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Student-Based Budgeting Means Fairer and More Effective Education Spending

Students frequently are invoked to sell education tax hike proposals to voters. However, when those dollars are distributed, individual student needs end up being less of a priority.

The shortcoming doesn’t result from malicious design, but rather from entrenched habits and misguided faith in the wisdom of sweeping top-down decisions.

The latest recession stunted the growth of Colorado K-12 funding while spending obligations piled up, including additional taxpayer contributions to employee pensions.

Given such pressing limitations, how districts allocate money to schools matters more than ever. Some local education providers have successfully kept unavoidable cuts away from services that aid students.

A growing number of Colorado school districts have made a significant but easily overlooked change that makes funding clearer and fairer, and promotes more responsible and effective spending. Through student-based budgeting, far more dollars are directly assigned based on pupils’ needs. Principals and school communities are trusted to make more decisions closer to where individual students are served.

More research into the effectiveness of student-based budgeting is required. Yet preliminary national-level analyses show giving principals more authority over their schools’ budgets is strongly associated with better academic outcomes for students.

Traditional systems allocate most dollars to schools as personnel formulas and centrally created programs. Adding one more student may automatically trigger the requirement for an extra teacher or assistant principal, while the loss of a single student may have the opposite effect. School leaders are left with a highly limited pool of funds available to purchase items like classroom and office supplies.

Some share of spending must be decided at higher levels to avoid needless duplication or to meet broader accountability requirements. But most districts have far exceeded that share.

Meanwhile, some forward-thinking Colorado districts have provided more true local control. Poudre School District and Denver Public Schools have practiced student-based budgeting for eight years. At least four other districts since have joined them.

In these districts, each child arrives at school with a large share of his state-assigned revenue and the discretion to spend as needed. With input from parents and teachers, school leaders have more flexibility to opt between smaller class sizes or extra electives, to invest in a useful technology, or to save extra dollars for local projects.

Douglas County has seen this approach fundamentally alter the “spend it or lose it” mentality in which extra money is spent simply to justify the size of the budget. That mentality can lead to a closet full of unneeded scientific lab equipment purchased over the years. Instead, the district’s schools now have a combined $14 million in their individual savings accounts.

Like Douglas County, District 49 near Colorado Springs is one of the state’s lowest-funded districts. Yet its principals have direct decision-making over more than 80 percent of the budget, including school utilities. If leaders are frugal about turning out the lights, they can dedicate the savings to buy learning tools or extra support individual students need to succeed.

District 49 chief business officer Brett Ridgway describes the distinct value of the design: “The one-size-fits-all approach is about equality. Equity is about treating every student as they need to be treated.”

The district’s unique model of decentralized “zones of innovation” exhibits the priority of student-based budgeting in a very concrete way. The POWER Zone headquarters occupies a modest trailer on a middle school campus, with the only bathroom facilities available in the nearby school building.

Through visionary leadership, District 49 has turned the traditional school district role upside down. The role of the smaller, leaner central office has been transformed from “command and control” to customer service.

Like any change worth making, time and thoughtful effort are required to negotiate the transition to student-based budgeting. Denver and others have found that consistent training and support eventually overcome reluctance and skepticism. Greater understanding leads many more principals to embrace the potential that accompanies greater responsibility.

Under the leadership of reform-minded board and district leadership, this year Jefferson County has taken a major plunge into student-based budgeting. The suburban district follows the lead of others seeking to focus more resources on individual students through flexible local decision-making.

For the sake of smarter spending to achieve more promising results, the trend should continue.

Ben DeGrow (ben@i2i.org) is senior education policy analyst for the Independence Institute, a Denver-based free market think tank. This article originally appeared in the Greeley Tribune on September 24, 2015.