Financing higher student performance standards: the case of New York State

Many states have made performance standards the centerpiece of educational reform. Unfortunately, school aid systems have not kept up. Most aid system s ensure minimum spending per pupil instead of minimum student performance; that is, they fail to recognize that the cost of achieving a performance s tandard varies across school districts. This paper derives an educational c ost index and incorporates it into an aid formula designed to bring all dis tricts up to a performance standard. A district's performance can be moved toward a standard through a property tax rate increase, an efficiency incre ase, or increased state aid. In New York State, boosting efficiency to the current "best-practice" level would not bring large city districts even up to a minimal performance standard. In fact, these districts cannot achieve such a standard without large increases in state aid and local tax rates, a ccompanied by reforms that improve the productivity of teachers and adminis trators. (C) 2000 Elsevier Science Ltd. All rights reserved.