Diversity Incentives for School Districts
This recommendation would provide fiscal incentives for local school districts to expose low-income students to an economically diverse school setting, thus improving their educational opportunities and performance consistent with research findings.
The calculation for incentives for any existing school would be founded upon a "baseline amount of economic diversity." This baseline would establish a starting position (for example, the most recent school year) against which subsequent change would be measured that would trigger State financial incentives. The baseline would consist of counting the number of "low-income students" in each school building. (One might define low-income as qualifying for free/reduced-cost lunches, as is now calculated by most schools.)
A State funded incentive grant will be provided for each additional low-income student who is enrolled over and above the baseline number previously enrolled at that building, so long as the addition of that student does not result in the school building exceeding a 20% low-income student body.
This means that any existing public school will receive a per pupil grant when it chooses to:
a) enroll additional low-income students living outside the district and assign them to school buildings where less than 20% of the students are of low income,
b) enroll increasing numbers of low-income students residing within the district and assign them to school buildings where less than 20% of the students are of low income, or
c) transfer a previously enrolled low -income student from a school with 20% or more low-income students at the baseline and assign that student to a school building where less than 20% of the students are of low income.
The participating school district will receive an annual grant for each additional low-income student enrolled beyond the baseline. The amount of the grant will be equal to the average per pupil expenditure in the prior year in that existing school plus 10%. This strong incentive is recommended to overcome putatively higher costs of educating low-income children and possible prejudices of the body politic in the school.
Should any school building initially at a baseline below the 20% low-income student body threshold eventually exceed that percentage, any grants that previously applied would be reduced. The grants awarded to that school would be proportionately phased out as the building progressively exceeded a 20% low-income student body.
For any new public school building with no prior student body, no baseline can be established. Thus, incentive grants would apply to its initial constituting of a student body. Such a new school would be given an incentive to accept a low-income student as a first-time enrollee so long as less than 20% of the students are of low-income. In this case the school will receive an annual grant per low-income student equal to the average per-pupil expenditure in the prior year in that student’s original school district, plus 10%. Should the initial student body exceed 20% low-income, the per-student grant would be reduced pro-rata, as per above. The enrollment established during the first academic year will serve as that building’s baseline, on which future incentives would be provided as per rules for existing schools above.
It should be clear from the above that as low-income children first enroll in any school or school district (city or suburb) they will carry with them a sizable state subsidy. Hopefully, many schools will find it financially attractive to educate lower-income students in school buildings where they do not exceed 20% of the student body. Looked at from a different perspective, the State is assuming a larger share of the cost of educating low-income children and thereby providing incentives for public schools to expand the opportunities for these children to gain a quality education.
Diversity Incentives for Local Governments
To reduce areas of concentrated poverty and provide opportunities for low-income households to reside in areas close to suburban employment centers and raise a family in a diverse setting we recommend diversity incentives for local governments.
As in the case of schools, the calculation of incentive grants for any local jurisdiction would be founded upon a baseline amount of economic diversity. The baseline would consist of the number of "low-income households" (perhaps those with incomes below the official poverty line) in each neighborhood (census tract), as enumerated during the most recent decennial census.
For each neighborhood having less than 20% low-income households at baseline, incentives will be provided for increasing that percentage; for each neighborhood having more than 20% low-income households at baseline, incentives will be provided for decreasing that percentage until it does not exceed 20%. Specifically:
The logic of the policy creates somewhat different but complimentary incentives in exclusive suburbs, mixed-income cities, and high poverty inner-cities.
The use of the decennial census to measure changes in neighborhood populations should not prove problematic here, as it has not in the General Revenue Sharing and Community Development Block Grant Programs. If, for example, the policy were enacted today, the 1990 census would give the baseline and jurisdictions would have between now and the 2000 census to alter their population distributions. The observed changes between 1990 and 2000 would determine their grants for the next decade. Of course, they could further adjust their policies so that the 2010 census would reveal additional progress and yield subsequent grant increases for the ensuing decade.