The growth of student-based budgeting in school districts and a few states mirrors a national trend toward more decentralized school funding where the money follows the child. In the United States, we are in a transition period, moving from funding institutions to funding students. K-12 education funding is moving closer to the funding model for higher education, where the money follows students to the public, private or nonprofit school of their choice. We are moving away from a K- 12 system funded by local resources and driven by residential assignment to a system where funding is driven by parental choice and student enrollment.
Public funding systems at the state and local level are adapting to a “school funding portability” framework, where state and local school funding is attached to the students and given directly to the institution in which the child enrolls. More than 30 “school funding portability” systems (in cities like New York, Baltimore, Denver, Hartford and Cincinnati, and states including Rhode Island, Hawaii and Indiana) are funding students through student-based budgeting mechanisms. In 2012, Prince George’s County, Newark and Boston have moved to full weighted student formula systems where the money follows the child. Los Angeles Unified has more than 100 pilot schools funded on a per-pupil basis. In California, Colorado, Connecticut, Georgia, Nevada, Ohio and Utah there are ongoing legislative debates about fixing the state school finance system through a weighted student formula.
Student-based budgeting proposes a system of school funding based on five key principles:
- Funding should follow the child, on a per-student basis, to the public school that he or she attends.
- Per-student funding should vary according to the child's needs and other relevant circumstances.
- Funding should arrive at the school as real dollars—not as teaching positions, ratios or staffing norms—that can be spent flexibly, with accountability systems focused more on results and less on inputs, programs or activities.
- Principles for allocating money to schools should apply to all levels of funding, including federal, state and local dollars.
- Funding systems should be as simple as possible and made transparent to administrators, teachers, parents and citizens.
This guide will take a step-by-step look at the issues involved in moving to a student-based budgeting financing system. In order to move to a student-centered funding system, districts must weigh several key issues including:
- District Equity and Spending Analyses
- Right-sizing School Districts
- Pilot Versus Full Implementation
- Reducing Categorical and Restricted Funding
- Developing a Student-Based Budgeting Formula
- Level of Principal and School Autonomy
- Budgeting Tool Development
- School Choice Student Assignment
- School Level Accountability
While student-based budgeting is not a silver bullet, it is a school funding practice that makes resources more transparent, increases school level equity for students with similar characteristics, and allows the funding to follow the child. When parents and students have portable funding and can choose between schools within a district it provides a financial incentive for those schools to improve education practices to attract and retain families.