1. Student-Based Budgeting Aaron Smith Education Policy Analyst Reason Foundation

2. 1.What is student-based budgeting? 2.Why should districts adopt SBB? 3.What are the implications for Georgia?

3. Key Takeaway: Equitable funding and educator empowerment does not stop at the district level.

4. Wh at is Student-Based Budgeting? The allocation of funds via a weighted- student formula based on student characteristics such as ELL, SPED, and poverty. An individual student receives the same funding regardless of which school they enroll in.

5. StateDistrict ADistrict B SBB can be implemented at two levels: 1)State level

6. StateDistrict ASchool 1School 2School 3District BSchool 4School 5School 6 SBB can be implemented at two levels: 1)State level 2)District level

7. Student-Based Budgeting in the States Baltimore, MD Boston, MA Cincinnati, OH Denver, CO Poudre, CO Hartford, CT Houston, TX New York, NY Newark, NJ Prince George’s County, MD Oakland, CA Saint Paul, MN Milwaukee, WI Minneapolis, MN San Francisco, CA Rhode Island Hawaii Rochester City, NY New Orleans, LA Los Angeles, CA Chicago, IL Twin Rivers, CA Philadelphia, PA Austin, TX Camden, NJ Jefferson Parish, LA East Baton Rouge, LA Adams 12 School District, CO Cleveland, OH Detroit, MI Memphis, TN Clark County, NV

8. Boston Public Schools BPS’s Base Allocation in FY2014 was $3,832 Example Base  1.3 FRL  0.1 At Risk  0.2 1.6 Total Weight 1.6 x $3,832 $6,131 Total Funding SBB is more than funding.

9. Key SBB Principles Equitable Funding Portability School Autonomy Transparency Service-Oriented District Office Accountability

10. Why should districts adopt student-based budgeting?

11. Traditional FTE SystemSBB Resource Allocation Primarily distributed via staffing ratios and programmatic allotments. Actual dollars follow students to the school-level to be spent flexibly by school leaders.

12. Traditional FTE SystemSBB Resource Allocation Primarily distributed via staffing ratios and programmatic allotments. Actual dollars follow students to the school-level to be spent flexibly by school leaders. Principal ControlTypically <5% of budgeted dollars.Typically >40% of budgeted dollars.

13. Staffing Ratio Example Positions allocated to schools based on enrollment Membership counts at the margin can add or take away positions 25:1 Ratio School #1School #2 Students5074 Teachers22 Result: Lumpy distribution of resources across schools with less principal control over resources

14. Traditional FTE SystemSBB Resource Allocation Primarily distributed via staffing ratios and programmatic allotments. Actual dollars follow students to the school-level to be spent flexibly by school leaders. Principal ControlTypically <5% of budgeted dollars.Typically >40% of budgeted dollars. Salary Allotments School budgets charged average salaries for staff. School budgets charged actual salaries for staff.* *Some SBB districts charge schools based on average salaries for various reasons including legal considerations.

15. Average Salary Example School budgets charged for district average, not actual salaries Study concluded “Nonwhite, poor, and low performing students…attend schools with less qualified teachers.” * Result: Schools in low-income communities often subsidize schools in high-income communities. Teacher ATeacher B Years Experience 125 Actual Salary $47,000$62,650 Avg. Teacher Salary $54,825 School #1School #2 Actual Teacher Salary $47,000$62,650 Charged to Budget $54,825 Net ($7,825) $7,825 Source: Teacher Sorting and the Plight of Urban Schools: A Descriptive Analysis, Educational Evaluation and Policy Analysis, Lankford, Loeb, and Wyckoff

16. Key Takeaway: Traditional budgeting practices compound school-level inequities and stifle innovation.

17. Case Study Spring Branch ISD Houston, TX 35,000 students across 46 schools Relatively innovative district Still use traditional budgeting Principals lack autonomy

18. A Tale of Two Schools Northbrook HS (2,145) Memorial HS (2,563)

21. Per-Pupil Expenditures Northbrook HS $6,248 Memorial HS $5,557 $691 Surplus Source: Texas Education Agency 2013-14 School Report Card, downloaded July 2015

23. Takeaway #1: Schools in low-income communities tend to get less experienced, cheaper teachers— even within the same district. Not a problem per se, except…

25. Takeaway #2: Because average salaries are used in budgeting, schools like Northbrook subsidize schools like Memorial and cost savings can’t be used elsewhere.

26. Source: Center for Reinventing Public Education, In-Depth Portfolio Assessment, March 2015

29. Result: Accountability Without Autonomy Principals can’t allocate resources based on their school’s priorities. Budgetary Discretion Accountability for Results

30. The Principal’s Role in Student-Based Budgeting Effective principals can raise a student’s achievement level by 2-7 months of learning in one academic year* *Source: http://educationnext.org/school-leaders-matter/ Lead More Robust Strategic Planning Empowered to Align Resources with Strategy More Immersed in Key Responsibilities, Not Taken Away From Technical Wizardry NOT Required

31. SBB Implementation Best Practices Transitioning Budget Autonomy (e.g. full, tiered, earned) Training & Support Dedicated Financial Partners (e.g. Denver Public Schools) User-Friendly Software

32. Education Funding in Georgia Education Reform Commission recommendations include: Increased District Autonomy in Teacher Compensation Increased Funding Equity via New Weight for Low- Income Students Transparent Weighted-Student Formula

33. Key Takeaway: Equitable funding and educator empowerment does not stop at the district level. StateDistrict ASchool 1School 2School 3District BSchool 4School 5School 6

34. Thank You! Aaron Smith Aaron.Smith@Reason.org