A Review of the Mississippi Adequate Education Program Funding Process
Executive Summary
Introduction
PEER focused this review on the methodology of the Mississippi Adequate Education Program (MAEP) funding formula and the process the Mississippi Department of Education (MDE) uses to select school districts to calculate the funding base. PEER’s review sought to determine whether MDE’s method of selecting districts and analyzing costs produces a reasonable computation of the amount of funding each school district needs to provide an “adequate education” (defined in MISS. CODE ANN. Section 37-151-5 [1972] as meeting MDE’s Level 3 accreditation standards).
In making its determination, PEER reviewed:
how MDE chooses school districts for analysis;
how MDE derives costs of school districts; and,
how MDE uses derived average costs to allocate funds to school districts.
Description of the MAEP Fund Allocation Process
The MAEP funding formula requires that MDE first select representative school districts based on six factors, including the district’s accreditation level (districts included in the evaluation must be Level 3). MDE then calculates the base student cost of the representative Level 3 districts using instructional, administrative, operation and maintenance of plant, and ancillary support cost components. To be included in the averaging of costs, a district must be within one standard deviation of the mean for the applicable cost component. Finally, to compute district allocations, MDE multiplies the base student cost by the district’s ADA and makes adjustments for the number of at-risk students, the local millage contribution, and add-on programs such as transportation and special education.
This Exhibit contains a flow chart of the MAEP annual fund allocation process.
Conclusions Concerning the MAEP Allocation Process
With the information it has had available, the Department of Education has implemented a method of selecting districts and analyzing costs that produces a reasonable computation of the amount of funding each school district needs to provide an “adequate education.”
However, the formula does not account for school district efficiency, a factor that could, over the long term, affect funding levels. The formula does not allow for unusual growth or loss in districts’ enrollments. Also, neither state law nor departmental regulations require an accountability mechanism to ensure that at-risk funds added to district allocations are actually targeted for the at-risk student population.
Recommendations
MDE should develop a voluntary performance review pilot program for school districts that examines broad school district management and operational areas.
The four major areas should include administrative, instructional, operation and maintenance of plant, and ancillary support and under each category criteria should denote efficient and effective practices. Each area should have associated criteria to evaluate management and fiscal practices. For example, in the instructional area, MDE might examine district practices such as:
District administrators compare student academic assessments to state accountability standards and peer districts.
The district identifies and implements initiatives to address district-wide achievement gaps.
To ensure efficient use of resources, the district regularly compares central office staffing levels, including administrators and resource/curriculum specialists, to peer districts and/or state or national standards, and at a minimum, the district compares favorably using these standards.
For the first year of program implementation, the Legislature should appropriate funds for a management consulting firm to conduct three performance reviews. The review process should be monitored by PEER to finalize the scope of the review and provide feedback on the final report. The reviews should begin no earlier than November 1 of the school year and the results should be reported to the House and Senate Education committees and State Board of Education no later than July 1 of the preceding year.
In designing the efficiency review process, MDE should consider elements of Florida’s Best Financial Management Practices Reviews for schools. Florida law requires that each school district undergo one of these reviews once every five years. During these reviews, the Florida Office of Program Policy Analysis and Government Accountability and the Auditor General examine school district operations to determine whether schools are using the Best Practices to evaluate programs, assess operations and performance to identify cost savings, and link financial planning and budgeting to district policies.
Although Florida’s Best Financial Management Practices Reviews represent a strong model for incorporating efficiency reviews at the district level, that state’s process would be difficult to implement in Mississippi because of the number of districts in Mississippi and the amount of resources that would be required.
In order to ensure school districts are able to perform as a Level 3 accredited school, MDE should include in its budget request a proposal for the development of a growth reserve to meet the immediate needs of the districts having an increasing number of students. One possible option involves a growth model that examines growth over a five-year period and projects statewide needs. The model would include first performing a trend analysis on the last five years of ADA data to constitute MDE’s projection for growth. The model would provide a formula for calculating a growth projection for each of the 152 districts and statewide.
The total projected growth rate would establish a pool (growth reserve) that would fund fast-growing districts. The total projected growth could be multiplied by last year’s base student cost to calculate the growth reserve.
TOTAL PROJECTED GROWTH IN ADA X LAST FISCAL YEAR’S BASE STUDENT COST = GROWTH RESERVE
During the school year, if districts discover and document growth above and beyond their projected growth, they could request funds from the growth reserve. In the second and third month of the fiscal year, districts would calculate their ADA. If this exceeded MDE’s projected growth for a particular district, that district could request additional funds. The funds received from the growth reserve would be proportional to the district’s growth.
For example, if the state wanted to establish a growth reserve for FY 2004, average daily attendance data from FY 1998-FY 2003 would be used to perform a trend analysis. After the projected growth was determined, the department would calculate the growth reserve for the state using the base student cost from FY 2003. For example, if DeSoto County’s growth represented ten percent of the total growth, the district would be able to receive up to ten percent of the growth reserve.
In order to meet the needs of the at-risk population, it is vital that school districts design programs, materials, curricula, or educational resources with at-risk monies to ensure that the district and community needs for at-risk students are incorporated in the programs. MDE should take an advisory role in the process, similar to the assurance reviews the Special Education and Vocational-Technical offices perform, and assist the districts with implementation and evaluation. In addition, MDE should modify its accreditation system to include an assessment of the use of at-risk resources.