Education Secretary Betsy DeVos’ 2020 federal education budget proposal includes a 10 percent overall cut to U.S. Department of Education’s annual spending, putting 29 federal programs on the chopping block for total savings of about $7.1 billion. The firestorm over the department’s cuts to the Special Olympics, which President Donald Trump then reversed course on, generated all of the national headlines but some smaller initiatives in the plan, like $50 million to a weighted-student funding pilot program, could be the most consequential for students. And, importantly in these polarized times, the pilot program could realistically appeal to lawmakers on both sides of the political aisle.
School finance formulas are notoriously complex. Some federal and state education dollars arrive at school districts with strings attached. School districts generally have the final say over how funds are divvied up among their schools. Most districts do this by employing full-time equivalent (FTE) budgeting, which distributes funding to individual schools based on the number of staffing positions they have. These positions are generally built on rigid ratios, like one FTE teacher for every 30 students.
Ample research shows FTE budgeting shortchanges schools and students in low-income communities. For example, a comprehensive study by the U.S. Department of Education found school districts consistently spend less money per pupil on the schools that have the most low-income students. A Brookings study by Marguerite Roza and Paul T. Hill found funding discrepancies of up to $1 million among similar-sized schools in the same district because schools in low-income areas often end up with less experienced and lower paid teachers, which results in those schools receiving significantly less money per teacher than schools in higher-income areas.
But that’s not all, FTE budgeting not only affects how much is doled out to each school but also how the funds are spent. A common misconception is that principals have authority over spending decisions at their schools. The reality is that a typical principal has autonomy over less than five percent of his or her school’s budget, with district officials dictating how the bulk is spent. As a result, principals, particularly in low-income areas, often lack the ability to spend money on the priorities they believe would most improve their schools.
Another issue with FTE budgeting is the money doesn’t “follow the child” and thus it is incompatible with intra-district school choice programs, which are particularly beneficial for low-income families who are stuck in underperforming neighborhood schools.
To address these problems, school districts across the country, including major districts in urban areas like Boston, Denver, Indianapolis, and New York City, are adopting weighted-student funding systems that allocate education dollars directly to schools based on student needs. Houston Independent School District was the first to do so, in 1999, and research by Jodi Moon of Rice University’s Kinder Institute for Urban Research finds the policy has been successful in promoting equity and giving principals more say in spending decisions at their schools.
Unfortunately, burdensome regulations make it difficult to integrate federal dollars into these funding formulas, which lawmakers tried to remedy by creating a pilot program in the 2015 reauthorization of the Every Student Succeeds Act signed by President Barack Obama that aimed to ease restrictions for participating districts. However, school districts decided paying the transition and the systematic costs of changing how they handle federal dollars weren’t worth taking part in the program and the pilot has failed to live up to its potential.
That’s where Education Secretary Betsy DeVos’ $50 million budget proposal comes into play: up to 10 school districts would receive federal funding as a one-time incentive to make the switch to weighted-student funding. The districts could spend the money on a number of things, including transition costs and better support for principals as they shift funding systems.
While policymakers should be wary of federal involvement in K-12 education, reallocating dollars toward this pilot program could ultimately lead to insights that help slash onerous federal regulations around school spending and streamline the budgeting process in ways that allow education funding to follow students to the schools of their choice. The weighted-student funding pilot proposal has the potential to make education spending more fair for students, especially in low-income areas and, at the very least, would be a small investment to help 10 districts decentralize spending decisions and put education dollars to better use.