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Student-Based Budgeting: A Potentially Powerful Tool in Tough Times

As districts face growing budget pressure and look for ways to make the most of limited resources, Student-Based Budgeting—in the right circumstances—can be an attractive alternative. The Annenberg Institute for School Reform, partnering with ERS, dedicated the entire fall issue of Voices in Education (VUE) to this topic, providing an important and timely discussion of the opportunities, strategies, and challenges of implementing Student-Based Budgeting. There’s an appeal to a funding system that allows resource decisions to be made at the school level by those who know best individual student and school needs. Central office staff need not make all the painful cuts. What’s more, there is transparency and increased equity in a system that designates dollars based on the relative needs of every student. A general education student in one school draws the same dollars as his or her equivalent across town.  School systems that have already implemented or are considering Student-Based Budgeting know how powerful this approach can be for school leaders, who have more control and accountability when they hold the purse strings. 

Tough economic times, however, add challenges to school-based budgeting. Even when funding comes to a school in the lump sum of cumulative per pupil allocations, program specifications, salary schedules, staffing ratios, and other mandates restrict how principals can actually spend their budget.  Rarely can money be allocated in neat bundles—half a librarian, a quarter of a teacher—that correspond easily to budget shortfalls.  As one participant summarized in an ERS-organized Student-Based Funding summit last March, “The schools had an illusion of discretion but contracts and staffing obligations left principals debating over what amounted to pennies in the end.” (See the summit proceedings.)

In this environment of deep cuts and looming deficits, stability of funding is paramount for schools using Student-Based Budgeting. Those schools that reap the benefits of Student-Based Budgeting do so because their districts are able to ensure certain supports and conditions. This begins with a clear district understanding of minimum staffing and funding requirements, especially in the case of small schools that have higher per pupil cost structures. Basic foundation amounts for all schools or a district-controlled reserve fund can help to offset funding disruptions and sudden drops in revenue. Such Student-Based Budgeting districts as Baltimore and Denver are also easing certain restrictions and supporting school leaders to rethink the allocation of resources in less traditional ways.  Sharing people and resources across schools, better utilizing educational technology, and creating flexible scheduling and staffing are a few of the ways that districts can help school leaders deal with budget shortfalls without compromising the academic needs of students.

Although the economic downturn has placed added pressure on Student-Based Budgeting systems, also commonly referred to as Fair Student Funding systems, with the right strategies and support in place, participating districts have found the transition empowering. As Baltimore School CEO Andres Alonso summarized, “Fair Student Funding is not about budgets. It is about equity, freedom, and accountability.” Shifting central decisions and capacity to the school level has helped schools focus on what’s most important for students, making the difficult trade-offs necessary during the economic crisis.

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