In 1985, the Polaroid camera was considered cutting edge. So were Apple’s first-ever Macintosh personal computer, the Windows 1.0 operating system—and the state of Georgia’s education funding formula, which was passed that year. Polaroid now has a mobile app, Windows 10 is coming out, and Apple has released over 100 computer models since that first Mac, but Georgia is still operating with a funding formula that was designed for the kids of The Breakfast Club. And Georgia isn’t alone in having such an antiquated state funding system. Minnesota and Connecticut haven’t had a major overhaul since 1989. Arizona’s formula dates back to 1980. Iowa’s formula has been essentially the same since the mid-1970s.
There are serious drawbacks to this legislative lag. When a school or district wants to try something new, it needs to find the money to do so. Many state education finance systems, though, weren’t designed with 21st-century innovations in mind. State funds are often tied up in inflexible spending categories or are allocated in ways that disincentivize changes to the status quo. We’ve collected a few examples of state funding systems standing in the way of creative and promising initiatives.
Full-Service Schools
In some low-income areas, “full-service” or “community” schools have partnered with local social service providers to address the root causes of their students’ lagging academic performance, including hunger and poor nutrition, shortages of clothing and supplies, limited access to health care, and low levels of parent education. This broad-spectrum, commonsense approach to student support has been shown in repeated studies to raise student achievement, improve child health, and strengthen parent engagement.
These kinds of services, though, are generally not funded out of state education budgets, which are intended to cover a more narrow definition of educational expenses. A survey by the Coalition of Community Schools (CCS) found that the average such school draws only 14% of its budget from state education dollars, and only a quarter from district funds. The rest comes from a grab-bag of federal grants, private foundations, city government support, community organizations, and in-kind contributions—a patchwork that depends on the coordination of many stakeholders and turns ensuring proper support for continuing services into a full-time job in itself. This situation is exacerbated by certain state funding systems. First, some states allocate funds for particular inputs (such as teachers and classroom materials) rather than for instructional costs overall. In these states, like Alabama and West Virginia, schools have little to no flexibility to pay for these support services out of their public funds, no matter how efficiently they manage their budgets. And in states that provide no extra money to meet the specific needs of low-income children, like Alaska and Georgia, schools have no logical source of funds to draw upon for wraparound services. It is no coincidence that these states are not among the thirty or more that host community schools.
Innovative Uses of Teacher Time
Public Impact, a national organization focused on improving learning outcomes, launched the Opportunity Culture (OC) initiative in 2011. OC aims to expand the reach of the best teachers to more students by doing things like placing them in charge of multi-classroom teaching teams or allowing them to rotate between in-person and digital instruction—and pays them commensurate with that greater impact. Schools in Nashville that implemented the initiative all saw high growth in reading and math within the first two years, and teacher responses to the program have been overwhelmingly positive.
However, in Public Impact’s home state of North Carolina, budget rules regarding teacher positions create significant hurdles for this kind of creative reorganization. OC schools typically give up some of their faculty positions, creating room in their budgets to pay their OC teachers more. But whatever the amount previously budgeted for a traded-in position, the state will only free up the funds for the starting pay for that position, which is about $15,000 less on average. That significantly reduces the pay increases schools can give high-impact teachers. In some cases, the loss spread over an entire school can rob it of $100,000 or more of its original budget, and that money reverts to the state, not the district. Emily Ayscue Hassel, co-director of Public Impact, says, “North Carolina’s school position trade-in policy is a tax on local innovation. It is slowing the spread of excellent teaching and learning in schools.” This system allows the state to take advantage of school-level innovation as a way to recapture district funds, and it makes it more expensive for school faculties to organize in the way that best serves their students.
Access Through Technology
In many communities, whether for reasons of funds, a paucity of qualified teachers, or poor economies of scale, students lack access to college-preparatory courses. In rural communities, there is often a dearth of Advanced Placement options. In predominately black and Latino schools, students are more likely to lack access to core math and science courses. One solution is for states to make available a “course choice” model, under which students can supplement their educational programs with individual courses supplied by online providers. A 2014 report prepared by Evergreen Education Group, a consulting firm that focuses on digital learning, identified only eleven states with policies with course choice policies that allow the per-course funding allocation to follow the student, which is the financing system that best facilitates this kind of access to course offerings.
John Watson, founder of the group and lead author of the report, explains that even when other states allow select groups of students to take supplemental coursework online, they will often do so by funding a specific virtual school with a politically vulnerable appropriation rather than integrating the option into their education formulas (as was the case in Missouri, whose Virtual Instruction Program’s appropriation was slashed midyear, laying off teachers after only three months of employment), or by charging school districts fees, which they may or may not then pass along to the students. Some states pay online providers less than a course unit would cost in a district setting and then pocket the difference, sending it neither to the provider nor to the student’s home district. “In all of these cases,” says Watson, “either the student has to pay, or the district has to pay, or the supplemental course provider may run out of funds to provide courses.” In the large majority of states, including several with large rural areas that could particularly benefit from course access, the funding system simply isn’t set up to facilitate this kind of simple innovation.
Time for a Reboot
The handful of states that have tackled school funding reform more recently have moved in the direction of greater flexibility for local decision-makers. California’s Local Control Funding Formula, passed in 2013, eliminated about 80 designated categorical funds and consolidated them into a per-pupil allocation that can be spent in response to local needs. Rhode Island’s 2010 formula is similarly structured so that the funding attaches to the student, not the line item. But too many of our states are well behind on this issue—in some cases, about forty years behind. Our elected officials often cite the importance of schools imparting 21st-century skills. They should meet educators halfway with 21st-century funding systems.