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Carolina Institute for Public Policy
District Expenditures of Disadvantaged Student Supplemental Funds
2004-05 through 2006-07
April 2009
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District Expenditures of Disadvantaged
Student Supplemental Funds
2004-05 through 2006-07
April 2009
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District Expenditures of Disadvantaged
Student Supplemental Funds
2004-05 through 2006-07
April 2009
IGNACIO NAVARRO
CALIFORNIA STATE UNIVERSITY
MONTERERY BAY
REBECCA A. ZULLI
UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL
GARY T. HENRY
UNIVERSITY OF NORTH CAROLINA AT
CHAPEL HILL
CHARLES L. THOMPSON
EAST CAROLINA UNIVERSITY
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Table of Contents
Introduction 1
Summary of Key Findings 2
Expenditures Classification Scheme 2
Chart of Expenditure Categories 3
Nature of DSSF Expenditures Across Time 4
Magnitude of DSSF Expenditures 4
Allocation of DSSF Dollars 4
Allocation of DSSF Funds by Expenditure Category for the 16 Pilot Districts 5
DSSF Funds and Teacher Pay 8
Fund Supplanting Analysis 11
Conclusions 11
Tables:
Table 1 Total DSSF Expenditures in Pilot Districts 4 Table 2 Allocation of DSSF Funds by Expenditure Category (Percentages and Total Amounts) 5 Table 3a Allocation of DSSF-Funded Expenditures by District (Percentages and Total Amount)
in 2004-05 6 Table 3b Allocation of DSSF-Funded Expenditures by District (Percentages and Total Amount)
in 2005-06 7 Table 3c Allocation of DSSF-Funded Expenditures by District (Percentages and Total Amount)
in 2006-07 8 Table 4 Percent of Total DSSF Funds Dedicated to Teacher Salaries and Supplements in the
16 Pilot Districts from 2005-2007 9 Table 5 Evolution of Teacher Bonuses and Supplementary Pay Differentials between DSSF
Districts and their nearest non DSSF Neighbors from 2003-2006 10 Table 6 Estimates of DSSF Funded Expenditures’ Impact on Locally Funded Expenditures 11
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District Expenditures of Disadvantaged Student Supplemental Funds: 2004-05 through
2006-07
Introduction
In 2004, Governor Mike Easley and the North Carolina State Board of Education established
the Disadvantaged Student Supplemental Fund (DSSF) as a pilot program in 16 of the state’s
most educationally disadvantaged districts. The overarching goal of the program was to
improve student learning and academic performance in the pilot districts, especially for
academically disadvantaged students. During the 2004-05 school year, the program provided
$22.4 million in new funds to the target districts. The program allowed districts flexibility to
allocate funds among a dozen “proven strategies” designed primarily to attract and retain
qualified, competent teachers and to provide enhanced instructional opportunities to students
at risk of school failure. The NC Department of Public Instruction (DPI) was required to
provide assistance and monitor the program through the Local Education Agency Assistance
Program (LEAAP). The pilot program continued with slightly increased funding for the
2005-06 school year. In 2006-07, the Governor recommended expanding the program
statewide, and the General Assembly appropriated $49.5 million for this purpose. The
original 16 pilot districts continued to receive the same amount of funding per pupil as they
received in the first two years, approximately $840 per academically disadvantaged pupil, but
the remainder of the state’s districts received approximately $88 per academically
disadvantaged pupil.
In 2005, before the statewide expansion, the General Assembly mandated an evaluation of
the effectiveness of the strategies funded by the DSSF program, as well as the effectiveness
and efficiency of DPI’s LEAAP teams. The team carrying out the evaluation is based
primarily at the University of North Carolina at Chapel Hill, with participation by researchers
at East Carolina University, Georgia State University, and California State University -
Monterey Bay. This is the fourth in a series of reports from the research team, but the first to
report findings on the DSSF expenditure patterns in the 16 pilot districts. The first report
compared the quality of teachers available to disadvantaged and other students in pilot
districts with the quality of teachers available to students statewide, traced patterns in the
performance of students progressing through NC schools, described how pilot districts spent
their funds and implemented the program, and explored the strengths and limitations of
assistance provided by DPI’s LEAAP teams. The second report provided an update on
teacher quality in pilot districts during the second year of the program and assessed the use of
DSSF to supplement teachers’ salaries. The third reported findings on the impact of the
DSSF on student performance in high school. In that report, based on a research design that
enabled us to separate out the effects of DSSF funds from a comprehensive array of other
influences on student achievement, we concluded that the DSSF definitely improved high
school student achievement during the two-year pilot.
An important next step was to assess the relative magnitude of DSSF resources in each of the
pilot districts and delve deeper into the manner in which they were spent in the pilot districts.
Consequently, the current report presents a thorough examination of the nature of DSSF
expenditures across the 2004-05, 2005-06, and 2006-07 years within the 16 pilot districts.
This report was designed to address the following five key questions:
(1) Overall, what is the magnitude of the DSSF resources as a percent of total
expenditures in the pilot districts?
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(2) Within the pilot districts, to which functional categories of expenditures were
DSSF funds ultimately allocated?
(3) To what extent were DSSF funds allocated to teacher salaries within the pilot
districts?
(4) How does the competiveness of teacher salaries in the 16 pilot districts compare
to those of their neighboring districts?
(5) To what extent were DSSF funds used to supplant monies from other sources?
Summary of Key Findings
In proportion to pilot districts’ total budgets, DSSF is a relatively small funding source.
Since the initiation of the DSSF program, DSSF-funded expenditures in the 16 pilot DSSF
districts represented less than 3% of their total expenditures. The majority of DSSF
expenditures in the 16 pilot districts were allocated to Regular and Special Instruction.
Across the 2004-05 and 2006-07 school years, the 16 pilot districts spent 66 cents per dollar
of their DSSF funds on Regular Instruction – on teachers and other costs of providing
classroom instruction in academic courses during the normal school day and week.
Cutting the pie in a different way, we see that the pilot districts spent about half of the DSSF
resources on teacher salaries and supplements. Furthermore, in the aggregate the proportion
of funds expended for salaries and supplements remained relatively constant over time. In
school year 2004-05 the pilot districts spent about 48% of the DSSF funds on teacher salaries
and supplements during the school year. This percentage increased slightly to 51% by school
year 2005-06 and decreased to 47% by school year 2006-07.
Another way of examining the impact of DSSF funds on salary spending in the districts is to
focus on salary competiveness. Salary competitiveness considers the salary changes in the
pilot districts relative to the salary changes in neighboring districts. After matching each
pilot district with its non-DSSF neighbors, we compared the teacher bonuses and
supplementary pay differentials between DSSF districts and their nearest non DSSF
neighboring districts for the year before the DSSF pilot program began (2003-04) through
school year 2005-06 (the last school year before the program was administered statewide).
Overall, eleven (11) out of 16 DSSF pilot districts gained salary competitiveness relative to
their closest non-DSSF neighbors. The remaining (5) of the16 DSSF decreased in
competitiveness over the three year period examined (2003-04 through 2005-06).
A final question is whether the pilot districts reduced local expenditures and supplanted those
expenditures with DSSF funds, thus defeating the purpose of creating a “supplemental fund.”
Importantly, our analysis did not find any evidence of fund supplanting.
Having provided this preliminary overview of our findings, we now step back to provide
more detail on the methods underlying our analyses as well as on the details of our findings.
Expenditures Classification Scheme
In our previous work examining the allocation of resources in high schools across the state,
we developed a coding scheme for classifying school and district expenditures by purpose
and object codes into 15 categories. We used this same coding scheme to conduct the current
analysis of expenditures in the DSSF pilot districts over the four year period from prior to
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inception through the first three years of implementation. The chart below describes each of
these categories.
Chart of Expenditure Categories
The NCDPI provided us with detailed expenditure data for each of the 115 districts in the
state for the 2003-04, 2004-05, 2005-06, and 2006-07 school years. For the state as whole,
we calculated total expenditures and total DSSF expenditures for each of the 4 school years.
We focused only on expenditures in the 16 pilot districts during these years, again calculating
total district expenditures and total DSSF expenditures and then breaking each of these totals
down into our previously developed expenditure categories. We then used DPI supplied
enrollment data to compute total per-pupil expenditures and per-pupil expenditures in each
Expenditure Category Types of Expenses Included
Regular Instruction Annual teacher salary, benefits, local salary supplements, bonuses,
classroom materials for instruction of regular students
Special Instruction Annual teacher salary, benefits, local salary supplements, bonuses,
classroom materials for instruction of students with special needs
Professional Development
for Instruction
Expenditures related to staff development and new teacher
orientation. These include expenditures for workshops and mentor
salaries and benefits.
Student Services
Salaries, benefits, and materials for guidance services,
psychological services, speech, language pathology, media
services, and some health services related to instruction.
Supplementary Instruction Salaries, benefits, and materials related to instructional programs
outside the regular school day.
Technology Purchases of hardware and equipment, computer software,
materials for technology vocational ed, and IT expenditures.
Other Supporting Services
Salaries, benefits, and supplies for student health services (not
related to instruction) such as medical, dental, and nursing services
as well as other student services not related to instruction.
Transportation Salaries and benefits for transportation personnel and other
expenditures related to the daily transportation of pupils.
School Maintenance &
Utilities
Salaries, benefits, and supplies for activities related to cleaning,
repairing, and maintaining school premises and the utility charges.
Maintenance & Food
Services
Salaries, materials, and food supplies for student nutrition
activities.
School Leadership Salaries, benefits, and supplies related to the principal’s office.
Community Services
Activities that are not directly related to the provision of education
for pupils in a local school administrative unit. These include
services such as community recreation or civic programs and
salaries for personnel related to these activities.
Capital Outlay Acquisition of property, renovations, replacement of furnishings
and acquisition of buses, etc.
District Administration
Salaries, benefits, supplies and other expenditures that support
district level activities including the board of education,
superintendents, business services, personnel services, statistical
services, planning, research, evaluation services, etc.
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category for the DSSF pilot districts, as well as, the state as a whole for both total
expenditures and for DSSF expenditures exclusively.
Nature of DSSF Expenditures Across Time
Magnitude of DSSF Expenditures
Since the implementation of the DSSF program in 2004-05, DSSF-funded expenditures in the
16 pilot districts represented less than 3% of total expenditures. The absolute amount of
DSSF funded expenditures increased from school year to school year in these districts. But
when we consider DSSF expenditures as a percentage of total expenditures in the pilot
districts, the pattern is different. As Table 1 below depicts, in the first year of DSSF
implementation, the state spent a total of $21,127,229 on DSSF-funded expenditures in the 16
pilot districts. DSSF expenditures in pilot districts increased by 6.05 % in the 2005-06 school
year and by another 0.45% in the 2006-07 school year. In relative terms, however, the
DSSF’s share of total expenditures in the 16 pilot districts remained fairly constant between
2004-05 and 2005-06 school years and decreased between the 2005-06 and 2006-07 school
years. As column 7 in Table 1 shows, DSSF expenditures represented approximately 2.8% of
total expenditures in the 16 pilot districts in 2004-05 and 2005-06. By the 2006-07 school
year the relative share of DSSF expenditures from total expenditures in the 16 pilot districts
decreased slightly to 2.7%.
In the 2006-07 school year, statewide DSSF funded expenditures increased by 113% when
the program expanded its coverage to include all school districts in the state. As column 4 in
Table 1 reveals, this increment in DSSF funds increased the relative importance of DSSF
funds as a percentage of total state expenditures from .19% in school years 2004-05 and
2005-06 to .37% in 2006-07.
Table 1: Total DSSF Expenditures in Pilot Districts
Allocation of DSSF Dollars
The majority of DSSF-funded expenditures in the 16 pilot districts were allocated to Regular
and Special Instruction. As Table 2 shows, between the 2004-05 and 2006-07 school years,
the 16 pilot districts spent 66 cents per dollar of DSSF-funded expenditures in Regular
Instruction. About 9 cents per dollar went to Special Instruction. Taken together, 75 cents
per dollar of DSSF- funded expenditures were allocated to Regular and Special Instruction.
Year All School Districts 16 Pilot Districts
Total
Expenditures
Total DSSF
Expenditures
DSSF
Expenditures
as % of
Total
Expenditures
Total
Expenditures
Total DSSF
Expenditures
DSSF
Expenditures
as % of
Total
Expenditures
2003-04 $10,345,330,573 $0 0.00% $698,455,645 $0 -
2004-05 $10,869,915,860 $21,127,229 0.19% $751,639,702 $21,127,229 2.81%
2005-06 $11,802,766,450 $22,405,838 0.19% $794,293,447 $22,405,838 2.82%
2006-07 $12,826,356,602 $47,820,309 0.37% $826,400,284 $22,505,639 2.72%
Total
04-05 - 06-07 $35,499,038,912 $91,353,376 0.26% $2,372,333,433 $66,038,706 2.78%
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In the aggregate, DSSF pilot funds in the last 3 school years were spent (in decreasing order)
on Regular Instruction (66%), Special Instruction (9%), Technology (9%), Professional
Development (6%), Student Services (4%), Supporting Services (3%), Transportation (1%),
School Leadership (1%) and District Administration (less than 1%). It is worth noting,
however, that the allocation of DSSF funded expenditures across different expenditure
categories was not constant over time. The most significant example of this change in the
spending mix over time can be observed in the Technology category. As Table 2 shows, in
the first year of DSSF implementation (2004-05), the 16 pilot districts allocated 14% of their
DSSF funded expenditures to technology-related activities. In the following years, however,
there was a substantial shift in allocation of resources from Technology to other expenditure
categories.
Table 2: Allocation of DSSF Funds by Expenditure Category (Percentages and Total
Amount)
Allocation of DSSF Funds by Expenditure Category for the 16 Pilot Districts
The last section revealed that, in the aggregate, there were slight variations on how the 16
pilot districts allocated their DSSF funded expenditures across different expenditures
categories over time. This section shows that there was significant variation in the DSSF
expenditure allocations across the 16 pilot districts. Tables 3a, 3b, and 3c show how each
district allocated its DSSF funded expenditures across different expenditure categories in
percentage terms for school years 2004-05, 2005-06, and 2006-07 respectively.
As Table 3a reveals, in 2004-05 the DSSF districts allocated from 30% to almost 90% of
their DSSF funded expenditures to Regular Instruction. Half of the pilot districts spent 70%
or more of their DSSF funds in Regular Instruction, while the other half allocated the DSSF
funds in a lesser degree to Regular Instruction and instead utilized more funds for the
Technology and Special Instruction categories. A couple of districts stand out for their
higher than average spending in Technology: Thomasville City Schools and Edgecombe
County Schools, which allocated less than 50% of their DSSF funded expenditures to Regular
Instruction and invested about 40% and 30% respectively to Technology.
By school year 2005-06, the majority of the pilot districts concentrated a higher proportion of
their DSSF funded expenditures to the Regular and Special Instruction categories than in the
previous school year. This trend was accompanied by a reduction in the proportion of funds
allocated to Technology. Interestingly, however, the Montgomery County School System
adopted an opposite strategy by increasing the proportion of DSSF funds going to
Technology related expenditures from 17% to 41% and reducing the proportion of funds
going to Regular or Special Instruction from 56% to 30% and 12% to 5 % respectively.
Year Reg
ula
r
Inst
ruct
ion
Sp
ecia
l
Inst
ruct
ion
Pro
fess
ion
al
Dev
elo
pm
ent
for
Inst
ruct
ion
Stu
den
t
Ser
vic
es
Tec
hn
olo
gy
Oth
er
Su
pp
ort
ing
Ser
vic
es
Tra
nsp
ort
ati
on
Sch
oo
l
Lea
der
ship
Dis
tric
t
Ad
min
istr
ati
on
Total $
2004-05 66 7 6 2 14 1 1 1 0 $21,127,542
2005-06 68 10 6 5 6 3 1 0 0 $22,405,838
2006-07 65 10 6 5 9 5 0 0 0 $22,505,639
All Years 66 9 6 4 9 3 1 1 0 $66,039,019
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Other interesting cases are that of Edgecombe County and Northampton County Districts,
which reduced substantially the proportion of funds, dedicated to Technology and shifted
them primarily to the Professional Development category, becoming the two districts that
allocated the highest proportion of funds to this category.
Table 3a: Allocation of DSSF Funded Expenditures by District (Percentages and Total Amount)
in 2004-05
School Year 2004-05
District Reg
ula
r
Inst
ruct
ion
Sp
ecia
l
Inst
ruct
ion
Pro
fess
ion
al
Dev
elo
pm
ent
for
Inst
ruct
ion
Stu
den
t
Ser
vic
es
Tec
hn
olo
gy
Oth
er
Su
pp
ort
ing
Ser
vic
es
Tra
nsp
ort
ati
on
Sch
oo
l
Lea
der
ship
Dis
tric
t
Ad
min
istr
ati
on
Total $
Lexington City 88 0 0 2 9 0 0 0 0 791,028
Thomasville City 43 2 11 2 40 1 0 2 0 666,500
Edgecombe County 30 13 7 10 29 8 0 4 0 1,897,435
Franklin County 72 4 7 2 16 0 0 0 0 1,940,026
Halifax County 89 0 3 0 0 1 0 7 0 1,355,053
Weldon City 68 0 14 0 17 0 1 0 0 269,387
Hertford County 55 22 3 2 17 0 2 0 0 901,500
Hoke County 72 7 8 2 9 0 1 1 0 1,648,250
Hyde County 50 13 0 0 37 0 0 0 0 182,083
Montgomery County 56 12 1 7 17 5 1 2 0 1,119,499
North Hampton County 31 26 10 0 24 2 7 0 0 813,500
Pasquotank County 57 13 4 3 17 5 0 0 0 1,371,591
Robeson County 79 6 11 0 2 0 2 0 0 4,815,883
Vance County 75 3 0 1 18 0 3 0 0 2,039,250
Warren County 72 3 6 1 14 1 3 0 0 777,494
Washington County 70 3 1 0 26 0 0 0 0 538,750
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Table 3b: Allocation of DSSF Funded Expenditures by District (Percentages and Total Amount)
in 2005-06
School Year 2005-06
District Reg
ula
r
Inst
ruct
ion
Sp
ecia
l
Inst
ruct
ion
Pro
fess
ion
al
Dev
elo
pm
ent
for
Inst
ruct
ion
Stu
den
t
Ser
vic
es
Tec
hn
olo
gy
Oth
er
Su
pp
ort
ing
Ser
vic
es
Tra
nsp
ort
ati
on
Sch
oo
l
Lea
der
ship
Dis
tric
t
Ad
min
istr
ati
on
Total $
Lexington City 86 0 0 6 9 0 0 0 0 766,750
Thomasville City 74 5 8 2 9 0 0 2 0 634,500
Edgecombe County 21 18 21 3 15 19 0 0 3 1,903,750
Franklin County 83 4 3 8 1 0 0 0 0 1,997,250
Halifax County 99 0 1 0 0 0 0 0 0 1,283,295
Weldon City 79 0 0 2 15 0 1 0 4 264,500
Hertford County 53 19 4 9 11 2 2 0 0 883,500
Hoke County 77 6 7 5 0 3 0 2 0 1,744,250
Hyde County 99 0 1 0 0 0 0 0 0 162,788
Montgomery County 30 5 4 18 42 0 1 0 0 1,128,249
North Hampton County 29 14 27 17 0 10 0 2 0 793,750
Pasquotank County 55 6 7 12 7 13 0 0 0 1,452,563
Robeson County 74 18 5 0 0 0 3 0 0 5,958,789
Vance County 88 0 1 6 2 0 3 0 0 2,130,654
Warren County 56 18 11 1 3 7 4 0 0 771,000
Washington County 75 4 2 0 19 0 0 0 0 530,250
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Table 3c: Allocation of DSSF Funded Expenditures by District (Percentages and Total Amount)
in 2006-07
DSSF Funds and Teacher Pay
This section of the report examines the proportion of DSSF funded expenditures that were
allocated to salaries across the 16 pilot districts over expenditure categories and time. In
addition, the final portion of this section examines whether over the time the DSSF pilot
districts’ teacher salaries became more competitive compared to those paid by their closest
non-DSSF neighbors1.
1 Salaries were calculated using accounting codes that correspond to salaries, supplements, and bonuses for
teachers in Regular, Special and Remedial Instruction.
School Year 2006-07
District Reg
ula
r
Inst
ruct
ion
Sp
ecia
l
Inst
ruct
ion
Pro
fess
ion
al
Dev
elo
pm
ent
for
Inst
ruct
ion
Stu
den
t
Ser
vic
es
Tec
hn
olo
gy
Oth
er
Su
pp
ort
ing
Ser
vic
es
Tra
nsp
ort
ati
on
Sch
oo
l
Lea
der
ship
D
istr
ict
A
dm
inis
tra
tio
n
Total $
Lexington City 94 0 0 6 0 0 0 0 0 766,750
Thomasville City 56 0 3 1 19 19 0 2 0 634,500
Edgecombe County 34 15 10 2 13 21 0 3 0 1,903,750
Franklin County 73 11 5 10 0 0 1 0 0 1,997,250
Halifax County 91 0 2 0 0 7 0 0 0 1,283,561
Weldon City 52 0 0 7 29 2 1 0 9 264,500
Hertford County 51 2 14 6 11 16 0 0 0 890,741
Hoke County 72 2 10 3 9 4 0 0 0 1,744,250
Hyde County 71 23 1 1 4 1 0 0 0 162,750
Montgomery County 35 13 11 20 13 6 2 0 0 1,128,249
North Hampton County 51 9 8 20 0 12 0 0 0 772,235
Pasquotank County 68 4 1 11 13 3 0 0 0 1,495,876
Robeson County 58 20 7 0 14 0 1 0 0 6,136,246
Vance County 92 0 0 7 1 0 0 0 0 2,023,750
Warren County 78 1 11 2 0 7 1 0 0 770,980
Washington County 72 8 10 0 9 0 0 0 0 766,750
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Table 4 shows the percentage of DSSF funded expenditures used toward teacher salaries and
supplements in each of the corresponding years by District. The table reveals that, in the
aggregate, the 16 Pilot Districts spent about half of the DSSF funds on teacher salaries and
supplements and the proportion of funds expended for salaries and supplements remained
relatively constant over time. Pilot districts spent about 48% of their DSSF funds on teacher
salaries and supplements in school year 2004-05. This percentage increased slightly to 51%
by school year 2005-06 and decreased to 47% by school year 2006-07. Table 4 also reveals
that even though in the aggregate the proportion of DSSF funds allocated to teacher salaries
remained relatively constant over time, individual districts used different expenditure
strategies, and these strategies changed over time. Franklin County schools, for example,
allocated 45% of their DSSF funds to teacher salaries in 2005-06 but increased that share to
about 70% by 2006-07. On the other hand, Halifax County schools spent about 73% and
54% of their DSSF funds on teacher salaries in 2004-05 and 2006-07 respectively.
Table 4: Percent of Total DSSF Funds Dedicated to Teacher Salaries and Supplements
in the 16 Pilot Districts from 2005-2007
Teacher retention and recruiting was one of the main concerns for school principals in the 16
pilot DSSF districts at the time the DSSF program was enacted2. Next we examine the
impact of DSSF funds on average teacher salaries in order to assess whether salaries in DSSF
pilot districts became more competitive in relation to their non-DSSF neighbors. To make
this comparison we defined neighbors for DSSF pilot districts as all districts that shared a
border with a DSSF pilot district and were not classified as a DSSF pilot district. After
matching each pilot district with its non DSSF neighbors, we compared the differences in
average bonus and supplementary teacher pay for school years 2003-04 (before districts
received DSSF funding), 2004-05, and 2005-06.
2 See Henry et al (2008) , “Improving Teacher Quality in the DSSF Pilot Districts: A Comparison of Progress
from 2004-05 to 2005-06”
District
School Year
2004-05
School Year
2005-06
School Year
2006-07
Lexington City 42 65 54
Thomasville City 34 65 47
Edgecombe County 28 23 29
Franklin County 42 58 69
Halifax County 73 51 54
Weldon City 51 61 43
Hertford County 48 55 37
Hoke County 47 45 53
Hyde County 48 71 69
Montgomery County 46 8 15
North Hampton County 36 22 38
Pasquotank County 33 48 57
Robeson County 59 61 42
Vance County 61 71 72
Warren County 24 42 33
Washington County 59 42 38
Total 48 51 47
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We concentrate on bonus and supplementary pay because the certified portion of a teacher
salary is largely determined by education, experience, and NBCT status and varies little
across different districts once these teacher characteristics are accounted for. The results are
presented in the second and third columns in Table 5. The second column illustrates the
average supplementary pay differential between teachers in a particular DSSF district and
teachers with similar characteristics in their neighboring district before they received DSSF
funds (school year 2003-04). Thus, the second column reflects the DSSF and non-DSSF
salary differential for teachers with the same years of experience, National Board
Certification status, and education level for the 2003-04 school year. The third column in
Table 5 illustrates the supplementary pay differential for school year 2005-06, and the last
column in Table 5 shows whether there was a change in the supplementary pay differential
two years after the DSSF program was implemented.
The last column in Table 5 shows that, by the 2005-06 school year, 11 of the 16 pilot districts
gained salary competitiveness relative to their closest non-DSSF neighbors, either by
increasing the positive salary differential or by decreasing the negative differential they had
before DSSF implementation. On the other hand, 5 pilot districts lost relative
competitiveness by decreasing the positive differential or increasing the negative differential
they had before DSSF was implemented. Hertford County schools showed the largest
increase in salary competitiveness relative to its neighbors in the observation period. In
contrast, Halifax County School’s average supplementary pay became less competitive than
their neighbors’ during the observation period.
Table 5: Evolution of Teacher Bonuses and Supplementary Pay Differentials between
DSSF Districts and their nearest non DSSF Neighbors from 2003-2006
District
DSSF-Neighbor Difference $* Change in
Bonus/Supplementary
Pay Gap ** School Year
2003-04
School Year
2005-06
Lexington City -1658* -1608* 51
Thomasville City -1132* -1558* -425**
Edgecombe County 53 553* 500**
Franklin County -1813* -1260* 554**
Halifax County -1236* -2050* -813**
Weldon City -1265* -712* 553**
Hertford County 379* 1847* 1468**
Hoke County -682* -262* 421**
Hyde County -509* -358* 151
Montgomery County -142* -612* -469**
North Hampton -314* 233* 547**
Pasquotank -537* -921* -384**
Robeson County -2271* -1865* 405**
Vance County -249* 141 389**
Warren County -180* -674* -494**
Washington County 122 985* 863** *Represents statistically significant difference between DSSF district and neighbors at the .05 level.
** Represents a statistically significant salary differential in 05-06 to that of 03-04 at the .05 level
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Fund Supplanting Analysis
The last section of this report addresses the question of whether pilot districts used DSSF
dollars to supplant the expenditure of local funds. In other words, did pilot school districts
reduce expenditures funded locally and supplant them with DSSF funds, thus defeating the
purpose of creating a “supplemental fund”? We would deduce there was evidence of fund
supplanting if increases in DSSF funded expenditures were accompanied by decreases in
expenditures made from other funding sources.
Districts get funds from multiple sources at the local, state, and federal levels. Furthermore,
school districts’ strategies for allocating funds into expenditures change over time due to
changes in funding sources and changes in the composition of the student populations they
serve. As a result, in order to study the effect of a particular funding source on another, it is
necessary to isolate the correlation between expenditures made with a particular fund source
on expenditures made with another funding source by holding other factors constant,
including other funding sources, districts characteristics, and events that may change
statewide funding strategies in a particular year. Multiple regression analysis is a way to do
this statistically.
Table 6 presents the results of a regression analysis that estimated the impact of an extra
dollar of per pupil DSSF funded expenditures on locally funded per pupil expenditures. One
can imagine that a district might use DSSF funds to supplant local funds during a given year.
In addition, districts that spent DSSF funds in one year might find it possible to decrease
local expenditures in the following year (for example, the purchase of technology or
materials). Table 6 indicates that DSSF expenditures did not exert any statistically significant
effects on local expenditures, either in the year in which the DSSF expenditures were made or
in the following year.
Table 6: Estimates of DSSF Funded Expenditures’ Impact on Locally Funded
Expenditures¹
% Change in locally funded per pupil
expenditures associated with a 1$ increase
in per pupil DSSF funded expenditures
(same year)
% Change in locally funded per pupil
expenditures associated with a 1$ increase
in per pupil DSSF funded expenditures
(same year and the past year)
Current Year 0. 007 0. 006
Past Year - -0.008
¹Numbers correspond to coefficients of an econometric model estimated using the First Difference
Estimator. Coefficients on other variables omitted from this table for simplicity.
In conclusion, none of the coefficients on the DSSF funded expenditure variables (current or
lagged) in our regression analyses were statistically significant by themselves or jointly.
Thus, our analysis did not find evidence of local fund supplanting caused by DSSF funded
expenditures.
Conclusions
While the DSSF was a relatively small funding source for the 16 pilot districts, the program
allowed them substantial flexibility in using the funds. Key purposes of the program were to
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attract and retain qualified, competent teachers and to provide enhanced instructional
opportunities to students at risk of school failure, and it seems from their patterns of
expenditures, that expenditures for these purposes were a priority in the pilot districts.
Overall, across the three years of funding, the pilot districts allocated a majority of the DSSF
resources, 66 cents per dollar, to expenditures in the category of Regular Instruction.
Increasing expenditures for teacher salaries, supplements and bonuses was a particular focus
of the DSSF expenditures in the pilot districts, with over 50% of the DSSF funds allocated to
salaries and supplements. Eleven of the 16 pilot districts increased the amount they spent on
salaries, with the greatest increase being nearly 20%. Increasing the expenditures on salaries
is clearly consistent with a focus on attracting and retaining quality personnel. Changes in
the expenditure patterns over time could reflect (1) more time to plan for the use of these
funds on the part of the districts, (2) better advice about how the funds could be used to
improve student achievement, (3) greater confidence that the DSSF would continue and
therefore, (4) they could make greater allocations to recurring costs such as teachers salaries,
or (5) changing local needs.
Increasing the ability of educationally disadvantaged districts to attract and retain teachers by
offering more competitive salaries may have contributed to the positive effects of the DSSF
funds on high school student achievement that we found in earlier reports. However, simply
increasing the amount spent on salaries does not necessarily make a district’s salary more
competitive. Competitiveness is also based on what other districts are able to offer to
prospective teachers. Over two thirds of the 16 DSSF pilot districts gained salary
competitiveness relative to their closest non-DSSF neighbors, either by increasing the
positive bonus and supplementary pay differential or by decreasing the negative differential
prevailing before DSSF implementation. Although small relative to pilot districts’ total
budgets, the DSSF funds enabled eleven of the pilot districts to offer more competitive
salaries to attract and retain quality teachers.
A crucial final finding is that the pilot districts did not simply reduce local expenditures and
replace those expenditures with DSSF funds, thus defeating the purpose of creating a
“supplemental fund.” Overall, the findings of this examination suggest that DSSF funds were
used as intented and were associated with increases in salary competiveness in the majority of
pilot districts. In combination with the other reports it appears that by targeting funding to
districts rather than to specific schools or students and allowing flexibility within guidelines
for how the districts spent the funds within the framework of the ABC Accountability System
has resulted in appropriate use of funds and improved student performance.