Districts Experiment With 'Weighted' Funding
Student numbers, needs drive dollars
Before this school year, creating a budget for schools in the Boston school district would regularly expose a tangle of competing interests.
The district had multiple ways of funding its schools. Some schools were allocated staff members based on student counts; other schools, which had been granted some budget autonomy, were given a pot of money based on enrollment. In tough budget years, cuts were made across the board—except in some schools, which couldn't operate with those reductions and ended up having money restored. Years of such adjustments created wide funding disparities among schools.
But in 2011, the 57,000-student district made a shift to a more uniform way of funding schools based on the numbers and types of students they served, with extra money, or "weights," given for students who are eligible for free or reduced-price lunch, enrolled in special education, learning English, or academically off track, among other factors. Instead of being forced to hire a certain number of staff members with that money, principals got flexibility in how to spend those funds.
The district uses several factors to determine how much money should be added to the base rate of educating a student. These added amounts of money, or "weights," mean that some students make a dramatically different impact on a school's bottom line than others.
Under Boston's system, a low-income English-language learner in 6th grade—student A in this example—would generate fewer funding dollars than a 4th grader with autism, or student B.
In moving to a "weighted student-funding formula," Boston joins other districts, such as Baltimore, Denver, Rochester, N.Y., and New York City, that believe this method better serves student needs and creates more transparency and fairness in district finances. And in a time of tight budgets, some also say this funding method creates a process where cuts can be managed around an individual school's needs, instead of coming by decree from the central office.
"The benefit is you have a single way of allocating resources across the district regardless of the type of school you're in," said John McDonough, Boston's chief financial officer. That leads to a significantly more rational way of responding to budget concerns, he said.
For example, Boston, facing a $63 million shortfall in fiscal 2012 out of an $829.5 million general fund budget, would have needed all schools to cut about 7.4 percent from their budgets as a part of closing the gap, said Seth Racine, the district's deputy chief financial officer.
But reallocating resources through weighted student funding meant that about 45,000 students were in schools that ended up making smaller cuts or even gaining in funding, despite the overall budget shortfall. Other schools in Boston experienced real decreases in funding or saw their budgets remain the same this school year, based on enrollment and the makeup of their student bodies.
Weighted student funding came to the United States in the mid-1970s from the Edmonton school system in the Canadian province of Alberta. The formula goes hand-in-hand with decentralized decision-making: Schools are given money based on student enrollment, but to operate effectively, principals must also have the power to make staffing changes as they see fit.
Over the years, the concept has received support from education policy leaders on both the left and the right. In 2006, the Thomas B. Fordham Institute, a Washington-based research and advocacy group, published an advocacy document called "Fund the Child: Tackling Inequity and Antiquity in School Finance," which found supporters among Democratic and Republican lawmakers. The document argued that weighted student funding shifted dollars to the students who need them most, and also gave charter schools a chance to get a larger chunk of education funds. ("Call for ‘Weighted’ Student Funding Gets Bipartisan Stamp of Approval," July 13, 2006.)
Marguerite Roza, a senior scholar focusing on education finance at the Center on Reinventing Public Education, affiliated with the University of Washington Bothell, said she believes current fiscal pressures are sparking some renewed interest in weighted student funding. School principals presumably have a better idea of their own needs than the central office staff, she said, so superintendents may think "if we attach flexibility to a cut, the decision can be made to fit the context of the individual school."
Weighted student funding can also help promote nonstandard staffing models that are growing in popularity, Ms. Roza said, offering as an example the Rocketship Education model. The Palo Alto, Calif.-based charter management organization combines online learning with small-group instruction. Standard funding formulas that provide a teacher for a certain number of students don't allow for that kind of flexibility, she said.
Link to Achievement?
Weighted student funding is not just a way for districts to fund schools. Gov. Jerry Brown of California, a Democrat, proposed earlier this year using a weighted student-funding formula to change how the state distributes money to its school systems. The state now has dozens of categorical funding streams that require districts to spend money for specific purposes; the weighted formula would do away with some of that complexity and give schools a base amount, plus additional dollars based on enrollment numbers for low-income students and English-language learners.
But weighted student-funding formulas are no answer to boosting student achievement, despite the formulas' appeal to both liberals and conservatives in the education field, said Eric A. Hanushek, a senior fellow at the Hoover Institution, at Stanford University. Mr. Hanushek, who wrote a March 28 Commentary on weighted student funding for Education Week, said in the essay that the formula method operates under an optimistic assumption that transparency in funding is connected to student growth.
In actuality, Mr. Hanushek said, principals are constrained by collective bargaining agreements and state, federal, and local regulations. "Maybe they can hire another remedial-reading teacher instead of an art teacher," he said in an interview. "But the flexibility school principals have is pretty marginal." And the formulas aren't connected to drivers of student performance, he argued. In his commentary, he said that it would be better for states and districts to use a funding mechanism that explicitly gives financial rewards for achievement.
Some of the earliest adopters of weighted student funding have backed away from the funding mechanism in favor of other methods of allocating dollars to schools. The 47,000-student Seattle district made a change after operating under the weighted funding system from 1997 to 2007, said Duggan Harman, the district's assistant superintendent for business and finance. Though Seattle is often used as a "poster child" for people who don't like weighted student funding, Mr. Harman said the system could work well in some districts as long as resources are adequate.
But in Seattle, "the way we implemented it was more onerous on schools than it needed to be," Mr. Harman said. "It gives an illusion of flexibility" when in reality, only about 10 percent of the money that a school received could really be spent at the principal's discretion, he said. The rest of the money was devoted to mandates based on union agreements and local and state regulations.
For the past four years, Seattle has used a model that distributes teachers and administrators based on the number of students a school has. There is still some weighting, where extra money is distributed to high-poverty schools, but it is not as extensive as under the old formula. The district is considering ways to create more flexibility with administrative staffing, so that schools might be able to choose to spend less money in that area and more money for instructional purposes, Mr. Harman said.
But other school districts plan to continue with their work on weighted student funding. Los Angeles launched a pilot of weighted funding in some of its schools in 2009-10, with plans to implement the policy districtwide by the 2012-13 school year. Baltimore, which just finished its fourth year of implementation, has seen several positive changes from the shift, said Matthew Hornbeck, a principal at Hampstead Hill Academy, a pre-K-8 grade school serving 650 students.
Mr. Hornbeck said he was able to use the flexibility offered by weighted student funding to provide assistant teachers for his kindergarten and 1st grade classes, which he would not have been able to do otherwise. He also said that he can use his dollars to "shop" for the best providers for extracurricular programs for his students. Under the old system, those extracurricular providers received a block of money from the central office and had little incentive to "sell" their programs to schools.
The funding formula, which Baltimore calls "fair student funding," also encourages principals to find more students for their schools, because more students mean more money, Mr. Hornbeck said. More than 900 school-age students have returned to school to earn their high school diplomas since the formula has been in place, he noted.
"In addition to the altruistic goal, it has a financial benefit for those schools that get those kids back," Mr. Hornbeck said.
Weighted student funding does create "winners" and "losers": schools that see more or less funding under the system than they had in previous years. And the formula can present challenges to small schools, whose enrollments may dip so low that operating a school is not feasible. In those cases, districts may have to use a base allocation in addition to the weighted formula.
Boston, in creating its formula, has had to work around all of those issues. To cope with the issue of winner and loser schools, it created a system it calls "soft landings," where schools that would otherwise face major cuts would not lose all that money at once. To address the needs of schools with high concentrations of students in poverty, the system provides extra dollars to schools that have more low-income students than the district's average. And all schools are given a foundation amount of $200,000.
These adjustments are in addition to a complex series of weights that are still under discussion: Boston is working on how to properly weight for students in special education, some of whom need more supports than others, and students in alternative education, who may be receiving a mix of services provided through the district and through community-based agencies.
Despite those challenges of implementation, Mr. McDonough, Boston's chief financial officer, said the system is pleased with the work.
"Our experience is that there's general consensus and uniformity that it's the right thing to do," Mr. McDonough said.
Vol. 31, Issue 35, Page 12