When Cecilia Mendoza recently hired eight teachers for her school in Oakland, Calif., the principal had to consider something that most school leaders in the country rarely take into account: the cost of their salaries.
In the Oakland Unified School District, the actual amount of staff salaries counts against individual schools’ budgets. So a more experienced employee—who has a bigger paycheck—eats up more of a school’s funding than does a less experienced one.
“You start to look at things very differently,” said Ms. Mendoza, the principal at Calvin Simmons Middle School. “You think: This person is costing me a certain amount of money. Are they earning the money they are getting?”
The policy, now in its first year in Oakland, is in contrast to districts’ standard budgeting practices, which essentially ignore the fact that the cost of filling a position in a particular school depends on the years of service of the person hired.
Proponents of Oakland’s approach say it reduces inequities in resources within districts. Because schools that serve high-poverty populations often have teachers with less seniority, their budgets go further under the model than do the budgets of schools with many veteran educators.
“The mere fact that they are doing this means that they will bring more resources to the schools that need it the most,” Marguerite Roza, a school finance expert at the Center on Reinventing Public Education at the University of Washington, said of the Oakland district. “And that’s a move in a positive direction.”
Ms. Roza and other analysts say Oakland is the only large district in country they know of that is using the model, which has been adopted nationwide in England. Houston has considered a similar process, but hasn’t instituted it.
The practice is controversial, because it changes the role of seniority in hiring by giving it a price tag. Schools also must readjust their budgets as they fill vacancies.
Dealing in Dollars
When allocating resources to schools, most U.S. districts think in terms of staff positions, not dollars. So two schools might have the same number of employees, but the actual cost of the two staffs can vary widely if one school has a more seasoned workforce.
Those differences are hidden in districts that don’t report budgets on a school-by-school basis. But even where schools have been given broad authority over their spending, the amount that districts “charge” sites for each position usually isn’t what’s paid to the person in a job.
In the 45,000-student Seattle district, for instance, when a school hires someone, its budget is charged the systemwide average salary for the position, regardless of what the new employee actually makes. Using averages is meant to ensure some stability in school-level funding, because the cost of each position is fixed.
But Russlynn Ali, the director of the Education Trust West, which is based in Oakland, said using averages results in fewer dollars being spent on students with the most needs.
Her group, an affiliate of the Education Trust, a national research and advocacy organization in Washington, is preparing a new analysis of California data that will show the differences in per-pupil spending that show up within districts once teachers’ actual salaries are figured in.
“We never get at the fact that a school in a suburban area of the same district, as a result of its teacher pool, is spending much more to educate those children than a school in the same district that doesn’t have the ability to recruit or retain those expensive teachers,” she said.
Oakland, which Ms. Ali lauds for tackling the issue, adopted the use of actual salaries in determining school budgets as part of an overhaul of the district’s financial operations. State officials took over the district 18 months ago, when financial mismanagement was partly blamed for a $60 million deficit in the system’s $400 million general fund budget.
Under what’s being called “results-based budgeting,” decisions over how to spend money have been shifted from the central office to the schools.
Randolph E. Ward, the state-appointed administrator who runs the 43,000-student district, said one aim is to heighten fiscal accountability. “It’s creating a mentality of ‘It’s our money now, it’s the site’s money, and it has to be carefully handled and responsibly disseminated so we actually get results,’ ” he said.
At the same time, the change is meant to give a greater advantage to high-need schools in recruiting teachers. By charging schools the actual cost of teachers, a school with more novice educators has more money left over to pay for training, supplies, or even to hire another teacher and thus reduce class sizes—all of which could make a school more attractive to potential recruits.
Mr. Ward hopes to break a local tradition in which schools in the poorest neighborhoods—mostly in Oakland’s low-lying areas—lose out in competing for experienced teachers with schools in the more affluent areas in the hills overlooking the San Francisco Bay.
“We’d like to see every school with a nice balance of veteran and junior teachers, because that allows for a lot richer collaborative process,” he said.
The district teachers’ union sees other motives. Ben Visnick, the president of the Oakland Education Association, accuses Mr. Ward of targeting seasoned teachers as a way of reducing the budget gap.
“What this does is, it forces principals to force higher-paid teachers to retire or resign,” said Mr. Visnick, whose group is affiliated with the National Education Association.
For now, the change hasn’t resulted in a huge redistribution of dollars. In a district undergoing deep budget cuts, and with a rapidly declining enrollment, many school leaders in high-poverty areas say the budget policy hasn’t meant a big windfall. Rather, they’ve lost less money than they would have if they weren’t charged the actual amount of salaries.
Schools in Oakland’s hill areas also haven’t yet felt the brunt of the new practice. Recognizing that suddenly charging actual salaries would devastate the budgets of some schools that now have very experienced employees, district leaders tapped about $5.2 million from local tax-levy funds to cushion the blow to those schools for three years.
Whether those schools will hire differently once that money dries up remains to be seen. Likewise, it’s unclear how well the district’s high-need schools will be able to attract and keep more experienced teachers, as Mr. Ward intends.
Denise Saddler, the principal at Anthony Chabot Elementary School, a high-performing school in the Oakland hills, said she doesn’t think her school will suffer as a result of being charged the actual cost of its employees. Experienced teachers might cost her more, but she also believes she’s better able to use what money she does have, given the greater flexibility that comes with the approach.
“I absolutely value veteran teachers and new teachers,” said Ms. Saddler. But, she adds, “I would never not hire a veteran teacher because they cost too much.”
Ms. Mendoza, the principal at Calvin Simmons, agrees. The middle school she runs serves a high-poverty community. While the new policy makes her more attuned to the contribution that each of her staff members is making, she said, it hasn’t made her reluctant to employ senior people.
Although she hired seven teachers for this school year who are in their first couple of years in the profession, she also recruited one who has eight years of experience. “If you choose to eliminate all of the senior staff and cut corners,” Ms. Mendoza said, “that decision may not help your student achievement.”
Coverage of leadership is supported in part by a grant from The Wallace Foundation, at www.wallacefoundation.org.
A version of this article appeared in the January 05, 2005 edition of Education Week as Actual Cost of Salaries Figures Into Budgets For Oakland’s Schools