Economic Issues of Student Achievement in a Non-Profit School Environment

The objective of this work in writing is to examine the economic issues of student achievement in a non-profit school environment. Toward this end, this work will examine literature across many areas of study to produce a synthesis of the information and knowledge available on the economic impacts of achievement among students who attend a non-profit school. Examined will be issues relating to accountability of non-profits, the accountability levels required for producing higher achievement among students and the availability of resources for student learning that results in achievement. Many non-profit schools are reported as failing. For example, it was reported that a non-profit school district in New Orleans intends to focus on failing New Orleans public schools and specifically that “A Recovery School District official plans to launch a nonprofit charter-management organization aimed at taking over and turning around failing schools.” (RENEW Charter Management Organization, 2009) It is reported that this move is representative of “a national trend toward creating groups that can step in and transform failing campuses; if further signals the latest evolution in a survival-of-the-fittest school landscape in New Orleans.” (RENEW Charter Management Organization, 2009) Ebrahim (2010) writes in the work entitled “The Many Faces of Nonprofit Accountability” that nonprofit leaders “face multiple and sometimes competing accountability demands: from numerous actors (upward, downward, internal) for varying purposes (financial, governance, performance, mission) and requiring differing levels of organizational response (compliance and strategic).”

I. Non-Profit Economic Outlook for 2011

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According to the Business Monthly “Forecast 2011: Clouds Breaking, Business looking Up” the non-profit organization is facing another tough year financially. The nonprofit organization will be “forced to navigate challenging opposing forces. With slow overall economic growth and deeper cutbacks in government spending, general needs continue to grow in our communities. Anxiety and stress, increased housing and employment insecurity, and aging infrastructures leave our communities and our environment at risk – increasing the demand for the services provided by nonprofit organizations.” (Business Monthly, 2011) The combination of “…decreased incomes, depleted investments and declining tax bases” are reported to be resulting in “less financial support from the individuals, foundations and governments that traditionally support nonprofit organizations.” (Business Monthly, 2011) Difficult strategic decisions are required for the non-profit in regards to “…maximizing the likely decreases in resources and assets available. For some, this will be an opportunity for innovation; for others, it may mean further narrowing of missions, limiting services or reducing service provision/employment.” (Business Monthly, 2011) It is reported as well that the “…new economic and political environments are far more volatile than they have been and will require organizations that can navigate change and better forecast future demand and support.” (Business Monthly, 2011)

I. Overview of Non-Profit School Funding

The work entitled “2010 Charter School Facility Finance Landscape” that there are approximately 5,000 public schools “operating under charters, educating approximately 1.5 million children nationally.” In addition, the report states that an ongoing problem for these schools is “lack of access to appropriate public facilities or to public funding…” (Educational Facilities Financing Center, 2010) Charter schools are different from traditional school districts in that Charter schools “do not have taxing authority and must rely on limited public capital funds and operating revenues to pay for their facilities.” (Educational Facilities Financing Center, 2010) There has been significant expansion in the financing of charter schools over the last twenty years as the charter schools as support in the earlier phases came from “…nonprofit community development organizations with support from the philanthropic community and the U.S. Department of Education.” (Educational Facilities Financing Center, 2010) However, there are presently more than 24 private nonprofit organizations that provide financing for the charter schools in the amount of $1.1 billion in direct financial support and another S369 million in the New Markets Tax Credit (NMTC) allocation. (Educational Facilities Financing Center, 2010, paraphrased) In the private sector, there are a reported 29 nonprofit organizations are stated to “provide significant facilities assistance to charter schools in the form of grants, loans, guarantees, real estate development and technical assistance.” (Educational Facilities Financing Center, 2010) There are also seven foundations with commitments to facility financing “on a more localized basis, providing grants and program-related investments (PRIs) to help finance charter school facilities.” (Educational Facilities Financing Center, 2010) In addition, “twenty nonprofit organizations provide financing for charter school facilities as part of their community development or charter support missions. Three organizations provide real estate development services, including one development that also provides credit enhancement and loan financing for charters.” (Educational Facilities Financing Center, 2010) The total provided by these nonprofits is the amount of $1.1 billion in direct financial support to charter schools. Charter schools additionally received funding from seven federal programs that provide various kinds of assistance. Further, the U.S. Department of the Treasury is reported to allocate authority for “three federal tax credit programs for which charter schools are eligible.” (Educational Facilities Financing Center, 2010)

II. Assessment of Funding Impacts on Schools

It is reported in the work of Lips, Watkins and Fleming (2008) entitled “Does Spending More on Education Improve Academic Achievement?” that the answer to whether “….education expenditures are correlated with student performance” has been the focus of academic researchers for quite some time however, it is reported that “there is a lack of consistent evidence on whether Education expenditures are related to academic achievement.” It is stated that while the findings are inconsistent that “leading researchers in the area acknowledge that any effect of per-pupil expenditures on academic outcomes depends on how the money is spent, not on how much money is spent.” (Lips, Watkins and Fleming, 2008) It is stated “…the issue is getting productive uses from current and added spending. The existing evidence simply indicates that the typical school system today does not use resources well (at least if promoting student achievement is their purpose.” (Lips, Watkins and Fleming, 2008) Hedges and Greenwald are noted to state that “The results do not provide detailed information on the educationally or economically efficient means to allocate existing and new dollars.… Discussions of school reform… should instead incorporate an assessment of the current relation between inputs and outcomes and determine how to best allocate resources in specific contexts.” (Hedges and Greenwald, “Have Times Changed?” p. 90. Lips, Watkins and Flemings, 2008) It is stated that it is clear from these findings which compete one with another that policymakers “should seriously consider improving how to allocate educational resources more effectively.” (Lips Watkins, and Fleming, 2008) Findings in public schools include the fact that “…Continuous spending increases have not corresponded with equal improvement in American educational performance. Long-term measures of American students’ academic achievement, such as long-term NAEP reading scale scores and high school graduation rates, show that the performance of American students has not improved dramatically in recent decades, despite substantial spending increases. The lack of a correlation between long-term Education spending and performance does not suggest that resources are not a factor in academic performance, but it does suggest that simply increasing spending is unlikely to improve educational performance.” (Lips, Watkins and Flemings, 2008) In addition, it is reported “…increasing federal funding on Education has not been followed by similar gains in student achievement. Federal spending on elementary and secondary Education has also increased significantly in recent decades. Since 1985, real federal spending on K-12 education has increased by 138%. On a per-student basis, federal spending on K-12 education has tripled since 1970. Yet, long-term measures of American students’ academic achievement have not seen similar increases. Long-term test scores among specific student populations, including ethnic minorities that have been a focus of federal Education policy, have improved some. However, the achievement gaps among white, black, and Hispanic students persist in test scores and graduation rates.” (Lips, Watkins and Fleming, 2008) Finally, findings show that education reform efforts need to focus on the improvement of allocation of resources rather than “simply increasing funding.” (Lips, Watkins and Fleming, 2008)

The work of Lockwood and McLean (1993) states that there has been the assumption that “there is an unquestionable connection between school funding and student achievement” however, it is reported in a study conducted among Alabama grade 4 and grade 8 students which e3xamined funds spent directly on the student and through the measurement of student achievement on Stanford Achievement tests which show “a relationship between school funding and student achievement….” although it is stated that the “relationship is not a simple linear one, but rather an ogive-shaped curve” which illustrates that “until funding is increased to a high level, the increases will have relatively little impact on student achievement. Additionally, when the amount spent on teaching higher order skills is increased, the relationship between school funding and student achievement will become closer.” (Lockwood and McLean, 2008)

It is reported in the work of Powell and Steinberg ( ) that the “deinstitutionalization of government resources has also led to the commercialization of the nonprofit sector and has further handicapped poor communities.…


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