There has been growing interest in adapting Return-on-Investment thinking to education—sometimes called educational productivity, academic ROI, or K-12 ROI. But most ROI analysis misses a big opportunity: it often leaves out some of the biggest cost drivers in the district’s budget and never addresses some of the fundamental resource issues that may actually drive student success.
Education leaders need a new approach—one we’re calling System-Strategy ROI. This approach starts with a fundamental student need and asks not “Which program is better?” but “What resources will meet this need?” School system leaders can help their teams take a System-Strategy approach to K-12 ROI by structuring the planning conversation around five key steps:
It is important to note that ROI in K-12 education—in any form—is not a magic formula. But the System-Strategy approach is a powerful tool for adding structure, rigor, and data-backed evidence to the difficult decisions a school system must make on behalf of its students.
Thinking around K-12 ROI needs to be incorporated in the annual budgeting process. Budget Hold'em for Districts is an interactive exercise, modeled after a card game, that allows players to choose a "hand" of investments and savings options that together advance student learning and meet a budget target. The exercise is fun and engaging, and brings together different stakeholders (including district leadership teams, school boards, unions, parent groups, advocacy groups, aspiring leaders and more) to redesign the budget as a reflection of the district's true priorities.
Return-on-Investment analysis is a tool for improving resource efficiency—which is to say, improving the impact of your limited resources. Widely used in the business world, it compares the expected gains (returns) per unit of cost (investment) of a variety of potential actions. In recent years, there has been growing interest in adapting this approach to education—sometimes called educational productivity, academic-ROI, or K-12 ROI.
Education leaders do not seek a monetary return on their investment, like business leaders do; they seek greater student learning, or other outcomes like student citizenship, higher graduation rates, or increased lifetime earnings and career options. They want to use their scarce dollars on what works best for students.
Though districts have made great strides in this direction, most K-12 ROI analysis is still missing a big opportunity. Like in the elementary literacy example, districts often use ROI to evaluate programs and initiatives—comparing this PD program to that one, or debating whether to invest in iPads, after-school tutoring, or a new instructional management system. These appear as line items on a budget and are obvious targets in the yearly cycle of funding cuts and additions.
But this process misses some of the biggest cost drivers in the district’s budget and never addresses some of the fundamental resource issues that may actually drive student success. For example, districts rarely analyze the ROI of different aspects of teacher compensation (like paying teachers for advanced degrees), workforce management strategies (like hiring and retention policies), or how schools group teachers with students and organize time in the school day. These strategies don’t appear as line items and often involve input from multiple departments. But changes to these fundamental uses of people, time, and money may affect far more students, more intensively—and deliver the highest K-12 ROI.
Many districts’ strategic planning processes are not set up to consider these deeper issues. Planning happens in departmental siloes, often without an opportunity for the academic and finance departments to work together. Moreover, strategic planning often comes after key resource decisions have been made. It is not uncommon for schools to be required to submit their schedules and staffing plans in April while school improvement planning happens in May or August. Any K-12 ROI analysis that happens after schools have made their major resource decisions is unhelpful at best, and frustrating at worst.
To maximize the power of ROI analysis, education leaders need a new approach—one we’re calling System-Strategy ROI. This approach starts with the fundamental student need to be addressed and asks not “Which program is better?” but “What resources will meet this need?” This means considering a wider range of options, including those that:
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