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Published in Print: November 30, 2005, as Hawaii Moves Forward With New School Finance Formula

Hawaii Moves Forward With New School Finance Formula

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In the face of controversy and lingering confusion, the Hawaii state board of education has voted to begin putting the state’s new system of school aid in place in the 2006-07 school year.

State legislation enacted last year called for such a “weighted-student formula.” The state board worked out the actual formula and approved it last month by 7-4 vote.

The plan is designed to target money to students’ specific learning needs and to give principals and school communities more control over spending on personnel, supplies, and other areas. Ultimately, state policymakers hope, when the money follows the child, schools will be better equipped to educate each student. While Hawaii will be the only state to completely convert its school finance system to a weighted-student formula, California and Colorado are studying the concept. School districts in San Francisco, Seattle, and other cities use or have used the school aid system, which was pioneered in the Canadian city of Edmonton, Alberta. ("‘Weighted’ Funding of Schools Gains Favor," Nov. 3, 2004.)

Under the new formula, more than 70 percent of the total state education department budget—roughly $1.3 billion based on budget figures for fiscal 2006—will be in the hands of principals. Currently, they have virtually no control over their budgets.

But while the new local control is welcome, school leaders, parents, and teachers have had a harder time swallowing the fact that, depending on the populations they serve, some schools will lose money under the new formula, while other schools get more. Because of those concerns, state board members say they will continue working to refine and improve the formula. In fact, Greg Knudsen, a spokesman for the state education department, said he expects that the formula will be “radically changed” in the long run to keep schools from seeing large losses.

Under Hawaii’s weighted formula, the basic per-student allocation is set at $4,274. That figure increases, based on funding “weights,” for special education students, English-language learners, students who qualify for subsidized meals, and for other student categories.

‘Extremely Apprehensive’

The road to the new funding plan began in 2003, when Gov. Linda Lingle, a Republican who took office that year, met with William Ouchi, a management professor at the University of California, Los Angeles, and a proponent of the weighted-funding approach.

State officials then visited Edmonton to learn more about its system of giving principals control over spending decisions.

For Ms. Lingle, who has tried unsuccessfully throughout her term to break up Hawaii’s single, 181,000-student school system into smaller districts with locally elected boards, the weighted-student formula represents progress toward decentralization.

Under Hawaii's new weighted-student formula for school aid, basic per-student funding is set for all students at $4,274.

Students with greater needs, such as those in special education, English-language learners, and those living in poverty, receive a funding "weight," meaning their schools receive more money for educating them. As a result, schools with more students with designated needs will see their state aid increase, while schools with fewer will see decreases.

But doubts remain about how schools will absorb decreases in aid.

At an Oct. 20 state board meeting, Roger Takabayashi, the president of the Hawaii State Teachers Association, an affiliate of the National Education Association, said that teachers were “extremely apprehensive” about what would happen at their schools under the new plan.

He complained that schools were already underfunded and could not afford to lose money because of the formula change.

“Our teachers are very resourceful, and they are making do with what they have,” Mr. Takabayashi said. “Cutting budgets even further—at any school—is not in the best interest of the schools and the students they serve.”

Some board members proposed cutting administrative positions at the central office to spare schools from losing money, but state schools Superintendent Patricia Hamamoto advised against that move, saying it would hinder the department’s ability to provide services to schools.

The state board’s original plan was to phase in the reductions and the increases over four years, 25 percent at a time, beginning with the 2006-07 school year. To reduce the burden on the schools that are expected to lose money, the board decided to limit the gains or losses to just 10 percent of existing budgets in the first year. The second year, the changes will increase to 25 percent, the third year to 50 percent, then in the fourth year, the changes will be fully in place.

Budget Awareness

Robert Campbell, the director of the weighted-student-funding project in the state education department, said he thinks that schools that are losing aid are less concerned now that they have some actual figures to work with: A 10 percent reduction, Mr. Campbell said, might translate to half a teaching position.

The department also hopes that other schools will be able to benefit from the lessons learned by 22 schools that volunteered in fall 2004 to pilot some of the pieces of the new aid program, such as instituting school community councils and implementing a new financial-accounting plan.

While schools had limited spending flexibility under the pilot phase, one school showed, for example, that it preferred to replace hard-to-fill paraprofessional positions with a full-time licensed teacher who was better qualified to analyze student-achievement data, Mr. Campbell said.

“We’ve seen much more awareness now of where the budget is going,” he added.

Under the current plan, 72 percent of the state education budget will be controlled by local principals, which means that for now, functions such as transportation and food service will remain with the central office.

Act 51, the 2004 law that authorized the new spending plan, set a goal of eventually moving 80 percent to 90 percent of the funds to the school level. When that happens, according to Mr. Campbell, schools at some point are likely to take on some measure of responsibility for “getting children to school, feeding them, or cleaning up after them.”

Vol. 25, Issue 13, Page 24

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