Student-based budgeting will be most effective when it is integrated into a larger district-wide strategy for improvement. But changing the manner in which a district allocates funding to schools is no small undertaking. The following is a cursory list of some considerations and challenges that districts might want to address before undertaking student-based budgeting.

Determining Which Resources to Include in the Student-Based Budgeting Formula

Clearly, a district that implements a student-based budgeting system will not entirely eliminate all district-level resources in favor of school-level budgets. Therefore, when a district moves to student-based budgeting, it will need to determine which line-items can be pooled and distributed through the student-based budgeting formula, and which will remain locked—strictly for district allocation.

At a 2010 summit on student-based budgeting, most of the 14 participating districts that were implementing student-based budgeting kept centralized control over bulk purchases and district-wide services, but they gave schools control over general education, ELL, and professional development. Over other areas—such as special education, custodial services, and technology–there was less agreement about whether districts or schools should retain control.

Funds pooled for student-based budgeting should be both school-based and unrestricted. In determining which resources to allocate, a district should also consider—among other things:

• The district’s vision of the roles that will be played by principals; this influences the degree of autonomy they should be given over school-level budgets.
• Whether the district wants to trust individual schools to exercise discretion on issues of health and safety
• Whether the district needs to retain responsibility over compliance issues for which the district is, itself, accountable to the state and federal governments.
• Whether economies of scale mean it makes more sense for the district to pay for certain expenses in bulk.

For a more detailed analysis of this strategic process, see ERS’ guide to implemented student-based budgeting, here. 

Dealing with Projected v. Actual Enrollment

Student-based budgeting systems require more detailed and accurate enrollment projections than traditional funding systems. Because districts need to allocate funding based upon weights for different types of students, the district must estimate precisely how many ELL, low-income, special education (etc.) students will be enrolled in each school.

When enrollment projections are off, or when students move in the middle of the school year, funding is off. Schools will then need to have funding added or subtracted from their budgets after the school year has already begun.

Districts will need to develop a clean strategy for making adjustments throughout the school year. 

Choosing Between Average and Actual Salary

In building school budgets, the leader who is developing the budget will need to plan based upon the salaries of their staff. They can either do this by estimating the required funding based upon average salaries, or they can use the actual salaries of their staff.

It is far easier to use actual salaries, because they are more precise. However, there are (at least) two problems with using actual salaries:

• If budgets are based upon actual salaries, then schools with more experienced teachers cost more, so they use more of the district’s resources and divert money from schools with less experienced staff;
• If school leaders have control over staffing, using actual salaries for budgeting can give them an incentive to hire less expensive teachers so that they can save money.

For these reasons, most districts use average salaries, rather than actual salaries, for budgeting purposes. 

Being Prepared to Adjust

Since student-based budgeting is complicated, districts should be prepared to adjust the formula over time. Additionally, districts will likely need to adjust their planning schedules for the school year. Under a traditional funding system, a district likely set its budget first, then staffed schools, then created academic plans. Now, the district may need to do this planning in the reverse order because the budgeting and staffing are based on the needs of students. 

Providing Professional Development

How to develop an effective school budget is not a part of most school leader training programs. As a result, school leaders are going to learn how to build a budget and allocate their resources wisely. Therefore, districts need to invest heavily in professional development so school leaders make the best use of greater autonomy. Additionally, district-level staff will need professional development to help them shift to a new framework in which they serve schools, rather than control them.

 Additionally, this professional development might need to be accompanied by a new data system that will track funding allocation and inform decision-making.

Closing Under-Enrolled Schools

Particularly when student-based budgeting is tied to school choice, districts will need to address declining enrollment in some schools. Districts should be prepared to establish a certain minimum enrollment at which funding a school makes sense. Otherwise, an open but under-enrolled school will actually be diverting funds from the rest of the district (including funds that could be part of the student-based budgeting pool).

Acknowledging Collective Bargaining as a Potential Barrier

School leaders can’t truly have the autonomy over their schools until they have the power to hire the staff they need and let go of the staff they don’t. However, they are often limited by collective bargaining agreements. This is a significant hurdle if student-based bargaining is being used as part of a larger strategy to raise school-level accountability and flexibility.

Sources

• Annenberg Institute for School Reform (2010). Student-Based Budgeting. Read it here.
• Calvo, N. (2011). Opportunities and Challenges of Student-Based Budgeting. Read it here.
• Education Resource Strategies (2010). Fair Student Funding Summit: Conference Proceedings and Recommendations for Action. Read it here.
• Education Resource Strategies (2014). Transforming School Funding: A Gude to Implementing Student-Based Budgeting (SBB). Read it here.
• Furtick, K. and Snell, L. (2013). Weighted Student Formula Yearbook: Overview. Read it here.