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Transforming School Funding: A Guide to Implementing Student-Based Budgeting

What is Student-Based Budgeting?

Student-Based Budgeting (SBB) has become a popular initiative for district leaders who seek to allocate scarce resources to schools, especially in the face of stubborn achievement gaps, changing and complex demographics, and shrinking federal and state support.

SBB—also called weighted student funding, fair student funding, student-based allocations, or student-centered funding—is a school funding system where schools receive dollars based on the number of enrolled students and their individual needs (such as English language learners, or students from high-poverty backgrounds), and often includes giving school leaders more control over their budgets.

The Student-Based Budgeting Toolkit is a set of tools to guide districts through those decisions and process changes:

Is Student-Based Budgeting Right for My District?

Over the past decade, ERS has supported 10 districts that currently implement SBB. From that experience, we have learned lessons about what districts should consider before moving to SBB; details on how to design the funding formula; and what core central office processes may need to change to make sure the initiative is successful.  

Student-based budgeting has the potential to change the game for students by increasing funding equity across schools and empowering principals to design schools to best meet their students’ unique needs.

student-based budgeting creates equity, transparency, and flexibility in district funding

But we’ve also seen that SBB on its own is insufficient to transform schools and school systems. Implementing a new funding formula and offering school leaders more resource flexibility is important, but it’s not enough to ensure that the resources will be used strategically to promote student achievement. As a Boston Public School principal explained, “Flexibility doesn’t ensure success. It helps create the conditions for success.” School systems that are considering SBB must have: 

  1. A clear vision for how SBB supports its overall system strategy;

  2. A clear understanding of what it takes to successfully implement SBB.

The Student-Based Budgeting Toolkit helps districts gain those two things.

Which Districts Use Student-Based Budgeting?

Student-based budgeting has grown remarkably over the past few years. A decade ago, only a handful of the nation’s largest urban school systems used the model; now as many as 16 major urban school systems do so.

Major Urban School Systems Using Student-Based Budgeting as of 2018

(Based on a list created by Edunomics Lab at Georgetown University, as well as ERS’ experience with school systems)

  • Atlanta (GA)
  • Baltimore (MD)
  • Boston (MA)
  • Chicago (IL)
  • Cleveland (OH)
  • Denver (CO)
  • Indianapolis (IN)
  • Nashville (TN)
  • Milwaukee (WI)
  • Minneapolis (MN)
  • New York City (NY)
  • Newark (NJ)
  • Poudre (CO)
  • Prince George’s County (MD)
  • San Francisco (CA)
  • Shelby County (TN)

How Leading Districts Describe Their Student-Based Budgeting Theories of Action

Excerpts taken from public materials published by school systems:

  • New York City Department of Education 
    “Fair Student Funding is part of the district’s vision of Equity and Excellence for All. The district identifies three areas of work to advance their goal that every child has one chance at an excellent education: Academic Excellence, Student & Community Support, and Innovation. FSF enables innovation by allowing schools to experiment with new programming and initiatives. FSF aims to provide schools and educators the flexibility and resources they need to meet students and families where they are.”

  • Denver Public Schools 
    “Denver Public Schools implemented SBB as a model to allow for site-level autonomy in 2007–08 because of the wide array of student and school needs across the district. DPS believes that school leaders make the best decisions about how their school should be structured, and the SBB process reflects that belief.”

  • Metro Nashville Public Schools 
    “Metro Nashville Public Schools uses a budgeting method called Student-Based Budgeting. Using this method, more than half of the district’s operating budget is divided amongst and sent directly to our schools. At this point, it is up to the principals of each school to decide how best to allocate their resources. Money is budgeted according to the educational needs of each individual student. This means that students with more demanding sets of needs, such as those with special needs, or who are learning English as a second language, will be allocated more money. No two students are the same, and NPS goes to great lengths to be able to afford each student the time and attention they need.”

How Do You Define Student-Based Budgeting?

As mentioned above, student-based budgeting (SBB) goes by many names, including student-based allocations (SBA), fair student funding (FSF), weighted student funding (WSF), or student-centered funding (SCF). Regardless of the name, at its core SBB is a funding system whereby dollars follow students based on student need. More specifically, it describes any district funding model that:

  • Allocates dollars instead of staff or materials
  • Is based on the number of students
  • Uses objective and measurable student characteristics as weights—for example, poverty status, English language learners (ELL), students with disabilities (SWD), grade enrolled, low academic performance, or high academic performance/gifted status, among others

Student-based budgeting differs from the traditional funding system used in most American school districts, where resources are distributed to schools in the form of staff and dollars designated for specific purposes.

As a result, principals in traditional systems have limited flexibility over their resources. Many districts also provide little transparency as to why schools get what they get, which makes it difficult to assess how equitably the funding system allocates resources. In contrast, SBB is designed to promote the three pillars of a high-performing funding system:

  • Equity: “Dollars follow the student.” The strongest funding models ensure that resources are distributed equitably based on student need.
  • Transparency: “The formula tells you what you get.” The optimal funding system has clear and easily understood rules for where, how, and why dollars flow. Under SBB, these rules are expressed as a formula, which the district central office creates and adapts over time with the input of stakeholders.
  • Flexibility: “Principals own their budgets.” By distributing funds rather than staff, SBB enables school leaders to define the resources they need to drive student achievement.

Leveraging Student-Based Budgeting in Your District

For student-based budgeting to be a powerful strategy in increasing student achievement, we have learned that school systems need two things:

  1. A clear vision for how student-based budgeting supports its overall system strategy. 
    While SBB is technically a funding system initiative that changes how districts fund their schools, a successful SBB system is about much more than that. Giving school leaders flexibility over their resources isn’t what drives change; it’s what leaders do with those resources that drives change. This is why SBB is most successful when it is part of a broader strategy for school empowerment—what we call “strategic school design.” Under strategic school design, school leaders identify their key student and teacher needs, implement an empowering, rigorous curriculum, and then reorganize resources (people, time, technology, and money) to enact a coherent set of research-backed strategies. Clarity around the goals for SBB should guide each district’s design decisions and inform how leaders measure success.

  2. A clear understanding of what it takes to successfully implement student-based budgeting.
    Transforming your school funding system is no small feat, and the technical and adaptive changes required to shift to SBB should not be underestimated. Under SBB, the principal role expands to include managing resources and setting a school vision, which may be new for many principals. For principals to be successful in those new responsibilities, districts need to invest in significant support and training. Similarly, under SBB, the role of the central office shifts from the traditional “command and control center” to a “collaborative service center” which may require a significant shift in the roles, responsibilities, and mindset of those working in central office.

When implemented well, we have seen SBB play an important role in a district’s overall strategy to improve student outcomes. For example, SBB has been an important foundational element in the theory of action for Denver Public Schools, which is centered around equity for high-needs populations and principal flexibility.

The Student-Based Budgeting Toolkit explores what districts need to consider to ensure that SBB is fully integrated into their overall system strategy. It is intended to help district leaders assess whether SBB is the right strategic move for their district.

Transforming School Funding: A Guide to Implementing Student-Based Budgeting
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