More accountability needed for nearly $600 million aimed at low-performing students

Nearly $600 million a year ($551 million in fiscal year 2018) is sent directly to school districts, charter schools, and other educational organizations across Minnesota to pay for the educational needs of students who do not meet performance standards appropriate for their age. Referred to as compensatory education revenue, this state funding is one of two sources of a school funding stream called “basic skills” revenue, which is aimed at closing Minnesota’s stubborn achievement gap.

But according to a 2020 evaluation report from the Office of the Legislative Auditor, the statewide impacts of the revenue are unknown given the broad range of programs schools use the money for and the little detail provided on how school districts spend the revenue. School districts were also not reporting whether the programs funded by the revenue increased student achievement, as required statutorily. The OLA was directed to evaluate the aid in 2019 after legislators expressed accountability and transparency concerns.

Paired with the OLA’s findings is a Star Tribune investigation that also unearthed “insufficient detail and major inconsistencies in how school districts track compensatory revenue spending.”

The Star Tribune’s investigation found that school districts reported money spent only on three of the 12 categories, while other spending was generically assigned to expenses including salaries, materials or transportation expenses. Also, many districts reported spending vastly more or less than they had received in a given year.

For 80 percent of the compensatory revenue, data on how school district spending aligned with the aid’s allowed uses were not available, the OLA report continued.

In December 2019, the Minnesota Department of Education adopted new reporting codes to identify the different categories the money is spent on, such as remedial instruction in reading or math, study skill improvement, or extended school hours.

But more accountability is necessary, according to the OLA, to remedy the lack of transparency in spending and reporting of compensatory education revenue. Its recommendations included:

• The Minnesota Department of Education should evaluate additional methods for improving counts of students from low-income families.
• The Legislature should consider changes to mitigate the downsides of calculating compensatory education revenue based on counts of students from the prior year.
• The Minnesota Department of Education should monitor school district implementation of the department’s new practices for reporting spending of compensatory education revenue.
• The Legislature should repeal the requirement that all school districts dedicate a portion of compensatory education revenue to extended-time activities [such as, summer school].
• The Legislature should clarify the requirement for reallocating compensatory education revenue based on a school board-adopted plan.
• The Legislature should repeal the requirement that school districts report annually on whether compensatory education revenue increased student achievement.
• The Legislature should require school districts to report whether programs funded with significant amounts of compensatory education revenue are consistent with recognized best practices.

The revenue amount distributed to schools is based on the number of students qualifying for free or reduced-price lunch and the concentrations of these students at a school site. In Minneapolis, for example, the school district received over $57 million in compensatory education revenue in fiscal year 2018 to support its low-income students (64 percent of its total student body). But student performance on state-based tests shows Minneapolis students continue to struggle, with around 75 percent of its low-income students not  performing at grade level in either reading or math.

More disclosure and accountability is needed not only for the compensatory aid, but for education spending in general. As I discuss here during a Master Class on education in Minnesota, despite multiple streams of funding going into education, and spending increases year after year, educational disparities continue to plague our state.

Where are the results of all our spending?