School & District Management

By the Numbers

By Jeff Archer — February 18, 2005 3 min read
School finance experts agree that interest in student-based budgeting is on the rise.

When Mark Smith was principal of Houston’s Anderson Elementary School in the early 1990s, he often ran up against a maddening mathematics problem.

At the time, the Houston Independent School District doled out money to schools for nonteaching staff members—like assistant principals, clerks, and librarians—based on a set of enrollment formulas that topped out around 1,200 children. With 1,570 students, Anderson got no additional funding for such positions than did much smaller schools.

“It was like those other 370 kids didn’t matter,” recalls Smith, now a manager of school administration in the district’s central office.

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His gripe partly explains why some districts, including the 210,000-student Houston schools, have adopted a “student-based” funding system. Instead of assigning staff positions based on broad enrollment ranges, a student-based system gives money to schools based on the actual number and kinds of students at each site. For a big school like Anderson Elementary, that means added funds for each additional student—and more flexibility in how to spend the money.

That’s because the approach typically goes hand in hand with site-based management, under which decisionmaking authority is moved from the central office to the school, allowing principals and other in-building officials more of a say in everything from spending to staffing.

Smith, the Houston administrator, says the two strategies work best in tandem. Districts that decentralize budget decisions to schools need an equitable way to allocate money. Likewise, he argues, it doesn’t make sense to equalize funding among schools without also giving schools more say over how they use the money.

“If you go to student-weighted funding and then tell principals how they have to structure their budgets, you’ve done nothing,” he says.

Pioneered in Canada’s Edmonton school district in Alberta in the 1980s, student-based funding has been imported to Seattle, Cincinnati, and San Francisco, along with Houston, during the past several years. It typically replaces “staff-based” budgeting, which gives schools additional teachers, counselors, aides, or other staff members for a set number of students—say, one teacher for every 25 students.

Because districts also decide where to place special resources such as bilingual teachers and music programs, the top-down approach has long resulted in different levels of per-student spending at schools within the same district, says Marguerite Roza, a senior fellow at the Center on Reinventing Public Education, based at the University of Washington. In a study of student-based budgeting in Houston, for example, she found two elementary schools of similar size and student makeup, but under the staff-based model, one got $2,341 per student while the other got $4,312.

School finance experts agree that interest in student-based budgeting is on the rise. As the push to hold schools more accountable for academic results prompts closer scrutiny of what it costs to educate students to higher standards, policymakers are searching for new ways to divvy up their finite resources.

Experts also say it’s important that school leaders get trained in how to manage their finances. Union contracts, which often mandate that schools have comparable staffing levels, are another hurdle.

“As soon as there are consequences for schools that aren’t performing, then all of a sudden people start to say, ‘This school has this, and we don’t,’ ” Roza says.

The model poses new challenges, however. For one, redistributing funds creates winners and losers among schools. Some districts try to cushion the effect by phasing in student-based budgeting over several years. Others include subsidies for the smallest schools, which, lacking the economies of scale of larger sites, can lose substantial funding under the model.

Experts also say it’s important that school leaders get trained in how to manage their finances. Union contracts, which often mandate that schools have comparable staffing levels, are another hurdle.

Houston principal Diana De La Rosa says the approach is worth the effort. When Houston switched to student-based budgeting in 2000, she led the city’s Benavidez Elementary. With most of its students living in poverty and in need of bilingual services, the school got more aid under the new model.

With the new cash and the flexibility in using it, De La Rosa reduced class sizes for her most-struggling English-language learners, paid for after-school programs, and hired staff members to help with parent engagement. She moved to a nearby middle school a year ago, by which time Benavidez had gone from “acceptable” to “recognized” under the state accountability system.

“We could individualize programs to meet the needs of the students according to the population we had,” De La Rosa explains, adding, “It feels like justice is being done.”

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