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Indiana Policy Review

Frequently Asked Questions About Weighted Student Formula

Is it the right school finance solution for Indiana?

Lisa Snell
January 24, 2008

Lisa Snell, one of the nation's foremost experts on school reform, answers critical questions about how a weighted student formula could fundamentally reshape school finance and performance in Indiana. Lisa is director of education and child welfare studies at Reason Foundation and has met with Indiana state legislators and others to discuss weighted student formula reforms for Indiana public schools.

1. In a nutshell, what is "weighted student formula"?

The broad concept of weighted student funding (WSF) goes by several names including results-based budgeting, student-based budgeting, "backpacking" or fair-student funding.

It proposes a system of school funding based on five key principles:

  1. Funding should follow the child, on a per-student basis, to the public school that he or she attends.
  2. Per-student funding should vary according to the child's need and other relevant circumstances.
  3. 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.
  4. Principles for allocating money to schools should apply to all levels of funding, including federal, state, and local dollars.
  5. Funding systems should be as simple as possible and made transparent to administrators, teachers, parents, and citizens.

2. How is this different from funding schools based on enrollment in the current system?

In the current system in Indiana school corporations receive funds based on the number of children enrolled in a corporation and their individual characteristics which are weighted through either categorical programs for education programs or additional funding for student characteristics such as poverty or English learner status.

However, at the district level these resources are not allocated to schools based on individual student characteristics. Schools in Indianapolis, for example, are allocated resources for staffing positions based on the number of full-time equivalent (FTE) salaries the district has calculated that an individual school is entitled to. So when you examine individual school budgets in Indiana you see money flowing to school positions and not children.

Salary averaging across schools means individual schools with similar student populations may receive vastly different real dollar amounts at the school level within a corporation.

New York City public schools are implementing weighted student formula district wide, encompassing 1.1 million students in 1,400 schools. New York City schools begin the transition to Fair Student Funding during their 2007-08 fiscal year. Here is an actual example of how funding would change for the Walter Crowley Intermediate School in Queens, New York, between the 2006-2007 and 2007-2008 budget years.

Under the old approach, Walter Crowley would have received $4 million for instructional programs, $1.2 million for special needs students, and another $1.9 million for "consolidate programs," for a total budget of $7.1 million. Under the weighted, Fair Student Formula approach, Walter Crowley will receive $8.8 million. In short, funding students based on their individual characteristics and not based on a staffing model increases the school's budget by more than $1.6 million.

Since New York City public schools are phasing in the new funding approach, Walter Crowley will only receive a portion of the new formula. However, the new weighted student budgeting also creates transparency by showing what resources each of the 1,400 schools in New York City are entitled to based on the characteristics of their students, not based on a bureaucratic staffing model unrelated to the actual students in the classroom. These numbers simplify the budget process in a way that is transparent to parents and all education stakeholders.

3. Indiana has already experimented with charters schools, and their success has been lackluster. Why should we believe that weight student formula would be any better at improving student performance?

While charter schools have had positive impacts in Indiana, especially in Indianapolis, they are mostly operating on the margins of school reform. The weighted student formula is more robust because it generally includes every public school in a school district, education corporation, or geographic area. It changes the culture of the public school system.

Everyone becomes focused on student outcomes because families have legitimate choices within the public school system. If an assigned, or neighborhood, school is not meeting a child's needs, that child can move to another school within the district and take their funding with them.

Every school in a district becomes a school of choice and the funding system gives individuals, particularly school administrators, the autonomy to make local decisions. This autonomy is granted based on the contractual obligation that principals will meet state and district standards for student performance. It is a system-wide reform that allows parents the right of exit to the best performing schools and gives every school an incentive to change practices to attract and retain families from their communities.

4. How does this program handle children with special needs?

Weighted student formula provides extra resources to support special needs children, another "weight" in the weighted student formula. These resources arrive at the schools as "real dollars," giving principals flexibility to spend those resources in the manner that best supports the needs of those students. In New York City, before Fair Student Funding, special education students were funded based on classroom-support models such as Collaborative Team Teaching (CTT) and self-contained special education classrooms. Now, schools receive funds in real dollars based on the daily number of periods of special education classroom support each student requires. Students who spend a greater percentage of their day receiving special education services are weighted accordingly and receive more money.

5. Can a weighted student formula be implemented within the current collective bargaining agreements? Wouldn't teachers be disadvantaged by this system?

Yes, weighted student formula has been implemented in most districts based on the current collective bargaining contracts. Most critics of weighted student formula fear that giving principals real dollars to spend will create a bias toward hiring less expensive and less experienced teachers. Critics argue that senior teachers with more years of experience will be at a disadvantage because they cost more to hire.

There are two ways that districts have implemented weighted student formula. In the first scenario, districts have given principals real dollars but they continue to charge schools for average district salaries. This is how weighted student formula has been implemented in most districts. Therefore, schools still have more equity because they receive funding for actual students but they are not charged the real costs of their staffing decisions. Therefore, schools with more senior staff continue to receive a hidden subsidy.

The second way weighted student formula is implemented is by charging schools for the actual teacher salaries. New York City, for example, is phasing in charging schools for the actual salaries of their teachers because it believes it will create more equity and it will lead to better use of resources as principals decide how to spend money to improve student achievement.

6. New York City seems to be the district that has been most aggressive with this program. How did they work through their existing collective bargaining agreement?

New York City revitalized the way it hired teachers by adopting an "open market" system. New York ended "bumping" and "force placing," practices that forced principals to hire teachers even if they weren't qualified or a good fit for the school. Now, through a new "open market hiring system," more than 3,000 experienced teachers applied for open jobs and were selected by principals for vacancies across the system.

The New York Department of Education worked with the United Federation of Teachers (UFT) to actually change the contract to make it more supportive of a weighted student formula. The new contract:

  1. Allows the Department of Education (DOE) to recruit and retain the high-quality teachers that New York City students need and increases teacher pay by 15 percent.
  2. In exchange, the contract also gives the DOE the ability to create "Lead Teacher" positions, with a $10,000 salary differential, giving principals a powerful new tool to recruit experienced, talented teachers to high-need schools.

More recently, the DOE and UFT agreed to create a $15,000 housing incentive for experienced math, science, and special education teachers who come to the DOE and agree to teach for at least three years in high-needs schools. The agreement provides struggling students an additional 150 minutes every week in small-group instruction so they get the help they need to catch up during the school year.

Like New York City, several districts that have instituted weighted student formula have negotiated alternative contracts with the unions that keep in place most teacher protections but allow principals more flexibility. For example, both Boston pilot schools and the new Belmont autonomous zone schools in Los Angeles operate on a three page contract that is basically a memorandum of understanding negotiated between the district and the union.

7. Is this a reform that must be implemented statewide to work? What states have reformed their school finance system based on the weighted student formula concepts?

This reform can work on a statewide basis or through individual districts. To date, the majority of school districts using weighted student formula have done so without state legislation. This is a flexible reform that can work at the state level or on a district-by-district basis.

Nevada and Hawaii adopted weighted student formula through state legislation. Hawaii, with one centralized school district, passed this reform statewide in 2005. In 2007 Nevada passed state legislation that offers local schools and districts some financial incentive on a per-student basis to convert to empowerment schools. Several states including South Carolina and Delaware are considering proposals for weighted student formula and school empowerment.

8. Indiana is faced with significant demands on its budget. Wouldn't implementing a system-wide school finance reform simply put more pressure on state and local budgets?

This is a reform that works within existing budget frameworks. It is a reform that more equitably distributes money that is already available. Furthermore, because of savings from reducing the cost of the central office, this reform can free up more money for the local school level and individual classrooms. If categorical programs and other funding streams are collapsed into larger block funding streams it can reduce overall administration costs, directing more money to the school level. This financing mechanism allows policymakers to have a more transparent idea of how existing school resources are distributed.

9. What impact would a weighted student formula have on school efficiency? Wouldn't school administrators feel threatened by this approach to financing their schools?

Weighted student formula can be a threat to district-level administrators. As more money is directed to local schools, a by-product has been a reduction in the number of central-office staff. In New York City, the move to weighted student formula system has been in conjunction with a "rightsizing" of the central education office.

10. Like most state school finance systems, Indiana's school finance system is under legal and political pressure to move away from the property tax. How would a weighted student formula address concerns about equity in school finance?

Weighted student formula works best when all funding is equalized and not based on differences in local property tax allocation. Indiana has already made efforts to equalize funding across districts. Therefore, it already has a culture concerned with school equity and a more centralized funding system than most states. Weighted student formula is the next step to drive that student equity to the school level. Indiana has already done the hard part of aggregating school resources at the state level. It makes weighted student formula a reform that makes sense to continue toward the goal of individual student equity.

11. This seems like a program that works best in a big city school district where there are already lots of schools. What about suburban and rural districts which tend to be smaller?

This strategy also works in suburban and rural districts. If this is done at the state level, students could have access to schools in more than one school district even if they reside in a very small district. However, in extremely small districts with transportation limitations to other schools, school choice may be less important than school autonomy. In a geographically isolated school, weighted student formula still gives principals more control over resources and parents and teachers more input into how those resources are used to meet the needs of individual children.

12. Where does the leadership for implementing a weighted student formula come from? School boards? Administrators? Legislators? Citizens?

Strong state leaders or an individual superintendent can introduce the community to this concept. They can involve all stakeholders including, principals, parents, teachers and community leaders in a transparent process to decide on student weights and other implementation issues from school choice to professional development for principals. This really becomes a group discussion about equity and fairness in education funding that involves the entire community. Still, it takes leadership from individual legislators or school officials who believe in the concept of weighted student formula.

State legislators can be proactive by:

  1. Visiting other school districts that have implemented weighted student formula. A trip to New York City and a review of the New York City Department of Education would offer the most comprehensive view of a large-scale weighted student formula program.
  2. Reviewing existing examples of model legislation for weighted student formula and tailor it to meet Indiana's needs.
  3. Reviewing existing resources in Indiana and proposing a system of weights that would work within the current constraints of state and federal categorical funding. While this proposal would be subject to change, it would give legislators and stakeholders a clear idea of how resources might be allocated under this new financing system.

School administrators and teachers can be proactive by:

  1. Visiting or talking to staff, board members, and other constituents from districts that have already implemented weighted student formula.
  2. Developing a preliminary weighted student formula implementation plan with the school board and holding open meetings to discuss the plan and receive feedback from the community.
  3. Reviewing how current resources are aggregated at the district level and building a preliminary proposal for weighting students to give stakeholders an idea of how weighted student formula would work in practice at the school level.

Lisa Snell is Director of Education


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