The Status of ESSA's School-Level Financial Requirement

As you likely know (unless your New Year’s “no-internet” resolution is still in effect), the Obama administration’s ESSA accountability regulations are now gone, and states are left to interpret much of the ambiguity in the Every Student Succeeds Act (ESSA) on their own. Among the rules thrown out were a few about how to calculate and report school-level per-pupil expenditures on state report cards.

In the absence of regulations, states still need to meet the law’s requirement to report: “The per-pupil expenditures of Federal, State, and local funds, including actual personnel expenditures and actual non-personnel expenditures of Federal, State, and local funds, disaggregated by source of funds, for each local educational agency and each school in the State for the preceding fiscal year.” (emphasis added).

Understandably, state agencies are a little concerned about designing and implementing a system to collect this level of data in time for the next school year with so few parameters.

But it’s not worth getting too worried, and here’s why:

1. The opportunity remains. With or without the regs, states have an opportunity to combine financial data with existing outcomes data to build sophisticated information systems that can be used as a tool for school improvement. Such a system enables users to see where schools are leveraging their resources to beat the odds for students. That information, paired with strong school and district leadership and management, can be used to help schools leverage their dollars to do the most for students.

2. States have more flexibility to design systems that work best for them. By relaxing the rules around how to calculate the per-pupil expenditure requirement, states can now focus on designing financial transparency systems that serve their needs. This flexibility can allow states to move beyond the compliance exercise, and instead take advantage of the inherent opportunity in the law.

There is no doubt that challenges remain.  Many states are a long way from assembling data collection systems that will reliably yield the needed school level data.  One big loss for the states in overturning the regs was the option for an extension in meeting the requirement.

Will all states use the flexibility afforded with the repeal of the regs to develop valuable financial tools?  Time will tell, but to help states interested in doing so, Edunomics Lab is convening a working group of 23 states focused exclusively on the financial transparency requirement. Most recently, in the wake of the regulations being pulled, the working group expressed interest in using our time together to develop financial reporting standards to better allow for cross-state comparisons. We recently convened this group in Washington, D.C. for a full day of networking and learning. You find the materials from that meeting here.

If you are interested in learning more about the working group, please contact Katie Hagan at Katie.Hagan@georgetown.edu.