As the school year starts back up, millions of children are returning to class in states that have enacted new school finance laws — states like New Mexico, Texas, and West Virginia, among others. Despite the fact that many of these recently-enacted laws reshuffle millions of education dollars and inject millions more, most students are unlikely to see significant differences in their own schools. That’s because individual school districts, not states, are the true gatekeepers for how school-level resources are used — and if they don’t reform their ways, state changes will only have muted effects on the lives of individual students.
Here’s how funding works in nearly all public school districts: With money they’ve received from local, state, and federal sources, central office officials use schedules to allot staffing positions to schools based on rigid ratios. For example, a typical district may have a policy where it provides one guidance counselor for every 800 students enrolled at a school, or one teacher for every 25 students. These core staff are tasked with administering general classroom education, and account for the bulk (around 80 percent) of a school’s costs. Beyond that, districts provide categorical funding streams to each school for things like teacher training, classroom technology and school supplies, college preparation, and any other special initiatives the local school board supports.
As innocuous as this typical system sounds, it has a number of disadvantages for students. Firstly, the top-down staffing structure can lead to large disparities in how many dollars are given to each school — often at the expense of the highest-need schools. Brookings Institute research found funding disparities of up to $1 million between similar-sized schools located in the same school district. This is largely because schools in low-income areas may be given the same number of positions as schools in higher income areas, but they regularly get less experienced and lower paid teachers and staff — leading to lower spending at more disadvantaged schools since districts under the traditional staffing model don’t differentiate between teacher salary levels.
Another disadvantage of the prevailing district budgeting model is that it gives principals very little power over their school budgets — making it impossible for them to make changes when resources are being used ineffectively or don’t match their unique student needs. Things like which kinds of staff to hire, which services to purchase from the district, or whether to administer special programs for vocational education or gifted students — are all usually outside of a principal’s control. In fact, the average principal only gets to directly manage less than 5 percent of her school budget.
But there’s a growing movement that represents a serious shift away from the traditional, one-size-fits-all staffing model at public school districts. A new study from Reason Foundation surveys 20 districts across the country that have opted out of this model for an alternative system called student-based budgeting (SBB). SBB districts give principals greater control over their budgets (between 20 and 60 percent of their total operating budget, varying by district) by allocating dollars instead of positions. Also, most of the SBB districts Reason studied allocate the dollars via formulas that direct more funding to children with higher needs (i.e. low-income, disabled) — ensuring that higher-need students aren’t underfunded as they often are under traditional district budgeting systems.
Most of the districts Reason examined have either increased their commitment to SBB over time or have recently adopted the model. This growing popularity demonstrates that many of the key education issues frequently brought to state legislatures — salaries, class sizes, funding for high-need kids, closing achievement gaps — can be directly addressed by local districts if they are willing to fund schools with actual dollars and put more power in the hands of their principals. After all, they’re going to know what their kids need better than district officials or state legislators.