Education Finance and Accountability Program
(EFAP)
 

Education Cost and Development of School Aid Formulas

William Duncombe
John Yinger

Performance standards have been at the center of recent debate on educational reform. Many states have implemented new performance standards, often based on student test scores, and a district' state aid is sometimes linked to its success in meeting the standards.  National politicians have debated the merits of a nationwide testing program, which is a way to obtain comparable performance indicators across states. This focus on performance is designed primarily to promote better performance by holding schools accountable. The trouble is that a school's performance is influenced not only by the actions of its administrators and teachers but also by factors outside of its control, such as the nature of its student body. Thus a focus on performance is inevitably unfair unless it can somehow account for the impact on performance of factors that are outside the control of school officials. 

One of the objectives of this research has been to develop education cost indices that reflect the key factors outside a district's control, including resource prices, student and family composition, and district enrollment size.  Our cost indices are based on the results from education cost models that account for the impact of these external factors, and student performance levels and efficiency. Our second major objective is to show how these cost indices can be used in the development of school aid programs, which are designed to achieve various equity objectives. Given the recent focus of many states on developing minimum performance standards for students, we show how to develop "performance foundation formulas" for distributing basic operating aid to school districts. 

Policy Briefs:

• Policy Brief No. 21/2001. Fixing New York's State Education Aid Dinosaur: A Proposal. John Yinger (June). Introductory Letter. 
   

• Policy Brief No. 10/1998. Financing Higher Standards in Public Education: The Importance of Accounting for Educational Costs. William Duncombe and John Yinger (February). 
  
   

Papers:

• "Financing Higher Student Performance Standards" The Case of New York State," William Duncombe and John Yinger. Economics of Education Review, October 2000, pp. 363-386. *A single copy of this article can be downloaded or printed for your personal research and study.(©2000 Elsevier) Reprinted with permission from Elsevier Science.  Abstract  
  
  

• "Performance Standards and Educational Cost Indexes: You Can't Have One Without the Other," William Duncombe and John Yinger.  Equity and Adequacy in Education Finance: Issues and Perspectives.  Chapter 8 in Helen F. Ladd, Rosemary Chalk, and Janet S. Hansen (eds.), Reprinted with permission from Equity and Adequacy in Education Finance: Issues and Perspectives. (©1999 by the National Academy of Science). Courtesy of the National Academy Press, Washington, D.C. Abstract
  
  

• "Balancing Conflicting Policy Objectives: The Case of School Finance Reform," Jocelyn M. Johnston and William Duncombe. (©1999) Public Administration Review), 58(2): 145-158. This article may be used for research purposes, and no further distribution of this material is permitted without permission from the publishers. Abstract
  
  

• "School Finance Reform: Aid Formulas and Equity Objectives," William Duncombe and John Yinger. National Tax Journal, L1(2): 239-262. For reprint requests see http://ww.ntanet.org.   Abstract
  
  

• "Why Is It So Hard to Help Central Schools?" William Duncombe and John Yinger. Journal of Policy Analysis and Management, 16(1): 85-113.  Abstract
  
  

• "Alternative Approaches to Measuring the Cost of Education," William Duncombe, John Ruggiero, and John Yinger. Chapter 10 in Helen F. Ladd, (ed.), Holding Schools Accountable: Performance-Based Reform in Education.(©1996  The Brookings Institution. Reprinted with permission.) Abstract

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