This post is by Jennifer Poon, Fellow, Center for Innovation in Education.
Suppose you are throwing a birthday party for a five-year-old and want to hire an entertainment company. Company A provides a magician who performs a standard set of magic tricks for an established hourly rate. Company B offers your choice of a magician, clown, face-painter, and balloon artist, all of whom get paid only if and when the kids are having fun. Even more, with Company B, each child can choose which act to watch at any given time; and you can give partial-compensation to the performers whenever they entertain only part of the group. Which company would you hire, and why?
Chances are, you would hire Company B because their entertainers are better incentivized to ensure that kids are having fun, and because the company allows for a more customized experience for each kid at the party. Company A may provide quality fun for those kids who enjoy the particular magic tricks performed, but the company will be neither as motivated nor as equipped to do whatever it takes to make sure each and every child has fun.
Thinking beyond party entertainment, when we consider how to fund learning opportunities for students the choices are not so different. For some time, states and districts have employed something akin to Company A, providing schools with funding based on the number of hours of instruction their students receive. How much a student learns during those hours, or how relevant the instruction is to their needs and interests, does not typically factor into funding calculations. The finance model was built for an education model that provides fairly monolithic programming for most students who proceed through the curriculum in lock-step.
Today, however, a new option exists in the pattern of Company B. Schools, districts, and states shifting to student-centered learning models, such as competency-based education (CBE) and personalized learning, are creating new rules for teaching and learning. Students may enroll in a mix of full- or part-time programs online or outside of their neighborhood school depending on what suits their needs and interests; may gain credits or micro-credentials whenever they master content and skills, which they may do in school or through expanded learning opportunities, internships, or career pathways outside traditional school walls; and may move at a pace uniquely their own, even progressing at different paces in some topics versus others.
These new structures and the teaching and learning environments they create demand new ways of funding such opportunities so that the funds incentivize behaviors that produce success. Recently, three funding concepts have risen to the forefront of national discourse: portability, performance-driven funding, and weighted student funding, each of which holds promise for supporting flexible, competency-based, and personalized learning opportunities. Of course, education finance isn’t as simple as party planning, and each of these concepts have pro’s and con’s which have been debated in recent pieces by school finance experts including a study by Larry Miller and a blog post by Marguerite Roza. So what can we make of it? A close read of Miller and Roza’s arguments suggests that how school systems align these concepts can make all the difference in how well they are able to ensure that all students succeed.
Portability is a funding mechanism where dollar amounts are allocated per student and “follow” students wherever they enroll. While invoked by many as a strategy to fund charter schools or voucher programs, the concept can be applied to student-centered learning systems in which students may earn credit for learning full- or part-time through online or out-of-school experiences. In such a system, each student would carry a metaphorical “backpack” of funding from which they can pull to pay for whatever mix of school(s) or provider(s) that they choose as they embark on unique educational pathways. As Roza notes, such a model would incentivize schools and providers “to pursue diverse digital and personalized learning offerings in ways that work best for their mix of students.” Conversely, without such funding rules - and without applying them at the federal, state, and district level - schools and systems will have fewer options for supporting student learning, much like the party host hiring Company A’s solo magician.
Performance-driven funding models attempt to mirror the shift in how CBE credentials learning with an aligned shift in how it is paid for. Traditionally, districts and schools are funded based on enrollment numbers or average daily attendance - i.e. how many students signed up or showed up for a given amount of time, regardless of how much they learned. This method of funding “seat time” is like hiring Company A and paying the magician based on hours performed, regardless of whether he was any good. But as systems shift to CBE, wherein credit is awarded not for “showing up” but for demonstrating competence, one might expect to provide compensation in a similar manner - much like the entertainment company that only gets paid when kids are actually having fun.
Currently, performance-driven funding models in K-12 education are more commonly found tied to online course offerings or, to a lesser degree, in contracts with providers of supports and interventions for struggling students. Most existing models are completion-based, meaning that compensation is given to the provider when milestones - such as assignments or an end-of-course assessment - are completed or passed. Some models are high-stakes based on completion of a full course or exit exam, such as Florida’s model that funds online programs when students pass an end-of-course exam; whereas others are low-stakes, such as New Hampshire’s model that funds the state’s Virtual Learning Academy Charter School (VLACS) based on the percentage of low-stakes assignments its students have completed.
Weighted student funding (WSF) describes a per-pupil funding allocation model that allocates more dollars to students based on student demographics that are typically associated with higher costs to educate to state standards. Common student categories that receive higher levels of funding include low socioeconomic status, special education, and English language learners. WSF is utilized to allocate at least portion of funds in most every state and district. In cases where states or districts have applied WSF rules to an unusually high proportion of funding, some studies have shown there to be more equitable distribution of resources as a result.
When applied in combination, portability, performance-driven funding, and weighted student funding can provide viable mechanisms for financing student-centered learning experiences such as personalized learning and competency-based education. To do so, and to avoid unintended consequences, policymakers should carefully craft such policies to ensure their systems are both effective and equitable. Here are three take-aways we might learn from Miller and Roza
1. School systems should consider applying portability rules to both full-time and part-time enrollments.
In current funding models, it is more common for states to allow portable funding if students enroll full-time in a school other than their neighborhood school, but less common for states to permit partial funding portability based on part-time enrollments. In New Hampshire, for example, funding for the state’s Virtual Learning Academy Charter School (VLACS) is portable only if students enroll full-time. Part-time enrollments, on the other hand, are essentially funded twice: the state fully funds the student’s home district, and then through funds coming from a separate source in the state budget, provides additional funding to VLACS based on the number of assignments that the part-time student completes.
Both Miller and Roza warn that funding part-time enrollments through set-asides in state budgets makes such funding vulnerable to budget cuts down the road. Miller suggests that system-wide portability may be a solution, meaning that “sending districts” would be forced to share funding with other providers if their students enroll part-time elsewhere. But Miller also concedes that doing so may ultimately reduce uptake if districts discourage students from enrolling elsewhere in an effort to retain funding. Roza offers a mitigating strategy by encouraging states to consider incentivizing districts through short-term investments or innovation grants, with the understanding that districts and schools will need to adjust their budgets to be sustainable as system-wide portability is phased in over time
2. Policymakers and stakeholders should explore the impact of portable and/or performance-driven funding models on equity.
Both funding portability and performance-driven funding models have been criticized for their potential to create inequitable distributions of funding across students, so states considering such policies should first consider their impact on equity.
Many funding models that rely on portability also use weighted student funding - that is, more money follows students that face greater costs to educate to standards - but some have argued that this is not enough to ensure equity because it does not compensate for the compounding effects of higher concentrations of higher-needs students. That is, a low-income student in a high-income school is generally less expensive to educate to standards than that same student in a low-income school. Applying the argument to portable funding for personalized learning experiences, school systems may need to continue considering group demographics in addition to individual student demographics when assigning weights to portable funding formulas. Those building systems that allocate a “backpack” of funding to each student may still want to allocate some additional funds that go directly to schools, programs, or other learning experiences that serve disproportionate numbers of high-needs students.
Like funding portability, performance-driven funding policies have the potential to create inequity by concentrating more money on some students than others. This risk is evident in New Hampshire, which does not include weighted student funding in its completion-based funding to VLACS. While the intent may be to incentivize VLACS educators to invest in the success of all its students regardless of demographics, such policies may inadvertently cause teachers to focus more energy on those students who already possess the background knowledge and skills needed to successfully complete assignments, overlooking those who are struggling. VLACS attempts to overcome this conflict of interest by holding teachers accountable for student success rates (a measure of the ratio of students who successfully complete a course compared to the number that enrolled), thereby retaining an emphasis on success for all students. Another option for states may be to craft performance-driven funding models that account for students’ prior learning and apply weighted student funding according to the amount of growth required to reach the standards or competencies in question. Or, school systems may use student demographics as a basis for weighting the amount of pay that schools or providers receive when students achieve performance targets, but such measures are blunt at best.
3. System leaders should mitigate the risk that performance-driven funding models might create misaligned incentives for educators.
In systems that use the same high-stakes measures to determine funding and accountability, teachers could be incentivized to pass a greater number of students than are actually competent in order to generate more revenue and to secure their positions. Or, they might steer students away from more challenging programming in a misguided effort to boost completions.
To reduce such misbehaviors, system leaders might look to create separate funding and accountability determinations by using distinct (though related) measures. In the case of VLACS, funding is determined by the percentage of low-stakes assignments its student body completes in aggregate, regardless of whether students end up mastering competency-based assessments and passing their courses. But the state holds the school and its teachers accountable for students mastering competency-based assessments - thus, regardless of how the school is funded, teachers remain incentivized to help students demonstrate mastery, not just to “pass them along.”
Further, VLACS retains a focus on each individual student by compensating teachers for instructing an agreed upon number of students who complete 100% of their personal assignments. Teachers who exceed that number are given extra pay, while those who miss their targets are not deducted pay but are instead referred for professional development.
Another key factor not to be overlooked is the role of culture in mitigating misbehaviors. At VLACS, Miller observed that "[a]t every stage of this analysis, we found VLACS leaders downplaying, minimizing, and protecting teachers and students from performance pressure.” In the words of one teacher interviewed,
”...there’s no part of what we do that ends up saying to the kid, you must do this because our funding is on the line, and instead of just worrying about learning, they’re worried about their teacher losing their job.... It just wouldn’t be right.”
Thus, education leaders should recognize the power they hold to define cultural norms and expectations in such a way that the pressure to secure funding or jobs is never inappropriately placed on students, or educators.
Ultimately, it is up to education leaders and their local communities to work together to design a system that best meets their needs. Additional suggestions for how this might be done are included in a recent paper released by the Center for Innovation in Education with support from the Nellie Mae Education Foundation. We hope that continued dialogue around these issues will enable education leaders to create systems wherein financial supports and incentives are aligned with a clear focus on student mastery and support college and career readiness through both traditional and innovative pathways.
The opinions expressed in Learning Deeply are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.