Open enrollment’s losers

Research shows fiscal health doesn’t translate into school competitiveness

By Mary Beth Leone-Getten | Spring 2010

Despite Minnesota’s constitutional obligation to provide a “uniform” public school system for all, more of the burden of education has fallen to school districts in recent years. Theirs is a tall order: to ensure that every student, regardless of primary language or ability, meets state and federal learning standards in the face of dwindling funding. State aid has dropped 13 percent in inflation-adjusted dollars since 2003, and many districts are scrambling to close funding gaps through levy referendums. After years of doing more with less, the financial health of some Minnesota school districts is on shaky ground.

Minnesota’s system of open enrollment, which policymakers established to allow the education system to self-regulate, has created a system in which schools and districts must compete for students. Through open enrollment, parents can send their children to public schools outside their own district, with state aid following the pupil to their district of choice. Funding disparities have been one unintended consequence of this competition, with a direct impact on districts’ bottom lines.

The correlation may stop there, however. “Right or wrong, there is a tendency to presume that districts in good financial position are competitive and produce quality academic results,” says Nicola Alexander, associate professor in the Department of Organizational Leadership, Policy, and Development. She has researched what the dueling pressures of finances, competition for students, and measures of student achievement mean for 55 Twin Cities metro school districts.

Alexander examined the revenues, expenditures, operating position, and the debt structure of each district, as well as its ability to attract students. More competitive districts enrolled a higher percentage of resident students and attracted more non-residents. She also considered the intersection of fiscal health, competitiveness, and academic achievement as measured by the percentage of students who passed the basic skills test.

Perhaps not surprisingly, districts with relatively sound fiscal health showed a positive ability to attract and retain students to their jurisdictions and had higher passing rates for basic standards tests. Yet the relationship between fiscal health and competitiveness was less pronounced than the correlation between competitiveness and educational performance, suggesting that educational achievement (as measured by test scores) plays a bigger role in choosing a district. The converse is also true. A district can be fiscally well managed with little impact on its ability to draw students or on the number of students passing assessment tests.

Alexander’s study reveals that more districts are struggling financially. In 2000, districts spent $6.50 of every $100 raised on debt service. By 2006, that number jumped to $11.75 per $100. This shift could have far-reaching consequences.

“In the absence of adequate funds, a district might deal only with immediate needs, because they don’t have the finances to do otherwise,” Alexander explains. “If they end up borrowing money, in the end less resources will be spent directly on educating children, as more revenue will be used to make principal and interest payments.”

Even districts that have made tough financial decisions to “right size” continue to feel the ripple effect years later. In Alexander’s 2001 study, the Minneapolis district was among the lowest in fiscal health. Since that time, the district has closed schools and consolidated programs to meet strict budget constraints. Today Minneapolis boasts strong fiscal health scores but is still hemorrhaging students to nearby districts.

Ironically, nearby Edina, which has benefited from adding these students to its rolls, posts the same fiscal health scores as Minneapolis. Edina is among the most competitive districts, drawing more than 18 percent of its students from outside the district. Minneapolis retains just over 83 percent of its potential students, the lowest among the 55 metro-area districts.

During times of declining enrollment and flat funding from the state, the Mahtomedi district has greatly benefited from the 19 percent of its students who come from open enrollment. “Open enrollment has given us economic stability to maintain class sizes, teachers, programs, and services, all of which makes us attractive to families,” explains Mahtomedi superintendent Mark Wolak (Ed.D. ’99). “But it has its limits to keep the district fiscally sound. Ultimately, an increase in state aid is crucial to long-term stability.”

Retired Robbinsdale Area Schools Superintendent Stan Mack (M.A. ’77) saw his former district buoyed by an annual influx of 200 open enrollment students. However, after a failed 2007 referendum—and the program cuts that followed—these families scattered to neighboring districts.

In 2008, a district referendum passed; student numbers are slowly rebounding. Mack, who did his preparation through the college for licensures as director of special education, secondary school principal, and superintendent, cautions families against jumping ship as districts work to right size their schools. “The reality is that most school districts will need to close buildings as lower birth rates work their way through our schools,” explains Mack. “Moving kids when the grass seems greener somewhere else is short-sighted, since educational stability has been documented as a critical element for student success.”

Whether from fiscal challenges, low student achievement, or just the perception of problems, it’s difficult to shore up a district once an exodus of students has begun. This raises another area of concern: When there is flight from a district, the remaining students can be those most likely to require costly resources, such as special education and English language learning.

Alexander thinks her findings merit a closer look at the implications of open enrollment—especially on the students who do not have the ability to leave a struggling district.

“If you accept open enrollment as a market-based model, this assumes there are winners and losers,” explains Alexander. “My ultimate concern is this: What happens to the students who are left behind?”

For more information

Nicola Alexander, nalexand@umn.edu,

612-624-1507

Additional resources:

Alexander, N. (2008) A healthy balance: Fiscal condition and district competitiveness in the Twin Cities metropolitan districts of Minnesota. Journal of School Business Management. 20(2). pp. 34–43.

Koedel, C., Betts, J., Rice, L., et al. (2009) The social cost of open enrollment as a school choice policy. Working Papers Series. 09(10)

Lowen, J. T. (2008) An equal opportunity education? Connect. 2(2)

Thorson, G., and Anderson, J. The Minnesota miracle abandoned?

Changes in Minnesota school funding, 2001-2007. Rural Minnesota Journal 1(2)