The standard deviation was $9,854.58. 82

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Table 4.2 Minimum Maximum Mean Std. Dev. N of Cases Discretionary Funds per Building $ 4,086.00 $40,000.00 $14,962.00 $ 9,854.58 18 The amount of discretionary funds available per pupil across districts ranged from $8.70 as a minimum to $71.70 with the mean amount of $35.56. The standard deviation was $19.12. Table 4.3 illustrates these discretionary funds per student. Table 4.3 Minimum Maximum Mean Std. Dev. N of Cases Discretionary Funds per Student Within Nine School Districts $ 8.70 $71.70 $35.56 $19.12 18 As shown in Table 4.1, there are no appreciable differences in the amounts of moneys allocated to the buildings within the same school district to be spent in the 400 and 500 series of Instructional Supplies and Equipment in this sample. Data provided in Table 4.2 and Table 4.3 indicate that there are differences in the amounts of 83

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discretionary funds available per building and per student. There are differences between district allocations of discretionary fund. Differences in discretionary funds available at the building level were examined next. Table 4.4 shows these differences in schools serving high and low income communities, respectively. Table 4.4 Total Discretionary Funds per Building District School A School B Difference 1 $12,995 $4,923 $ 8,072 2 $14,452 $7,350 $ 7,102 3 $8,958 $26,100 $-17,142 4 $20,131 $16,174 $ 3,957 5 $40,000 $12,617 $ 27,383 6 $15,169 $14,359 $ 810 7 $12,723 $16,608 $-3,885 8 $4,230 $5,265 $-1,035 9 $33,176 $4,086 $ 29,090 Column Column Average Mean Mean Difference $17,982 $11,942 $ 6,039 Differences exist between the amount of discretionary funds earned in each elementary building in relation to the total dollar amounts allocated to each elementary school by the district finance office. Differences favored six of nine district paired schools with higher a socio-economic 84

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level as defined by schools with a low percentage of children eligible for free or reduced lunches. To examine the differences of the discretionary funds available per student, Table 4.5 is presented. Table 4.5 Discretionary Funds Available per Student District School A School B Difference 1 $34.56 $13.83 $ 20.73 2 $22.69 $16.63 $ 6.06 3 $56.34 $71.70 $-15.36 4 $60.82 $48.43 $ 12.38 5 $56.26 $41.37 $ 14.89 6 $24.87 $28.04 $ -3.17 7 $43.57 $33.22 $ 10.35 8 $14.69 $8.70 $ 5.99 9 $52.08 $12.27 $ 39.81 Column Column Average Mean Mean Difference $40.65 $30.46 $10.19 Again, differences were seen in the amount of dollars available on a per pupil basis. These differences can affect equity in funding the supplies, equipment and materials, in addition to other educational opportunities provided at the building level. As seen on average, schools with a lower percentage of students eligible for the free or 85

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reduced lunch program are those schools with more discretionary funds both per pupil and per building. The additional dollars added to.the district allocation, whether analyzed by student or by building, did make a significant difference in the amount of money available at the building level. Because the revenue is proportionate to the number of children in the school, the larger dollar amounts have a more significant purchasing power than the smaller amounts. For example, a discretionary fund amount of $4,000 may purchase four computers, but a fund of $40,000 can be used to purchase a whole computer lab. The structured interviews with each of 18 elementary principals and the comparisons of the budget figures in the study show that there are differences in the amounts of money that are available to these principals in the form of discretionary funds. Both the building total and the dollars per student were used to indicate the impact of the discretionary funds on the whole 86

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building as compared with the $111 per student district average mandated by the 1988 Finance Act. Question Two What key factors account for differences in discretionary funds available between schools within a district? Many factors may influence the differences in the amount of discretionary funds available to elementary principals. Those studied in this research paper include the number of students in the building, the economic status of the neighborhood as defined by free or reduced lunch eligibility, the ethnic make up of the neighborhood, the relative age of the building, and the setting of the elementary school, urban or suburban. Quantitative Data Hypothesis One: There is no significant relationship between the number of students in the population of the building and the amount of discretionary funds available to the building principal. A Pearson correlation coefficient and a scatter plot were used to evaluate the relationship in the amounts of discretionary dollars available to 87

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schools with the number of children who were in membership in the building according to the October Count of 1990. Table 4.6 describes the correlation between the discretionary funds and the number of students. Table 4.6 Pearson Correlation Coefficient Number of the Student Population of the Building and Discretionary Funds Discretionary Funds Population of the Building r= 0.512 p= 0.03 A scatter plot of discretionary funds and the population of the building in Figure 4.1 also showed a significant relationship between the amount of money available to schools and the size of their population. 88

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Figure 4.1 Scatter Plot: Discretionary Funds 1 Population of the Building 40000 p E R 30000 B u I L D 20000 I 2 N * G * I 10000 N * $ 2 * 0 0 200 400 600 800 POPULATION OF BUILDING Table 4.6 and Figure 4.1 indicate that the population of the students in the elementary building is a significant factor in predicting the dollars that can be raised through discretionary funds at the elementary building. Therefore the null hypothesis was rejected. There is a significant relationship in the amount of money available to principals through 89 ____________________________

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discretionary funds and the size of the student population. Hypothesis Two: There is no significant relationship in the percentage of children eligible for free or reduced lunch and the amount of discretionary funds available to the building principal. An independent samples t-test was used to evaluate the differences in the amounts of discretionary dollars available to schools with high percentages of free or reduced lunches, indicating a low socio-economic level, and those with a high socio-economic level, resulting in low percentages of free or reduced lunch eligibility. As indicated by Table 4.7 there is a difference in the amount of available dollars but because of the small sample size, and high variance within each group of schools, this difference is not statistically significant (alpha= .05). Table 4.7 Independent Samples t-test: The Effect of Socio-economic Level on Discretionary Funds Mean "A" 17,981 Mean "B" 11,942 Difference 6039 90 DF T p 16 1.329 .203

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Tables 4.7 indicates that the socio-economic level of the neighborhood is a factor in the amount of money that can be raised through discretionary funds at the elementary building. However this relationship was not shown to be statistically significant. Therefore, the null hypothesis was not rejected. There is a difference in the amount of money available to a principal through discretionary funds in a high economic neighborhood as compared to that of a principal in an elementary school found in a low socio-economic attendance area, but this difference was not found to be statistically significant. Figure 4.2 displays a scatter plot of this relationship. 91

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Figure 4.2 Scatter Plot of Discretionary Funds and % of Students Eligible for Free or Reduced Lunches p E R B u I L 40000 30000 D 20000 I N G I 10000 N $ 0 * 0 * * * * * * 0.2 0.4 0.6 0.8 PERCENTAGE OF FREE OR REDUCED LUNCH 1.0 By controlling the size of the population of the school, and comparing the amount of discretionary funds per pupil and the socio-economic level as indicated by the percentage of students eligible for free or reduced lunches, additional data are examined. Multiple regression was used to examine the relationship between the amount of discretionary funds and the percent of students eligible for free or reduced lunches while controlling for differences in school size. Table 4.8 indicates that there is a relationship between the percentage of students 92

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eligible for free or reduced lunches and the discretionary funds available per student. Table 4.8 Multiple Regression Discretionary Funds Predicted by School Size and The Percentage of Students on Free or Reduced Lunch N-18 Coef. Std. Er. t p{2 tail) Multiple Constant 6467.714 6302.938 1.026 0.321 R-.635 Std. Error Est.=7942.98 Ethnic 31.255 -16244.206 12.440 7834.979 2.513 -2.073 0.024 0.056 The null hypothesis was not rejected, there is a relationship, but this relationship was not shown to be statistically significant. The multiple regression indicates that an increase of 10% in the percentage of children eligible for free or reduced lunch corresponds to a decrease in the discretionary funds of $1,624. Hypothesis Three: There is no significant relationship between the percentage of children of ethnic minority and the amount of discretionary funds available to the building principal. A Pearson correlation coefficient and a scatter plot were used to evaluate the relationships between the amounts of discretionary dollars available to schools and the percent of students considered to be ethnic minorities. These include children in the Hispanic, Black, Pacific Islander, and Native American 93

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categories according to the 1990 figures from the Colorado Department of Education Management Services. Table 4.9 Pearson Correlation Coefficient: Percentage of Ethnic Minority on Discretionary Funds Discretionary Funds Ethnic Minority % r= -0.188 p= 0.456 A scatter plot of discretionary funds and ethnic minority percentage of the neighborhood does not show a significant relationship in the amount of money available to schools and the small percentage of children who are of a minority or non-white background in El Paso County. 94

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p E R B u I L D I N G I N $ Figure Scatter Plot of Discretionary Funds and Ethnic Minority Percentage 40000 * 30000 20000 * * * * 10000 * * * 0 0 0.1 0.2 0.3 0.4 0.5 0.6 PERCENTAGE OF ETHNIC MINORITY Tables 4.9 and Figure 4.3 indicate that the amount of money available to schools of high ethnic minorities is less than the dollars that can be raised through discretionary funds at the other elementary buildings. However, the null hypothesis was not rejected. There is a very small correlation in the amount of money available to principals through discretionary funds in neighborhoods that have a low ethnic minority population. Differences indicate that schools with higher percentages of ethnic minorities 95

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have less discretionary funds making the correlation negative. However, controlling the size of the population of the school, and comparing the amount of discretionary funds per pupil and the percentage of students who are of ethnic minority, these results are statistically significant. Table 4.10 indicates that there is a significant relationship between the percentage of students of ethnic minority and the discretionary funds available per building when the size of the population of the building is controlled. Table 4.10 Multiple Regression The Percentage of Ethnic Minority Students and Discretionary Funds N=18 Coef. Std. Er. t p(2 tail) Multiple Constant 2116.38 5574.143 0.380 0.710 R=.675 Std. Error Population 45.301 13.301 3.406 0.004 Est.=7738.152 Ethnic -31383.062 13588.742 -2.309 0.036 Table 4.10 shows the multiple regression comparing the percentage of ethnic minorities and the amount of available discretionary funds controlling the factor of the size of the population of the school. The table also indicates that an increase of 10% of children in ethnic minorities corresponds to a decrease in discretionary funds of $3,138. 96

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Hypothesis Four: There is no relationship between the relative age of the school building and the amount of discretionary funds available to the building principal. Figure 4.4 shows the relationship between the age of schools (old or new) and their classification within districts as a high socio-economic status or low economic status. Figure 4.4 Matrix of Discretionary Funds and Relative Age of the Building Rich Schools Poor Schools NEW OLD 1-A 2-A 4-A 5-A 6-A 7-A 8-A 9-A 3-A 3-B 1-B 2-B 4-B 5-B 6-B 7-B 8-B 9-B An independent samples t-test presented in Table 4.11 was used to evaluate the relationship between the age of the school building and the amount of discretionary funds available to the building principal. 97

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Table 4.11 Independent Samples t-test: The Effect of the Age of the Building on Discretionary Funds Mean New 17,619 Mean Old 11,640 Difference 5979 DF T p 16 1. 305 210 In the data collected all but one of the district's paired school buildings were found to be consistent. The pattern followed that the New Schools were the "Rich Schools" (School A) while the Old Schools were the "Poor Schools" (School B). The data indicates that the null hypothesis can not to be rejected; the probability of generalizing the findings to larger populations is prohibited. There are differences in the relative age of the building and the amount of discretionary funds available to the building principal, but these findings were not statistically significant. Hypothesis Five: There is no difference in the amount of discretionary funds available to the building principal and the setting of the school building; either suburban or urban. Again, a matrix will be presented in Figure 4.5 to show the comparison of the setting of the building and the availability of discretionary funds. 98

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Figure 4.5 Matrix of Discretionary Funds and the Setting of the Building Rich Schools Poor Schools 1-A 2-B 2-A 3-B 4-A 5-A SUBURBAN 6-A 7-A 8-A 9-A 3-A 1-B 4-B URBAN 5-B 6-B 7-B 8-B 9-B An independent samples t-test found in Table 4.12 was used to evaluate the relationship of the setting of the school building and the amount of discretionary funds available to the building principal. Table 4.12 Independent Samples t-test: The Effect of the Setting of the Building on Discretionary Funds Mean Suburban 16,918 Mean Urban 12,516 Difference 4,402 DF 16 T p .938 .362 The data indicates that the null hypothesis can not be rejected; there are differences in the setting of the building and the amount of discretionary funds available to the building principal, but the 99

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probability of these findings being generalized to other school populations was not statistically significant. In the data collected, all but three of the school buildings were found to be consistent in the pattern. Suburban schools were the "Rich Schools" (School A) while the urban schools were the "Poor Schools" (School B). There were two schools studied which were located on military installations, truly neither urban or suburban. These schools were placed in the suburban category as this was the closer of the two settings. Summary of Quantitative Analysis The research question asks for differences in the amounts of available discretionary funds. As indicated by the research study there are differences in the amounts of funds available to elementary school principals through discretionary funds. The second research question also asks for factors accounting for these differences. The research shows that among the factors correlated with the ability to generate revenue in an elementary school through discretionary funds are these: the size of the population of the school, the socio-economic level of the neighborhood, the ethnic background of the people in the attendance 100

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area, the relative age of the building, and the setting of the elementary school. The data indicate that both the socio-economic level as defined by those students eligible for the free or reduced lunch program and the percentage of children of ethnic minority in a school are factors influencing the abilities to generate additional discretionary funds when the size of the population is controlled in these selected elementary schools. The percentage of students of ethnic minority is shown to be a stronger predictor of available discretionary funds than the percentage of children on free or reduced lunches when the building size is taken into account. The next figure, Figure 4.6 presents an overall summary of the findings in partial answer to Question Two. Figure 4.6 Summary Matrix of the Correlations of Discretionary Funding in Eighteen Elementary Schools in El Paso County Rich Schools High Socio-economic Low Ethnic Percentage High Student Enrollment New Building Suburban Setting 101 Poor Schools Low Socio-economic High Ethnic Percentage Low Student Enrollment Old Building Urban Setting

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The summary reveals that the "Rich Schools" were found to be large physical plants recently built in the suburbs where the percentages of ethnic minorities are low and the percentages of affluence is high. This indicates only part of the portrait of the relationships of discretionary funds on elementary schools conditions. The qualitative section of the research study attempts to develop a better sense of the causes for these differences. The next segment is that of the perceptions of the elementary principal as to the factors that influence the ability of raising additional revenue in the building. The following qualitative portion of the research study gives more background into the study of discretionary funds in elementary schools. Qualitative Data During the structured personal interviews with the 18 elementary principals representing the most diverse elementary schools in their district, data were collected, verified, transcribed and then analyzed to provide a detailed understanding of the factors that affect discretionary funding. In order to provide a background knowledge from each of the 18 elementary principals, the structured 102

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interviews were designed to gain information through the following interview questions: How do you define fiscal equality or financial equity as it pertains to your position as an elementary school principal? What sources of discretionary funding are available to you in your building? Who is involved in earning the extra funds? How do you feel about the additional funds? How do you feel about having or not having additional funds to work with? How do you help teachers and or parents understand the differences in funding? Are there concerns from your central office about these fund-raising activities? The answers to these interview questions will be used to answer the second and the third of the three main research questions of the study. How do you define fiscal equality or financial equity as it pertains to your position as an elementary school principal? Elementary principals in all 18 schools had the most difficult time answering the first question in the interview. The responses varied, but many took a second or two to answer, made a remark about the length of time since they had taken a class in school finance, and then gave their personal reflections on financial equity. Whether principals were leaders of "Rich" or "Poor" schools, they agreed that financial 103

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equity meant equal opportunity for students to have access to educational programs and services. When a leader of a "Poor School" responded, the definitions of equity were focused on the needs of that particular school. I see equity differently. I see it in terms of resources. Do schools have what they need? When you are looking at a school such as the one I am in, which is an older school, an inner city school, the equity discrepancy between that school and the other schools within the same district is pretty wide. The reason for that is because those schools start at a disadvantage. No matt'er how much or how many times you put resources into them, it's almost a point of will they ever catch up? Unfortunately, not a whole lot is put into those schools in terms of resources, so catch-up on the equity issue is always there. A principal from a more affluent district and neighborhood had this answer to the same question with a slightly different viewpoint on fiscal equity. I think in terms of equity; it is a nice goal but something that is almost impossible to achieve because they are all so different and we do have local control and local school boards. Our own local goals are entirely different; our aspirations are different and our sources of funding are naturally different. So, I think equity is something we can talk about, but I wonder if we ever really will be able to achieve it under the present political structures. During many of the interviews, the perceptions of inequality that the principals saw between or among elementary schools turned to hard feelings. I realize that the amount of funding that I receive per pupil is considerably less than the number of dollars that are received at the other schools. Personally I feel that the district I 104

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work in shorts their elementary schools in terms of buildings. To me, financial equity is where the central office feels the majority of the support is coming from, in terms of parents and where the squeaking wheels are. I happen to be in an area where there are no squeaking wheels because there are non-voting people here, compared to where the other schools are within the immediate area of the central office. It is said that theirs is 20 to one as to what is spent in my school. These parents have no idea what the rest of the community looks like. There is no one to carry the banner for these people. What sources of discretionary funds are available to you in your building? In listing sources of discretionary funds in their buildings, elementary principals were very consistent in discussing available resources. In analyzing the typical derivations of discretionary funds, the largest and most consistent was that of the PTO or PTA, parents groups who supported the schools. All eighteen principals recognized the parent groups as a source of funds to support educational opportunities in the schools. Principals in general were very supportive of the role that the parents played in earning money for the school. There were extreme variations in the amount of the dollar support, depending on the ability of the school's economic structure. We have a strong parent volunteer group that raised $580 last year, primarily selling T-shirts to students and parents. Compared to the following: 105

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Our philosophy isthat we only want to do one fund-raiser a year. That is conducted by our PTA, so it is not even associated with the school. Our particular PTA is very generous. Whatever we need as a building, their role is to support us. We realize that; the average budget is about $10,000 to $12,000 per year; most of that is given back to us. Other differences came in the amount of input the principal had in the spending of the "PTO money." One principal from a "Rich School" summarized in this manner. We, the PTO Board and I, meet monthly and that's their reason for being in the district, to do fund-raising activities. I am really lucky because our PTO has always had the viewpoint that yes, we want to raise money, but we want to raise it in a family kind of atmosphere, one that gives back to parents and to the kids. So we choose to do carnivals because it is a way we can bring our families together. It is fun for everybody. Another "Rich School" principal did not feel as positive about the involvement with the parent group as these comments imply. We have a good working relationship. I don't dictate to them and they don't dictate to me. We have a nice collegial relationship. The President always comes to me; they ask for my ideas and they usually say that's fine. This year we had a bit of a discussion because in our library we have great round tables. They are working fine, but I have seen these square oak tables that push together nicely, and they don't take up so much space. I suggested those, and they did vote on it; and it came up for discussion, and they decided and they voted against it. They are the ones raising the money and I can look for those in another way. We had a silent auction and a dessert, an evening without the children, and made tons of money. That was a huge success. And you know you can come or not and spend as much money as you want, and you know nobody knows or notices or cares. 106

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Other sources of funding included school pictures, the pop machine in the building, rental of the school building after hours, community grants, arts enrichment committees, recycling projects, and foundation grants. Several schools included their federally funded Chapter II and Drug Free Schools money in their discretionary funds. The rationale for this was that it was "their money," and they could spend it however they chose under their district's policy of site-based budgeting. The majority of the fund-raising projects that are successful are found in the "Rich Schools" where the financial capabilities of the parents and the community to raise additional funds are higher. There was one old school, a "Poor School" in an urban setting, that was unique in its total amount of discretionary funds. This school was in the first year of a monumental play park project. The earnings from community grants alone were $15,300. The principal was not involved in any way with the project; the funds were handled through the community grants. After more follow-up on the cost of the completion of the project, it was found to be $50,000, a substantial addition to the school's playground at no cost to the district or from the school's meager budget. This is an isolated incident but explains the 107

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digression from the consistency of the "Rich School versus Poor School" findings of the research study. Who is involved in earning these extra funds? The parents. The repeated answer to this question was that parents were the primary group involved in earning funds for the school. A principal of a "Rich School" discussed the spirit of competition among adults. There is some ego involvement in how much money we raised and if we raised more than last year's PTO and did we buy more things? We try to make the parents do the majority of the hustle. Another principal from a "Rich School" with a particular parent who was seriously involved in fund-raising activities talked about the variety of their school's events. We didn't go out and sell candy because it was against our philosophy. Our fund-raisers stemmed more around a family movie night, PTO breakfa.sts with Peter Rabbit and Santa Claus, and roller skating parties. They even went so far as to have their hair checked for shampoo studies. Many parent groups are responsible for the total fund-raising effort in their school. In another "Rich School" this principal explained the school's limited in fund-raising. It is primarily the responsibility of the ways and means committee of the PTA. Parent volunteers come in to collect the money and set up the whole thing. Basically it is all done by parents. It is a very short period of time and very minimal disruption to the staff as well as to the students. 108

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In a "Poor School" with limited parent support and limited neighborhood resources, the principal discussed the school's fund-raising efforts. We can have one fund-raiser a year because our community is very conscious of money all the time. We feel like with pictures and tennis shoes and back to school expenses, we have to inform them anytime we do anything. We have to make sure we put it out at a certain time of the month when people get their pay checks and spread the fund-raisers out throughout the year. Traditionally the PTO board decides which fundraiser we do, when it will be held, and then they involve the students. The students. Many of the principals reported that they were involved in school-wide sales campaigns at some time during the year. However, every principal whose school was doing a sales type of fund-raiser was very adamant that even though the children were selling, they were not allowed to do door-to-door sales because of the safety issues involved. Every principal noted that their board of education had policies that prohibited door-to-door sales. However, they often encouraged their students to sell to close neighbors and friends. All of the fund-raisers of this type also involved an incentive program for the spirit of competition. Several principals admitted that without this incentive program, their sales would not be as successful, and that actually they were encouraging students to sell door-to-door with this program. The more students there are in the 109

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population of the school, the more are available to go door-to-door to canvas the neighborhoods and to call on family and friends. Some examples of what principals say about students being involved in sales included the following: We try not to put the kids in the line of fire! We do not want our children going door-to-door. Students are given very specific instructions about door-to-door sales. We take a lot of care to be sure we are not endangering the kids in any way or creating a liability for ourselves. We don't have kids going door-to-door, and we don't nickel and dime people to death. Children are involved in fund-raising activities, but they never go out into the neighborhood. We have a firm and fast rule about that, and I'm glad we do. Kids have the choice to participate in candy sales; we do ask that they do not go door-to-door on any kind of candy sale that we have. Everything we send home is for the kids to take to their parents to take it to work, neighbors, relatives, and that sort of thing. We don't make a big to-do because I think that then the kids will be going out stomping the streets, and we don't want that. That is unsafe, especially in our neighborhood. We don't do walk-a-thons, read-a-thons, or march-a-thons; we just won't do it! The teachers. Teachers were not involved in fund-raising events in these 18 schools. They were 110

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almost totally sheltered from any involvement with selling products, collecting money, or incentive activities. However, teachers were encouraged by all eighteen principals to write grants to obtain money for their schools. Called the "Dream Team" in one school, teachers worked many extra hours to submit grants for supplies, equipment, or inservice training for the staff of the school. Several districts have grant programs; and the Pikes Peak Education Coalition, a group of businesses in the Colorado Springs area, encourages innovative and creative educational grants through their mini-grant program of $500 stipends. One principal from a "Rich School" said the teachers wrote a federal grant for a total of $330,000 for new technology for their school. We have a group of very talented teachers, so we receive many grants. In the last year, we had three different grants awarded to our school. So, these provide inservices and materials for the teachers. This summer, we wrote a grant for $330,000 with the federal government. It is mostly in the area of technology, acquiring more hardware, more release time, some software, and so on. We have accomplished a lot with grant money. In a "Poor School" teachers don't seem to have the time or energy to apply for grants. The principal of this school was almost apologetic about the allocation of grants. 111

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It would have been more had more teachers put in more grant applications. Or potentially they could have, if they were good enough. But it is a competitive type thing, and in our school they are just not allocated. The principal. There were great variations in the involvement of the principal in fund-raising among the 18 schools. Several felt it totally beneath them to become involved, while others explained their involvement and their interest in fund-raising activities. One of the "Rich Schools," whose principal was very active in fund-raising, was credited with the enthusiasm it took to get the students excited about selling. If we were having some sort of magazine sales or something, we might have this little contest within the school. And if the kids were able to generate so much money, I would cut off my tie and if we generated so much more, I would cut off my pants. We would have a lot of fun with it. Also, from a "Rich School," the principal admitted reluctant support for fund-raising. As an administrator, I don't like leading these types of things. I know you have to but it's nice to know you do it one time and say there is enough money now that you have done it one time. You have to get out there and be a sales person sometimes. If you don't get it one place, you go to another. You touch all your bases. Financially, I don't think there is a teacher in this building who could say they have a request that they haven't received yet! Another principal from a "Rich School" explained fund-raising from this perspective. 112

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I am a big part of it because it takes a lot of organization, and every year you have different parents and you have to guide them on what worked last year and the year before. It is amazing how it can monopolize your time. I guess it is the dollars, but it is also what the goals were and it can be political and really a burning issue. It is probably my albatross. What strikes me about the whole thing is that it can be an emotional issue. An entirely different perception carne from a principal of a "Poor School" who did not enjoy fund-raising and did not feel it was part of the job description of an elementary principal. Fund-raising and money are always concerns because those are areas I am not comfortable with. I mean give me instruction, give me discipline, give me staff development. I am really weak and so I would feel more comfortable, be more motivated, to figure out how to make more money. I'm sure I could be a little better. You know, however minimumly I can be involved is how I operate. I see other principals who are more comfortable with money matters and I think it becomes a challenge for them. They probably do a lot better and have more equipment. Yes, money is important but I don't feel that I'm not doing my job well because of a lack of money. Summary of Qualitative Data The 18 elementary principals had definite perceptions of fiscal equality and financial equity in school finance. They also realized the benefits of the additional funds that were earned through discretionary funds at their school buildings. The administrators discussed many of the factors that affected their ability to raise additional funds for their schools and their students. The most 113

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influential factor was the parent groups who raised money through the PTO or PTA. Although fund-raising was the most popular and frequent way of earning discretionary funds sponsored by the parents, it was often the students themselves who were not allowed to go door-to-door but called on neighbors and friends to earn money for the school. There were also grants written by teachers which produced many dollars that were used to purchase supplies, buy major equipment such as computers, and provide inservice training for the teachers. The principals' involvement was varied, but in most cases there had to be at least a minimum effort to earn funds or to supervise parents and students to do fund-raising activities. The last of the three research questions will be answered by the elementary principals who presented their perceptions of the effects of the differences they observed in the discretionary funds available to them in their schools. Question Three What are the effects of the differences of equity on educational programs and services for the students? Qualitative Data The last section of the research study will report the principals' perceptions of the effects of discretionary funds. The question will be divided 114

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into the following sections: the feelings of the principals dealing with the additional funds or lack thereof; the additional materials, programs and services that were provided; and finally the principals perceptions of the parents' and teachers' feelings about these differences in available resources. How do you feel about the additional funds? and How do you feel about having or not having these additional funds to work with? Principals' perceptions. As with the other questions asked, the feelings and perceptions about additional available funds varied with the amount of funds a principal earned. The majority of the principals from the "Rich Schools" were very happy to have the funds. Many felt they could get along without them. Many also felt that they had every right to earn and to spend these funds to provide the extras for their students. I have always been curious abut the fact that there are always going to be those schools that service a community that are a little more well-off than another school. What are the equity issues and where do you draw the line? I do like the fact that buildings, schools, are communities. We should be given some kind of latitude as to what they would like to do for their kids without theparameters of saying, "No, you can't do it because no one else can do it." But I am not sure how you can get around that issue. 115

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Another "Rich School" principal was hesitant about the ability to be a powerhouse fund-raiser when other schools in the district were not as fortunate. I am lucky because in my school and in my community there are a number of, should we say, upper income families and upper income contacts where we can do some schooljcommunity partnerships. I feel very fortunate and that is a valuable part of the program for students. Equity wise, there are other schools in my district who don't have this ability to generate funding. I question whether that is fair and whether we are doing a service to all children by having that strict definition of site-based management. You know, if you look at site-based management at my school, then I ought to generate all the funding I can and dump it back into my school and live happily ever after. I guess I have problems with being a powerhouse of fundraising. The perceptions of a principal of a "Poor School" were framed around the "Have versus Have-Not" philosophy. When the newest elementary school opened up in my school district, there were a lot of questions. We were struggling, collecting Safeway receipts and having fund-raisers to purchase computers. One of my staff happened to be at the new school. He saw pallets of new computers waiting to be installed into their state-of-the-art computer lab. But our school is so old we would not be able to plug them in. our whole school would need to be rewired, even if they gave us the computers. It is a questions of the haves and the have-nots! The principal of that new elementary school on the other side of town discussed these perceptions of discretionary funding and what it meant to that school. 116

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I can't think of anything that we have needed and there wasn't a way to get it. We have networked our whole computer lab by forming a partnership with Apple. They have invested about $12,000 in our lab for us. We are the leader in our district in terms of technology in this building because it is newer. We have a worthwhile project. If you are direct and honest and if there is a real need, if you don't get it one place, you go to another. When asked about the principal's feelings of available discretionary funds, a "Poor School" principal was very emphatic. Envious! We do a lot of joking. You know, we can do exactly the same fund-raiser as the other school with the same amount of students, and they make three times the money we do. They also have options to do somethings like magazine sales that we wouldn't even touch. In our community, a lot of the people aren't even interested in reading. So we kid about their PTO adopting us instead of sending money to another charity. Additional materials, programs, and services. New technology and computers are examples of capital expenditures that are purchased with discretionary funds available to schools. Other supply and equipment items that were mentioned by the principals were library books, audio-visual materials, textbooks, special awards for students, playground equipment, and supplies for teachers. Many principals from "Rich Schools" said that these funds were nice to have for extras, but that the basic education of the students would go on even if there were no discretionary funds. The principals 117

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from the "Poor Schools" seemed to depend on the additional funds to buy many of the things that parents and the children could not afford to buy or supply on their own. There are also programs and services that are bought and paid for with discretionary funds that are not basic education. Examples of these are outdoor education, after-school enrichment classes, performing arts presentations, inservice activities for teachers, artist-in-residence programs, assembly programs, parenting classes, coffee for the teacher's lounge, or even a new refrigerator. Again,the "Rich School" principals had many different uses for the discretionary funds because they had the additional money to spend. For our building discretionary fund I try to use that for things we don't get through the regular school budget. They tend to fall in equipment areas. We provide coffee for the teacher's lounge because I feel like the staff members are the ones who put up with all of the hassles so it is a small way to pay them back. We bought a new refrigerator, a VCR; and we have done some things like that. Things we couldn't get through the year from the school budget but they benefit the school. Last year we got into a little trouble because we used our building discretionary account to pay for the limousine rental for our fourth grade Reading-for-Success Program. The kids had gone without television for a period of time and were treated to a limo ride to school. We wrote a check for that out of our building rental fund. Unfortunately, the newspaper on that and the school had paid for it. We got phone calls and hate mail. It is really hard for people to understand that this isn't 118

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school district money! We really like having our discretionary fund. It is so nice if you are having an inservice for teachers, and you need or want to buy materials; you just get the checkbook and get it. Using discretionary money instead of having to use the district's instructional funds is a double benefit for 11Rich Schools." Not only do they have money for the extras, but they also have more of their own district allocations to buy supplies that were intended to be taken from the 400 and 500 Series. Another principal from a "Rich School" felt that the discretionary funds available to the school saved the money designated for instructional supplies. It is really nice to have because it allows me a little flexibility. Somebody came in today and asked who was going to pay for the ribbons for our school-wide reading program. I just pay for those because it is so much easier than going through the district budget and using up my instructional materials for that. So, it just allows.us to do those kind of things and enhance our program. In an off-the-record comment, the same principal said the parents at the school had wanted to pay for the salary needed to hire an art teacher for the building. The board of education had declined the offer, saying that the PTO group did not have the authority to hire additional teachers for the school. Another "Rich School" provided after-school enrichment activities four days a week during the school year. There was a minimal fee that earned 119

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money for more discretionary funds, supplied money for scholarships for those who could not afford the fee, and provided four hours per week of an extended school day for the students. Four hours a week of additional child care was also provided at a very reasonable cost to the parents. The students were able to get approximately 144 additional hours of instruction a year in areas such as foreign languages, gymnastics, science explorations, cooking, games, first aid, as well as a variety of other subjects taught by parent volunteers. This program was not available at other schools in the district. Principals who have additional funds may choose to use the money for field trips. A principal from a "Poor School" had concerns about these expenditures and the inequalities they cause students. It does concern me because I think if we had a few extra dollars, that would give us opportunities for kids to participate in the community. But, you see, it is a double bind; that is exactly what we would use the money for. We don't have the money; the kids don't have the exposure and won't be able to get it. The kids that have the exposure, their schools earn extra money to go on more field trips. As that "Poor School" principal put it, "it's the haves and the have-nots." The discrepancies in funding by additional discretionary accounts enhance the differences in educational opportunities for the children of these schools. 120

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How do you help parents and teachers understand the differences in funding? The feelings of parents and teachers. The principal who talked about the "have and the have-nots" from that small urban, inner city school put it most eloquently and sincerely. What do we need? I have always approached it with my parents and my staff from that viewpoint because you can develop a lot of bitterness and anger over what other people have and we don't have. I think it is important in a position of leadership that you don't fuel that, but say, "Fine let them have it, they need it. What do we need and how can we work on that proactively?" It's not easy. Channeling those feelings, I think, is real important and making them proactive and positive rather than pointing out what the others have that we don't. Rather than, and I have seen this happen to some of my colleagues, becoming angry and bitter about discrepancies that exist, I have to pull back from that and really communicate to my staff and parents. It took me a couple of years to get to that point, and I think it is a more constructive way to go about it. Many teachers do not understand the words 11no money," and this principal from a "Rich School" explains how teachers adapted innovative and creative ideas into their teaching. I never have a lot of problems with teachers or parents wondering why there isn't money for that or this. I don't think they understand there is a limit. The teachers I have are very creative and innovative and when they want to do something, I do not want to say no, particularly if they are excited and enthused about it. Many of my teachers spend some of their own money. I try to caution them with the understanding that they might not be reimbursed. 121

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Schools that have little fund-raising potential sometimes have parents who do not seem interested in school finances as described by this "Poor School" principal. Our parents aren't terribly aware because of our location. There is another school very close and we can get into some unhealthy competitions, so I try to play this down. We try not to make these things issues; if it comes up, we try to explain. But we try to give the reasons without saying "poor us." Because of the benefits they see for their children in completing a task, contributing to a group effort, and handling money, many parents would like to support fund-raising. A principal from a "Rich School" explained the way parents would prefer to be involved. I would think half of my parents would just like to write their checks and be done with it. They don't want their kids to have to go door-to-door! of Qualitative Data The differences in the effects of the additional discretionary funds that are seen by the elementary principals from these 18 schools in El Paso County can be summarized by the purchase power of the dollars. More revenue can be spent on added benefits such as supplies and equipment, direct purchased services, additional art and music programs, inservices for 122

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teachers, after-school enrichment for students, or after-school day care which benefits the parents. Inequities can be seen by principals, parents, and teachers who come from "Poor Schools" in the supplies and activities that their schools can not provide for their students. Principals from "Rich Schools" also see the unequal availabilities of dollars but attribute it to the philosophy of site-based management and the right of parents through local control to supply the resources their neighborhood schools need to educate the children of their attendance area. Summacy Presented in this chapter by research question, this exploratory study revealed important findings on discretionary funds available at the elementary school level in 18 schools in El Paso County. The chapter reported that differences do exist in the amounts of money available to elementary school principals. The differences are significant between elementary schools within a district and among elementary schools within El Paso County. The key factors that were found to influence the amount of discretionary funds available to principals included the size of the population of the school, 123

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socio-economic level of the neighborhood, the urban or suburban setting of the school, and the age of the school building. Other factors that influenced the availability of additional funds were the parent groups who supported the fund-raising efforts and earning of other discretionary funds, the students' involvement in fund-raising activities, and the principals' interests and involvement in earning discretionary funds. Teachers were generally involved only in writing grants that brought additional funds to the school. The effects of these added discretionary funds to the building budgets of elementary school principals were increases in supplies and equipment, added hours of instructional time through after-school enrichment for the students, more inservice opportunities and supplies for the staff, free or reduced fees for day care provided for parents through school programs, and defrayed spending of the school districts allocated 400 and 500 accounts. The findings from the interviews and the research from the Colorado Department of Education point out many discrepancies in funding the 400 and 500 series of Instructional Supplies and Materials. Not only are there differences in the amount funded per pupil in each district throughout this county, but also there 124

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are differences between the selected elementary buildings due to additional funds not allocated by the district. These differences are evident because of the discretionary funds at the building level. The findings suggest that the use of discretionary sources from each building studied compound the inequities for these funding categories. 125

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CHAPTER 5 SUMMARY, CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS This study has investigated the presence and the amount of discretionary funds available to building principals in 18 elementary schools in El Paso County. The final chapter in the study describes the summary of the findings, the conclusions, the implications of the research, and the recommendations for further study. Summacy The major purposes of the study were to investigate the presence and the extent of inequities between the dollar amounts available for expenditures of instructional supplies and equipment as impacted by discretionary funds. The factors accounting for the differences in discretionary funds available to elementary principals were examined. The study was also conducted to document the impact of these 126

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discretionary dollars on the opportunities for educational enrichment in the programs and services available to the students of these 18 elementary schools. Literature Review The review of the related literature provided information and background material for the study and was examined in four areas dealing with school finance. The first examined the historic court cases throughout the United States concerning equity in educational opportunity. Litigation in the late 1960s and 1970s was rampant as states were deeply involved in reviewing and changing their school finance formulas to meet the mandates of the courts (Augenblick et al., 1991). The activities of the 1980s centered around the school improvement, excellence, and reform movements. This was a period of reviewing and testing the constitutionality of the litigation of the previous decade. In the 1990s the courts have forced reform in the funding of school districts and proclaimed the need to limit the disparities in per-pupil revenue as they relate to the wealth of school districts (Augenblick et al., 1991). 127

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Arguments were made that money does make a difference, that is, districts with more funds offer a richer array of courses, have lower pupil-teacher ratios, are able to hire better-qualified teachers, employ more ancillary personnel, and have more modern facilities and equipment (Augenblick et al., 1991, p. 26). The courts turned from student equality to taxpayer equity and from a focus on inequity across school districts to the lack of sufficient funds for schools. Interpreting the states' education clauses was the basic premise for the findings as the courts ruled on the constitutional language of "thorough," "efficient," "equal protection," and "fundamental rights." The plaintiffs argue that if our nation is to compete in a world economy and to regain its national prominence, children who grow up in economically disadvantaged families must be allowed the same educational opportunities as children from wealthy families (Wood & Thompson, 1991, p. 25). The next phase of the literature review studied the changing policies of school finance and the political ramifications of these changes. Although expenditures for financing education are growing, there are changes in the sources of school revenues (Odden & Kim, 1991). Because of inequities in the abilities to generate property taxes, more of the burden of funding is coming from state sources. 128

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Property-poor districts which usually have low per-pupil expenditures but high tax rates are competing with districts with rich property values having high per-pupil expenditures and low tax rates (Odden & Kim, 1991). New approaches to the funding of schools were the direct result of court mandates to force states to adopt finance formulas that were constitutionally correct (Augenblick et al., 1991). The reform movements of the 1980s and of the 1990s have linked school finance to substantive educational objectives relating to the national and state goals (Odden & Kim, 1991). Cut-backs in federal spending for education and competition from other domestic programs have resulted in schools seeking alternative sources of funding to finance education. The third phase of the literature review dealt with the emerging practice of inequities caused by schools generating their own funds through school/ business partnerships, grants, foundations, and fundraising. Documentation of private financing of public schools has just recently been added to the literature dealing with school finance. In his book Savage Inequalities (1991), Jonathon Kozol cites specific examples of fund-raising activities and the additional 129

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effect they have on expenditures in schools. A of the California Local Education Foundations by Judith Adams drew similar conclusions. Funding provided by most successful foundations enables their respective districts to make expenditure choices which provides additional educational opportunities for students while circumventing equal funding laws (Adams, 1991, p. 195). The final section was a historical summary of Colorado finance legislation that lead to the revision of the Colorado State Finance Act of 1988. The history of the 1973 Public School Finance Act and the court challenge in 1977 were reviewed as were the events leading up to the enactment of the Public School Finance Act of 1988. The new law specifies that districts average an expenditure of $111 per full time equivalent student per year for supplies and equipment. Another unique feature of the Colorado Finance Act is the principle of grouping districts into one of eight setting categories designed as a multi-level foundation approach to funding the 176 school districts (Augenblick et al., 1991). No research was found that explored the study of the equity of discretionary funds in elementary schools. This study of additional, non-line item 130

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funds that may be used to enhance educational opportunities will provide new information in the study of school finance and educational equity. Findings of the Study The summary of the findings of the study is presented by each of the three research 1. What differences exist in the amounts of money available to elementary principals to supplement district budget allocations? a. There were minimal differences in the amounts of dollars that school districts allocate to the individual elementary schools within the district for Instructional Supplies and Equipment in the 400 and 500 Series of the General Fund Budget. The data indicated that there are differences in the amount of dollars among the 9 districts that is allocated to their elementary schools by the districts in El Paso County for the Instructional Supply and Equipment categories. b. The 18 schools studied varied in the amount of discretionary funds available for supplementing district budget allocations. There were differences in discretionary funds available to these elementary 131

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schools between schools within a district. The data indicated that the discretionary funds earned were greater in schools identified as 11rich" and less in schools identified as "poor" in all but one of the nine pairs of schools studied. c. There were differences in discretionary funds available among the eighteen schools in El Paso County. These differences were found to be consistent with the findings as analyzed per student and per building. "Poor Schools" had less revenue from discretionary funding than did the "Rich Schools" of the county. The data answering the first research question found that there are differences in the amounts of funds available to elementary principals both between schools within a district and among schools in El Paso County. 2. What key factors account for differences in discretionary funds available between schools within districts? a. The study found that the number of students in the building's population had an effect on the ability of that school to raise additional funds through discretionary means. Schools with the largest populations were able to earn more through 132

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door-to-door sales campaigns. Both the Pearson product moment correlation coefficients and the scatter plots demonstrated the relationships in dollars earned through fund-raising and the number of the students in the population of the school. b. The socio-economic level of the students as measured by the number of children eligible for the free or reduced lunch program was found to be a factor accounting for differences in available discretionary funds. Independent samples t-tests and scatt.er plots were used to test the significance of the relationships in available funds. The analysis indicated that the socio-economic level of the neighborhood is a factor in the amount of money that can be raised through discretionary funds, but that this factor is not statistically significant thus, generalizations to other populations could not be made. The "Rich Schools" were able to raise more money through discretionary funds per student than the "Poor Schools" in all but one district pair. When analyzed by total building funds, the "Rich Schools" earned more money than the "Poor Schools" in six of the nine district pairs. Other factors involved in fund-raising analyzed in the qualitative data 133 ..... _..._..._..._... _____ ....................................................................................................................................... ___

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influenced the fund-raising efforts in these three schools. c. The study indicated that the amount of money available to schools with a high percentage of ethnic and racial minorities is different than the dollars that can be raised through discretionary funds at the other elementary buildings. Independent samples ttests and Pearson product moment correlation coefficients and scatter plots were used to test the significance of the relationships in the amount of money available to schools and the percentage of minority children. Those schools with a low percentage of ethnic minority students were the "Rich Schools" and the schools with the greatest amounts of discretionary funds. d. When the population of the buildings was controlled and a multiple regression was used to test the significance of the data, it was found that there were stronger correlations between the amount of children eligible for free or reduced lunches and the amount of discretionary funds per pupil available to the building principals. An even stronger correlation was found between the percentage of ethnic minorities 134

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and the amount of discretionary funds per pupil. This was found to be statistically significant. e. The relative age of the building was examined in the study. A matrix comparing the relative age of the buildings of the 18 schools and the ability to raise additional discretionary funds revealed that eight of the nine identified "Rich Schools" were built less than 15 years ago. Eight of the nine identified "Poor Schools" were older than 15 years. An independent samples t-test was also used to test the significance of the relationship. The probability that the findings could be generalized to larger populations of schools was not significant. f. In a similar pattern, the settings of the 18 buildings were compared in a matrix. The findings of the study indicated that the setting of the building; either urban or suburban, displayed a consistent pattern. Eight of the "Rich Schools" were found in the suburban setting, while seven of the "Poor Schools" were found in the urban settings. There were two inconsistent school pairs in the study, two schools which are located on military bases or posts which could not be classified as truly urban and were placed in the suburban category. An independent t-135

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test was used to test the significance of relationship. The probability of generalizing the findings was not significant. Secondary factors that affected the ability of building principals to realize benefits from discretionary funds were discussed in interviews with each of the 18 administrators. These findings were examined through the qualitative data from the perceptions of the elementary school principals. g. The most consistent and influential factor common to all schools were the parent groups who raised money through the PTO or PTA. In all 18 schools, the initiative of the parents was consistently mentioned as the most significant difference in the amount of discretionary funds available. The principals agreed that the parents' efforts to help raise funds through bake sales, carnivals, candy sales, and family fun activities generated money for the schools that would not be available by other means. The one "Poor School" in an urban setting that did not fit the pattern of other school pairs earned $21,500 through parents-promoted fund-raising activities to build a playground project for that school. The efforts of this parent group 136

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made School B of District #3 fall into the pattern of the other "Rich Schools." h. The fund-raising activities were sponsored by the parents' groups but were often carried out through door-to-door sales campaigns throughout the neighborhoods. All nine districts had Board of Education policies that discouraged door-to-door sales, but the principals realized that without an incentive or competition of sales earnings, the fundraising would not be successful. The success of the fund-raising was due in large part to the number of children who participated in the activity. The schools with larger populations had more children to canvass the neighborhoods and contact more potential buyers. i. The qualitative data found that teachers had very little to do with the fund-raising activities. The teachers' efforts in earning additional revenue for the school came through the grants that they wrote. These grant were written to supplement inservice opportunities for the staff, to enhance programs and activities for the students, and to purchase more supplies and equipment for the school. 137

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j. The elementary principals were found to be significant factors in the amounts of discretionary funds available to their schools. Principals who were interested and involved with the activities were found to be the most influential and successful in earning discretionary funds for their schools. These principals spent many hours directing fund-raising activities with parents and students. They were involved in the planning of fund-raising activities and the distribution of the funds as they were spent in the school. The principals who took fund-raising very seriously admitted that it diverted time from their other .duties as a building administrator. Principals who did not enjoy garnering money perceived students as going without many opportunities because of their reluctance to become involved with fundraising. Findings of the second research question indicated that among the factors correlated with the ability to generate revenue through discretionary funds are these: the size of the population of the student body, the socio-economic level of the neighborhood, the ethnic background of the students in 138

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the attendance area, the relative age of the school building, and the setting of the elementary school. Secondary factors affecting the amount of available discretionary funds are influential parent groups, students who do door-to-door sales, teachers who successfully write grants, and the principals who are actively involved in raising additional money for the school. 3. What are the effects of the differences of equity on educational programs and services for the students? The finding of the last research question reported the perceptions of the principals dealing with the inequities caused by unequal amounts of discretionary funds. These inequities were seen in the abilities for the principals to provide additional materials, programs, and services for the students. The perceptions of the parents and the teachers about the differences in available resources were also examined. a. The findings indicated that the principals' perceptions of the impact of discretionary funds depends on the amounts of funding available to their building. Those who had more funds to spend thought it was their right to garner and spend the funds as 139

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site-based managers. The "Rich School" principals generally enjoyed and were involved in the fund-raising activities. Principals of "Poor Schools" did not share the same enthusiasm. They felt it was difficult to tease their students with fund-raising activities and to burden the parents with additional financial concerns. b. The findings of this portion of the qualitative data indicated that the discretionary funds available to the 18 schools were used to purchase capital expenditures such as computers and new technology. Also purchased were library books, audio-visual material, textbooks, playground equipment, and classroom supplies. Programs that were made available were after-school enrichment classes, outdoor education, assembly programs, and parenting classes. Schools without the benefits of these discretionary funds were not able to supplement their general fund budgets to purchase these additional items and services. c. The perceptions of the parents and the teachers were found to be reflective of the degree to which they benefitted from the discretionary funds. The teachers and parents who were from the "Rich 140

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Schools11 felt that the principle of local control gave them the right to purchase extras for their students. Because the parents and the teachers from the 11Poor Schools11 did not have the additional purchasing power, they felt the unfairness of the differences in discretionary funds. Conclusions The conclusions of the study are based on the findings of the research in the 18 buildings in El Paso County as well as the findings from the review of the related literature dealing with equity in educational finance. 1. Within school districts in El Paso County having more than one elementary school, there were minimal differences found in the amount of dollars allocated for Instructional Supplies and Equipment in the 400 and 500 Series of the general fund budget. 2. Differences in financial resources were found in elementary schools within districts and among elementary schools in the 18 schools studied in El Paso County. These differences were due to the additional discretionary funds available to elementary school principals. 141

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3. Schools with the most successful programs for raising additional discretionary funds were those with large physical plants, recently built in the suburbs, and those where the ethnic minority percentages were low and the percentage of affluence was high. The parents in these schools were actively involved in fund-raising efforts, the large population of students was involved in door-to-door fund-raising campaigns, the teachers were successful in their bids for grants from community or government sources, and the principals elevated fund-raising events to a high priority in the responsibility of their positions. 4. Additional discretionary funds allow the principals to supplement their district allocated budgets, offering purchasing power for supplies and equipment, more educational opportunities for instructional time, more inservice education for the teachers, and more indirect services to the parents of the community. Schools with less opportunities for earning discretionary funds were not able to provide comparable services and opportunities for their children. 5. The availability of the additional discretionary funds to the building principals adds 142

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rather than reduces the disparity between the "Rich Schools" and the "Poor Schools." An even greater disparity is seen in the effect that these discretionary funds bring to the schools with a high percentage of students of ethnic and racial minority. The conclusions from this study of elementary schools in El Paso County, Colorado, are consistent with the findings of others who have studied equity of allocated funds but who have only compared districts throughout a state. In a paper presented at the meetings of the American Colleges for Teachers Education in San Antonio, Texas, in February 1992, David C. Berliner suggested this goal for school funding. We should equalize the funding for schooling, so that schools in one part of the state or even within a district, cannot spend twice or three times more per-child per-year than other schools in the state. The parents of Grosse Point and Great Neck and Princeton should inform the state legislatures what it takes to educate their children properly, and that standard of support should be applied to every district in the state (Berliner, 1992, p. 58). Money does make a difference in the quality of a child's education. Experts in school finance have discussed the differences in spending for the past 30 years. Arthur Wise, director of the Center for the 143

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Study of the Teaching Profession at the RAND Corporation testified at a senate hearing for the Fair Chance Act of 1990 (H.R. 3850). While children from advantaged families are more likely to attend clean, well-apportioned schools staffed by adequate numbers of qualified teachers and supplied with up-to-date books and technological aids, children from disadvantaged families are more likely to attend class in dilapidated school buildings staffed by less-than-fully qualified teachers, supplied with outdated textbooks, and few, if any, technological aids (Penning, 1990, p. 32). A public school advocate and a champion for our nation's urban schools, Jonathan Kozel speaks for equity in financing education with the collective wealth of our society. We ought to finance the education of every child in America equitably, with adjustments made only for the greater or lesser needs of certain children. And that funding should all come from the collective wealth of our society (Scherer, 1992, p. 6). Implications Fiscal equality has indeed been studied by the courts, the legislature, and the citizens of the State of Colorado, especially since the enactment of the Colorado Finance Law of 1973. Revisions in the law, The Finance Act of 1988, the structure of school finance, and the inequities that are still apparent, 144

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indicate that there is much to do to further the cause of all children in the state. This study of elementary schools, in nine school districts of one county, has shown the scope of unequal funding for the children of the county. For all of the children and their parents, the school leaders, the patrons of the communities, and those interested in equal public support of our schools, this study is a beginning. The ability for some schools to raise $40,000 in additional funds while others are able to raise only $4,000 is not equal or an equitable funding of a child's education. We can hardly study school finance or begin to assess the differences in the State's eight setting categories without examining the possibilities of additional resources available because of neighborhood affluence. The implications for those in the leadership roles of schools are controversial because of the political, ethical, and economic issues that they uncover. implications are all entangled because of these same issues. Cutbacks in state funding, expectations for schools to do more with less of the state's general fund budget, and the philosophy of 145

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local control, demand that these implications and questions must be addressed. 1. Do we encourage the building leaders of our schools to focus their time and energies on fundraising to supplement the districts' limited budgets? By placing pressure on elementary principals to balance tax allocated budgets and to provide more for their school populations, the expectations are there to be the "instructional leader" and also to be the "financial advisor" of the building. The competition between and among school leaders to garner additional funds, to supply more opportunities, and to enhance the learning environment must be evaluated. 2. Do we allow the "local control" heralded in the State of Colorado to dictate the amount of private funding one neighborhood can produce for their students while denying the same opportunities to others because of the size of the population of the school, the socio-economic levels of the families, the age of the building, or the setting of the school? The "Robin Hood" philosophy of school finance is certainly controversial, and was rejected by the "Rich Districts" in the debates over the School Finance Act of 1988 in Colorado. Affluent neighborhoods have 146

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always been able to provide the many extras that distinguish them from the poor neighborhoods. Entangled in the arguments are the considerations that through local control, districts have been able to tax themselves to provide services they value for their communities. Because property-poor districts are not able to raise the same dollars through similar means, the concept of financing schools through property taxes must be reviewed. 3. Do we promote students to become fund-raisers by offering incentives and the spirit of competition to promote high sales quotas? The spirit of competition in some schools has become more than spirited. When sales quotas are required before students can participate, the competition has become a requirement. The fact that companies are in the business of fund-raising and that because of a lack of tax dollars to fund schools adequately, we will see more of these schooljbusiness partnerships with children doing the selling. Evaluation of the instructional time spent by schools in promoting and endorsing fund-raising activities needs to be carried out. 147

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4. Who should monitor equity among schools within a district? Should the district superintendent be responsible for providing equitable fund-raising opportunities among schools within the district? Should the state regulate the amount of funds that a building can raise to supplement the line item budget categories for instructional supplies and equipment? The traditional philosophy of the state has prevented any intervention into the control of local funding by discretionary means. The state's enactment of the Finance Law of 1988 and the inclusion of the eight setting categories was meant to bring about a more equitable dispersion of state funds. The principle of local control is difficult to deny on the district level and would be almost impossible to monitor at the individual building. Imagine a district being sanctioned because of a violation of the "Fund-raising Rule." 5. Do we condone unequal educational opportunities for students, unequal training for teachers, and unequal advantages for parents that have been subsidized by candy sales, grant writing, and silent auctions? 148

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No school district in this study monitored the amount of discretionary funds that one building earned, or collected the dollars into a central fund, or then divided the money equally among all schools in the district. The philosophy of "what we earn is ours to spend" prevailed in all schools. Local control and wanting the best that money can buy for 11our school" is highly regarded. It isn't that we are condoning unequal treatment for others, but we are not able to recognize that these discretionary funds play such a significant role of inequality of education. The ethics of equal opportunity must be examined to include a simple candy sale, even if it does earn $12,000 for one school. 6. Do we penalize schools which are small, urban, poor, and ethnically rich for these attributes? The writings of Kozol (1991) and the studies of school finance on the state and national levels of Wise, Natale, Wood, and Thompson, to name a few, agree that we do penalize these children. Many other research studies and the cases that the courts have ruled on over the past 20 years show that we do discriminate against the children who come from property-poor districts. States contend that they 149

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provide equal and equitable education for all children. The Colorado State Constitution guarantees a "thorough and uniform system of free public schools." This research study, based on only one county and nine different school districts contradicts this guarantee. There are strong correlations between the small, poor, and ethnically rich schools and their inability to raise the discretionary funds that other schools within the same district and within the same county are able to do. 7. Do we determine the quality of education in these elementary schools as a function of the wealth of the neighborhood in which the schools are found? Related to the previous question, there are many who agree that the concerns over the principle of "fiscal equality" as outlined in the Serrano Suit of 1971 are still prevalent today. Reform is still needed and the problems of equity in school finance will continue to plague our states and the nation until equality has been achieved. Improving education for children in poor school districts would benefit them and the nation. A future physicist is as easily born in 150

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Jersey City as in Alamo Heights. But it is not only potential luminaries that are lost; it is part of an entire generation of citizens whose potential contributions are stunted by the inadequacy of the education they are provided. School finance reform cannot solve all of the problems of education, but it can equalize the opportunities that the state provides. To continue to distribute better education to children in rich districts and worse education to children in poor districts is only to exacerbate the inequities that children bring to school. To equalize educational opportunity is to redress some of the accidents of birth (Wise & Gendler, 1989, p. 36). Recommendations The study of the availability of discretionary funds for elementary school principals raises many more questions to be considered by those interested in reforming school finance. The following recommendations suggest further study: 1. The factor of a neighborhood's abilities to raise significantly more funds to supplement educational opportunities for its schools is a reality that has always been present but rarely mentioned in studies of equal opportunities for students. Extensive study in the area of inequities brought about by discretionary funds should be conducted throughout the state and at other levels of public education, including middle schools and high schools. 151

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Studies expanded to include discretionary funding in the areas of athletic booster clubs, parents for the arts, and support for elite gifted and talented programs should be examined to discover the true costs of special programs as well as those considered basic education. 2. With the current concerns of school finance and taxation limits in the State of Colorado, schools will be restricted in the amounts of money that can be allocated through district general fund budgets. Since the need to privately fund public schools is predicted to increase and cause further inequities, discretionary funding must be explored. This would include studies of elementary schools throughout the State of Colorado, studies at the middle and high school levels, and also at the university level. Funding from other federal sources allocated to specific districts such as block grants and federal impact aid (P.L. 874) should be examined and considered in the general fund budgets as part of the state's funding formula instead of as separate entitlements. Studies of state funding have not considered discretionary funds in recommended 152

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allocations. Considerations should be made to include all funding sources from local revenue before state tax dollars are distributed. 3. Accurate and responsible accounting of building activity funds are needed at the district level. Reporting of these funds to the State Department of Education to truly assess the amount of money and the way dollars are spent per pupil should be mandated and monitored by the State. The district per-pupil expenditures should be examined at the state level reflecting and reporting accurate spending levels per school and per district. 4. The federal government's lack of involvement in funding schools coupled with the issue of the Colorado taxpayer's initiative for fiscal responsibility should challenge the State Legislature to study its funding priorities or children may be forced into doing door-to-door sales to finance our schools. Recommendations for further study at the state level are school budgets, considering discretionary funds as part of the local revenue in the finance formula. The acknowledgement of discretionary funds as significant sources of revenue 153

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and considering them as per-pupil revenue and expenditures throughout the state is necessary. 5. In light of the other educational commitments of the building principal, the responsibility of raising the needed funds to supplement the education of the students in the school needs to be examined. The time that the principal spends monitoring the parents' involvement in earning additional revenue for the building, and supervising students and teachers who are involved with funding sources for schools needs to be evaluated. 154

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APPENDIX A REPORTS OF DISCRETIONARY FUNDS BY DISTRICT 155

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I 1990-1991 I BUILDING BUDGETS I DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #1 SCHOOL PICTURES POP MACHINE BUILDING RENTAL P. T. 0. COMMUNITY .GRANTS READING IS FUN OTHER RECYCLING GRANT $ TOTAL TOTAL STUDENTS DISCRETIONARY $/STUDENT $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES TOTAL FUNDS AVAILABLE PER STUDENT SCHOOL A $1,026.00 $36S.OO $790.00 $3,226.00 $4,570.00 $415.00 $1,500.00 $12,995.00 376 $34.56 $96.00 $130.56 156 SCHOOL B $960.00 $225.00 $858.00 $1,400.00 $500.00 $980.00 $0.00 $0.00 $4,923.00 356 $13.83 $96.00 $109.83

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #2 SCHOOL A SCHOOL B SCHOOL PICTURES $1,712.00 $700.00 POP MACHINE $200.00 $0.00 BUILDING RENTAL $1,260.00 $0.00 P. T. 0. $6,000.00 $4,000.00 COMMUNITY .GRANTS $1,200.00 $400.00 READING IS FUN $0.00 $0.00 OTHER RECYCLING $80.00 $0.00 FOUNDATION GRANT $4,000.00 $2,250.00 DISCRETIONARY $ TOTAL $14,452.00 $7,350.00 TOTAL STUDENTS 637 442 DISCRETIONARY $/STUDENT $22.69 $16.63 $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES $77.44 $78.99 TOTAL FUNDS AVAILABLE PER STUDENT $100.13 $95.62 157

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #3 SCHOOL PICTURES POP MACHINE BUILDING RENTAL P. T. 0. i COMMUNITY .GRANTS ARTS ENRICHMENT OUTDOOR EDUCATION OTHER RECYCLING FOUNDATION GRANT DISCRETIONARY $ TOTAL TOTAL STUDENTS DISCRETIONARY $/STUDENT $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES TOTAL FUNriS AVAILABLE PER STUDENT 158 SCHOOL A SCHOOL B $431.00 $900.00 $376.00 $0.00 $0.00 $0.00 $7,546.00 $6,200.00 $543.00 $15,300.00 $0.00 $700.00 $0.00 $2,400.00 $12.00 $0.00 $50.00 $600.00 $8,958.00 $26,100.00 159 364 $56.34 $71.70 $96.00 $96.00 $152.34 $167.70

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1990-1991 BUILDING DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #4 SCHOOL A SCHOOL B SCHOOL PICTURES $679.00 $648.00 POP MACHINE $191.00 $0.00 BUILDING RENTAL $0.00 $0.00 P. T. 0. $11,066.00 $5,870.00 COMMUNITY GRANTS $2,950.00 $3,300.00 OUTDOOR EDUCATION $4,445.00 $5,610.00 STUDENT COUNCIL $0.00 $440.00 OTHER RECYCLING $0.00 $106.00 FOUNDATION GRANT $800.00 $200.00 DISCRETIONARY $ TOTAL $20,131.00 $16,174.00 TOTAL STUDENTS 331 334 DISCRETIONARY $/STUDENT $60.82 $48.43 $ DISTRICT ALLOCATION PER STUD,ENT FOR INSTRUCTIONAL SUPPLIES $154.00 $154.00 TOTAL FUNDS AVAILABLE PER S.TUDENT $214.82 $202.43 159

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON =========d======================================= DISTRICT #5 SCHOOL A SCHOOL B SCHOOL PICTURES $1,500.00 $755.00 POP MACHINE $0.00 $350.00 BUILDING RENTAL $0.00 $0.00 P. T. 0. $12,000.00 $2,936.00 COMMUNITY .GRANTS $10,000.00 $7,376.00 CHAPTER II $6,500.00 $1,200.00 OTHER RECYCLING $0.00 $0.00 FOUNDATION GRANT $10,000.00 $0.00 DISCRETIONARY $ TOTAL $40,000.00 $12,617.00 TOTAL STUDENTS 711 305 DISCRETIONARY $/STUDENT $56.26 $41.37 $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES $75.00 $75.00 TOTAL FUNDS AVAILABLE PER STUDENT $131.26 $116.37 160

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #6 SCHOOL A SCHOOL B SCHOOL PICTURES $719.00 $555.00 POP MACHINE $846.00 BUILDING RENTAL $0.00 $0.00 P. T. 0. $0.00 $503.00 COMMUNiTY .GRANTS $1,413.00 $2,700.00 SCHOOL FUND RAISERS $10,307.00 $6,755.00 OTHER DRUG FREE SCHOOL $930.00 $1,000.00 FOUNDATION GRANT $1,800.00 $2,000.00 DISCRETIONARY $ TOTAL $15,169.00 $14,359.00 TOTAL STUDENTS 610 512 DISCRETIONARY $/STUDENT $24.87 $28.04 $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES $86.50 $86.50 TOTAL FUNDS AVAILABLE PER STUDENT $111.37 $114.54 161

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #7 SCHOOL PICTURES POP MACHINE BUILDING RENTAL P. T. 0. COMMUNITY GRANTS AFTER SCHOOL ENRICHMENT STUDENT COUNCIL OTHER RECYCLING CHAPTER II DRUG FREE SCHOOL DISCRETIONARY $ TOTAL TOTAL STUDENTS DISCRETIONARY $/STUDENT $ DISTRICT. ALLOCATION PER STUD.ENT FOR INSTRUCTIONAL SUPPLIES TOTAL FUNDS AVAILABLE PER STUDENT SCHOOL A $847.00 $204.00 $0.00 $6,000.00 $1,392.00 $2,000.00 $650.00 $130.00 $700.00 $800.00 $12,723.00 292 $43.57 $111.00 $154.57 162 SCHOOL B $1,100.00 $458.00 $0.00 $7,650.00 $3,300.00 $2,400.00 $100.00 $300.00 $700.00 $600.00 $16,608.00 500 $33.22 $111.00 $144.22

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #8 sCHOOL PICTURES POP MACHINE BUILDING RENTAL P. T. 0. COMMUNITY GRANTS READING IS FUN OTHER RECYCLING CHAPTER II DISCRETIONARY $ TOTAL TOTAL STUDENTS DISCRETIONARY $/STUDENT $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES TOTAL FUNDS AVAILABLE PER STUDENT SCHOOL A $0.00 $0.00 $0.00 $880.00 $2,450.00 $0.00 $100.00 $800.00 $4,230.00 288 $14.69 $110.00 $124.69 163 SCHOOL B $0.00 $250.00 $0.00 $1,800.00 $2,645.00 $570.00 $0.00 $0.00 $5,265.00 605 $8.70 $110.00 .$118. 70

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT #9 SCHOOL A SCHOOL B SCHOOL PICTURES $2,783.00 $452.00 POP MACHINE $862.00 $350.00 BUILDING RENTAL $0.00 $0.00 P. T. 0. $3,400.00 $100.00 COMMUNITY GRANTS $7,338.00 $250.00 READING IS FUN $0.00 .$0.00 STUDENT STORE $908.00 $104.00 IMAGINATION CELEBRATE $3,580.00 $0.00 RECYCLING $0.00 $18.00 CHAPTER II $6,105.00 DRUG FREE SCHOOLS $8,200.00 $0.00 DISCRETIONARY $ TOTAL $33,176.00 $4,086.00 TOTAL STUDENTS 637 333 DISCRETIONARY $/STUDENT $52.08 $12.27 $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES $93.00 $90.00 TOTAL FUNDS AVAILABLE PER STUDENT $145.08 $102.27 164

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APPENDIX B GRAPHS OF PER PUPIL FUNDING BY DISTRICT 165

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DISTRICT #1 BUILDING BUDGET $220.00 $200.00 $180.00 $160.00 $140.001 $130.56 VI $120.00 I a:: $109.83 ...J $96.00 0 $100.00 $96.00 1-' c m m $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B DISCRETIONARY FUNDS/STU DENTS DISCRETIONARY $ D DISTRICT$ TOTAL$

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DISTRICT #2 BUILDING BUDGET $220.00 $200.00 .$180.00 $160.00 $140.00 rn $120.00 ll:: 5 $100.001 $100.13 ...J $95.62 0 ...... c C'\ -..] $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ I1D TOTAL $

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DISTRICT fl3 BUILDING BUDGET $220.00 $200.00 $180.00 $167.70 $160.00t $152.34 m $140.00 en $120.00 a:: ::3 ....1 0 $100.00 ..... Q CD $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ [iill TOTAL $

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DISTRICT #4 BUILDING BUDGET $22o.oor $214.82 $202.43 $200.00 $1 $160.00 $140.00 (IJ $120.00 r::t:: :5 ...J 0 $100.00 1-' c 0'1 \0 $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL 8 FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ TOTAL$

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DISTRICT 1/5 BUILDING BUDGET $220.00 $200.00 $-180.00 $160.00 $140.00t $131.26 en $12o.oo1 $116.37 ll:: ...J $100.00 0 I-' c -..J 0 $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL ASCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ IBI TOTAL $

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DISTRICT #6 BUILDING BUDGET $220.00 $200.00 $180.00 $160.00 $140.00 In $12o.oof $114.54 a: $111.37 ...J 0 $100.00 1-' c -..J 1-' $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ mil TOTAL $

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DISTRICT /17 BUILDING BUDGET $220.00 $200.00 $180.00 $16o.oo! $154.57 $144.22 I $140.00 en $120.00 0:: ...J 0 $100.00 ,_. Q -..1 IV $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ 1!3 TOTAL $

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DISTRICT 1/8 BUILDING BUDGET $220.00 $200.00 $180.00 $160.00 $140.00 $124.69 $118.70 en $120.oof $11o.odiiBII $110.0 :5 ...J 0 $100.00 ...... c -.J w $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ 11m] TOTAL $

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DISTRICT 1/9 BUILDING BUDGET $220.00 $200.00 $180.00 $16o.oo I $145.08 $140.00 If) $120.00 D:: :3 $1 oo.oof $102.27 _J 0 $93.00 $90.00 1-' c -..J $80.00 $60.00 $40.00 $20.00 $0.00 SCHOOL A SCHOOL B FUND TOTALS PER STUDENT DISCRETIONARY $ D DISTRICT$ l!i1ill TOTAL $

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APPENDIX C DISCRETIONARY FUND COMPARISONS PER BUILDING 175

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EL PASO COUNTY 1990 -1991 DISCRETIONARY FUND COMPARISONS PER BUILDING DISTRICT SCHOOL A SCHOOL B % DIFFERENCE 1 $12,995 $4,923 37.88% 2 $14,452 $7,350 50.86% 3 $8,958 $26,100 291.36% 4 $20,131 $16,174 80.34% 5 $40,000 $12,617 31.54% 6 $15,169 $14,359 94.66% 7 $12,723 $16,608 130.54% 8 $4,230 $5,265 124.47% 9 $33,176 $4,086 12.32% 176

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$40,000 $30,000 (!) z c ...J m a:: $20,000 LLI D.. 1-' If) a:: ...:I :5 ...:I ....1 0 c 2 EL PASO COUNTY 1990 1991 DISCRETIONARY FUND COMPARISONS 3 4 5 6 7 DISTRICTS WITH 2 OR MORE ELEM. SCHOOLS SCHOOL A D SCHOOL B 8 9

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APPENDIX D DISTRICT ALLOCATIONS FOR SUPPLIES AND EQUIPMENT 178

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EL PASO COUNTY 1990 -1991 DISTRICT ALLOCATION FOR SUPPLIES & EQUIPMENT (400 AND 500 SERIES) DISTRICT SCHOOL A SCHOOL B % DIFFERENCE 1 $96.00 $96.00 0.00% 2 $77.47 $78.99 1. 96% 3 $96.00 $96.00 0.00% 4 $154.00 $154.00 0.00% 5 $75.00 $75.00 0.00% 6 $86.50 $86.50 0.00% 7 $111.00 $111.00 0.00% 8 $110.00 $110.00 0.00% 9 $93.33 $90.00 3.75% 179

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APPENDIX E PER PUPIL FUNDING COMPARISON BY COUNTY 181

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EL PASO COUNTY 1990 -1991 TOTAL PER PUPIL FUNDING COMPARISON DISTRICT 1 2 3 4 5 6 7 8 9 SCHOOL A $130.56 $100.13 $152.34 $214.82 $131.26 $111.37 $154.47 $124.69 $145.08 SCHOOL B $109.83 $95.62 $167.70 $202.43 $116.37 $114.54 $144.22 $118.70 $102.27 182 % DIFFERENCE 84.12% 95.50% 110.08% 94.23% 88.66% 102.85% 93.36% 95.20% 70.49%

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$250.00 $200.00 1z LLJ c :::l $150.00 In r::t: LLJ Q. ..... en 0) 0::: $100.00 w ...J 0 c $50.00 $0.00 2 EL PASO COUNTY 1990 -1991 TOTAL PER PUPIL FUNDING COMPARISON 3 4 5 6 7 DISTRICTS WITH 2 OR MORE ELEM. SCHOOLS 8 9

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APPENDIX F EL PASO COUNTY AND OR REDUCED LUNCH PERCENTAGES BY SELECTED DISTRICTS 184

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EL PASO COUNTY 1990 -1991 % OF FREE AND REDUCED LUNCH COUNT PER BUILDING DISTRICT SCHOOL A SCHOOL B % DIFFERENCE 1 5.00% 19.00% 380.00% 2 5.00% 41.00% 820.00% 3 19.00% 34.00% 178.95% 4 2.30% 13.20% 573.91% 5 4.00% 86.00% 2150.00% 6 53.00% 60.00% 113.21% 7 19.00% 27.00% 142.11% 8 40.00% 66.00% 165.00% 9 12.00% 53.00% 441.67% 185

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90.007D 80.00% 70.00% 60.00% en 1z LLI c 50.00% ::::) t; ..... 1.&.. 40.00% CD 0 0'1 30.00% 20.00% 10.00% 0.00% 1 2 EL PASO COUNTY 1990 -1991 7D OF FREE AND REDUCED LUNCH COUNT 3 4 5 6 7 DISTRICTS WITH 2 OR MORE ELEM. SCHOOLS SCHOOL A D SCHOOL 8 8 9

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APPENDIX G DISTRICTS SAMPLED IN EL PASO COUNTY, COLORADO 187

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DISTRICTS STUDIED IN EL PASO COUNTY DISTRICT FALL 1990 # OF ASSESSED ENROLLMENT ELEM VALUATION SCHOOLS Academy #20 10,986 11 404,483,100 Chey. Mtn. #12 2,549 4 149,924,170 Colo. Spgs. #11 30,009 38 1,254,125,000 Falcon #49 2,488 3 72,858,670 Fountain #8 3,625 5 32,923,890 Harrison #2 9,666 12 265,383,370 Lewis-Palmer #38 2,417 3 92,035,930 Manitou Spring 1,127 2 47,111,440 #14 Widefield #3 6,933 9 112,762,940 188

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APPENDIX H QUALITATIVE INTERVIEW QUESTIONS 189

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Interview Questions How do you define fiscal equality or financial equity as it pertains to your position as an elementary school principal? What sources of discretionary funding are available to you in your building? Who is involved in earning the extra funds? How do you feel about the additional funds? How do you feel about not having additional funds to work with? How do you help teachers and or parents understand the differences in funding? Are there concerns from your central office about these fund-raising activities? 190

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APPENDIX I SEMI-STRUCTURED INTERVIEW GUIDE 191

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1990-1991 BUILDING BUDGETS DISCRETIONARY FUND COMPARISON ================================================= DISTRICT # SCHOOL PICTURES POP MACHINE BUILDING RENTAL P. T. 0. COMMUNITY GRANTS READING IS FUN OTHER RECYCLING FOUNDATION GRANT DISCRETIONARY $ TOTAL TOTAL STUDENTS AVERAGE $/STUDENT $ DISTRICT ALLOCATION PER STUDENT FOR INSTRUCTIONAL SUPPLIES TOTAL FUNDS AVAILABLE PER STUDENT SCHOOL A SCHOOL B $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $0.00 $0.00 ERR ERR $ $ ERR ERR 192

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