School & District Management

‘Weighted’ Funding of Schools Gains Favor

By Jeff Archer — November 02, 2004 10 min read
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The allegations in the complaint revolve around the broker’s ethical duty to represent the interests of the insurance buyer. Marsh, in fact, describes that duty in its ethics statement, posted on its Web site: “Our guiding principle is to consider our client’s best interest in all placements. We are our clients’ advocates, and we represent them in negotiations. We don’t represent the [insurance companies].”

Classes at Van Asselt are smaller than those in the system as a whole. The school offers all-day kindergarten for free, while schools in wealthier parts of town charge fees to parents who want more than a half-day program. Money for staff training also is more plentiful at the school than elsewhere in the 45,000-student district.

“Our kids need extra support,” said Hajara Rahim, Van Asselt’s principal. “In a high-end school, teachers can function with 29 or 30 kids in a class, whereas we can’t.”

Tipping the scales in Van Asselt’s favor is a budget strategy called “weighted student” funding. Rather than allocate staff members to schools on the basis of student enrollment, a weighted-student model divvies up money based on the actual number and kinds of students at each school.

Interest in weighted-student funding, which Seattle adopted in 1997, is on the rise among education leaders. San Francisco started using it in 2002. Hawaii, with a single, statewide school system, is in the midst of implementing it. Officials in California and Colorado are studying how they could push the model throughout their states.

Spurring the attention is a book published last year by William G. Ouchi, a management professor at the University of California, Los Angeles. In Making Schools Work: A Revolutionary Plan to Get Your Children the Education They Need, he praises the use of weighted-student funding in Seattle, Houston, and Edmonton, Alberta, the Canadian city where the model was pioneered. Mr. Ouchi, who has become a guru on the subject, has advised policymakers in California, Hawaii, and elsewhere in recent months, as has former Edmonton Superintendent Mike Strembitsky.

Fans say it’s a budget strategy whose time has come. As the accountability movement prompts closer scrutiny of what it costs to educate children to higher academic standards, education leaders are searching for new ways to allocate finite resources among schools.

“If we know that different kids arrive in the classroom further from the standards than others, then your funding system has to address your need to get more resources to those kids,” said Joseph Olchefske, a former Seattle superintendent.

Following the Student

Not everyone is rushing to adopt weighted-student funding, which is linked closely to site-based management. Proponents of centralized management say there are other ways to reduce inequities without shifting considerable decisionmaking authority over financial matters to schools, as almost all of the districts that use weighted-student funding have done.

Even some district leaders who favor weighted-student funding are uneasy about the prospect that states may mandate it.

Most districts use “staff based” budgeting. For every 25 students, for example, a school might get another teacher. Similar increments usually determine the number of instructional aides, librarians, and assistant principals at each building.

On top of that funding, districts typically pay for special programs at schools. They might put additional bilingual teachers in schools with lots of English-language learners, or they might put a special music program in a school with a particular interest in the performing arts.

But the conventional model can lead to different levels of per-pupil funding from school to school within districts, and even among schools with similar types of students. That’s because one student can make the difference between getting another staff member or not. Also, some schools are better than others at convincing district leaders that they need special programs.

Such inequities remain hidden in most districts, because they don’t report per-pupil spending on a school-by-school basis, said Marguerite Roza, a senior fellow at the Center on Reinventing Public Education, located at the University of Washington in Seattle.

“As soon as schools think about dollars in terms of per-pupil funding, they realize that every expense of [another school] eats into their own per-pupil allotment,” said Ms. Roza, who has analyzed school spending patterns.

With weighted-student funding, a district divides up money—rather than staff positions and programs—among schools. Proponents also call it “student based” budgeting, because the money follows the student. When a school gets another student, it gets the extra amount of money that any other school in the district would get for that student.

Because some students cost more to educate, districts that use the approach “weight” the funding based on children’s needs. So in Seattle, an elementary school gets $2,927.23 for every regular student in grades 1-3. For a pupil who also needs bilingual education services, it gets 27 percent more. For a student living in poverty, it gets about 10 percent more.

“Similar students in different schools should get similar funding,” Mr. Olchefske said. “What school you attend shouldn’t vary the amount of resources you receive, but the existing model absolutely creates that outcome.”

Decentralizing Decisions

Weighted-student funding does not determine all of the resources a school receives. Seattle gives each school a base amount for administrative overhead. Certain state and federal funds that come with restrictions on their use don’t go through the formula. Central-office expenditures also don’t show up in the weighted-student allocations.

In Seattle, $194 million of the district’s total budget of $443 million goes through the weighted formula.

Still, the method does result in a significant shifting of resources. Consider again Van Asselt Elementary, where about 80 percent of the school’s 430 pupils live in poverty. When the district switched from staff-based budgeting to its weighted-student formula in 1997, the school gained about $375 per student as a result of the change, according to data collected by Ms. Roza. At the time, the school had about 286 students, making for a total increase of $107,250.

Meanwhile, at Wedgewood Elementary School, in one of the city’s most affluent neighborhoods, the new formula resulted in a decrease of funding of $200 that year. With about 365 students, Wedgewood lost $73,000.

In borrowing the strategy from Edmonton, Seattle became among the first big-city districts in the United States to use weighted-student funding. The Houston and Cincinnati districts adopted it in 1999. San Francisco followed two years ago. In each case, the move has been part of a larger school improvement strategy that seeks to decentralize financial decisions to individual schools.

As Mr. Ouchi, the author of Making Schools Work, explained: When schools get control over their budgets, district leaders need a defensible way to determine each school’s allocation.

“If you decentralize, how much money are you going to give each school?” he said. “And weighted-student funding is the only political answer.”

Mr. Ouchi is an unlikely promoter of the model. An expert on Japanese business practices at UCLA’s Anderson Graduate School of Management, he once served as chief of staff to then-Mayor Richard J. Riordan of Los Angeles. California Gov. Arnold Schwarz enegger tapped Mr. Riordan, a fellow Republican, last year to be the state’s secretary of education.

As the governor’s top adviser on school policy, Mr. Riordan has said he supports weighted-student funding and site-based budgeting, although he has yet to put forth a specific plan for using them statewide. California policymakers are searching for alternatives to what many analysts see as a Byzantine process for channeling education money through numerous programs.

Exactly how California might move to a statewide weighted-student plan remains uncertain. The strategy is politically risky, particularly when money is scarce. By redistributing resources, it produces winners and losers among schools. Some California district leaders oppose the idea of having the method imposed on them by the state.

In a interview last month, Mr. Riordan hinted that he might propose incentives instead. “You could tell districts that if you will do this, we will take away all the strings as to how the money is going to be spent, and that probably is the way the governor will go,” he said. “But it’s not clear.”

In Colorado, districts wouldn’t have that option under a plan proposed by Rep. Keith King, the Republican majority leader in the state House of Representatives. He is drafting a wide-ranging bill that would require districts to adopt a weighted-student funding model and to shift decisions over how to spend the money to the school level.

Mr. King, who is consulting with Mr. Ouchi on the legislation, notes that states already allot aid to districts largely based on student need, and yet most districts still use the staff-based method to distribute resources to their schools.

“If it is a valid argument that we give more dollars to districts that are serving those kids,” he said in a recent interview, “then we should specifically ask those districts to spend that money on those kids so they are not left behind.”

Alternative Fixes

Mr. King plans to introduce his bill after the Colorado legislature reconvenes in January. If so, he’ll encounter opposition.

Jane Urschel, the associate executive director of the Colorado Association of School Boards, said local leaders should determine how to distribute their resources. She also doubts that many principals want the added administrative burden of creating their own budgets.

“It sounds idealistic to say, ‘Let the money follow the student,’ ” she said. “But it may not be to the best advantage of students to fund that way.”

Others say that districts are able to address the varied needs of students within a staff-based model. Some school systems, such as Charlotte-Mecklenburg, N.C., use different formulas to assign staff positions to schools depending on such indicators as the percentage of poor students at each building.

Eric J. Smith, the former Charlotte-Mecklenburg superintendent who started the district’s “differentiated staffing” system, said weighted-student funding can put schools in a difficult situation.

“Where it doesn’t work for me is, what if the principal at the end of the day doesn’t have money for a full-time reading teacher—just three-fourths of one—and then they can’t hire the kind of quality they need,” said Mr. Smith, who is now superintendent of the 75,000-student Anne Arundel County, Md., schools. “I’d rather have a district formula that says, ‘We’re going to give you the full thing.’ ”

Weighted-student funding poses other challenges. Some districts that use it have had to add special subsidies for small schools, which, lacking economies of scale, can lose substantial dollars in a transition to the model. Union contracts, which often stipulate staffing levels at each school, also could present obstacles.

Even in Seattle, it’s unclear what the future holds for the district’s use of the approach. An election there a year ago put in place a new school board majority, which has begun an extensive evaluation the school improvement strategies launch ed by the district’s previous leadership.

Ms. Rahim, the principal of Van Asselt Elementary School in Seattle, wouldn’t want to receive funding any other way. She values the added discretion she has in spending as much as she appreciates the added money.

She has used $40,000 that in the past was designated for a foreign-language enrichment program, which she thought was ineffective, to instead pay for teacher training and instructional materials.

That kind of flexibility, she said, has let her build an academic program that best fits her school. Last year, student performance at Van Asselt rose enough to move it off the state’s list of schools that hadn’t made adequate yearly progress under the federal No Child Left Behind Act.

“Everyone bought into what we were doing, the teachers bought into what we were doing, because we said this is what we need to do,” Ms. Rahim, who has been a principal at the school since 1995. “It wasn’t someone else telling you what you needed to do.”

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