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Summer 2008 Vol. 15. No. 4 Focus on Following the Money

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Looking to divide the pie more fairly

New CEO wants to distribute school funds through a "weighted student funding" system.

By by Dale Mezzacappa on May 22, 2008 12:00 AM
Photo: Harvey Finkle

Incoming CEO Arlene Ackerman, talking here with Masterman sophmore Dan Jones, endorsed student calls for more openness in District dealings at a Philadelphia Student Union rally outside District headquarters April 24.

Incoming School District CEO Arlene Ackerman comes to the Philadelphia School District determined to adopt a new system for distributing funds to schools that could significantly redirect resources to high-poverty areas and give parents, teachers, and principals more say over how money is spent.

The system, called “weighted student funding,” or “weighted student formula,” would also bring more transparency to the District’s budget, which one national school finance expert has called “the worst” she’s ever seen – a mishmash of numbers that make it difficult to track school-by-school and program-by-program spending.

Also sometimes called “fund the child,” a weighted student formula assigns a dollar value to each child based on circumstances including poverty, lack of proficiency in English, and other educational needs.

“It determine[s] how you are going to allocate funds in an equitable way to schools based on specific student characteristics,” Ackerman said in an interview.

Students with more needs have more money follow them, whatever school they attend. What characteristics to include in the formula and how much weight to give each would be decided in an open process involving parents, teachers, principals, and community members.

“It’s important as a way to address equity and bring more openness and participation to the budget process,” said Ackerman.

She said she plans to start holding community meetings about the process in the fall.

Weighted student funding has supporters who span the political spectrum, from free-marketers who see it as a step towards more choice to community organizers who see it as a way to pump up budgets in the neediest, most poverty-stricken schools.

But critics say that it doesn’t work when budgets are tight or shrinking and schools wind up fighting in a “robbing Peter to pay Paul” scenario. And budgets are tight in Philadelphia, which is facing cuts due to a projected $39 million shortfall in the 2008-09 budget.

However, Ackerman thinks that adopting weighted student funding could help address the shortfall, making it more likely that state legislators and City Council will consider sending more money to the District “if they are convinced we’re distributing the dollars we have more equitably.”

Ackerman is a pioneer of this approach, having helped implement a version of it in her three previous districts: Seattle, the first U.S. district to embrace it, Washington, DC, and San Francisco.

In one form or another, it is also used in such districts as Houston, New York City, Cincinnati, and Oakland, CA.

It discards long-standing methods for allocating staff and resources to schools that appear neutral, but tend to favor better-off schools. Laden with complexity and political minefields, however, it has been relatively slow to catch on across the country.

Resources follow need

“The key idea is that similar kids are funded similarly,” said Joseph Olchefske, the former superintendent in Seattle and now a consultant working on school budgets for the American Institutes for Research. “If part of your philosophy is that resources follow the kids based on need, then you put more resources where the need is higher.”

He added that the process, “is far more than budget reform; it’s a way of organizing the district and thinking about decision-making and equity. It raises a lot of issues that need lots of discussion.”

Currently, Philadelphia, like most districts, uses a “staff-based” method for distributing the bulk of its resources, allocating a certain number of teachers to each school based on total enrollment. Since 1994, Philadelphia has given schools flexibility in the use of another portion of budgeted funds – also based on the number of students and called “discretionary funds” – from which a principal pays for administrative and other staff, supplies, and extra services.

Implementing weighted student funding in Philadelphia would transform the often-inscrutable budgeting process, which is fraught with anachronisms and built-in inequities.

“Discretionary funds,” for instance, are calculated on a per-student basis and differ by grade level. But while K-8 schools are allotted only $310 for each seventh or eighth grader, middle schools get $856.

“If ever there was a district that needed someone to come in and clean up the finances, Philadelphia is it,” said Marguerite Roza, a professor at the University of Washington and national expert on school budgets who analyzed the District’s finances in 2006 for former Mayor Street’s education advisory panel. “It’s the worst I’ve ever seen…. Nobody knew where the money went.”

A national consulting firm, Education Resource Strategies, is analyzing how money is spent in schools here, Ackerman said.

Traditional staff-based budgeting, according to Ackerman, is inherently inequitable because it assumes that “all schools are alike. But all schools are not alike, they don’t have the same population and the same needs.”

The traditional system also allows savvy principals and parent groups to advocate for add-ons – more AP courses, extra counselors, specialized programs – that further skew the imbalance, Ackerman said. “We already spend more at certain schools with no rationale why we’re doing it,” she said. “The process is not transparent. Schools that don’t have a principal or parent community who can articulate the needs don’t get those extras.”

One of the most controversial issues to consider with such a huge shift in budgeting is the practice of computing school budgets using the same amount for every teacher, regardless of how much that teacher actually earns. Because more veteran, higher-paid teachers tend to cluster in lower-poverty schools, that is one of the major factors behind the built-in inequities of the staff-based system.

“There are arguments on both sides [but] I’m certainly open to having that discussion here,” Ackerman said.

Another potential controversy around weighted student funding is what to do when money follows the students away from struggling schools that are losing enrollment, and whether districts should put money back into such schools.

Politically sensitive

Ackerman said she understands that radically changing the budgeting process will be politically sensitive, “and already people are lining up for and against it.” The community meetings will “explain what it is and what it is not. This has to be done with a grassroots process,” she said.

Some who work within the District are boning up on the concept.

“I think for comprehensive high schools, a weighted formula really helps,” said Michael Silverman, principal of Germantown High School, where three-fourths of the students are low-income, more than half drop out, and only a handful reach proficiency in math and language arts. “It would free up more money to help us.”

Ackerman said she would appoint a committee made up of principals, parents, teachers, and community members to work out the new funding formula. She expects it would work for an entire year. “It’s a very intense process,” she said.

The committee would decide what factors to include as meriting extra resources and how much extra weight to give each. Some districts have given extra for “gifted” students, while others haven’t. Some give more weight to students in lower grades, or to those in upper grades, depending on the district’s priorities. Some stick strictly to individual student characteristics such as poverty.

Districts also have to factor in the effect on school budgets of special education and federal Title I dollars – separate funding streams dedicated to students with learning disabilities and low-income students. The weighted formula applies only to basic education dollars.

All those choices will ultimately affect how much money each school gets.

The budgeting switch, which could happen in the 2009-10 fiscal year, may start with a pilot project in just a few schools, Ackerman said, which is what happened in San Francisco.

Ackerman stressed that working out a new budgeting formula is just the first step toward the ultimate goal: improved student achievement. What follows – giving schools flexibility to determine how to use the resources – is the most important component, she said.

“Schools decide on an academic plan, then they align that academic plan to the budget to determine how to support it,” she said.

The principle of having dollars allocated based on individual student characteristics was used in the recent “costing-out” study, which determined that all but a handful of Pennsylvania districts were not spending sufficient dollars to educate all their students to high standards.

That study, commissioned by the state legislature and conducted by a consulting firm, assigned weights to students based on their educational needs and determined that Philadelphia, with its high-needs population, needed nearly $1 billion in additional funds.

About the Author

Contact Notebook contributing editor Dale Mezzacappa.

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