Education and the Public Interest: School Reform, Public Finance, and Access to Higher Education

EDUCATION AND THE PUBLIC INTEREST

EDUCATION AND THE PUBLIC INTEREST School Reform, Public Finance, and Access to Higher Education

EDWARD P. ST. JOHN University of Michigan, USA

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Contents

Figures and Tables

vii

About the Author and the Contributing Authors

xi

Acknowledgements

xiii

Introductio n

xvii

Part I. Public Policy and College Access Chapter 1. Globalization

3

Chapter 2. The Public Interest

25

Part II. State Indicators Chapter 3. Academic Access

57

Chapter 4. Financial Access

83

Chapter 5. Pathways and Markets

115

Part III. Student Outcomes: Reanalyses of the NELS Chapter 6. Access to Advanced Math

135

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Chapter 7. Enrollment

163

Chapter 8. Attainment

193

Part IV. The Public Interest Chapter 9. Improving Access and College Success

217

Chapter 10. Redefining the Public Interest

235

References

255

Index

269

Figures and Tables

Figure 2-1. Framework for assessing policy influence on educational opportunity: Linking education policy to educational outcomes

28

Figure 2-2. Pathways to College Network principles

44

Figure 2-3. A balanced access and attainment model

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Table 3-1. Trends in the implementation of high school reforms in the 50 states and the District of Columbia

59

Table 3-2. Trends in SAT scores, high school graduation rates, and college enrollment rates for high school graduates

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Table 3-3. Descriptive statistics for variables in the fixed effects analysis of SAT score, graduation rate, and enrollment rate averages across year for all U.S. states

62

Table 3-4. Three-step fixed effects regression for SAT combined scores in the states

67

Table 3-5. Three-step fixed effects regression for high school graduation rates in the states

69

Table 3-6. Three-step fixed effects regression for college enrollment rates in the states 71 Table 3-7. State reports on SAT scores: Change in average SAT scores 1990 to 2000 with policies significant in the fixed effects regression of combined SAT scores

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Table 3-8. State reports on change in graduation rates: Change in graduation rates 1990 to 2000 with policies significant in fixed effects regression

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Figure 4-1. Framework for assessing the impact of public finance strategies on postsecondary attainment

85

Table 4-1. Independent variables used in analysis of high school graduation rates

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Table 4-2. Independent variables used in analysis of college enrollment rates by high school graduates

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Table 4-3. Fixed-effects regression: The influence of population characteristics and state finance strategies on public high school graduation rates in the 1990s

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Table 4-4. Fixed-effects regression: The influence of population characteristics and state finance strategies on college enrollment rates in the 1990s

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Table 4-5. State reports: College enrollment rates, state grant funding, and public institution tuition and funding

95

Table 4-6. Estimated costs and benefits of meeting the equity standards in funding for need-based grants: Baseline, low-range, and high-range estimates

101

Figure 4-2. Estimation of costs for meeting the minimum equity standard in need-based state grants 102 Table 4A-1. Simulation of costs and benefits of meeting the minimum equity standard: State-by-state analysis—Baseline estimate 105 Table 4A-2. Simulation of costs and benefits of meeting the minimum equity standard: State-by-state analysis—Low-range estimate 108 Table 4A-3. Simulation of costs and benefits of meeting the minimum equity standard: State-by-state analysis—High-range estimate

111

Table 5-1. National percentage of FTE enrollment in public four-year, public two-year, private nonprofit, and private for-profit colleges

121

Table 5-2. Fixed effects regression analyses of impact of state school reform on college destinations: Public four-year, public two-year, private nonprofit, and private for-profit

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Table 5-3. Fixed effects regression analyses of the impact of public finances on college enrollment rates by type of institution: Public four-year, public two-year, private nonprofit, and private for-profit

126

Figures and Tables

ix

Table 6-1. Specification for individual-level variables in multilevel analyses of preparation

141

Table 6-2. State-level variable coding for two-level model used to analyze preparation

142

Table 6-3. Descriptive analysis of college preparation: All students

146

Table 6-4. Two-level multinomial logistic regression analysis of college preparation: All students 149 Table 6-5. Descriptive analysis of individual-level variables for analyses of college preparation: Low-income students 152 Table 6-6. Two-level multinomial logistic regression analysis of college preparation: Low-income students 154 Table 6-7. Descriptive analysis of individual-level variables related to college preparation: Middle-income students

156

Table 6-8. Two-level multinomial logistic regression analysis of college preparation: Middle-income students 157 Table 6-9. Descriptive analyses for individual-level variables related to college preparation: High-income students

159

Table 6-10. Two-level multinomial regression analysis of college preparation: High-income students

160

Table 7-1. Variable coding for analyses of enrollment and college choice using NELS 168 Table 7-2. Descriptive statistics on enrollment for all students

170

Table 7-3. Two-level logistic regression analysis of enrollment for all students

172

Table 7-4. Two-level multinomial logistic regression analysis of college choice for all students 174 Table 7-5. Descriptive statistics for enrollment for low-income only

176

Table 7-6. Two-level logistic regression analysis of enrollment for lowincome students 178 Table 7-7. Two-level multinomial logistic regression analysis of college choice for low-income students 180 Table 7-8. Descriptive statistics for enrollment by middle-income students

182

Table 7-9. Two-level logistic regression for enrollment by middle-income students 183

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Table 7-10. Two-level multinomial logistic regression analysis of college choice for middle-income students 184 Table 7-11. Descriptive statistics for enrollment by high-income students

186

Table 7-12. Two-level logistic regression for enrollment of high-income students 188 Table 7-13. Two-level multinomial logistic regression analysis of college choice: High-income students 189 Table 8-1. Variable coding for analyses of attainment using NELS

196

Table 8-2. Descriptive statistics for the analysis of degree attainment: All students

200

Table 8-3. Two-level multinomial logistic regression analysis of degree attainment: All students

204

About the Author and the Contributing Authors

Edward J P. St. J John Edward P. St. John is Algo D. Henderson Collegiate Professor at the University of Michigan Center for the Study of Higher and Postsecondary Education. He recently published Refinancing the College Dream: Access, Equal Opportunity, and Justice for Taxpayers (Johns Hopkins University Press, 2003) and co-edited Incentive-Based Budgeting in Public Universities (Edward Elgar, 2002) and Reinterpreting Urban School Reform: Have Urban Schools Failed, or Has the Reform Movement Failed Urban Schools? (SUNY Press, 2003). Professor St. John is series editor for Readings on Equal Education (AMS Press, Inc.) He holds an Ed.D. from Harvard University Graduate School of Education and M.Ed. and B.S. degrees from the University of California, Davis.

Contributing AuthoJrs Anna S. Chung is a Ph.D. candidate in economics at Indiana University Bloomington and research associate for the Indiana Project on Academic Success. Her dissertation research on students in for-profit postsecondary institutions has been supported by grants from the American Educational Research Association and the National Association of Student Financial Aid Administrators. She has also been awarded the Cameron Fincher Fellowship by the Association for Institutional Research for the best dissertation proposal of the year. Her other research on the economics of education xi

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focuses on the effects of public policy on access to higher education, labor market outcomes for students, and utilizing economic indicators in assessment of education policies. Choong-Geun Chung is statistician at the Center for Evaluation and Education Policy (CEEP) at Indiana University Bloomington. His research interests are statistical models for school reform, access and persistence in higher education, and issues in minority representation in special education. Glenda Droogsma Musoba is assistant professor of education at Florida International University. Previously she was policy analyst and associate director of the Indiana Project on Academic Success at Indiana University. She has a Ph.D. in higher education from Indiana University. Her research interests include higher education access and equity, persistence in higher education, education policy, K–16 education reform, and social justice. Ada B. Simmons is executive associate director of the Center for Evaluation and Education Policy (CEEP) at Indiana University Bloomington. Prior to her current appointment, she was Research Analyst in the campus’s institutional research office. Her research focuses on issues of educational equity, such as minority disproportionality in special education and access and attainment of underrepresented groups in higher education. She holds an Ed.D. from Indiana University.

Acknowledgements

This book would not have been possible without financial support from Lumina Foundation for Education along with the support of professional staff and graduate students at Indiana University. In 2002 I initiated two projects for Lumina Foundation that provided the basis for the analyses. Project funding only provided the opportunity for research, however, so the additional support from graduate students, support staff, and professional colleagues was crucial. The financial indicators project, initiated at the request of Lumina Foundation for Education, supported development of state indicators, used in part II, as well as the reanalysis of the National Education Longitudinal Study (NELS), presented in part III. Derek V. Price, Jerry S. Davis, and Robert C. Dickeson of Lumina Foundation for Education provided reviews and guidance for the indicators study. The advisory panel members for the indicators analyses included in part II were Derek V. Price, Jerry S. Davis, Jill Wohlford, and Deborah Bonnet (all of Lumina Foundation), Cheryl Blanco (Western Interstate Commission for Higher Education), Brian Fitzgerald (Advisory Committee on Student Financial Assistance), Susan Kleeman (Illinois Student Assistance Commission), Donald Heller (Center for the Study of Higher Education at Pennsylvania State University), Paul Lingenfelter (State Higher Education Executive Officers), Tom Mortenson (Pell Center for the Study of Opportunity in Higher Education), Laura Perna (University of Pennsylvania), Kenneth Redd (National Association of Student Financial Aid Administrators), Scott Thomas (Institute for Higher Education-University of Georgia), and Nick Vesper (State Student Assistance Commission of Indiana). Their guidance for and reviews of analyses included in this book are appreciated. The opinions expressed are xiii

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those of the author and do not necessarily represent policies or positions of Lumina Foundation for Education or members of the project advisory panel. In collaboration with the Indiana Commission for Higher Education (ICHE), Indiana University received funding for a study of academic preparation and college success that used national- and state-level databases to examine the pathways to college. This project enabled the research team to develop a set of indicators for state education policies that proved important in analyses presented in parts II and III of this book. Stanley Jones (ICHE Commissioner) provided the vision for the study of academic preparation and college success, and Jeffrey Stanley (Assistant to the Commissioner) provided expert guidance on the execution of the study. In addition, Ontario Wooden and Jesse Mendez provided analysis support on the financial indicators studies. Their hard work and thoughtful comments are greatly appreciated. JingJing Lou, a graduate student in policy studies at Indiana University, assisted with the review of the literature. She conducted reviews as part of an independent reading course and shared them with me. I am grateful for her goodwill and support. Amy Fisher, a graduate student at the University of Michigan, assisted with the development of the index. Colleagues at Indiana University and the National Advisory Committee on Student Financial Assistance were also very important in the formulation of the strategy used for these analyses. Don Hossler, Professor of Higher Education at Indiana University, not only shares my interest in student outcomes but he provided an outstanding sounding board for me as I pondered issues for this book. William Becker, Professor of Economics at Indiana University, has been a good critic as well as a friend. Bill’s probing critiques always challenge me to think through topics more thoroughly. Brian Fitzgerald, former Staff Director for the Advisory Committee of Student Financial Assistance, and William Goggin, Economist and current Staff Director for the Advisory Committee, encouraged me to undertake a reanalysis of the NELS. They argued that there had been serious statistical errors in the official analyses published by the National Center for Education Statistics and that a reanalysis was merited. Glenda D. Musoba, Choong-Geun Chung, Ada B. Simmons, and Anna S. Chung were collaborators and are acknowledged as chapter co-authors in parts II and III. Glenda was lead analyst for studies of academic preparation and access (chapter 3), while Choong-Geun was the lead analyst for the analyses of financial access (chapter 4). Anna collaborated on reanalyses of financial and education policy indicators (chapter 5) and also collaborated on the reanalyses of NELS in part III. Ada B. Simmons contributed to the simulation analyses in chapter 4. In addition, Choong-Geun completed preliminary statistical analyses of NELS for part III before he accepted a

Acknowledgements

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position with the Center for Evaluation and Education Policy at Indiana University. He was co-author of an earlier version of these analyses published in the Readings on Equal Education series. Anna collaborated on additional analyses for these chapters and reworked the entire set of analyses in part III as part of our response to reviewers. Leigh Kupersmith and Sarah Martin provided technical support in editing and manuscript production. Leigh was Publications Coordinator at the Indiana Education Policy Center when these projects were undertaken and assisted with many of the original reports. Sarah joined the Indiana Project on Academic Success as Publications Coordinator in May 2004 and provided support in every phase of manuscript production, from editing through development of references. This support is sincerely appreciated. Finally, the Center for American Progress funded a study, published as Affordability of Postsecondary Education: Equity and Adequacy Across the 50 States, that also supplied information for this book. Carmel Martin and Cindy Brown provided thoughtful reviews of that paper. They requested state-level analyses of the financial indicators database that proved a very useful step in my effort to build an understanding of finance policy. I also extended their approach to the analyses of school reform policies in this book. This support is gratefully acknowledged. Edward P. St. John Ann Arbor, Michigan

Introduction

In the U.S. as in many other countries, the goal of improving elementary and secondary (K–12) education as preparation for college has taken center stage in the debate about expanding college access. Yet voter resistance to taxation has made it difficult to finance school reform and to expand higher education using older progressive finance schemes. New strategies have emerged in education reform and public finance that focus on accountability and privatization. Policy indicators—including changes in test scores, school graduation rates, and college enrollment rates—are often used to rationalize these new strategies. Unfortunately, there has been a paucity of systematic assessments that examine whether the implemented policies and changes in public funding have resulted in improved student outcomes. This near void in research on the effects of education reforms and public finance strategies means that the U.S. and most other countries could be pursuing flawed reform strategies. Since a complex and diversified set of reform strategies is being used across countries—and across states in the U.S.—we can reasonably expect that different policies have different effects on outcomes. Thus, a sophisticated evaluation approach is needed to generate information about policy indicators and student outcomes that can inform policy deliberations. Detailed analyses that consider the effects of policies on different student outcomes are needed to complement state and national comparisons. Although the evaluation methods are necessarily complex and multileveled, it is necessary to find relatively simple ways to communicate vital information from research findings to policy makers and voters. Education and the Public Interest: School Reform, Public Finance, and Access to Higher Education introduces and tests a new framework for xvii

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assessing the impact of public policies on student outcomes. Chapter 1 reviews global developments in education and higher education finance. College students in the U.S., like students in most other countries, have faced higher tuition charges with increased availability of private capital in the form of student loans to pay a portion of college costs. Like most other developed countries, the U.S. has been in the midst of a period of education reform that emphasizes accountability. The great variation in accountability policies across the states in the U.S. during the 1980s has made it possible to assess the effects these policies have had on policy indicators and student outcomes. While privatization is being used internationally, student debt alone is probably not a sufficient means for equalizing college opportunity. The substantial variations in tuition charges and in state funding for grant programs (need- and merit-based) make it possible to assess the effects of these policies within a national context that emphasizes loans. Chapter 2 examines the strategies used in states in relation to the public interest in higher education and provides a logical basis for assessing the effects of the new accountability and finance policies. John Rawls’s theory of justice, adjusted for the pragmatic nature of pluralist society, provides a basis for examining (1) the basic right to a quality education, an aim of the accountability movement; (2) equal rights for access to quality education for diverse racial/ethnic and income groups; and (3) the public cost of diverse funding strategies relative to both basic and equal rights. Rather than merely using trend data to rationalize policies that may or may not influence their intended outcomes, part II demonstrates an analytic approach that uses state indicators to assess linkages between policies and educational outcomes, an approach that could be adapted to the comparative study of national systems. The analyses of state-level indicators control for demographic characteristics, the structural features of state systems of education, and tax rates in assessing the effects of K–12 policies and state finance policies on educational outcomes. Chapter 3 examines the associations between state education policies on indicators related to academic preparation. While many of the new K–12 policies—e.g., higher math standards, more course requirements, and exit exams—are said to be related to higher achievement, as measured by test scores (i.e., state averages on SAT exams), these same policies were also related to increases in dropout rates. In spite of rhetoric to the contrary, the new reforms have been largely unrelated to high school graduation rates. These contradictory effects are troubling, given that improvements are needed in both high school graduation and college enrollment rates. Chapter 4 examines the relationship between pricing strategies—tuition charges, along with state funding for need-based and non-need (merit) grants—and both high school graduation rates and college enrollment rates. Again, the findings only partly support

Introduction

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the rationales that have been used to argue for accountability and privatization. While funding for both non-need grants and need-based grants was associated with improved college enrollment rates in the 1990s, funding for non-need grants was also associated with reductions in high school graduation rates, contradicting claims about the indirect effects of merit aid on educational improvement (e.g., Bishop, 2002, 2004). Proponents of the academic preparation rationale—the set of beliefs that underlie accountability reforms—have not only overlooked the role of needbased financial aid in improvement of student outcomes, but they have incorrectly specified the nature of the access challenge. The structural constraints on state systems—especially the limited capacity of two-year and four-year colleges—are not only related to the extent of access but also create multiple pathways to college. Chapter 5 uses the notions of academic pathways and markets to reanalyze the indicators database. The results further illuminate the complexity of the college access challenge in the U.S. Specifically, the implementation of honors diplomas was negatively associated with enrollment in in-state public colleges. However, offering Advanced Placement courses was associated with enrollment in public fouryear colleges. At the same time, high tuitions in public colleges, coupled with high grants, were associated with the development of private markets for four-year colleges, which extended opportunity by expanding capacity. At the very least, there is a need for better coordination of academic and finance policies in the states. However, to understand more fully the nature of the problem, it is crucial to examine how state policies relate to student outcomes, using individual data. Part III undertakes a reanalysis of the National Education Longitudinal Study (NELS), which tracks students in the high school class of 1992 from middle school, with the 1988 base survey, through the college years, with the last follow-up in 2000. This is the most recent longitudinal survey tracking students from high school into college, and it has been used previously to build a rationale that advanced math courses taken in high school are the best predictors of college success (Adelman, 1999, 2004; NCES, 1997a, 2001c). Research using NELS has been used to argue for reform agendas that emphasize transforming comprehensive high schools into college preparatory high schools in the U.S. (e.g., Kazis, Vargas, and Hoffman, 2004; Pathways to College Network, 2004). Our analyses examine the relation between K–12 reform and preparation in advanced math as well as the effect of public funding strategies on access and persistence. These chapters were written for a general audience with a modest understanding of statistics as well as for technical readers. In addition to providing descriptive background, these chapters use two-level models to examine the effects of

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individual background and experience (level 1) and state policies (level 2) on a series of student outcomes. First, we examined the impact of K–12 policies on whether students completed advanced math courses (chapter 6). Given the emphasis on high school math in reports by the National Center for Education Statistics (NCES) and the American Council on Education (ACE), it was important to consider whether state education policies—often rationalized based on the assumption that they would improve math achievement—actually influenced course-taking behavior and/or high school dropout. Students who completed calculus or trigonometry/precalculus as their most advanced course were compared to students who did not have this level of math attainment. We found only modest associations between some of the new policies and completion of calculus when the entire population was considered, but no significant relationships with completion of trigonometry/precalculus. At a prima facie level this provides very weak support for the accountability regime. Presumably, requiring more math courses for graduation and raising standards for math education are associated with the availability of advanced math, at least calculus. The reanalysis of NELS also examined the statistical relationships of state funding for financial aid and tuition charges by public institutions in states with college enrollment (chapter 7), variables omitted from the NCES analyses (Becker, 2004; Heller, 2004). To overcome some of the selection bias included in these earlier studies, we included all high school students in the analyses. Students who had not taken advanced math, had not taken SAT exams, or had not even graduated from high school were included in the analyses along with students who had taken advanced math—because all types of students do have the opportunity to enroll in college, at least in some circumstances. Controlling for student background, we examined taking math courses, taking entrance exams, scores on entrance exams, and graduating from high school for associations with enrollment and college choices. As expected, we found an association between advanced math and college enrollment, especially enrollment in public and private four-year colleges. However, whether or not students graduated from high school also had a substantial statistical association with college enrollment, especially with enrollment in four-year colleges. Thus, if the K–12 reforms have an influence on high school dropout rates as well as on access to advanced math for some groups of students, then the consequences of the new policies are contradictory. The analyses of access and enrollment (chapter 7) also examined the relationships between state finance policies and college enrollment. Consistent with the indicators analyses of generations of research on the economics of higher education, these analyses reveal a positive relationship

Introduction

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between need-based grants and college enrollment. Also consistent with the market analyses using policy indicators, we found that high tuition in public colleges and high state grants were associated with enrollment in private colleges. Thus, the expansion of the private colleges was influenced by finance policies in the states. As a final step in the reanalysis of NELS, we examined persistence and degree attainment (chapter 8). Consistent with the NCES studies (Choy, 2002; NCES, 2001c), we found an association between completing advanced math in high school and eventual attainment of four-year and advanced degrees. However, we also found that after eight years low-income students had significantly lower odds of completing degrees and significantly higher odds of being still enrolled, even when controlling for high school math. The national system of finance created unequal odds of college success across incomes, controlling for high school preparation and other social and demographic factors. Thus, contrary to the findings of prior, flawed research, (a) advanced math in high school was not the primary determinant of college success and (b) there were substantial inequalities in educational attainment across income groups, after controlling for preparation. As a conclusion (part IV), I reconsider the access challenge along with the public interest in education. The challenge of improving high school preparation, access to higher education, and degree attainment is far more serious than previously portrayed in official statistical reports on the subject (see chapter 9). Family income and public finance play much more substantial roles in preparation than previously assumed in NCES studies. Further, the education reforms implemented in the 1990s missed the most critical aspect of the access challenge—equaling opportunity for low-income students. The gaps in opportunity were widened by the academic reforms, not narrowed. However, this is not to argue for casting these reforms aside. Rather, it is time to undertake serious reflection on the status of education and finance policies and to achieve better coordination between them— coordination that addresses inequalities created or made worse by 20 years of problematic reforms. Education and the Public Interest uses a new framework for evaluating education and finance reforms (chapter 10), one that could be adapted for comparative studies of countries. In particular, the literature on social justice merits consideration in efforts to evaluate and rethink education and public finance policy. If the education reforms now under way are setting a new standard for basic education, with preparation in math and other subjects sufficient for college enrollment, then equal access to quality schooling becomes more, not less, important. If such a basic standard is needed for economic citizenship—to be capable of supporting a family through a combination of education and employment—then the duty to improve

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education in ways that are fair and just, providing this basic right to all, is imperative. The American system of education has fallen farther from this standard as a consequence of the so-called “excellence” movement, rather than coming closer to the espoused goals of the movement. Is it not now time to rethink and craft education and finance policies to meet this just standard for educational improvement? The concluding chapter of this book summarizes lessons learned and makes a few recommendations for consideration by voters and policy makers.

I

PUBLIC POLICY AND COLLEGE ACCESS

Chapter 1 GLOBALIZATION

Higher education is in the midst of a massive transformation in its structure and finance in the United States, as it is globally. The old system of education was mostly publicly funded and controlled, with privately funded schools and institutions of higher education enrolling a small percentage of students. This system of public education, created in the U.S. in the 19th century, has been privatizing during the past two decades and appears to be moving rapidly, if variably, toward a new structural model. The new system of finance uses high tuition along with student loans and grants to stimulate market response. Increasing use of vouchers and charters in K–12 education mirrors the movement toward privatization of public higher education in the U.S. There has also been a push toward increased government accountability in both K–12 and higher education, changing the institutional obligations for receiving public support. The philosophy of the emerging system differs from the progressive values of earlier reforms that made education a mass enterprise. In addition to promoting the values of individual discretion and choice, the new reform advocates also argue for lower taxes. The notion that educating students in the new system will cost taxpayers less than the older system underlies many of the arguments for reform, especially those for the privatization of higher education. The U.S. is not alone in this transformation. Indeed, most social democracies are undergoing a similar transition in both education and social welfare. While it is vital to distinguish education from welfare, given the fact that investment in education would be needed even if there were no need for welfare,1 it is interesting that privatization is taking place in both welfare and 1

In a true socialist state—of which there is no historical example—all citizens would contribute to the social good through their work, while society would provide equal educational opportunities for all of its citizens. While none of the democratic societies

3

4

Chapter 1

education, both of which are humanitarian concerns critical in civil societies. My argument is that the intent to have a more just society should be maintained, even if the structure of education is transformed along with the means used to finance it. In fact policy makers in most countries should ponder how to retain the public interest in education in the face of the globalization that is driving privatization. In one form or another privatization of higher education is sweeping the globe. In the social democracies of North America, Europe, and Australasia, education systems are moving toward high tuition and high loans as a means of public finance that shifts more of the cost burden to families, while K–12 education systems are experimenting with charters, vouchers, and other methods of introducing market forces, with full or partial support (Henry, Lingard, Rizvi, and Taylor, 2001). It should be noted that most of the voucher experiments in the U.S. provide only partial support for high-need students (Metcalf and Paul, 2006), expecting charity from private schools to cover the remaining costs (St. John and Ridenour, 2001). In Russia, China, and other former Soviet countries, there is also rapid movement toward privatization of higher education and decentralization of control of both K–12 and higher education (Rizvi, in press). And developing countries face difficult choices about creating educational systems during a period when the market model dominates the international literature on education. Education and the Public Interest undertakes a critical examination of the globalization process in education, using a comparative study of U.S. states.2 While there has been a general pattern of movement toward privatization and accountability in the U.S., during the 1990s there was a great deal of variability in the rate and pattern of change across the states. This variability, coupled with the relatively large number of states (50), means that other nations can learn from the U.S. case, just as the states can learn from a comparative analysis. As background, I describe my approach to this comparative study of the states and how it can inform policy decisions in education and public finance in other nations as well as in the states.

2

reached this point of development in the 20th century, there was substantial evidence of movement in this direction before the new conservative turn in the last two decades of the century (Huber and Stephens, 2001). In the remainder of this book, “states” refers to states in the United States and “nations” refers to nation states.

1. Globalization

1.

5

GLOBALIZATION AND THE PUBLIC INTEREST

Policy debates about education in the U.S. tend to be domestically focused. Seldom do public officials discuss international educational trends in political campaigns, unless it is to bash U.S. schools for American students’ low test scores. Low achievement has been central to the education reform rationale in the U.S. since the publication of A Nation At Risk (National Commission on Excellence in Education, 1983). Many American readers would be surprised to learn how similar developments in the states are to global patterns in education and public finance. To understand these patterns, we should also consider globalization in trade and social welfare before focusing on the specific issues facing K–12 and higher education.

1.1

Globalization in economic and social policy

Globalization can be understood in the U.S. as an economic development involving corporations in an international labor market, changes in taxpayer support for social welfare and education, and the end of the Cold War. As corporations internationalize, they move more production jobs out of the U.S., along with the revenues that are no longer taxed in this country (Tabb, 2002). Princeton economist Robert Gilpin (2001) defines the global political economy as “the interaction of the market and such powerful actors as states, multinational firms, and international organizations” (pp. 17-18), a definition that elevates the corporation to the level of the nation state. He concludes his extensive treatment of the political economy with an argument about its governance: With the end of the Cold War and the triumph of neoliberalism, the purpose of governance seemed clear again; for most American officials, business leaders, and professional economists, the purpose of governance was to facilitate free trade, freedom of capital movements, and unrestricted access of multinational firms to markets around the globe. The global economy, according to this position, should be governed in accordance with policy prescriptions of neoclassical economics, and its rule should be based on market principles. (pp. 400-401) In a very real sense, this process of elevating the role of multinational firms implicitly to equal status with nation states is not unrelated to the end of the Cold War and the end of the neocolonial period. Historically most analysts in higher education compared national systems of education and social welfare based on the national origins of those systems, drawing parallels between systems (Clark, 1978; Kerr, 1978). During the earlier period, developing countries followed the developmental paths installed by

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the colonizing countries. When these systems were nationalized upon independence, the historic patterns usually remained. In the older system, the nation state still dominated the discourse because the role of the private economy was subjugated to a broader international conflict between socialist and capitalist systems. As the world entered the post-Cold War period, private corporations wielded more power because they were thought to be the economic engine that won that war. However, this rendition of the global period overlooks the roles social welfare and education played in the Cold War. Indeed, Western societies were better developed socially—and had better foundations for social justice—than the Soviet Socialist Republics. Ironically, the communist nations were founded on socially progressive principles but did not develop according to these intents, at least not as well as did the social democracies. However, the shift in the global period of economic development put a new economic system in place that devalued social welfare, emphasizing privatization of the formerly public systems (Huber and Stephens, 2001). The shift also reconceptualized the roles of taxes and debt in economic development and social agency (i.e., the public funding of social welfare and education). In the new global model, debt became a major means to generate revenue to fuel economic development in poor nations. The unevenness of tax revenues in indebted nations created problems with repayments at the same time developed nations reduced tax rates in favor of the wealthy and the private corporations (Stiglitz, 2002; Tabb, 2002). Some argued that the use of debt rather than international aid to promote development accentuated global inequalities (Tabb, 2002), while others argued that greater fiscal responsibility was needed in developed and developing nations (Stiglitz, 2002). Regardless of the reason, the role of debt changed after the Cold War. The former Soviet nations became indebted to Western nations through excessive borrowing from international agencies, while the U.S. failed to deal with its deficits and also amassed excessive debt. There was a bizarre parallel between the view toward taxes—with the unwillingness of voters in neoliberal democracies to be taxed at historic rates—and the view of the entitlement of nations, including the U.S., to build international debt. Regarding Russia’s failure to collect taxes and pay its debts, Joseph Stiglitz, winner of the Nobel Prize in economics and member of President Clinton’s administration, argues: And just as those who owe taxes must pay what they owe, those who owe money to banks—especially the banks that are now in the hands of government as a result of defaults—must be made to pay those debts. Again, this may entail an effective renationalization of the enterprise, a renationalization to be followed by a more legitimate privatization than had occurred previously. (2002, p. 191)

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This argument about taxes, debt, and responsible privatization has implications far beyond the former Soviet republics. Indeed, it has implications for privatization of public services and education in the U.S. While comparative scholars have examined transitions in the welfare nations,3 the linkage to globalization and higher education is generally less well understood. There is a trend in the U.S. and other Western social democracies toward privatization of welfare and social services, with private companies providing more services and government providing fewer services (Huber and Stephens, 2001). This not only places public service in the hands of corporate entities that are more concerned with profit than with meeting human needs, but reduces the public sector constituents who would support social welfare as it was known in the mid-20th century. There has been a strong push toward moving people from welfare to employment in the U.S. as well, a rationale that fueled changes in the welfare system in the late 1990s. These changes in the social safety net both accelerate income redistribution from lower- and middle-income families to wealthy families and increase demand for higher education (Phillips, 2003).

1.2

Privatization and taxation

When we examine U.S. higher education in isolation of global patterns of change it is easy to attribute privatization of public higher education to changes in political ideology (St. John, 1994, 2003). In addition, a reading of the broader literature on political economies reveals the link between the new global pattern of public finance—including the failure to stabilize tax revenues—and the transition of formerly public institutions. Unstable tax revenues and fees for service in education are tightly linked: “Most countries, facing severe budgetary constraints, have followed the Washington Consensus advice that fees would be charged. Their reasoning: statistical studies showed that small fees had little effect on enrollment” (Stiglitz, 2002, p. 76). Increasing fees for service in education became an acceptable alternative to raising taxes. While there was little negative enrollment effect, as measured by the rate of enrollment by traditional-age students, there was increased inequality in enrollment opportunity, at least in the U.S. (St. John, 2003). Both the changes in social welfare and in the financing of public higher education are appropriately viewed as part of the globalization process. The push for lower tax rates in the last part of the twentieth century also fueled the wealth redistribution. Lower tax rates not only concentrate 3

The literature more commonly refers to “welfare states.” However, since this book is using the term “states” to refer to state governments, it is more appropriate to refer to nations as such.

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wealth, but they reduce the resources available for social services and education. Funding for higher education has been easier to cut because it has been possible to develop the private market. There are substantial returns to individuals from their investments in higher education (Becker, 1964; Paulsen, 2001a). However, it is not as easy to reduce public social welfare and K–12 education because there is not the same type of private market for services, nor are the returns sufficient to charge high fees for services, especially to low-income recipients. So privatization of services was rationalized on the efficiency of the private sector, even though this means of delivery usually did not reduce costs (i.e., public colleges spend more per student in spite of the privatization process [St. John, 2003]). President George W. Bush has pushed for spending more public social welfare dollars in “faith-based” organizations and has introduced legislation toward this end. Before the welfare system emerged in the U.S., churches played a more substantial role in providing social services. However, prior to the Great Depression of the 1930s, there was no program that addressed poverty, and large numbers of American citizens lived in poverty and hunger. The private system of welfare, including services provided by nonprofit religious organizations, was inadequate, as became abundantly evident during the Depression. President Roosevelt began the development of the social welfare safety network as a means of ending the Great Depression. The return to private welfare—the “thousand points of light” of G. H. W. Bush (1988) and the new strategies of G. W. Bush—could move American society back to this earlier period.

1.3

Globalization and schools

There is a growing emphasis internationally on testing in K–12 education (OECD, 2001) and on school choice (Henry et al., 2001), suggesting some parallels between the issues facing K–12 reform in the U.S. and in other countries. Since publication of A Nation At Risk, the United States has been leading a global movement toward privatization and accountability in both K–12 and higher education (Henry et al., 2001). But how is this global leadership reflected in the patterns that typify the privatization of education related to the outcomes of education? The Organization for Economic Cooperation and Development (OECD) (2000, 2001) provides appropriate indicators for comparison for member countries that help define the status of participation, quality, and finance in developed countries. The OECD (2001) compared member nations on attainment across levels of education. Participation rates for early childhood education (for children under three years of age) varied from 100 percent in France to less than 10 percent in Ireland, Korea, Switzerland, and Turkey. The U.S. fell below the

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OECD average on this indicator. In contrast, the U.S. ranked highest on the percentage of 50- to 54-year-olds with upper secondary education but fell behind four other countries on the percentage of 25- to 29-year-olds with this level of attainment. This illustrates an erosion of opportunity to attain a high school education in the U.S. compared to other OECD nations as well as gains in educational attainment by other countries. More troubling, compared to other OECD countries, the U.S. ranked below all but one country (Poland) in literacy rates and was worst on underachievement in literacy. Thus, on one of the most fundamental measures of achievement, the U.S. was a remarkable underachiever. Achievement problems in the U.S. are not limited to literacy, however. The U.S. ranked above the OECD mean in fourth-grade math but significantly below the mean in eighth-grade math, indicating erosion in the U.S. standing in math between elementary and middle school. In science and math attitudes and achievement, the U.S. ranked relatively high on math attitudes in fourth grade but low on math achievement. Conversely, the U.S. ranked relatively low on attitudes toward science in eighth grade, as it did on achievement. In sum, while the U.S. may lead a charge toward privatization and accountability in education, levels of educational achievement and attainment in the U.S. do not reflect well on this leadership role. The OECD (2000) also provides comparative statistics on public spending on education. As a percentage of the GDP spent on education at all levels, the U.S. ranked third behind Korea and Sweden in 1997. However, the U.S. ranked below about half of the OECD countries on public expenditures on education. Only Korea was farther down the path to privatization, with both a higher total percentage of the GDP devoted to education expenditures and a higher percentage of private payments to education. In other words, the U.S. is a model for privatization of education among developed countries. But how does erosion of educational achievement relate to privatization in the U.S.? And how has accountability in K–12 education—standards, testing, and aligned curriculum—influenced achievement, high school graduation, and college enrollment? The states in the U.S. maintain substantial policy control over education although the federal government exerts substantial influence over the direction of education policy. A study of the impact of public finance and accountability policy in the U.S. can inform policy makers in other nations that are on the path toward increased privatization and accountability, the hallmarks of the globalization movement in K–12 education. However, the purpose of this assessment of the impact of education policy on attainment and achievement in U.S. education is not merely to criticize. Rather, since the shift toward privatization and accountability are well under way, it may not be possible to go back. We need to take a closer

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look at what is working and what is not and why. Given the growing national debt in the U.S., along with the unwillingness of voters to increase taxes, it is unlikely that we will be able to change the path we are on, at least the path toward privatization of higher education. Rather, the goal of educationists who care about equity and quality in U.S. education may be reduced to restructuring the path we are now on. To the extent that other countries are following the path to privatization, they too can learn from an analysis of the effects of education policies in the states.

1.4

Globalization in higher education

There is a remarkable parallel between the privatization process in higher education in the U.S. and the global pattern. The trends toward privatization in the U.S.—including movement toward high tuition and high loan aid—are evident internationally, largely as a result of an overt effort by international organizations to promote this strategy. The OECD has played a major role in promoting the privatization of colleges and the development of loan schemes internationally (Henry et al., 2001). Comparisons of the U.S. to other OECD countries in the financing of higher education indicates the U.S. ranks low on expenditures on education largely because the comparative statistics do not take the state role into account. In the U.S., states are the primary funding source of public colleges and universities. The OECD statistics (2000) reveal substantial variation across the member countries in the use of loans and nonrepayable subsidies. In the U.S. as in other OECD member countries, subsidies to students and their families take the form of loans that must be repaid and student subsidies that do not have to be repaid (i.e., grants and scholarships). In the OECD, some countries have made loans their primary means of providing subsidies to students. By 1997 New Zealand, Norway, and Sweden and provided more than half of their direct student support in the form of loans (OECD, 2000). Australia provided about half loans and half other forms of aid. Several other countries (Canada, Denmark, Germany, Mexico, the Netherlands, Switzerland, and the United Kingdom) made less substantial use of loans. However, about half of the OECD countries used nonrepayable aid as their primary forms of student subsidies in 1997 (OECD, 2000). The World Bank has played a substantial role in promoting loans as a means of financing higher education in developed countries (Johnstone, 1998; Woodhall, 1989) and in developing countries (Albrecht and Ziderman, 1992; Woodhall, 1992). Not only has its literature promoted loans as a means of financing the expansion of higher education but it has also revealed great diversity in repayment schemes. There is also substantially more

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history of income-contingent repayment in other contexts than in the U.S. (Johnstone, 1989; Lleras, 2004). Loans per se are not the focus of this assessment of the impact of public investment, however. The U.S. case study reveals that loans enabled the federal government to expand access at a lower cost to the federal government than the prior reliance on grant aid (St. John, 2003). Yet while federal loans are available in all states, there is great variation in state policies on and funding of grants, along with substantial variation in the extent of access across the states. Analyses of the effects of state financing policies—the use of subsidies to colleges and grants for students as complements to a federal system of moderate need-based grants and substantial federal loans—can inform policy makers in the U.S. and internationally about the role of tuition and grants. Thus, the analyses of the impact of state finance strategies are relevant outside of the U.S. because similar strategies are being used in developing countries and former Soviet countries.

2.

A COMPARATIVE STUDY OF STATES

There is not a consensus about the direction of education and public finance policy in the United States, although a majority has supported certain reform principles over the past two decades. There has been widespread public support for public accountability of education systems (Rose, Gallup, and Elam, 1997; Rose and Rapp, 1997) as well as for reduction in public taxation. No Child Left Behind (NCLB), the 2001 education reform act of the George W. Bush administration, and other reform legislation has supported rapid movement toward market-based models for organizing and financing education. However, while there may be majority agreement in these directions in public policy, many educators have been resistant to these reforms. And since education is a state responsibility there is a great deal of variation in the methods states are using to “improve” their educational systems. The two major components of the new model—reform of K–12 education and privatization of higher education—are examined below along with the fundamental financial challenge facing states.

2.1

K–12 reform and the academic preparation rationale

The education reform movement has dominated the education landscape over enough time for most college undergraduates to have felt the effects of this movement through their entire education in school. And while the public interest in education should be reconsidered if we are to build an

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understanding of the choices we face, the excellence movement is now the dominant view of education. To build an understanding of the U.S. context, it is important to review the key features of this movement and how it relates to the academic preparation rationale that is widely used in the policy discourse about college access. 2.1.1

The education excellence movement

The No Child Left Behind Act (NCLB) includes the following features that hasten privatization: • A requirement that states have testing systems that measure the “quality” of schools, • A method of withdrawing federal funding from schools that do not make progress educationally, • An emphasis on private options for individuals who have been served by schools that do not measure up, and • An emphasis on “research-based” reform in both the public and private systems of education. The educational testing movement has been central to education reforms in the U.S. during the last two decades. In 1990 Chester Finn published an article entitled “The Biggest Reform of All” in Phi Delta Kappan, a publication widely read by American educators. Finn had been Assistant Secretary of the Office of Educational Research and Improvement (OERI) during the second term of President Reagan. He had oversight during the transformation of the National Center for Education Statistics (NCES) and the National Institute of Education (NIE) from agencies that appeared neutral to agencies that essentially promoted the new reform agenda. Although the Reagan administration was out of office in 1990, there was still a Republican administration (George H. W. Bush) and strong commitment to the new reform initiatives. In the 1990 article, Finn argued that the major accomplishment of the Reagan reforms had been to shift the focus of policy from equalizing educational system inputs—including equity in resources— to raising educational outcomes. The testing movement was central to this shift. In 1980 few states used testing as a central part of education. By 1990 national education legislation had been rewritten to require states to have some form of accountability system. Thus, the foundation for NCLB had been laid more than a decade earlier. The idea that federal funding for compensatory and special education might be denied schools that did not show “improvement” on test scores would have seemed absurd two decades ago, but this plan received bipartisan support in Congress when NCLB was passed. Given the long history of testing, it was not a large step in 2001 to require states to have an

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“approved” testing system and to link scores to funding. Not only had the focus of education policy shifted from inputs to outputs, but schools’ ability to receive federal funds—originally targeting the neediest students—was linked to their ability to improve test scores. Education standards provided the structure linking testing and education practice. During the 1980s and 1990s, education standards were developed across the content areas. In some areas, like reading and language education, there was relatively high variability in the content of standards across states (St. John, Loescher, and Bardzell, 2003). In the case of reading there was disagreement about basic approaches during this period. Since groups of educators generally met to construct standards, there was some variability in the ways these standards were stated. However, in some other areas there was relatively high agreement about the content of standards. In math, for example, the standards promoted by the National Council of Teachers of Mathematics (NCTM) were adopted by most states during the 1990s. The common standards gave states a way of linking curriculum to standardized “criterion referenced” tests. With a relatively common curriculum linked to tests through these common standards, the foundations for NCLB were largely in place in many states, even before the act became law. However, the linkages between funding for privatized educational activities and results from this testing scheme were novel at the very least. NCLB’s focus on research-based reform, with the heavy emphasis on randomized experiments, was a new development that had a well-established foundation. In the 1980s and 1990s, school reformers used comparative studies of treatment schools and “comparison” schools with similar characteristics to “test” reform models like Success for All (Slavin and Fashola, 1998) and Accelerated Schools (Hopfenberg, Levin, and Associates, 1993). And in the 1990s random assignment of vouchers and scholarships had been used as a means of testing the impact of these new schemes (Peterson, 1998; Witte, 1998). This new emphasis on education research legitimized these experiments, focusing the attention of reformers, who had amassed large sums of money, to “test” their ideas. NCLB gave these reform advocates priority for public research funding as well. This feature of the legislation complicated the picture facing reformers in schools. Educators were being required to rationalize their plans based on research and the experiments that were privileged in the process. However, problems were created by emphasizing randomized experiments. This concept of experimental design had originated in agricultural research in the late 19th century. In the first half of the 20th century, quasi-experimental research designs had been created as a means of using social science databases. With advances in computer and information technology, it became possible to study the effects of reforms as natural experiments.

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The research-based component of NCLB can be viewed as a political instrument promoting particular types of reform, especially if there is little regard for whether the reforms really work when broadly implemented after their “experimental” period. If schools have reform models imposed on them because they worked in an experiment somewhere else, then it seems critical that a system of evaluation be developed to see whether the implemented reform has had the desired effects. This requires using large databases on individuals, or specially constructed databases on states or schools, to evaluate the effects of reforms. However, adjustments for selection effects are needed in some instances, an issue considered below. For example, this book undertakes an evaluation of high school reforms that were implemented in the 1990s. Given the variability in the implementation of educational standards during that decade, as well as the variations in curriculum and other reforms, it was possible to assess the effects of the type of reforms that are included in NCLB. To the extent that reforms became commonly used across all states—for example, NCTM standards were implemented in all states by 2000—there was no variation to study. The variable rate of implementation made it possible to study the effects of this reform. During the 1990s there was a great deal of variation in the types of education reform policies being implemented across the U.S. (see part II). The number of states requiring NCTM standards increased across the decade, and there was also an increase in the number of math courses required for high school graduation. However, other policies such as exit exams for high school graduation did not increase substantially across the decade. It is interesting to note that public funding per student in K–12 education did increase. Thus, while there was movement toward the policies embedded in NCLB during the decade, there was also a great deal of variation in these policies. This book uses a new approach for evaluating the effects of state education and public finance policies in the states, an approach that could be adapted to the comparative study of countries. Part II uses time series analyses of indicators data on states in fixed effects regression analyses, a statistical method that controls for differences across states. These analyses examined the direct relationship between education policies and both preparation and enrollment outcomes as well as the relationship between public finance policies (funding per student for grant programs and tuition charge in state systems) and rates of college enrollment within states. Part III uses two-level models—integrating state level indicators with student record information from the National Education Longitudinal Study (NELS)—to provide an assessment of the effects of state education policies on preparation in math and the effects of state public finance policies on

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enrollment and persistence. Since students reside in states, these analyses do not have the implicit problems with selection that are evident in many other national studies. In combination, these analyses illustrate it is possible to evaluate the effects of public policies. It is important to build an understanding of whether the implemented reforms had their intended effects and if they had unintended effects. There have been very few evaluations of the effects of implementing educational standards and standardized tests, especially high-stakes exit exams. Instead, the focus has been on funding experiments and using the results of the experiments to fuel the reforms. I am not arguing against the excellence goals but pointing out that after more than 20 years of implementation little is really known about the effects of the “excellence” reforms on student outcomes. The system of aligned curriculum, standards, and testing is now well established. However, it is important to know the effects of these policies—both intended and unintended—to help us refine and reinvent education policy in the U.S. once again. My argument is that state education and finance policies should be routinely evaluated. The implementation of accountability systems within states requires that schools and colleges be held accountable. However, this approach does not hold states accountable for the effects of policies they legislate and implement through regulation and funding. Kirst and Venezia (2004) point out that high school curricula and college admissions requirements are not well aligned in most states. Their research illustrates that we need to build a better understanding of the interfaces between K–12 systems and higher education systems. However, while changing requirements for high school graduation can improve this alignment, especially between high schools and four-year colleges, we also need to consider how the new requirements influence test scores, high school completion or dropout rates, and college enrollment rates for high school graduates. In other words, it is not sufficient to argue for new policies based on research that considers intermediate variables—like high school courses taken. We also need to assess the intended effects of these policies (e.g., the effect on dropout). States should routinely consider the effects of education reforms enacted based on academic rationales as well as the effects of finance policies implemented based on financial rationales (e.g., arguments about privatization or equal opportunity). 2.1.2

The academic preparation rationale

The academic rationale being used in the debate about college access—developed in parallel to the education excellence movement in K–12 education — is an argument to align higher education

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reform with the excellence movement. In a response to a USA Today editorial (“College aid,” 2001) advocating increased investment in need-based student aid for higher education, Chester Finn (2001) argued that better preparation of high school students was a higher priority than needbased grants and that if high schools did their job there would be less need for higher education. His response summarized in a few short paragraphs the rationale about higher education access that had evolved over the prior two decades. At the outset of his presidency in 1980, Reagan faced a challenging situation. There had been relative equality in college enrollment rates for Whites and African Americans in the middle 1970s, largely as a consequence of federal student aid programs targeting low-income students (St. John, 2003). In the U.S., the issues of poverty and race were inextricably linked at the time, even after President Carter had signed the Middle Income Student Assistance Act of 1978 (MISAA), which liberalized the provisions for student aid programs to include middle-income students. MISSA had been a way of assuaging middle-class voters tired of equity-based programs thought to privilege minorities. The Supreme Court’s 1977 Regents of the University of California v. Bakke decision had not only constrained the use of racial preferences in college admissions, but the decision was popular. Equity and race were intertwined in ways that led many low-income White voters to support Reagan, who had argued for “trickle down” economics and had cut taxes to stimulate the economy. After his early success in cutting taxes, Reagan soon turned his attention to education. Reagan’s tactics for higher education finance began to take shape in his first term as he began to deemphasize grants, retargeting them on lowincome students—undermining the intent of MISSA with respect to student grants—and extending loans as the central feature of federal student aid (St. John, 2003). This policy served two purposes: It targeted the supposedly scarcer resources on students who had the most need and it used loans as a means of financing middle-income students (St. John and Byce, 1982). The strategy worked well but it had an unintended effect: The enrollment rate for minority students eroded slightly in the late 1970s and early 1980s (NCES, 1990). However, the decline in this rate had begun in the late 1970s as a consequence of the shift of discretionary institutional aid from low-income to middle-income students as a result of extending Pell grants to middleincome students (St. John, 2003). The targeting of Pell grants on low-income students may have been the best choice if the decline in federal investment in student aid was unavoidable. Given the prospect of future cuts, a fortune that may have been unavoidable according to economist Lee Hansen’s persuasive argument that the federal investment in grants had been excessive (e.g., Hansen, 1983), the Reagan strategy may have been reasonable in the

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sense that it targeted those with greatest financial need for need-based aid (Hearn, 1993; St. John, 2003). It rapidly became apparent, however, that a new rationale was needed because of the wide support for federal student grant programs, especially for Pell grants.4 Pell was a large, need-based grant program with voucherlike features that had been implemented under the earlier Republican administration of President Nixon. With declining African American participation rates5 the Reagan administration was asked by African American leaders in higher education to study the problem. The principal investigators of the study (Pelavin and Kane, 1988) faced a difficult challenge. While inadequate student financial aid provided the most reasonable explanation for the problem, the administration was not interested in hearing this response. Ultimately the report focused on an alternative explanation for the disparity. The fact that students in the “college preparatory” track were more likely to take advanced math courses had long been known among both high school educators and college admission officers. The fact that high school math courses were correlated with college enrollment did not surprise anyone. The official report argued that taking algebra by eighth grade explained the differential in college-going rates. The report was soon revised and republished as a monograph by the College Board6 (Pelavin and Kane, 1990). The report not only helped the administration dodge the toughest issue—the consequences of reductions in federal grants in the early 1980s—but it also set up the academic preparation rationale that is currently being used to argue that school reform is the answer to the access problem. The U.S. Department of Education soon began using the national databases to build the academic preparation rationale. They developed better ways to compare the courses students took in high school (Adelman, 1995, 1999), creating an extremely valuable resource for the study of the transition from high school to college. However, studies that used the course file developed an “academic index” combining high school courses with indicators on the college application process as an explanation for college enrollment behavior (NCES, 1997a, 2001a). The analysis included indicators that combined completing advanced math courses with taking college entrance exams and completing applications for college. Students who took all of these steps were, of course, more likely to go to college. 4

At the time, Pell was called Basic Educational Opportunity Grants. The current name of the program is used in this book to avoid confusing readers. 5 This was a consequence of the reduction in grants that was largely overlooked in the policy literature (St. John, 2003). 6 The College Board is a nonprofit organization that administers the SAT, the major college entrance test in the U.S.

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Unfortunately, students from low-income families may have been discouraged from taking the advanced courses or from taking entrance exams because they did not think they could afford to attend college (St. John, 2002, 2003). Subsequent reviews indicated that the NCES reports had serious mathematical errors (Becker, 2004; Heller, 2004), but by that time the academic preparation rationale had become central to research being reported by the American Council for Education (ACE) (Choy, 2002; King, 1999a), the nation’s premier higher education lobbying organization. While these ACE reports are not official government reports, they are the products of the nation’s primary umbrella organization for higher education (Cook, 1998), which means they have political influence. If these reports carry forward arguments made in official governmental reports, they illustrate an alignment between the lobbying community and political positions of the administration. Therefore, it is important to consider and compare the arguments made—and the rationales that underlie analyses—in both types of public documents. By the early 21st century the arguments for reforming high schools had become intertwined with the arguments for expanding college access. Not only was there a need to evaluate the efficacy of the high school reform strategies that were being so widely used, but there was also a need to reanalyze the National Education Longitudinal Study (NELS), the major NCES database, since analyses of NELS had been used to construct the new academic preparation rationale. A reanalysis was also needed to untangle the relative effects of student aid—and the decline in federal need-based grants—from the effects of high school reforms. Federal grant aid continued to decline though the 1990s, but enrollment rates improved. The use of loans may have had a positive outcome: It has provided a relatively inexpensive method of expanding college access. Throughout the 1970s, slightly over 30 percent of high school graduates enrolled in college. By 1980 about 45 percent enrolled, a substantial gain in enrollment that would not have been possible if there had not been ample loan aid (St. John, 2003). There are compelling arguments for further expanding college enrollment rates in the U.S. (Kazis, Vargas, and Hoffman, 2004; Pennington, 2003). Therefore, it continues to be important to untangle the ways education reforms and changes in public finance influence college access.

2.2

Privatization of higher education

There were major changes in the financing of higher education in the U.S. after 1980, and while federal student aid policy may have been a catalyst, substantial changes also took place within states. The degree of

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decentralization in the governance of higher education in the U.S. is unique internationally. Not only is the federal role less dominant than in nations with national systems of higher education, but public universities in the U.S. have a history of autonomy in most states. Neither states nor the federal government has a direct role in the governance of colleges and universities in the U.S., nor have they historically. While the U.S. differs from other nations in this respect, the pattern of public finance in the states has some important similarities to other nations. States in the U.S. historically paid most of the educational costs, and some states have maintained a commitment to low tuition charges. In the 1980s, a large number of private nonprofit colleges enrolled less than a third of the students. For international readers to understand the U.S. system, and for readers in the states to situate the implications of the privatization process, it is important to reconsider the context of American higher education before 1980. While more than one-third of high school graduates attended college in most of the 1970s, colleges had experienced substantial enrollment growth from the end of World War II until 1980. Initially the growth was due to the return of veterans, with support from the GI Bill,7 but enrollment continued to grow as the percentage of high school graduates increased through about 1960. The enrollment rate of college-age students did not increase much during the late 1960s and 1970s, but enrollment numbers did rise when the baby boom—another artifact of World War II—reached college age. By the early 1970s, however, there was concern that enrollment would decline when the baby boom generation passed through higher education. It was widely expected that by 1980 there would be an enrollment decline (Carnegie Commission on Higher Education, 1973; Cartter, 1976; Freeman, 1976; NCES, 1980) and that a large number of small, not-for-profit private colleges would close (Breneman, Finn, and Nelson, 1978; Carnegie Commission, 1973). These predictions assumed that the college enrollment rate for high school graduates enrolling in colleges would remain relatively stable, causing enrollment to decline. It was also widely assumed that private colleges would be hardest hit by the downturn in enrollment, because they were more dependent on tuition and had higher tuition charges (Breneman, Finn, and Nelson, 1978; Carnegie Commission, 1973). Had these forecasters known that prices would go up and grant aid would decline they probably would have given even more dire predictions, because it was widely assumed that enrollment rates were responsive to net price (i.e., tuition minus grants), which increased during the two decades. The privatization process had enrollment effects that no one predicted. To 7

The GI Bill of Rights provided grant aid to veterans who returned to college after World War II (Jencks and Reisman, 1968) and stimulated growth.

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understand the American version of privatization, it is important to consider both the federal and state roles in the process as well as the role of institutional strategy. 2.2.1

The federal role in privatization

While the federal government led the movement to privatization of higher education, it appeared at the time to be an accidental process. The federal government stimulated changes through both federal policies and the rhetoric of policy makers. 2.2.1.1 The policy shift. The shift from grants to loans in the 1980s and 1990s in the U.S. has been widely documented (Fossey and Bateman, 1998; Hearn, 2001b; St. John, 2003). In 1980, 48 percent of federal aid was in loans, but in 2000 grants had dropped to 77 percent of federal aid (St. John, 2003). Had the Reagan administration fully funded the provisions of MISSA and the 1980 reauthorization of the Higher Education Act (HEA),8 the cost of federal grant programs would have been substantially higher (St. John and Byce, 1982). The reduction in grants was achieved through the budget process (Hearn, 1993; St. John, 1994). Expansion in loans also happened gradually as a result of political decisions (Hearn, 2001b; Hearn and Holdsworth, 2004). However, there was substantial analytic drama beneath the veneer of political decisions. In the middle 1980s there was a widely held belief that loans had a negative influence on educational opportunity (Astin, 1975; Kramer and VanDusen, 1986; Newman, 1985). Soon there were studies that found a positive association between loans and both enrollment and persistence (St. John and Noell, 1987),9 and the Reagan administration had begun to lump all forms of aid together in critiques of higher education (Bennett, 1987; Carnes, 1987; Finn, 1988a, 1988b). The Reagan team in the Department of Education— 8

9

The HEA is the major federal legislation enabling student financial aid. The liberal features of MISAA were incorporated in the 1980 reauthorization of the act. These studies, summarized in a paper released by the U.S. Department of Education that extolled the virtue of loans in promoting educational opportunity (St. John and Noell, 1987), were eventually published in their more complete form. While loans were positively associated with enrollment and persistence for all students, they had different effects on minorities and low-income students (St. John, 1989, 1990a, 1990b, 1991, 1999; St. John and Noell, 1989). Since I conducted these studies under contract with the U.S. Department of Education in the Reagan years, it was not possible to publish the full findings until I had left the consulting business to take an academic position. Publication of more complete results could have resulted in the loss of contracts or the layoff of analysts.

1. Globalization

21

Secretary William Bennett and Assistant Secretaries Bruce Carnes and Chester Finn, Jr.—had adopted positions critical of higher education. During a period when funding for grants was falling rapidly, the administration evolved the argument that colleges were wasteful and that they raised prices to capture more federal aid dollars. 2.2.1.2 The ideological battle. An ideological battle about higher education was waged in the media in the late 1980s, and higher education lost (St. John, 1994). The Bennett team in the U.S. Department of Education advanced the following arguments (Bennett, 1986, 1987; Carnes, 1987; Finn, 1998a, 1998b): • Colleges had been “greedy,” raising prices to capture more student financial aid dollars. • Colleges had been wasteful and unproductive, further causing college tuitions to climb. • “Reckoning” time had come for higher education; lower grant aid would induce greater efficiency—the “no frills college.” These arguments not only proved mostly false, but the strategies used by the Department of Education—the shift from grants to loans—induced privatization. The research indicates that • As a result of the reduction in federal grants, private colleges raised tuition in part to provide more institutional aid (McPherson and Schapiro, 1991). • Spending per student for educational purposes increased in both public and private colleges (Davis, 1997; Hauptman, 1990; St. John, 1994). • Public colleges increased tuition to make up for decreases in state funding (Hauptman, 1990; St. John, 1994) and to raise funds for educational purposes. • Faculty salaries and technology costs were the primary reasons for increased expenditures for educational purposes (Davis, 1997; St. John, 1994). • Loans made it possible for middle-income students to pay the higher cost of tuition charges at both public and private colleges (St. John, 2003). Rather than stimulating reduction in price and increasing efficiency, the new policies stimulated development of a new market system of higher education finance in the U.S. While the rationale used by the Bennett team was largely critical of higher education costs, their strategy—the shift from grants to loans, coupled with the critiques—set new market forces in motion, including higher prices.

22

Chapter 1

2.2.1.3 The state role in privatization. Three types of state financial strategies can influence enrollment patterns among qualified students: the development of public campuses, funding institutions on a per-student basis to reduce tuition on public campuses, and providing grant aid—need-based and non-need (mostly merit-based) aid—to students who enroll in public and private colleges. While there have been arguments that states should coordinate these strategies (Hearn and Anderson, 1989, 1995; Hearn and Longanecker, 1985), coordination of state financial strategies has been an elusive goal. During the last two decades of the 20th century, enrollment was supposed to have declined nationally, at least according to all prior predictions, so it is not surprising that few states founded new state university campuses during this period. However the western states did face expanding demand and should have either developed new campuses or invested in grant aid to induce expansion of private colleges (Zumeta, 2004). Western states were slow to develop new four-year campuses and instead tried to expand through distance education, including electronic courses and programs (Farmer, 2004). But desired efficiencies (i.e., lower instruction costs per student) were difficult to realize through these new ventures. As a consequence, some states have actually declined in their rankings in college access. For example, California dropped from having the best enrollment rate in higher education among the states in 1990 to nearly the worst (St. John, 2005). Prior to 1980 most states used funding institutions as a means of lowering tuition; but this practice changed after 1980. The percentage of educational revenues per full-time-equivalent (FTE) student subsidized through state appropriations declined from 76 percent in 1980-81 to 68 percent in 1996-97 (St. John, 2003). The student share of costs, generated through tuition charges, rose substantially. While there is still a substantial differential in the charges of public and private colleges, in the past decade public college tuition charges rose at a faster rate than private college tuitions (College Board, 2004). While tuition charges have crept upward in public colleges across the U.S., there is still substantial variation in public sector tuition charges across the U.S. The greatest area of variability across states, however, is funding for student grant programs. During the 1990s there was substantial growth in merit (non-need) grants, especially in southern states (Heller and Rasmussen, 2001). State funding for need-based grants did not increase at as high a rate, but was higher by 2000 than in 1990. Tuition increased in most states, and there were major differences across the states in college affordability, especially for low-income students. In Georgia, for example, students who maintained a high grade point average (GPA) in high school

1. Globalization

23

would not have to pay tuition, but low-income students who did not meet this GPA threshold might not be able to pay for college, even with federal grants and loans (Dynarski, 2002). In a few states there was a high level of need-based grants which helped equalize opportunity to enroll. However, in most states, need-based grants were not adequate for low-income students to pay the costs of attending public four-year colleges (St. John, 2004). During the decade of the 1990s there was a great deal of variation in state finance policies (see chapter 4). Some states maintained high tuition and high grant aid, while others did not. This variation makes it possible to analyze the relative effects of tuition, non-need merit grants, and need-based grants. 2.2.1.4 Institutional strategy. While we focus on the impact of state education and finance policies on college access and persistence, it is important to note that there have been substantial changes in institutional behavior during the past two decades. Private colleges were the first to develop aggressive, market-oriented behavior in the early 1980s, in response to the prospect of declining enrollment and the declining federal investment in student aid (St. John, 1994). However, by 2000 many public universities had also adopted marketoriented behaviors (Hossler, 2004). Four areas of behavior changed substantially as a new, market-oriented system of higher education emerged: • In the early 1980s, many colleges began to develop new strategic plans that focused on changing missions and increasing enrollment (Keller, 1983; Norris and Poulton, 1987). • In the late 1980s, enrollment management emerged as a means of focusing on improvement in enrollment and retention (Hossler, 1984, 1987; Hossler, Bean, and Associates, 1990), an approach that was widely adopted, especially in private colleges. • Aggressive price discounting was used in private colleges to increase ability to attract high-achieving students (McPherson and Schapiro, 1998), an approach also adopted in public universities marketing to outof-state students (Hossler, 2004). • In the 1990s many public universities adopted incentive budgeting systems (Priest, Becker, Hossler, and St. John, 2002; Slaughter and Leslie, 1997) as a means of increasing incentives to raise funds from external sources and provide incentives to improve retention. By 2000 a substantially different marketplace had developed in U.S. higher education. Colleges and universities used strategic planning and market-oriented financial management to generate revenues. In addition, the recruitment and retention of students were high priorities because institutions were increasingly dependent on revenues from tuition.

24

Chapter 1

The serious problems with the NCES research on college access and persistence have been extensively documented (Becker, 2004; Fitzgerald, 2004; Heller, 2004; Lee, 2004; St. John, 2002, 2004). This book builds on these prior reviews, rather than repeating them. The central issues in the debate are addressed in part III. There is a crucial need for better evaluative information on the effects of state education and finance policies in the U.S. Many reforms are being rationalized based on seriously flawed analyses. Whether or not the research used to rationalize new policies is flawed, the effects of the new policies should be evaluated. In a democratic society the public requires information of the effects of policies their elected officials have chosen. Further, public officials should revise their policies to improve effects, especially if they can do so with relatively similar costs.

2.3

Conclusion

Education and the Public Interest examines how claims about rights are balanced within the political process. My argument has been that the public finance and education policies used over the past two decades have not only emphasized quality education over equal opportunity but have also failed to meet their intended outcomes (St. John, 2003, 2005). The next chapter introduces the logical frameworks used in this book to evaluate the effects of policies. Outcomes related to quality, equity, and cost are considered. Achieving balanced approaches to policy that address both equity and quality within the constraints of tax revenues represents a minimum standard for public accountability. If public officials gain political capital from advocating educational accountability, then it is also crucial to consider the public accountability of these political officials. Evaluative information about the efficacy of public policies is a crucial form of public information.

Chapter 2 THE PUBLIC INTEREST

A decline of integrity in public service has been evident in recent decades, as a parallel of the globalization process. In Public Integrity, J. Patrick Dobel (1999) argues that when politicians base their actions exclusively on ideological and personal beliefs, the public integrity of democratic institutions can easily be lost. The educated public—voters and taxpayers who ponder the future of education and society—should also ponder whether public policies are being based on unsubstantiated rationales. Policy development should be informed by research that examines whether the policy pathways chosen by public officials have effects consistent with the public goals and the claims made by political interest groups. To assess the impact of changes in public policies on education and public finance on preparation for college, access to college, and success in college, it is necessary to start with an objective framework, one that represents the public interest in education. This book focuses on the integrity of policy research with respect to the positions taken in relation to the research findings. In the U.S., policy makers are critical of the quality of schools. I am concerned with research on the correlates of test scores—e.g., math courses in high school or reading instruction approaches in elementary schools—that has been used to rationalize policy. The previous chapter discussed research used by state and federal policy makers to criticize colleges for their inefficiencies when prices rise but seldom to acknowledge the ways policies influence prices to rise. A counterview is that prices rise largely as a consequence of policy (Heller, 2006). When competing explanations for rising prices were examined, it was evident that government policy did have a substantial influence in public colleges (i.e., colleges were compensating for the loss of government needbased grants and state subsidies), but it was also evident that education expenditures have risen in public and private college in the U.S. (St. John, 25

26

Chapter 2

2003). My argument is that policy researchers have an obligation to consider the multiple vantage points on critical issues. The easy path is to use research to argue a particular position or point of view, but integrity requires understanding competing arguments and constructing research to test them. Integrity in educational policy research requires balanced approaches that test competing arguments about educational outcomes and that evaluate the effects of policies based on research-informed rationales. Finding theoretically sound designs to examine competing arguments is crucial to policy researchers and an integral aspect of integrity in research. This requires stepping beyond one’s own position on policy to consider it along with others in analyses and interpretations of research. Research of this type could lead to arguments that favor one policy position over another or to policy arguments that balance aspects of multiple rationales. For example, in research on college access there is little reason to doubt that preparation, information, and finances are all important, so it is reasonable to expect policy rationales to balance these elements. The concept of integrity in public policy making implies using research in balanced ways to craft and refine policies to achieve outcomes related to generally accepted goals. While this sounds simple, most policy arguments about education lack this type of integrity, a point emphasized in the prior chapter. As a university-based policy researcher, I am not directly engaged in the formation of policy. Instead, I hope my efforts to conduct balanced policy research can be informative for people who are engaged in policy making. However, to maintain my integrity as a researcher I try to use the best available data and methods in research that assesses competing rationales. This chapter starts with a brief summary of the framework used in this study—a way of viewing policy on access developed in Refinancing the College Dream (St. John, 2003). This framework provides a way of examining competing arguments about preparation, college transitions, and public finance. Then, I reexamine John Rawls’s theory of justice, which provides the core assumptions for the framework. Next, I reexamine the ideological arguments and competing economic and educational rationales for reform. Then, I introduce the balanced access model as a means of assessing rationales for education reform, an issue that has become a focus of my more recent research on education policy (St. John, 2004). Finally, I discuss my approach to measuring the effects of policy in relation to generally accepted statistical methods.

2. The Public Interest

1.

27

FRAMING THIS STUDY

Education and public finance policies have become imbalanced as a consequence of the overemphasis on academic preparation. This study uses a framework for assessing the ways public policies influence educational opportunity (see Figure 2-1) that was developed as a conceptual guide for seeking a more balanced approach to the study of access. This framework examines a comprehensive set of linkages: For K–12 education, families have a substantial direct influence on educational attainment, but the percentage of the population attaining a high school education and students’ level of achievement in public school also can be influenced by school reform (education policy) and by the social context (social and economic forces) to which children are exposed (e.g., parents’ work settings). For postsecondary transition, access for qualified students is influenced by students’ aspirations (career and education), as well as by policy interventions (i.e., tuition and student aid, postsecondary information, and admissions policies). The percentage of the population completing a postsecondary education can be affected by changes in educational environments, labor markets, and public funding of colleges and students. Educational attainment results in personal growth, which influences earnings and congruence. Taxation of increases in earnings provides a rationale for public investment, along with economic development from research. Congruence between education and personal development provides the basis for personal satisfaction with education and a willingness to support higher education (as parents or taxpayers). (St. John, 2003, p. 54) Centered in John Rawls’s theory of justice, this framework also considers recent theory and research in economics, sociology, and education. It provides a way of seeing how imbalance can be created if academic preparation is overemphasized at the preparation stage. Ignoring equal opportunity to prepare, as a policy issue, creates inequalities down the line, in college transitions and success, just as emphasizing achievement outcomes can encourage better preparation. This framework was used in Refinancing the College Dream to examine the relative roles of financial aid, postsecondary encouragement, and school reform in changes in access (i.e., the national college enrollment rate) and the rates of college enrollment for African Americans, Hispanics, and Whites. Since Whites have substantially higher incomes on average than African Americans and Hispanics, these relative measures provided an indicator of equality of opportunity. The enrollment rate was used as a general indicator of individual access to equal education while the relative

Parents’ Occupation

Postsecondary Education (PSE) Transitions Aspirations Applications Access Financial Academic

Potential Earnings

Middle Class Professions

Undergraduate College choice Major choice Persistence Graduate Choice of field University choice Persistence

Elite Professions

Individual Employment Opportunity Skilled

Education Policy

K–12 Schooling/Reform Policy Interventions Colleges and Universities Early reading interventions Prices and subsidies Financial strategies Comprehensive school reform PSE information Academic strategies School choice Affirmative action/merit Learning environment Standards/tests

Attainment/Equity Reduced retention rate Reduced dropout rate Increased graduation rate Achievement Increased test-passing rate Improved test scores

Exposure to Work Environments

Congruence

Individual Development and Attainment

Earnings

Source: E. P. St. John, Refinancing the College Dream: Access, Equal Opportunity, and Justice for Taxpayers, Johns Hopkins University Press, 2003.

Parents’ Education

Family Influence

Social and Economic Forces

Figure 2-1. Framework for assessing policy influences on educational opportunity: Linking education policy to educational outcomes

28 Chapter 2

2. The Public Interest

29

measures of college enrollment across racial groups was used as a measure of equal opportunity. The key findings related to student outcomes and public finance are summarized below to help frame this study.

1.1

Student outcomes

In the late 1960s and the 1970s major educational reforms were implemented, and in the 1970s the available federal grant aid was targeted on financial need. Three major postsecondary encouragement programs were also implemented (i.e., the federal TRIO programs1), providing encouragement and support for disadvantaged high school students. College enrollment rates for high school graduates did not increase substantially during this period, but across racial groups enrollment rates were relatively equal. The research on student aid during that period indicated a positive association between grants and enrollment, so there was reason to argue that student aid programs played a role in equalizing opportunity, but all three types of programs could have had an influence. In the 1980s government grant dollars declined, student loans increased, and education reforms refocused on student excellence. There were not substantial changes in encouragement programs. However, college enrollment rates increased, while there was a growing disparity in enrollment rates across racial/ethnic groups. The education reforms of the 1980s may have contributed to the increase in college enrollment rates but could not explain the disparity in enrollment rates. Analyses of the effects of student aid during the period revealed that loans were associated with expanded college choice by middle income students—helping to explain the expansion of enrollment rates. However, several studies found that student grants were not adequate for low-income students.2 In the 1990s the patterns evident in the 1980s persisted: Federal grants remained lower than in the 1970s; education reforms continued to be focused on excellence; there were modest increases in state-level encouragement programs; and loans continued to be emphasized over grants, 1

Legislated in the Higher Education Act of 1965, the TRIO set of programs includes Upward Bound, which takes disadvantaged high school students to college campuses to support preparation and encourage application; Talent Search, which seeks out and engages talented middle and high school students and provides some support services during high school; and Student Support Services, which provides counseling and other support services for college undergraduates. 2 The final section of this chapter discusses the approach used to make judgments about the adequacy of student aid, based on the earlier research. While the advances in measurement methods since that research was conducted change the methods that should be used in research on student aid research, this same recent research essentially validates the interpretive position used to judge adequacy in the earlier research.

30

Chapter 2

although some states began to reinvest in need-based grants. Enrollment rates continued to climb and the disparities in enrollment rates narrowed slightly but remained more substantial than in the 1970s. The analyses of the effects of student grant aid in studies in the states of Washington and Indiana revealed that increased funding for state grants was associated with equalizing opportunity, although causal inferences could not be made. This previous study (St. John, 2003) sets the stage for the analyses provided in parts II and III of this volume. While the prior review indicated that student grant aid played a role in equalizing opportunity and that loans played a role in expanding opportunity, many questions remained about the role and impact of school reform. The studies in this volume were designed to test these lingering questions, focusing exclusively on the 1990s because there was high quality data available on states and college students during that period. The remainder of this chapter explains the philosophical position on justice that underlies the research framework and discusses the analytic approach used to evaluate the effects of policy on access and measurement issues related to this task.

1.2

Public finance

The earlier study examined trends in education and related expenditures per student (the sum of administration, instruction, and plant operation) in both public and private colleges, along with trends in state and federal funding per full-time equivalent (FTE) student in public systems of higher education (St. John, 2003). In the 1970s both education expenditures per student and tuition charges changed very little and government subsidies increased slightly. Education expenditures in public colleges rose in the 1980s and 1990s, however, but not as fast as tuition. In addition, government funding per FTE in higher education (students enrolled) declined. Our estimate of government spending—that subsidized loans cost the federal government 50 cents per FTE—was extremely high, given interest rates and default rates. One question that the earlier study addressed was whether rising education expenditures explained tuition costs. While this notion cannot be completely dispelled given the correlation between education expenditures and tuition charges, the relationship between the decline in government spending on public colleges and need-based grants provided a more compelling explanation for tuition increases. Indeed, a substantial portion of tuition increases went to grants in private colleges throughout the period, and there was a near direct substitution of tuition dollars for loss of state support in public colleges and universities.

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31

Another possibility is that both the decline in government spending per student3 and the rise in education expenditures in four-year colleges were outcomes of privatization. With the rise in prices, college must offer a better product—a reason to increase expenditures. More recent studies of incentive budgeting (Priest, Becker, Hossler, and St. John, 2002) and privatization (Priest and St. John, 2006) in public universities reveal that as public universities adapt to the new financial environment they develop budget systems to provide incentives to raise revenue from instruction and research. The problem of finding revenue to support educational activities has been pushed down to academic units. At the same time, there is a push toward cheaper education—lower tuition and lower expenditure per student—in public two-year colleges (St. John, 2003; Voorhees, 2001). This market differentiation is another outcome of the movement toward privatization of public colleges that needs to be better understood. The argument that the market forces related to privatization help explain changing patterns of finance within institutions merits more attention and is a focus of this study. Given the emphasis on market forces and privatization, complaints about spending in research universities are misguided. Market forces encourage some institutions to improve quality as a means of attracting students and encourage others to economize and offer a lower cost product.

1.3

Critical questions

The review of trends and research findings in Refinancing the College Dream addressed some questions about education reform and public finance but suggested others for more detailed investigation. Serious questions remain about whether education policies influence improvement in collegegoing rates. To untangle further how state education policies influence preparation for college, this study focuses on the linkage between policies on high school curriculum and outcomes related to student preparation. A second set of questions relates to the role and influence of privatization and other public finance strategies in promoting or inhibiting educational opportunity. Privatization is more than an ideology; it is also a means of shifting some of the burden of paying for higher education from taxpayers to students and their families. Rather than just consider the relationship between privatization and enrollment rates, we also need to examine enrollment distribution and whether there is equal opportunity to enroll in public four-year colleges for equally prepared students. 3

With the shift of students to private colleges and the increases in tuition in both public and private colleges, government spending per student in the U.S. system declined in the 1980s and 1990s (St. John, 2003).

32

2.

Chapter 2

FINDING JUSTICE IN EDUCATION AND PUBLIC FINANCE POLICY

Critical questions about education and public finance policies require that we situate the analysis in an understanding of the public interest. The earlier book used Rawls’s theory of justice as a starting point for reframing analysis of the linkages between public policies and college access. Below, I explore how Rawls’s theory relates to the topics of this study—the consequences of accountability schemes (i.e., aligning curriculum and testing with enrollment criteria for four-year colleges) and privatization strategies.

2.1

Defining the public interest

John Rawls’s theory of justice (1971, 2001) is a useful starting point for defining the public interest in the financing of schools, colleges, and students. His theory provides a moral lens for thinking about current education policy choices. In particular, his three principles provide a means of finding balance among competing interests in the education debates: • Principle 1 relates to basic rights, which all individuals have in a democratic society. The right to an education is widely accepted (Nussbaum, 1999; Sen, 1999), and in the U.S. equal access to college should be a right for those who qualify academically. • Principle 2 relates to equal opportunity, which argues that if there is an inequality it should favor the most disadvantaged. The historic emphases on equal opportunity in school desegregation and student financial aid are a few of many examples of this approach in education policy. • The “just savings principle” relates to cross-generation equity, which includes the use of taxation to support education. In the current context of majority concern about tax rates, it is important to balance taxpayer costs with concerns about equity and basic rights in education. Among the basic rights in principle 1, the right to an education is generally accepted. In fact, school enrollment is mandatory in the U.S., but there is still disagreement about what should be included in a general list of rights and liberties. In their discussions of women and developing countries, Nussbaum (1999) and Sen (1999) have explicitly argued for basic rights to education and literacy. In most countries, it is appropriate to consider education as a basic right, given that a K–12 education is a general requirement for youth and universal attainment of high school education is considered a national goal as well as an individual right. While it may seem extreme to argue that a college education should be a right for those who qualify academically, the National Center for Education Statistics has come

2. The Public Interest

33

close to making this argument in its official reports. Specifically, consider the following statement: Although there are differences by income and race/ethnicity in the fouryear college enrollment rates of college-qualified high school graduates, the difference between college-qualified low-income and middle-income students, as well as differences among college-qualified Black, Hispanic, Asian, and White students, are eliminated among those students who have taken the college entrance examinations and completed an application for admission, the two steps necessary to attend a four-year college. (NCES, 1997a, p. iii) While this statement and others like it in the NCES reports on access to higher education does not claim that access for prepared students is a right, it does argue that this standard has been attained. I have two concerns about this statement: (1) it reflects an appropriate basis for thinking about basic rights in the current period, but (2) it is based on fundamentally flawed research. The major error in the NCES analysis was that it included college applications (measured in response to questions asked during the senior year) as an indicator of preparation. In fact, many students in the National Education Longitudinal Study class of 1992 who went to college did not apply in advance and some who applied during their senior year did not go. When the academic indicators—high school courses, test scores, and so forth—are used as indicators of preparation, then it is evident that large numbers of students were left behind, as has been illustrated by numerous reanalyses (Advisory Committee on Student Financial Assistance (2002); Fitzgerald, 2004; Lee, 2004; St. John, 2003). The report introduced a standard that merits consideration even if the analyses on which it was based were fundamentally flawed. Principle 2 relates to equal opportunity and essentially argues that if there is an inequality it should favor the most disadvantaged. The historic emphases on equal opportunity in school desegregation and student financial aid are a few of many examples of this approach in education policy. The equal rights provisions of the federal constitution provided the basis for federal litigation of desegregation of higher education in the U.S. (Brown, Butler, and Donahoo, 2004; Conrad and Weerts, 2004), while federal legislation—the Higher Education Act of 1965 (HEA), as reauthorized over time for student financial aid programs (Title IV)—has emphasized the goal of equalizing educational opportunity (Advisory Committee on Student Financial Assistance, 2001; National Commission on the Financing of Postsecondary Education, 1973). Thus, to the extent that access to higher education is a goal of public policy in the United States, there is a legal basis

34

Chapter 2

for considering whether access is equal among diverse income and racial/ethnic groups when there is equal preparation. There is also a question in the U.S., and in other countries, about whether all groups have equal opportunity to prepare (Lleras, 2004). Initially, education in the U.S. was the sole responsibility of parents, local communities, and states—as the federal constitution left this responsibility to states. The federal government first got involved in education through the National Defense Education Act of 1958 (NDEA), an effort to provide general support for programs in science and math. Then the Elementary and Secondary Education Act (ESEA) of 1965 also established a federal role in compensatory education (providing additional financial support for educational programs for students who were at risk educationally) and special education programs (providing funds for students with special educational needs). The ESEA, as reauthorized, established a federal role in equalizing opportunity, while the NDEA demonstrated the federal interest in improving the basic quality of education—the basic right. The just savings principle relates to cross-generation equity, which includes the use of tax dollars to support education. In the current context of majority concern about tax rates, it is important to balance taxpayer costs with concerns about equity and basic rights in education. However, Rawls also argued that funding for programs that support the difference principle should be based on rights within a generation. In other words, once the public decides to provide education, the difference principle merits consideration, including equal rights to education. The just savings principle can be and has been used to make arguments to increase public funding. Historically, arguments about economic development—including the impact of funding for education on economic productivity—provided a rationale for public funding at the state level (Honeyman, Wattenbarger, and Westbrook, 1996; McKeown, 1996; Trammell, 2004) and federal programs (St. John and Parsons, 2004; Slaughter, 1991). While these arguments may be useful in constructing rationales for funding, they have not been persuasive for public finding in a period of declining taxpayer support. In particular, as the public funding for students enrolled in state systems of higher education4 goes down, as it did in the last two decades of the 20th century (St. John, 2003), there is reason to consider both equity and the extent of opportunity (supply) in relation to expenditures and demand. In the U.S., the taxpayer share of costs per student went down in the 1990s as spending increased (St. John, 2003). However, the states did not maintain equal opportunity for enrollment, especially for enrollment in public four-year colleges. Thus, a decline in public dollars per 4

State systems include public two- and four-year college and private nonprofit and for-profit colleges and universities.

2. The Public Interest

35

student in state systems is a false efficiency if realized at the cost of equal opportunity. The other caveat to the use of efficiency measures (or costs per student) in analyses of the impact of public policies is that the measure of efficiency implicitly assumes quality is maintained. Previously, I argued that an efficiency gain—that is a reduction in expenditures per student—was false if it resulted in a reduction in educational quality (St. John, 1994). Since expenditures per student enrolled in each sector of higher education in the U.S. did not decline in the 1980s or 1990s, the period studied in Refinancing the College Dream (St. John, 2003), I did not explicitly consider the issue of false efficiencies attributable to the shift in public finance strategies. However, given the complexity of the privatization process, we should reconsider the role of quality in the analysis of efficiencies.

2.2

Walzer’s critique of Rawls

Rawls’s theory has been criticized for the lack of constraint on redistribution of income. In particular, the difference principle is considered as having a high implication for public cost and income redistribution through the tax system. Financing equity can, in theory at least, be very expensive. Perhaps the best known of the critics is Michael Walzer, author of Spheres of Justice: A Defense of Pluralism and Equality (1983). Some of the specific criticisms in this text merit consideration, especially as they apply to the aim here of redefining the public interest in education and public finance of education. Walzer’s critique focuses primarily on the difference principle. He argues as follows: It is possible to set limits to the new conversion patterns, to recognize but constrain the monopoly power of the talented. I think this to be the purpose of John Rawls’s difference principle, according to which inequalities are justified only if they are designed to bring, and actually do bring, the greatest possible benefit to the least advantaged social class. More specifically, the difference principle is a constraint imposed on talented men and women, once the monopoly of wealth has been broken. It works this way: imagine a surgeon who claims more than his equal share of wealth on the basis of the skills he has learned and the certificates he has won in the harsh competitive struggles of college and medical school. We will grant the claim, if, and only if, granting it is beneficial in the stipulated ways. At the same time, we will act to limit and regulate the sale of surgery—that is, the direct conversion of surgical skill into wealth. (p. 14-15)

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While some other critiques argue for expanding Rawls’s notion of basic rights (Nussbaum, 1999, 2001), Walzer argued here that aspects of the difference principle may apply to pluralistic society even if we do not accept Rawls’s income redistribution. My arguments about the application of Rawls’s theory to education (St. John, 2003), summarized above, were similarly constrained. I argued that the principles have direct applicability to the process of public funding of education, in relation to access to educational opportunity—both as a basic right and an equal right. In addition, my argument was also constrained with respect to income: I argued for appropriate use of tax dollars rather than income redistribution, leaving arguments about tax rates to others. My argument was that when using tax dollars in the public interest, public officials have a fiduciary responsibility to taxpayers as well as to recipients of services. More generally, this dispute about the meaning of the difference principle—between Walzer’s view and Rawls’s statement—is inconsequential to my application of Rawls’s theory for defining the public interest in education. In a very real sense, the politics of the past 20 years have reversed the trend toward social equity implicit in the arguments of both Rawls and Walzer. The tax rates have gone down and there has been a redistribution of wealth back to the high income group (Fogel, 2000). Setting arguments about public and private benefits of education aside for a moment, along with the notions about wealth redistribution, the equity principle has merit. The central element of Walzer’s critique of Rawls is that the principles of justice should be constrained and contextualized to fit pluralistic societies. Consider his restatement as a comment on the American welfare state: What sort of communal provision is appropriate in a society like our own? It is not my purpose here to anticipate the outcomes of democratic debate or to stipulate in detail the extent or forms of provision. But it can be argued, I think, that the citizens of a modern industrial democracy owe a great deal to one another, and the argument will provide a useful opportunity to test the critical force of the principles I have defended up until now: that every political community must attend to the needs of its members as they collectively understand those needs; that the goods that are distributed must be distributed in proportion to need; and that the distribution must recognize and uphold the underlying equality of membership. (p. 84) This restatement of principles is more constrained than Rawls’s, but consonant with my discussion of the application of the principles to education above. Consider the adjustment of the argument about equal educational opportunity made in this text. The argument about equal

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opportunity for a higher education is adapted to focus on a community of prepared students. My argument was that financial need should be an integral part of the policy conversations about access and, specifically, that students who are equally prepared for a four-year education should have equal opportunity to attend (St. John, 2003). This argument is perfectly compatible with Walzer’s restatement of Rawls’s principles. Walzer makes the following argument about the public role in education: Educating citizens is a matter of communal provision, a kind of welfare. I would suggest that we commonly conceive of a more specialized education as a kind of office. Students must qualify for it. They qualify, presumably, by some display of interest and capacity; these two yield nothing like a right to a specialized education, for necessary specializations are a matter of communal decision, and so is the number of places available for specialized schools. Students have the same right that citizens generally have with regard to office holding: that they be given equal consideration in awarding the available places. And students have this additional right: that insofar as they are prepared for office holding in the public schools, they should, so far as possible be equally prepared. (pp. 209-210) Thus, there is little disagreement here with respect to my argument about the application of Rawls’s principles to education and Walzer’s more constrained restatement. However, I don’t agree with Walzer’s notion that education should be equated with social welfare, largely because the social and individual returns from education differ substantially from social welfare. Education is an investment with very substantial returns to society in the forms of social mobility and economic growth, two benefits that cannot be attributed to welfare. While Walzer does not explicitly consider financial aid for college students, he does consider vouchers for private schools. He is generally supportive of their use in a pluralistic society: “A voucher program for specialized education and on-the-job training makes a lot of sense” (p. 219). He also recognizes the limitations of the model as well: “The voucher plan assumes the activism of parents, not the community at large, but narrowly, on behalf of their own children. But its greatest danger, I think, is that it would expose children to a combination of entrepreneurial ruthlessness and parental indifference” (p. 219). In higher education the process of privatization is well under way, so we need better ways of understanding the public interest in education and how public policies promote related outcomes.

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Thus, my application of the theory of justice to education, above, provides an appropriate basis for assessing the impact of education policies, even given the narrower application of justice principles proposed by critics. In fact, Walzer’s critique is situated in a notion that education is linked to the welfare state and supposes that privatization (i.e., vouchers) loom on the horizon. By bringing forward the just savings principle and considering taxpayer costs in relation to achievement outcomes (as proxies for principle 1) and equity outcomes (as proxies for principle 2), it is possible to develop an analytic framework that is applicable to market systems of education finance.

3.

UNTANGLING RATIONALES FOR REFORM AND FINANCE

When research on education outcomes has been considered in the debates about college access and attainment in the 1990s, there has been a striking lack of balance in interpretation (St. John and Parsons, 2004). Two sorts of problems impede balance in policy research and policy debates. One is that different academic disciplines consider different explanations for outcomes. For example, educationists concentrate on education causes of inequality while economists focus on economic explanations. However, a range of ideological views—from liberal to neoconservative—can be found among educators, economists, and policy analysts. Increasingly, untested beliefs are used as the basis for interpreting research, advancing agendas rather than providing realistic assessments of the effects of policies. Given these patterns, it is crucial to consider competing rationales for reform before considering how best to assess these divergent claims. Debates on access and college success have reflected a progression of ideological arguments about education and public finance among economists and educationists. In the 1960s and 1970s there was a general consensus that further gains should be made in both access and equalizing opportunity, a belief rooted in the social progressive tradition (St. John and Parsons, 2004). There was more disagreement before 1980 about the extent and form of public investment in education than about whether these investments were needed (St. John, 1994). However, with the election in 1980 of President Ronald Reagan, a new conservative rationale took shape, arguing that the public had invested too much in education and welfare and that a reduction in tax rates was called for. After taking office, the Reagan administration began to focus on deficiencies in education and to use arguments about accountability rather than public subsidy as the primary public strategy. The administration’s arguments also had an influence on the economic rationales

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about loans. There have been responses by liberal educationists and economists to these new conservative arguments, reconstructing arguments for funding. A new liberal rationale has emerged that essentially argues for expanding opportunity, reconstructing arguments made by the new conservatives. However, until very recently there was very little balance in the rationales used to argue for education and finance reform.

3.1

Evolution of economic rationales

Economic rationales about education are important because of the substantial influence economists once had on education public policy. Human capital theory had substantial influence on public financing of education in the 1960s and 1970s, with the argument that both the public and private returns to investment in education merited consideration in public decisions about funding schools (Becker, 1964; Paulsen, 2001a). Human capital arguments were used to support the Higher Education Act (Slaughter, 1991) and continue to be used as a rationale for public funding of education (e.g., Honeyman et al., 1996). Most of the early arguments for funding supported subsidies to institutions and the view that funding led to better economic conditions. There is also empirical evidence that state investments in education are associated with growth of state economies (Paulsen, 1996a, 1996b, 1998), giving support to the economic argument. Two developments in economics merit attention relative to the shift in ideologies in public policy about educational opportunity. In the late 1960s economists began to question whether low tuition was both more costly and less equitable than high tuition and high need-based grants (Hansen and Weisbrod, 1967, 1969), an argument that had substantial influence on the reauthorization of the HEA in 1972 (Gladieux and Wolanin, 1976). This legislation expanded need-based grants—through Basic Educational Opportunity Grants (now the Pell grant program) and state student incentive grants—but did not provide incentives for states to increase tuition. Instead, tuition remained stable in the 1970s. In the 1980s, when the new conservative rationales came into play, colleges raised prices in response to reductions in direct state subsidies and federal funding for student aid (St. John, 1994, 2003). However, these new developments were being driven by another economic reality. The individual returns to education took an upturn in the late 1970s and have continued to be substantially higher for college graduates than high school graduates (Geske, 1996; Paulsen, 2001a, 2001b). The high private returns were used to argue for higher loans limits in the U.S. (Davis, 1997) and have been extended in new rationales for using private capital (Woodhall, 1988), including the argument for human capital contracts

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(Lleras, 2004). However, two problems with using private capital have surfaced, given the decline in need-based grants: Many low-income students cannot borrow or earn enough to pay the cost of attendance after grants, and some workers may not be paid sufficiently to merit loans. Some of the newer proposals, such as human capital contracts (Lleras, 2004), would partially remedy these problems because of income-contingent repayment, but they do change the implicit shift in the tax burden for promoting equity from the majority to low-income families. In other words, even if some loan scheme could be created that overcame the current limitations of using private capital, there continue to be equity issues that should not be dismissed without explicit consideration. Thus, several economic rationales have been used in support of different positions on college access and success. Econometric models are crucial to analyses of the effects of finance policies, as it is in arguments for these policies. However, we need to use the theory of justice to assess the impact of public policies because economic theory alone lacks adequate basis for considering public responsibility in education and public finance. Three specific rationales and indicators are used in this study. First, the new arguments about privatization are a central focus of this study. Public sector tuition, the average full-time tuition charge for public institutions in a state weighted by enrollment distribution in the state, provided a workable proxy measure for privatization. Rises in tuition charges in public colleges are related both to declines in state support and to increases in spending for education purposes within colleges. Both can be considered artifacts of privatization. Thus public tuition charges provide a good proxy measure of the extent of privatization. Second, a new argument has emerged about using merit aid to encourage preparation, enrollment, attainment, and economic productivity. This study uses state spending per FTE on non-need grants as a measure of state investment in this rationale. While there are a variety of non-need grant programs in states, most funding is for merit programs. And while there are other non-need grants, such as tuition subsidies for police officers, these programs reward a form of merit considered important in states. Therefore, this variable provides a reasonable proxy measure for state investment in the merit rationale. Third, the old argument about need-based student aid is also a focus of this study. There is a strong basis for considering the links between needbased grants and the opportunity to enroll in more expensive public and private four-year colleges. This study uses state funding of need-based grants per FTE as a measure of state investment in this strategy.

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41

Evolution of education rationales

In the 1960s and 1970s educationists were largely trusted to provide quality education. Local boards had control over schools and were involved in their regulation. States were involved in textbook selection for schools, but educationists were also integrally involved in this process. In higher education, the content of classes was, and still is, largely left to professors. Policy development was oriented toward expanding education and funding the expansion, as the post World War II baby boom worked its way through the education system. Three other educational rationales, in addition to the expansion of education, had political influence in the progressive period First, after the U.S. Supreme Court’s 1954 decision in Brown v. Board of Education, desegregation of education systems became paramount in education policy. At first, de jure segregation of schools in the southern U.S. was dismantled. Then the scope of desegregation was expanded to include de facto segregation in the rest of the country. Courts had a substantial influence over bussing and even education offerings but did not have success with desegregation per se, as the percentage of African American children in single-race schools remained high as a result of middle-class flight (Fossey, 2003; Orfield and Eaton, 1996). In higher education, the courts did not get involved until the late 1970s, and the student choice process substantially complicated these efforts (Brown et al., 2004; Conrad and Wertz, 2004). Nevertheless, racial isolation and affirmative action in admissions processes continue to be policy issues in both K–12 and higher education in the U.S. Second, public concern about education quality—especially in math and science—also has a relatively long history. After Sputnik was launched, the National Defense of Education Act of 1958 was passed with an aim to promote science education in the U.S. New math and science curricula were introduced, tested, and disseminated, but this policy priority did not hold much weight in policy debates of the 1960s and 1970s, as equity issues received more attention. Third, compensatory education (making up for deficits in preparation) and special education (addressing the needs of students with learning disorders or other special needs) were emphasized in the Elementary and Secondary Education Act (ESEA) of 1965 and subsequent legislation. In particular, Title I of the ESEA provided supplemental funding for schools with high percentages of low-income students so they could raise literacy and math skills. While schools had discretion about how to use these funds during the 1960s, federal policy has become more regulated over time (Wong, 2003). In special education, there were shifts from pull-out programs to mainstreaming special needs students (educating all students in regular

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classrooms) to exit exams for graduation that complicated the intent of these programs (Manset-Williamson and Washburn, 2003). More recently, the argument that improvements in academic preparation can reduce the gap for minorities and low-income students has been echoed by liberal groups (e.g., Kazis, Vargas, and Hoffman, 2004). A recent report from a national meeting on expanding opportunity stated the following “points of agreement” in the “next phase of education reform” (Kazis, 2004): • It’s not just about high schools; it’s also about postsecondary success. We can no longer accept high school as the terminal credential or learning experience for anyone. Policy must reflect the shift. • It’s not just about access to college; it’s also about postsecondary success. Too many policies focus on expanding access to college; too few focus on completion and success. Neither students nor society can afford this anymore. • It’s not just about efficiency of the pipeline; it’s also about equity. Getting more young people to and through postsecondary education is critical, but to do so in a way that promotes social cohesion and addresses the demographic trends in our country requires strategies that improve attainment and achievement for those who are most at risk of failing in high school and postsecondary programs. • It’s not just about attainment; it’s also about learning. The standards movement of the past decade has driven home the point that “seat time” and making it through school is no guarantee of learning. This is no less true of postsecondary institutions, but policies that address quality of college learning are in their infancy. • We’re all standards-based reformers now. There is no turning back from the dominant framework of high standards, common assessments of learning, and accountability systems linked to those assessments. Any reform effort must start from existing policies and work to make them more flexible and effective. Much remains to be done to improve on what has been built to date. • Older adolescents need more high-quality schools and learning options. We need more, different models for reaching, motivating, and engaging older adolescents in learning. Policy should stimulate alternatives, fund them adequately, and ensure that they do not degrade into a new tracking. • Policy matters: Finance, accountability, and governance all need to change to bring K–12 and higher education systems into a more coherent whole. Starting is the easy part. What is difficult is to specify the mix of policies that states can fit together to drive better postsecondary outcomes. (p. 9-10) This argument pulls together a new liberal position about access and represents a bold statement about reasserting the importance of equity, at

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least from the vantage point of educationists who do not think about economics. But we should also note what is missing. It does not focus on the market and the role of need-based student aid. This statement also carries forward standards and accountability without sufficient critical thought. The role and effects of standards, testing, and other accountability mechanisms must be evaluated rather than merely carried forward because they exist. It is crucial to balance economic and education arguments and to evaluate the consequences of the policy paths chosen, rather than to accept any single point of view or method as true without validating evidence. Such a balanced position is possible even if it remains elusive.

3.3

A glimmer of balance

Over the past several years, the Advisory Committee on Student Financial Assistance (ACSFA) has promoted a balanced framework that considers the roles of preparation and student aid (ACSFA, 2001, 2002; Fitzgerald, 2004). A shared agenda statement prepared by the Pathways to College Network (2004), an alliance of national organizations and funding agencies, comes closer to suggesting a balanced approach. Their agenda includes six principles (see Figure 2-2) similar to the points of agreement stated above. This agenda has more potential for contributing to the national discourse than the rationale of Double the Numbers because it points to the need for balance. It includes need-based financial aid and other forms of support along with an emphasis on preparation. And, with the focus on evaluation of the effects of reform rather than on holding schools and colleges accountable, this approach leaves room for and even encourages learning about reform. Fortunately, higher education in the U.S. is engaged in a process— reformulating agendas and coalitions—to address the equity gap that has developed. Any reasonable person should realize that reaching the underserved involves preparation and outreach along with financial support beyond the family ability to pay. As higher education moves toward privatized market systems from structured public systems, it is crucial periodically to assess the role and effects of finances as well as to adjust finance agendas to recognize the central importance of academic preparation to college success.

3.4

State education policy indicators

This volume examines the direct effects of education policies implemented within states. Using a range of policy indicators, these policies are related to the agendas that are now being promoted by various interest

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Figure 2-2. Pathways to College Network principles Principle One: Expect that all underserved students are capable of being prepared to enroll and succeed in college. All students must be challenged by high expectations. Principle Two: Provide a range of high-quality preparatory tools for underserved students and their families. Require a complete college-preparatory core curriculum. Make honors and college-credit courses available to all students. Provide early college awareness and broad support services to accelerate student learning. Principle Three: Embrace social, cultural, and learning-style differences in developing learning environments and activities for underserved students. Involve families in supporting learning. Affirm students’ social and cultural contexts. Create environments that support diversity and foster positive intergroup relations. Principle Four: Involve leaders at all levels in establishing policies, programs, and practices that facilitate student transitions toward postsecondary attainment from Elementary school to middle school, Middle to high school, High school to college, and College to work and further education. Principle Five: Maintain sufficient financial and human resources to enable underserved students to prepare for, enroll, and succeed in college. Staff schools and programs with well-qualified teachers, counselors, and leaders. Ensure equitable funding that addresses past deficiencies and meets student needs. Fund robust need-based financial aid. Principle Six: Assess policy, program, practice, and institutional effectiveness regularly. Use assessment models that demonstrate whether practices are working with underserved students. Focus on data that provide feedback for continuous improvement. Employ a variety of analytic tools, avoiding reliance on any single measure. Source: Pathways to College Network, 2004, A Shared Agenda: A Leadership Challenge to Improve College Success, www.pathwaystocollege.net.

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groups. In most instances we used actual policies, although in one instance we used a proxy for policy. Specifically, we used the percentage of students taking advanced placement (AP) courses within schools as an indicator of policies that encourage this practice. We could find no common indicators of state policies in this area. Otherwise, we selected policies that aligned with the new reform rationales and the underlying commitment to implement accountability as a means of educational improvement.

4.

THE BALANCED ACCESS MODEL

While the reframing of Rawls’s theory of justice provides a philosophical basis for this study, it does not provide the analytic framework. The balanced access model was originally developed as a means of examining the role of finances and the academic preparation in a reanalysis of statistics reported in NCES studies. Given the new focus on policy variables as indicators of policy rationales, it is import to refine the balanced access model to consider roles of education and finance policies in preparation, enrollment, and persistence. The refined model used in this book (Figure 2-3) provides an appropriate logical basis for examining the influence of K–12 policies and higher education policies on enrollment in higher education. This volume seeks a balanced approach to research that considers the role and influence of both education and finance policies. It is conceivable that analyses of the influence of both types of policies could support one rationale over the others. However, it is more likely that by examining the influence of both types of policies we can suggest revisions to rationales for both education reforms and public finance strategies. Research integrity requires using a balanced approach to the study of policy effects. In contrast, integrity in public policy requires balancing public interests in ways that are not only politically feasible but that also have a moral basis.

4.1

The logical model

At the center of this framework is the concept of the preparation pipeline used in most of the NCES studies of college access. Controlling for family education and income, the pipeline approach considers student expectations and plans, academic preparation (courses and grades), examinations (tests and scores), and college applications and admissions as steps toward enrolling in two- or four-year college. The selection bias in many of these reports came into play when the researchers excluded students who had not taken tests or applied for college from their access analyses (Becker, 2004).

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Figure 2-3. A balanced access and attainment model Academic Policies

Social Factors

Finance and Encouragement

High School Policy Funding Curriculum Standards Testing

Family Income and Education

Concerns About College Costs 1

Student Expectations and Plans

3

2 Encouragement

Academic Preparation

Direct link

3

Indirect link

Taking Examination 3 Application and Admission 3 Student Financial Aid

College Costs

Tuition and Grant $ 4

5

Enrollment in 2-Year and 4-Year College

7

6

Persistence to Degree

8

Source: Adapted balanced access model from E. P. St. John, Refinancing the College Dream: Access, Equal Opportunity, and Justice for Taxpayers, Johns Hopkins University Press, 2003.

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This restricted the analyses to people who thought they could afford to enroll. NCES failed to consider policy variables of any type. The fact that they failed to consider the direct role and influence of student aid on this population is well established (Fitzgerald, 2004; Lee, 2004) and is a serious problem, given their conclusion that preparation explained observed variation in the access outcomes (Choy, 2002; NCES, 1997a). The implication has been drawn that reforms in preparation can improve access. Yet if reform advocates are pushing for more accountability and higher standards, we should also recognize that these studies consistently look at math courses. NCES also failed to consider how different types of public policies—including standards, testing, and accountability—influenced math preparation. They found a correlation, but failed to consider what policies might influence the independent preparation variables included in their statistical equations. This logical model identifies the roles of both K–12 and higher education policies, providing a basis for a balanced assessment. Academic policies that can influence preparation and success include school funding, standards, graduation requirements, and other policies affecting high school students. These policies have a direct effect on preparation (i.e., requiring certain behaviors) and an indirect effect on college enrollment and success (i.e., through preparation). In addition, the refined model notes the effects of early financial concerns and commitments on preparation, along with other forms of encouragement. State and federal grant programs can have a direct influence on both college enrollment and college success.

4.2

Linking policy and outcomes

The refined logic provides a basis for examining the role and influence of both education and finance policies. Given these considerations, it is possible to assess six types of linkages using appropriate databases. Linkage 1: Family concerns about paying for college can have a direct influence on aspirations and preparation. Programs that provide guarantees of grant aid to students from low-income families have been shown to have an influence on preparation (St. John and Hu, 2006; St. John, Musoba, Simmons, Chung, Schmit, and Peng, 2004). In this volume the role of families is considered in both state- and individual-level analyses. In the state studies (part II), we used demographic indictors related to income, diversity, and education as logical controls for the roles of families at the state level. In contrast, in the individual-level studies (part III), we include family background variables similar to those considered in the NCES studies.

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Linkage 2: High school policies—funding, graduation requirements, and other policies—can influence whether students take preparatory courses. This is a direct link because the behavior is the object of the policy. In part II we examine the relationships between state education policies and state-level outcomes related to preparation, controlling for state demographics. Specifically, in chapter 3 we examine the effects of state education policies on SAT scores, high school graduation rates, and college enrollment rates— a sequence of outcomes that could be influenced by state K–12 policies. In the individual-level studies (part III) we focus on the effects of state education policies on completion of advanced math courses. We chose this outcome because it is the measure of preparation most often used in NCES analyses of the academic pipeline and in arguments for reform of high school curriculum. Linkage 3: Two types of linkages are evident in this category. First, encouragement programs can have a direct influence on preparation (Hossler, Schmit, and Vesper, 1999), but it was not possible to examine such programs as part of this study, and Indiana may have been the only state with such a program in the 1990s. Second, it is possible that state financial strategies have an influence on preparation. This argument has been made about merit grant programs in particular (Bishop, 2004) but could also apply to need-based grants and privatization. To test these propositions in the statelevel studies, we examined the relationships between state finance strategies used during the sophomore year (two years before graduation) and eventual graduation rates (see chapter 4). We also consider how finance policies during the first year after high school influenced enrollment rates, an outcome related to Linkages 3 and 4. Linkage 4: Tuition and state grant programs can have a direct influence on both whether students enroll and the type of colleges they enroll in—twoyear or four-year colleges. This topic is considered in both parts II and III. In chapter 5 we examine how state finance policies influenced enrollment rates in two-year colleges, public four-year colleges, and private colleges. These analyses provide new insights into the role of market forces across states. Then, in the analyses of NELS, we examine how state finance policies were associated with choices individuals made about enrollment in different types of institutions, including out-of-state institutions. Linkage 5: Currently the new education rationales argue for improved enrollments in four-year colleges. We conducted an initial test of this argument for chapter 5, examining how state education policies relate to enrollment rates in different types of public colleges. While we thought this analysis had sufficient logical basis at the state level, it held sway at the individual level. Instead, we consider the indirect effects, reflecting on the role of math preparation in college choice (chapter 6).

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Linkage 6: High school policies also have an indirect association with persistence in college—if high school courses are associated with persistence in college, controlling for other variables. Since this relationship is not direct but is conveyed through courses taken in high schools, we did not examine this direct linkage. However, we do consider the indirect effects in part III and IV. Linkage 7: State finance policies can have a direct association with enrollment and choice of four-year colleges, topics addressed in the reanalyses of NELS (chapter 7). Linkage 8: Finance policies can have a direct effect on persistence and degree attainment, a proposition that is well established in the literature. In this volume we examine this linkage as part of the analysis of NELS (chapter 8).

4.3

Examining the effects of policies rather than the effects of intervening variables

Perhaps the most distinctive feature of the analyses in parts II and III of this book is the focus on the effects of education policies and public finance rather than on intervening variables related to policy. Much attention is given to the role of math courses, but the role and influence of education policies that require math have received relatively little attention. Similarly, there is extensive literature on the effects of grants and loans, but relatively few studies have examined the influence of public finance policies on student outcomes. By examining the direct effect of policies rather than the effects of related intervening variables, we move the field of public policy forward. In fact, student aid packages are influenced by state grant programs, but a number of other forces influence these packages as well, including federal and institutional aid. So examining the direct links between state finance policies and student outcomes is new and necessary. In addition, the proxy variables for math courses have received an extraordinary amount of attention from researchers. Yet we know of no prior studies that examine how education policies influence the completion of different types of math preparation. The analyses of the direct of effects of K–12 policies have importance beyond debates about math courses, however, and relate directly to the discourse of accountability schemes.

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STATISTICAL CONSIDERATIONS

Since research on the direct links between policy and student outcomes is relatively rare in research on student outcomes related to access and attainment in higher education, it is important to consider how this approach relates to the debates about statistical methods in education policy research. In Refinancing the College Dream, I reviewed trends in indicators and evidence from prior research to build an understanding of the relationships between changes in policy and outcomes over three decades. This study focuses on the decade of the 1990s and uses two types of statistical models to examine the effects of policies. The analysis methods are inferential rather than causal but are an improvement over the description of trends and, nonetheless, have implications for policy. Five issues related to statistical methods and interpretation merit mention in framing the studies in this book.

5.1

Linkages between policies and outcomes

The accountability scheme currently in use in the U.S. and internationally uses indicators related to outcomes to assess quality but has little regard for factors that can influence outcomes or for the role policy plays in the outcomes. If such an accountability scheme achieved the opposite of its intended effects it could go unnoticed, given the many other factors that influence these outcomes. Analyses in chapters 3 and 5 use the types of indicators normally used in state accountability schemes, including test scores, graduation rates, and college-going rates. Chapters 4 and 5 examined the associations between state education policies and public finance strategies and these critical outcomes, controlling for appropriate demographic variables. Using regression, an inferential statistical method, to examine these relationships is a means of assessing the effects of policies in terms of the outcomes they are intended to influence. This provides a means of assessing the effects of state strategies—a step largely overlooked in the excellence movement.

5.2

Fixed effects regression of state indicators

The fixed effects regressions used in the analyses in part II provide control for the effects of the state context. When ordinary least squares (OLS) regression is used in a time series model with multiple years of data on the same states, it is not possible to control for the state effect. In contrast, the STATA program provides a means of controlling for each state, so the variance in outcomes attributable to the state context across the observations for the state are taken into account.

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Using the fixed effects method substantially improves the quality of the state-level models. The substantial R2 for the models presented in part II is largely attributable to the embedded control of variance attributable to state contexts. Had OLS regression been used, the R2 would have been much smaller. In addition, by controlling for these state effects, the fixed effects models measure the association between policy variables and the outcome measures.

5.3

Selection of variables and exclusion of cases

Perhaps the most serious problem with the NCES studies of access and persistence is that variable selection procedures were used that excluded cases from analysis (Heller, 2004). When individual records are used to report only on cases with certain selected characteristics, the results are misleading. For example, NCES selected students who had taken certain courses and who had applied for college, resulting in high rates of enrollment for the groups reported. The most serious methodological error was using college application to select cases for the analysis (Becker, 2004): Selecting students with certain high school courses or test scores excluded students who should be included in analyses. Rather than using variable selection to exclude cases, it is essential to code variables in ways that include all possible cases. The analyses of NELS in part III used an approach to variable coding that enabled us to include all possible cases in the analyses. For, example we coded variables for standardized tests in a design set that included students who did not take the tests along with categories of scores in the analyses. In addition to avoiding the mistake of falsely excluding cases, this approach allowed us to control for—and to consider the effects of—related variables that logically should be controlled for, according to sound theory.

5.4

Assumptions about aid adequacy (and the role of selection bias)

In the analyses of individual data in part III we do not use student record information of student aid packages. Because we used state-level policy variables, it was not necessary to examine the effects of student aid received. However, the analyses in this volume do rely on prior analyses of the effects of student financial aid. My approach to interpreting analyses of the effects of student aid using logistic regression analysis has been to consider aid variables and income variables in relation to each other—as a means of making judgments about aid adequacy. A positive association for aid variables in these models was

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assumed to mean aid was adequate, and negative association was assumed to be inadequate (St. John, 2003). When aid was not significant and income was not significant I interpreted the findings to mean aid equalized opportunity. This approach assumed that selection for award aid to students (i.e., needs analysis) was included in the effects of aid. Recently a few researchers have used adjustments for selection bias. In one recent study (e.g., Alon, 2005), the author presents both the logistic model without the selection variable and the regression with the selection. Alon’s analyses found income and parents’ education were the primary predictors of selection, so he excluded these variables when selection variable was included in the analyses of the effects of aid on persistence. In the model with income, parents’ education, and grant amount, income was positively associated with persistence and grant amount was neutral. In the second equation without income and parents’ education, the selection variable was negatively associated with the outcome while grant amount had a positive association. These findings are an improvement on the analysis of the effects of grants because they untangle the selection effect and the effects of aid amounts. However, these findings also illustrate that the earlier interpretation method was correct with respect to the notion of adequacy, although the statistical method left room for improvement. The analyses in part III examine the effects of state funding, as secondlevel variables, so it was not necessary to consider the direct effects of student aid amounts in the individual analyses. However, portions of this text carry forward prior conclusions about aid adequacy, an interpretation that still seems appropriate, given the state of knowledge.

5.5

Two-level models

Two-level models represent an improvement over single-level models in studies that consider the effects of education and finance policies on individual outcomes. In the analyses presented in part III, variables related to student outcomes similar to those used in the NCES studies—including background and preparation variables—are included in the first level. At the second level of these models we examine the significance of policy variables controlling individual characteristics. This two-level analysis made it possible to examine the effects of state policies. (See appendix for methods.)

2. The Public Interest

6.

53

STUDIES OF STATE INDICATORS AND STUDENT OUTCOMES

Education and public finance policies play a major role in promoting justice within democratic societies. For most of the 20th century, public decisions about investment in K–12 and higher education were guided by economic and education theories and research. Both sets of theories were used to argue for more public spending, as investments in the economy and in human capital. The new conservative shift of the 1980s changed the nature and substance of the education policy debates. Rather than arguing for expanding and equalizing opportunity, the dominant educational rationale became one of control and regulation of K–12 systems under the guise of accountability and standards. And rather than supporting growth in human capital, the new conservative rationale treated spending on education as an individual decision and benefit. It has taken proponents of education two decades to adjust to this shift, and the adjustment is not complete. Rawls’s theory of justice, especially his principles as reconstructed (St. John, 2003; this chapter), provides a basis for a framework for examining the public interest in education—one which treats the quality of education, the objective of accountability and standards, as a basic right and the equal opportunity to attain an education, the objective of public funding schemes, as a right related to the difference principle. This framework provides a balanced approach to the assessment of the impact of public policies on educational outcomes and is consistent with the history of education policy in the U.S. and the basis of constitutional support for education. This volume addresses important issues about public integrity as well as philosophical issues related to finding a more just approach to policy research. I am concerned about integrity in both research and the policy process. By using a balanced approach to research that considers alternative explanations—or rationales—for the role of policy in promoting and equalizing education opportunity, I hope these studies demonstrate one way of bringing integrity back into the research process.5 Excluding variables related to alternative or competing explanations for policy outcomes may reinforce beliefs but does little to inform policy makers about the consequences of policies. In addition, there is reason for concern about integrity in the policy process when most research is biased by beliefs and ideologies rather than balanced in the consideration of alternative policy rationales. 5

There is still plenty of room to improve methods used to evaluate the effects of public policies on educational outcomes. However, policy researchers should focus on the effects of policy rather than merely focus on intervening variables such as math courses completed.

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APPENDIX: USE OF HIERARCHICAL LINEAR MODELS By Anna S. Chung

In part III we analyze a number of factors affecting student outcomes. Because state-specific policies are of particular interest to us—and we know that every state has implemented the policies differently—we also want to know whether state policies had the same effect on student outcomes across states. From a data perspective, there are several nested mechanisms through which different factors are affecting students’ college access, enrollment, and attainment. Hierarchical linear models (HLM) are often used to answer research questions involving nested data (Raudenbush, 1988). When estimating the relationship between the factors and the outcome for a group of individuals in a traditional OLS model, we obtain one slope for each factor in the regression. Every slope in OLS is an estimate pooled within a population. In HLM, we produce a slope for each group within a given state. Utilizing multilevel models, we can account for the nested nature of our data, and we can observe whether the relationships we are testing differ across states. Hierarchical linear models are not the only method that accounts for variation between different groups. To separate fixed or random effects across states, one could use a fixed- or random-effects model. However, HLM also avoids another problem a traditional regression model would produce: aggregation, which would inflate the slopes on the state policy variables. There are two levels nested in our HLM analyses: Level-1 estimates the relationships among the individual-level variables and the outcome, and Level-2 produces the coefficient estimates for the state-level policy variables. Level-1 is frequently called the within-group model and Level-2 the between-group model, with state being a group in our analyses. It is important to keep in mind that while we distinguish a presence of two models, we think of them and estimate them as a whole. To estimate our models, we used HLM 6 (Raudenbush, Bryk, Cheong, and Congdon, 2004,) software. Besides reporting the odds ratios and the associated significance levels, we also listed the Level-2 variance component and the corresponding significance test in order to be able to interpret and evaluate the model. If the variance component was significant, we rejected the hypothesis of zero variance and concluded that there was a significant variation among states in the outcome of interest.

II

STATE INDICATORS

Chapter 3 ACADEMIC ACCESS

By Edward P. St. John and Glenda D. Musoba1

Increasingly, education reforms in the United States are rationalized as means of improving access to higher education through improvement in college preparation (Kazis, Vargas, and Hoffman, 2004). Many of the new state reforms—increasing math requirements for high school graduation, raising educational standards, aligning curriculum and standards, using standardized tests as high school graduation requirements, and using meritbased grant aid—are rationalized based on the assumption that preparation barriers impede access to higher education. The logic of this academic preparation rationale is supported by the No Child Left Behind Act (NCLB) and is reflected in policy changes over the past two decades. While the academic preparation rationale was based on analyses of the statistical relationship between high school courses and college enrollment (e.g., Adelman, 1995, 1999; NCES, 1997a; Pelavin and Kane, 1988), policies rationalized on the basis of these statistics have seldom been systematically evaluated. Specifically, the linkages between state education reforms and college enrollment have seldom been examined. This chapter discusses the evolution of the academic preparation rationale, our research approach, findings, and implications for reforms.

1

We thank Choong-Geun Chung and Ada B. Simmons for their support in an earlier version of analyses presented in this chapter: E.P. St. John, G.D. Musoba, and C.G. Chung, 2004, Academic Access: The Impact of State Education Policies, in Readings on Equal Education: Vol. 19. Public Policy and College Access: Investigating Federal and State Roles in Equalizing Postsecondary Opportunity, E.P. St. John, ed., AMS Press, Inc., New York, pp. 131-151.

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1.

Chapter 3

STATE EDUCATION REFORMS

States have used research from the National Center for Education Statistics (NCES) to rationalize their education policies, just as the federal government has used these reports to rationalize federal education legislation, such as NCLB. The types of education policies that are aligned with the new academic preparation rationale include • Instituting “honors” diplomas for high school programs with advanced math courses and other advanced courses • Implementing math standards that are compatible with the National Council of Teachers of Mathematics (NCTM) recommendations, a generally accepted approach • Encouraging high schools to offer advanced placement (AP) courses, especially in math • Requiring high school exit examinations for high school graduation • Requiring three or more math courses for high school graduation, as contrasted to the usual requirement of one or two courses • Encouraging students to take the SAT (or ACT)2 State policies on educational requirements changed substantially during the decade of the 1990s (see Table 3-1), as did other policies related to preparatory curricula. While only 12 states had math standards that were consistent with NCTM recommendations in 1991, that number grew to 100 percent adoption in 1997. Math standards progressively rose from only 11 states requiring three or more years of study in 1991 to 25 states having that policy in 2001, yet a relatively stable minority of states maintained local control. The average percentage of schools offering advanced placement (AP) courses in a state also grew steadily—from 44 percent to 55 percent. Other aspects of the education policy environment have remained relatively stable. In 1991 honors diploma policies had been implemented in 17 states. This remained relatively stable over the decade. The implementation of several other policies grew substantially. The number of states with policies requiring high school exit exams grew from 17 in 1991 to a high of 23 in 1999 but dropped to 20 in 2000. The average state participation rate in the SAT also was relatively constant over the decade. Advocates of the academic preparation rationale have argued that educational outcomes are not related to educational expenditures (Finn, 1990, 2001; Paige, 2003). Unlike prior periods when proposals for academic improvement were used to argue for increased education funding, this was not the case generally in the 1990s. However, K–12 instructional 2

Our models include only the SAT participation rate. In supplemental analyses, we found nearly identical results relative to the ACT participation rate.

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expenditures progressively rose from an average of $2,960 per student in 1991 to $3,650 per student in 2001, even when adjusted for inflation. Table 3-1. Trends in the implementation of high school reforms in the 50 states and the District of Columbia Education Reform Honors or advanced diploma (Number of states) NCTM (Number of states) AP courses (Average % schools participating) Exit exams (Number of states) 3+ math (Number of states) 1-2 math (Number of states) Local control (Number of states) Adjusted K–12 instructional expenditures 2 years prior/FTE (Average [$/1,000]) SAT participation rate* (National average) Number of states with full data

1991 17

1993 17

1995 17

1997 17

1999 18

2001 17

12

28

46

50

50

50

44.31

47.78

49.92

51.25

53.95

55.11

17

19

19

17

23

20

11

10

16

18

21

25

34

34

28

27

25

20

6

7

7

6

5

5

2.96

3.29

3.36

3.44

3.54

3.65

36.32

37.14

35.59

34.82

37.00

37.00

51

51

51

51

51

50

*Participation rates here are averages of the state average participation rates, therefore the averages are lower than the national averages reported by the College Board, which takes into account the size of the state cohorts. Sources of data: Provided in the “Research Approach, State Database” section of this chapter.

Arguments for the K–12 reforms have been largely based on correlation statistics between high school courses and subsequent educational attainment. However, these reformers have failed to evaluate systematically whether these education reforms have led to improvements in educational outcomes. Three outcomes are logically related to these new policies: test scores as a measure of achievement, high school graduation (and dropout) rates, and college enrollment rates for graduates. Trends in these indicators are displayed in Table 3.2, showing some evidence of improvement in two outcomes from 1991 to 2000. SAT scores improved modestly and college enrollment rates rose, but the high school graduation rates declined. Were these changes in outcomes related to the new education reform policies?

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Table 3-2. Trends in SAT scores, high school graduation rates, and college enrollment rates for high school graduates Combined SAT High School Grad Rate, College Enrollment Year National Average National Average Rate, National Average 1991 999 71.2% * 1992 1001 71.2% 53.31% 1994 1003 70.0% 55.67% 1996 1013 67.9% 56.39% 1998 1017 67.8% 56.85% 2000 1019 67.1% 56.88% *Data not available. Sources: SAT scores: Annual college-bound seniors reports, College Board; Graduation rates: Chance for College by Age 19 by State, Postsecondary Education Opportunity web site; College enrollment rates: Postsecondary Education Opportunity web site (www.postsecondary.org).

2.

RESEARCH APPROACH

We developed a state-level database from information on the 50 states to examine the relationship between the adoption of new education policies and outcomes thought to be related to them. The analyses in this chapter consider the effect of demographic characteristics and state education policies on each of these outcomes. The database, statistical methods, and data limitations are described below.

2.1

State database

A multiyear database (1991 through 2000) was compiled from a number of government and private sources. Variables were state-level policies and achievement data. For the outcome variables, recentered SAT scores were gathered from the annual national reports of the College Board, and high school graduation rates and college-going rates (enrollment the fall semester following high school graduation) were calculated by Tom Mortensen and are available as Excel tables in the Postsecondary Opportunity Newsletter under high school graduation (www.postsecondary.org). State policies for honors or advanced diplomas were collected in surveys by the Council of Chief State School Officers (CCSSO) (www.ccsso.org) and published in the Digest of Education Statistics (NCES, 1992, 1993, 2001b). This was coded as a dichotomous variable for each year with a value of one if the state had a policy and a value of zero if the state did not. Assessments of whether the state’s mathematics content standards were in compliance with NCTM recommendations were also collected in the same survey by the CCSSO (NCES, 1999). Each year of implementation coded to

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a dichotomous variable. The percentage of schools in each state participating in the AP program and offering AP courses was drawn from the College Board web site (www.apcentral.collegeboard.com) and by mail from the College Board staff. An alternative variable, the percentage of students in the state taking an AP exam, was also available for some years, but preliminary testing showed that these two variables functioned in a similar manner in the regression (both significant and in the same direction in a test run) and correlated highly with one another. Because the percentage of schools rather than students is under greater policy control, this variable was selected. State exit exam policy implementation dates are reported in the State Student Assessment Program 1998-99 school year database from NCES. This was cross-referenced with CCSSO survey data published in the Digest of Education Statistics (NCES, 1993, 2001b) and coded as a dichotomous variable, whether or not the state has an exam. Math graduation curriculum requirements were also compiled in the CCSSO surveys for 1992, 1995, 1998, and 2000 and were reported in the Condition of Education reports for those years. The number of credits in math required for graduation was collapsed into three groups: high (three or more), low (one to two), and states that allow local school boards to control graduation requirements. Data on the average K–12 school funding for each state was available from the NCES web site. Only instructional expenditures were counted, and expenditures were divided by the enrollment or FTE to get a per-student expenditure and rescaled by dividing by 1000. The state average SAT participation rate is published each year in the annual national report from the College Board and is available on their web site. If a data point for a state policy variable was missing for a particular year, the value from the prior year was carried forward. This was appropriate because most policies remain in place once implemented. In a year a particular policy was reported to be in development, we assumed it could not reasonably be expected to be fully implemented; therefore, in dichotomous variables it was coded “no” in those years. State-level demographic data provided controls for those demographic variables known to be associated with achievement. For instance, the state educational attainment level, as measured by the percentage of adults with a bachelor’s degree or higher, also serves as a proxy for the average parent education level in the state. State-level education data was collected from the Current Population Survey (CPS) conducted by the U.S. Census Bureau. Average state poverty levels, also collected by the U.S. Census Bureau, were used as an approximation for the financial status of the citizenry in the state. The ethnic composition of the state, as collected through the NCES Common Core of Data, represents the state demographic context.

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The descriptive statistics for the variables included in the indicators analyses of academic access are presented in Table 3-3. The poverty rate averaged 12.9 percent across states, while the percentage of minorities ranged from an average of 11 percent African American to 6.1 percent Hispanic and 4.8 percent other minorities. The average combined SAT score was 1056, while the average graduation rate was 72.6 percent, and the average enrollment rate of high school graduates was 52 percent. NCTM standards were implemented in 79 percent of the cases analyzed. The SAT participation rate averaged 36.6 percent. About half of the high schools had AP courses. There was substantial variation in math requirements across the cases. Table 3-3. Descriptive statistics for variables in the fixed effects analysis of SAT score, graduation rate, and enrollment rate averages across year for all U.S. states Independent Variables % Poverty % Black % Hispanic % Other minorities (= Native American + Asian) % Population with BA or higher Enrollment when the cohort was in 9th grade SAT participation rate Honors or advanced diploma policy State guidelines consistent with NCTM standards % of schools participating in the AP program High school exit exam required High (3 or 4) math credits required for grad Local board control of math requirements for grad K–12 instructional expenditures per FTE

Mean/Percentage 12.92% 11.01% 6.10% 4.81% 22.78% 66.00% 36.65% 33.66% 79.08% 50.82% 37.75% 34.77% 11.75% $3,380

Outcomes Measures Combined SAT score High school graduation College enrollment by high school graduates

2.2

1056 72.63% 52.12%

Statistical methods

The analyses below used a fixed-effects ordinary least squares regression procedure, which is most appropriate for time series or repeat measures data because it takes into account the association between the values within each state over time. Our regression analyses used data from 1991 through 2000 and were conducted with STATA 8.0 software. Fixed-effects regression provides a means to control for states’ effects. The statistical method used in this is a fixed effects version of ordinary least squares (OLS) regression. It is OLS because it uses a continuous outcome. However, for the sake of clarity,

3. Academic Access

63

we refer to this as OLS, even though a fixed-effects regression was used. For each year there are multiple variable observations for the states. The regression method allows for defining each state so that the variance related to the state is controlled for within the explained variance (R2). Consequently the fixed effects analyses of state indicators explain a more substantial portion of the outcomes than does OLS regression.3 These analyses present both the standardized and unstandardized coefficients for the variables in each regression. The unstandardized coefficients would be used to estimate effects, if this were an appropriate step. In these analyses we were focused on whether these education policies had an effect on key indicators rather than on the extent of effect. However, we present these coefficients for readers who might want to compare across studies. The standardized coefficient provides a means of comparing the relative effects of the different variables. Variables that have a larger standardized coefficient have more substantial effects than do variables that have the smaller coefficient. We present each of the analyses in three steps. The first step indicates how much variance is explained by demographic variables and by implementation of state education policies. The second step adds participation rate in the SAT, and the final step adds the education policy variables. This allows us to consider the added variance in the outcomes explained by SAT participation and by additional variables. We also consider whether the significance of variables changes across models, as a means of considering the meaning of relationships among variables.

2.3

Study limitations

Using a state-level database provides a logical approach for examining the relationship between policies and these state-level outcomes. Further, by controlling for demographic characteristics that can influence these outcomes, we use a logically sound approach for assessing the relationship between high school policies and outcomes related to academic preparation. This approach has some limitations. First, given the relatively small number of states and large number of policies, there were limits to the number of demographic variables we could have used in this model (see Table 3-3). Given these constraints, we went through a number of steps to refine the model. We combined CPS statistical categories on ethnicity to come up with three distinct measures: percentages of African Americans, Hispanics, and other minorities in the population. We tested different measures of educational attainment, including the 3

For the same models using OLS regression see St. John, Chung, Musoba, Simmons, Wooden, and Mendez (2004).

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Chapter 3

percentages of both high school graduates and bachelor’s degree recipients in the state populations, but concluded that the single measure, i.e., percentage of the population with bachelor’s degree or higher, was appropriate. We also tested other measures of wealth and income but concluded that state poverty rate was the most appropriate predictor. Second, the SAT is not the only college entrance examination, but it is widely used as an outcomes indicator of education quality for K–12 education (College Board, 2001; LeFevre and Hederman, 2001), and scores for the ACT, the other major college entrance examination, were not available for all of the years studied. However, we took steps to consider the consequences of using SAT scores. We tested an SAT model with ACT participation rates but found it did not make a difference. Therefore, we concluded these analyses provide an appropriate measure of the effects of state education policies on educational achievement.4 Third, we also recognized that individual-level data is more typically used to study access outcomes. However, analyses of individual databases, such as the National Educational Longitudinal Study (NELS), could use multilevel models when the effects of state education policies were examined (see part II). This approach also presents problems, given that it is not possible to use the weights with hierarchical linear modeling. Fourth, no attempt was made here to estimate the magnitude of effects of state education policy variables. The focus is on whether the new education policies had the intended effects on college enrollment and/or had unintended effects on high school graduation rates. Given the findings, we did not think it would be productive to provide further estimates of effects.5 Finally, since our aim was to untangle the effects of education and public finance policies rather than to build the best statistical model, we did not provide a combined model with education and public finance policies in this chapter. Instead, our focus is on building understanding of the role and influences of both education and finance policies. We conducted analyses with combined models on college enrollment rates and found that the effects were similar in the combined model to the ones reported in these chapters. Separate treatment of the two models is consistent with the logic of the balanced access and attainment model.

4 5

We also used this model to predict ACT scores and had similar findings. Specifically we found no effects of state education policies on college enrollment rates and found negative effects on high school graduation rates. In the future it might be worth estimating the number of dropouts attributable to policies such as increasing math requirements for graduation. However, we did not think these analyses would provide a constructive contribution at the present time.

3. Academic Access

3.

65

FINDINGS

The analyses of the impact of state policies are presented in three parts: student achievement (SAT scores), high school graduation rates, and college enrollment rates. Fixed-effects OLS regressions for each of the three outcomes are examined below.

3.1

Student achievement outcomes (SAT scores)

The analysis of the effects of high school reforms on student achievement reveals that both demographic variables and state education policies were associated with SAT scores (Table 3-4). State demographic characteristics explained a substantial portion of the variance (see adjusted R2), but SAT participation rates and high school reform did improve prediction. Poverty rates had a negative association with SAT scores, while the percentage of other minorities in the population and the percentage of the population with bachelor’s degrees were positively associated with the outcome across all three models. However, the coefficient for two of these variables—poverty rate and percentage of other minorities—dropped in significance (from .01 to .05) when state education policies were considered. There is a confounding relationship between state education policies and these demographic characteristics. States with higher poverty and lower percentages of other minority populations6 apparently were quicker to implement some of these reform policies, an issue that should be examined further in the future. The percentage of African Americans in populations had a modest positive association with SAT scores before we controlled for SAT participation rates. Several of the states with high percentages of African Americans emphasize the ACT and/or have lower percentages of high school students taking the SAT. The percentage of the high school population taking the SAT was negatively associated with SAT scores, an expected finding (Powell and Steelman, 1996), before the final step. Interestingly, SAT participation rates ceased to be significant when other state policies were considered. Apparently, states that take action on the other policies are also states that encourage high school students to take the SAT. This is a reasonable intermediate hypothesis, given that such an approach would be consistent 6

Since the association of poverty with SAT scores was strongly negative before state education policies were considered but weaker after they were considered, it is apparent that high poverty (greater negative) would be mitigated by the policies. The reverse would be true for minorities, in which case the positive effects of the variables would be mitigated.

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with the academic access rationale described above. The percentage of the high school population taking the SAT was negatively associated with SAT scores, an expected finding (Powell and Steelman, 1996), before the final step. Interestingly, SAT participation rates ceased to be significant when other state policies were considered. Apparently, states that take action on the other policies are also states that encourage high school students to take the SAT. This is a reasonable intermediate hypothesis, given that such an approach would be consistent with the academic access rationale described above. Three of the state policies were statistically significant and positively associated with SAT scores. Having implemented NCTM math standards had the largest standardized beta and the strongest statistical association (.01). Both the requirement of three or more math courses for graduation and the percentage of high schools offering AP exams were significantly and positively associated with average SAT scores. These findings offer relatively strong support for the use of NCTM standards in math and modest support for AP courses and raising math requirements for graduation—as strategies for improving test scores. However, to test the notion that requiring math courses improves access we must look at the other outcomes as well.

Variables % Poverty % Black % Hispanic % Other minorities (= Native American + Asian) % Population with BA or higher Enrollment when the cohort was in 9th grade SAT participation rate Honors or advanced diploma policy State guidelines consistent with NCTM standards % of schools participating in the AP program High school exit exam required High (3 or 4) credits in math required for grad Local board control of math requirements for grad K–12 instructional expenditures per FTE/$1000 Model Statistics Adj R2 N P-value for F test that all ui=0 Note: *** p