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Reason Foundation

Chicago Schools to Implement Student-Based Budgeting and Principal Autonomy

Katie Furtick
March 18, 2013, 4:45pm

In the 2013-2014 school year, the third largest school district in the country - Chicago Public Schools (CPS) - will join other districts across the country in moving from funding institutions to funding students. Student-based budgeting - also known as weighted student formula or backpacking - is a more equitable, decentralized method of funding schools where money follows the child and principals are given more autonomy over their school's budget.

For the past six years CPS implemented a pilot program on student-based budgeting covering 40 schools city-wide. CPS CEO Barbara Byrd-Bennett and Chicago Mayor Rham Emanuel have recognized the success of the program and champion full implementation of student-based budgeting.

But, not everyone is a fan of student-based budgeting.

Earlier this week, Chicago Teachers Union Vice President Jesse Sharkey released a statement warning about the dangers of Chicago Public School's (CPS) decision to move away from the outdated and complex school funding formulas currently in place, and toward the simpler and more equitable per-pupil school funding.

Sharkey argues that the per-pupil funding would promote discrimination among veteran teachers by incentivizing principals to hire less expensive novice teachers, and that there are oversight concerns over principals having more autonomy over their budgets.

There is little evidence from other districts that have implemented student-based funding that principals routinely discriminate against veteran teachers. On the other hand, the current school funding formula actually discriminates against a more vulnerable demographic - students.

Under the current funding formula CPS provides a regular classroom teacher for every 28 students in K-3rd grade, and for every 31 students in 4th grade and higher. Also for every 750 students the district provides an assistant principal, an art or music teacher, and a librarian or gym teacher. The district simply averages salaries across schools and reports school-level resources based on a district average. In reality, schools which have more senior staff get more dollars.

Seniority and personnel costs may result in vastly different per-pupil spending from one school to another even with similar students at each school. A US Department of Education study based on the school-level reporting requirement of the ARRA stimulus funds, found that more than 40 percent of schools that receive federal money to serve disadvantaged students through Title I spent less state and local money on teachers and other personnel than schools that don't receive federal money at the same grade level in the same district. The federal analysis identified 300 Chicago public schools that were receiving less money than the average non-Title I school. These schools had an average of 89 percent poverty and these low-spending Title I schools in Chicago had average per-pupil expenditures that were 13 percent below the average for non-Title I schools ($3,780 vs. $4,329).

Student-based budgeting is an efficient and transparent way to remedy funding inequities for the most disadvantaged students by funding schools with actual dollars rather than staffing positions. Baltimore Public Schools, for example, has made great strides in terms of within-district equity from one school to another since implementing their own form of student-based budgeting in the 2008-09 school year - Fair Student Funding.

In 2008, only 52 percent of Baltimore public schools were within 10 percent of the district's median per-pupil expenditure. By 2012, 81 percent of the district schools were within 10 percent of the median-funded school. In fact, in an analysis by Education Resource Strategies, Baltimore was shown to have the highest percentage of schools within 10 percent of the median per-pupil spending when compared with several similar districts.

Not only is student-based budgeting a more equitable way of funding students, it provides a more transparent and stable way to fund schools. Rather than have many complicated budgeting formulas for different schools, student-based budgeting applies one simple formulas across all schools. Also, by allowing money to follow students rather than set enrollment numbers there is more stability in funding. Under the current CPS formula, if a school falls short on the number of students enrolled in a given year by even one student it creates a fiscal cliff where the school could lose a teacher or two. Many times principals have had to cut back on supplies and equipment to avoid losing their staff, which can be disruptive to students.

Student-based budgeting is not unique to Chicago Public Schools. Over 30 school systems across the country have shifted to funding their schools through a type of student-based budgeting. Principals at these schools have successfully managed their school budgets after being given the flexibility they need to make the decisions that are best for their schools and their students.

Under student-based budgeting, CPS principals will gain autonomy over 50 percent of school budgets which will be directed to core instruction including hiring teachers, support personal, supplies, and additional instructional programs. The remaining 50 percent of the schools budget will continue to be allocated through the old funding formula for non-core instruction funding, including supplemental general state aid money for special education, magnet schools, International Baccalaureate, limited English proficiency programs, STEM, bilingual students, and Title I. Once principals complete their budgets, they must submit and get them approved by the district financial offices.

As stated by CPS CEO Barbara Byrd-Bennett, "Great schools are led by strong leaders. They set high standards and they know how to best support their students. They should have the autonomy to decide how to direct their resources toward the most important people in any school - their students."

CPS administrators and teachers must make their students their first priority. By implementing student-based budgeting, CPS is making a good start at increasing equity, spending transparency from one school to another, and ultimately student performance as principals have more control over using their resources to drive improvements in instruction and achievement.

Katie Furtick is Policy Analyst

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