Published Online: December 2, 2008
Published in Print: December 10, 2008, as Major Study Urges U.S. to Retool School Finance

Study Calls for Tightly Tying School Funding to Strategic Goals

When school systems spend more money on wealthy students than they do on poor students, more money on electives than on core academic courses, and more on Advanced Placement program classes than on remedial instruction, the education finance system is out of kilter.

That’s the conclusion of a team of researchers who recently wrapped up findings from a six-year, $6 million investigation of the federal, state, and local mechanisms that guide spending for the nation’s 97,000 K-12 schools. The group’s final report, which also outlines a package of bold steps policymakers should take to remake current school finance systems, was released at a Dec. 1 conference at the Brookings Institution, a think tank based here.

Financed with an initial grant from the Seattle-based Bill & Melinda Gates Foundation, the School Finance Redesign Project draws on 30 research projects at universities across the country. (The Gates Foundation also provides support for Education Week’s annual Diplomas Count report.)

The project also convened an 11-member consensus panel, called the National Working Group on Funding Student Learning, which released its own recommendations in October in a companion report. ("Overhaul School Finance Systems, Researchers Urge," Nov. 5, 2008.)

The final report, "Facing the Future: Financing Productive Schools,"Requires Adobe Acrobat Reader was the work of researchers based at the University of Washington in Seattle, where the overall project was based.

Both reports, though, describe a similar vision for turning around the nation’s school finance systems. They call for basing funding on student headcounts, connecting education dollars to results, supporting more innovation and experimentation, and holding schools and districts responsible for making continuous progress to improve student achievement.

But the new study goes a step further in urging dramatic change, according to Jacob E. Adams Jr., an education professor at the Claremont Graduate School of Education in Claremont, Calif., and the chairman of the national working group.

"We took the position that there are things you can do now to improve the links between resources and learning that would move us forward," Mr. Adams added, referring to the earlier report.

Less of a consensus document, the new report focuses more narrowly on innovating and experimenting to produce results down the road. It "takes the position that we don't know what works and that tinkering with the current system won't work," Mr. Adams said.

In-Depth Analysis

In the 2004-05 fiscal year, the final report states, the United States spent a total of $499 billion on its K-12 public schools. The problem, according to the researchers, is that many of the decisions made on how to spend that money are, in their words, haphazard, contradictory, politically driven, overspecified, opaque, and inefficient.

“Because we have a system where money is not connected to outcomes, we’re not able to answer the question, ‘How much should we be spending?’ ” said Marguerite Roza, a research associate professor at the University of Washington and the research director for the project at the university’s Center on Reinventing Public Education.

Ms. Roza led several studies for the project that looked in-depth at school spending in four states: North Carolina, Ohio, Texas, and Washington. District-level per-pupil spending in those states varied from a low of less than $2,000 a year in North Carolina to $4,424 in Ohio. At the state level, spending ranged from $3,321 per student in Texas to $5,295 in Washington state.

While federal funds went, as intended, to the highest-poverty schools in all of those states, that advantage was often offset by state spending for categorical programs, much of which went to schools with relatively small numbers of disadvantaged students, according to Ms. Roza’s analysis.

Ms. Roza also looked more closely at spending in six urban and suburban districts and found that schools often spend much less per pupil on core courses like English and mathematics than on elective courses. That’s due in part to average differences between the two types of courses in class sizes and in teacher salaries, with the most senior, and best-paid teachers, often getting the option of choosing elective courses for themselves.

While that part of the study drew on a small number of states, Ms. Roza said, the findings are consistent with other studies that point to similar patterns of unequal spending.

“Also, what we’re hearing from people is that these findings are ringing true with their experiences,” she added.

School administrators, for their part, are often prohibited from spending money differently, the researchers noted, because of requirements embedded in union contracts, or state and federal categorical programs.

“One of our main observations was that funding always comes with some sort of rule,” said Paul T. Hill, the director of the Center on Reinventing Public Education and the project’s current principal investigator.

Difficulties Seen

Under the redesign plan that Mr. Hill and his colleagues envision, states would combine all the money they now spend on K-12 education, divide it up by enrollment, and distribute it to school districts in the same way.

The plan also calls for student-based accounting systems, so that states and districts and researchers could pinpoint the most productive uses of state funds and move education dollars and people to smarter uses.

What that implies, the report states, is that “no use of money should be considered privileged or untouchable and that any decision to use money in a particular way be subject to amendment in light of evidence.”

When entire schools fail to meet their student-performance targets, that might mean targeting more training and resources to those struggling schools, the report says. But, it adds, districts also have to be willing to take other more drastic actions, possibly including reassigning personnel, canceling and replacing programs, bringing in new school providers, or making “new trade-offs between employees and technology.”

“If the district role is to do nothing but run a continuous-improvement system,” Mr. Hill added at the Brookings conference, “that’s a profound change.”

Mr. Hill acknowledged that the center’s redesign plan is “probably too big a bite for most states to take.” But he pointed to a number of districts, including those in New York City, Chicago, and New Orleans, that are already moving in the direction he advocates.

Several speakers at the conference noted that the researchers’ plan also poses some serious technological challenges for many rank-and-file school systems.

“I’m in general agreement with the recommendations, but practice is so much more complex than theory,” said Susan Sclafani. A managing director for the Chartwell Education Group, a consulting firm based in New York City, Ms. Sclafani directed the U.S. Department of Education’s vocational education program under former Secretary of Education Rod Paige and, before that, was the chief academic officer for the Houston school district.

She noted, for example, that during her time in Houston high-achieving students often “ceilinged out” on state exams. “So my question is, do we have the assessment systems we need to determine what is effective performance?” she asked.

Many schools also may not have the capacity to choose spending strategies that are more productive, she added.

Panelists also debated whether the nation’s economic problems posed an obstacle or an opportunity for school systems looking to rework their funding mechanisms. Ms. Roza noted, for instance, that policymakers might arguably embrace the project’s plan as a way to insulate themselves from politically painful spending cuts.

She said the message to district and school leaders might be: “Here’s how much money you have now. We’re going to loosen up the guidelines and you guys are going to have to make the choices.”

Vol. 28, Issue 15, Page 8

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