Seattle, Oakland ensure funding follows students

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This fall, a shrinking districtwide budget put the squeeze yet again on tiny Wing Luke Elementary, a low-income school in a racially diverse neighborhood. But a flexible budgeting system that Seattle Public Schools adopted seven years ago made it possible for Principal Ellen Punyon to hire an extra classroom teacher and keep her after-school program intact.

In 1997, Seattle became the first urban district in the country to do away with its staffing formula, which assigned teachers and other personnel to schools based on enrollment. (Here in Chicago, for instance, schools get one teacher for every 28 primary students.) Instead, Seattle adopted a new budgeting system that attaches a dollar amount to each student based on his or her needs, and lets the school decide how to spend it on staff, programs or educational materials.

“It’s the best thing that has ever happened to Seattle schools,” says Punyon. “It allows for a lot more flexibility and creativity.”

Since Seattle’s conversion, other districts have followed its lead, including Cincinnati, Houston, Milwaukee, Pittsburgh, San Francisco, Washington, D.C. and most recently, Oakland. The idea is gaining momentum elsewhere as school districts-Chicago Public Schools among them-seek to more wisely and equitably spend limited dollars in a climate ever more focused on improving student performance.

“Traditional budgeting tends to respond to political pressure,” notes researcher Marguerite Roza of the University of Washington’s Center on Reinventing Public Education. Schools with savvy parents or principals-who will ask the district to pay for special magnet or heritage programs, for instance-often end up with the most resources, sometimes from funds earmarked for low-income or other special needs students.

Meanwhile, schools that are serving the neediest students, who also tend to struggle the most academically, are sometimes shortchanged, Roza’s research has found.

However converting to a budgeting system where money follows students shifts additional funds to some schools at the expense of some others, and pioneering districts such as Seattle and Oakland have faced considerable political hurdles in doing so.

In Seattle, it was middle-class parents who furiously protested against losing money in their schools. In Oakland, the teachers union maintains that the new budgeting system is unfair to veteran teachers and the schools that employ them, and that some schools are suffering under a hastily implemented system that left them underfunded.

Seattle: Budgeting pioneer

Seattle Public Schools had fallen on rough times in the early 1990s, with dwindling enrollment, financial woes and declining test scores. Local business leaders rallied to recruit more innovative leaders for the school board, and by 1995, a new reform-oriented school board had installed retired Army general John Stanford to lead the school system.

To restore public confidence, both the board and superintendent decided to replace an unpopular desegregation policy that forced busing with a policy allowing parents to choose their own schools. Some board members floated the idea of a per-pupil funding formula that would attach extra dollars to students who were low-income, bilingual or in special education. The notion was to compensate schools that ended up with the neediest students. With additional financial resources, schools could then create more innovative programs to attract students, school officials reasoned.

After researching the idea during the summer of 1996, the board held a series of public hearings in the fall to present its proposal. Josesph Olchefske, then the district’s chief financial officer, remembers a lot of screaming by angry white, middle-class parents whose schools stood to lose money. “I was creamed in the papers, personally,” he recalls.

In January 1997, the board passed the controversial measure despite opposition. “This was wholesale change that hadn’t been done anywhere else in America,” says Olchefske. “We had a courageous board. We had a strong superintendent.”

To help win support for its controversial decision, the school board created a committee of 25 teachers union leaders, central office administrators and educators from a spectrum of schools to devise a formula that was fair to everybody. The committee would decide, given a set budget, how to weight the per pupil allocation for students who were low-income, bilingual or had a specific disability. The per-pupil money would cover a school’s teaching and support staff and its educational programs, materials and supplies.

The input was crucial in creating a workable formula, says Punyon of Wing Luke, who served on the committee for many years. School staff know precisely how dollars impact programs at their schools, she explains. “Just having principals there to tell our stories-how would this affect you–makes a big difference in how these decisions get made.”

Under the new formula, some schools’ budgets swelled by as much as 12 percent; others declined as much as 15 percent, Olchefske says.

Since then, the school board has adjusted the formula annually based on the commitee’s recommendations. “Many years we made recommendations and they weren’t totally followed,” Punyon adds. “At least the input was there.”

Student-based budgeting had a number of positive impacts on the school system, according to Olchefske who became district superintendent in 1998 and served until 2003. Innovative programs sprang up as principals got creative about using their dollars. (One elementary school started to teach its math and science lessons in Japanese.) The transparent funding structure reassured the philanthropists that the district wouldn’t offset grant money or donations with program cuts, and more donors invested. Student-based budgeting also became a principal recruiting tool, according to Olchefske “If you’re a dyanamic person who isn’t afraid of performance accountability, it’s a very attractive thing.”

But now shrinking budgets have tempered some of the initial enthusiasm for student-based budgeting, Punyon observes. The extra work it required seemed more worthwhile when a school committee got to debate whether to add an extra Spanish teacher or a music teacher. Now the debates concern which positions to cut. “That’s less fun. There are some angry feelings.”

Despite the tough decisions, Punyon says she wouldn’t want anyone making those decisions for her. “I’m sitting here watching the effects [on] the children,” she says. “I know what I’m getting for my dollar.”

Oakland: Radical approach

Besides being the newest convert to per-pupil budgeting, Oakland Unified is also the most radical. It is the only district in the country that is charging schools for the actual cost of each teacher’s salary, making inexperienced teachers less expensive than veterans.

Poor kids tend to get the least-experienced, lowest-paid teachers, which means less money is spent on their education than on kids with veteran teachers, explains Barak Ben-Gal, special assistant to Oakland’s superintendent. “It’s an equity issue,” he says.

Oakland’s switch to student-based budgeting came after the district fell into a multi-million dollar deficit and had to accept a state-appointed administrator to lead the district in exchange for a state loan. Randolph Ward, named state administrator in June 2003, wanted to give local schools more control over their budgets. Oakland had already piloted student based budgeting in 15 schools, and its school board had considered expanding it to all schools.

But the idea for using actual teacher salaries came from research that Ward and his staff reviewed about the funding inequities contained in teacher salaries, according to Katrina Scott-George, Ward’s special assistant.

In other districts with student-based budgeting, schools were charged same amount for each faculty position regardless of whether the teacher was a lower-paid novice or a higher-paid veteran.

Analyzing Oakland’s budget, George found a per-pupil spending difference of about $2,000 among Oakland schools that was due mostly to differences in the salaries of new or experienced teachers.

In Oakland, experienced teachers tend to seek jobs in middle-income “hill schools” on the northeast side of the city, while new teachers are concentrated in the lower-income “flatland” schools, according to Ben-Gal. “You have this completely uneven distribution.”

Under the new system, the district no longer subsidizes the additional cost of an entirely veteran staff at hill schools, and most will be forced to hire more inexperienced teachers. (To ease the transition in the first few years, the district is giving “hold harmless” money to schools that can’t afford their teachers.)

The district also hopes that schools with an inexperienced staff will spend some of the extra money they receive on professional development and coaching, Ben-Gal explains. With better initial teaching experiences, teachers may choose to stay in the flatlands, he says.

The Oakland teachers’ union opposes the new system, according to First Vice President Trish Gorham. For one, they fear that principals will tend to hire the cheapest teachers over the most experienced ones, she explains. Gorham also notes that veteran teachers remain in low-income schools that have good leaders. The new system may penalize these schools, she says. The highest-paid veterans can earn over $70,000, where new teachers with only a bachelor’s degree earn about $37,000.

Krishen Laetsch of the Cross-City Campaign for Urban School Reform’s Oakland office agrees that veteran teachers are not uniformly concentrated in the hill schools. “It turned out that a number of schools with low-performing students have veteran teachers.” Cross-city was an organizing force in the district’s switch to student-based budgeting, but didn’t advocate using actual teacher salaries because it could lead principals to favor cheaper teachers over better-qualified ones.

Cherie Ivey is principal of one high-achieving school in a low income area that will be penalized financially for its veteran staff. Out of 29 teachers at Fruitvale Elementary, 17 have more than 10 years experience and only one has less than five years, she says. On the other hand, she still came out ahead because the district turned over to schools some of the money that had supported central services, such as staff development. With the extra funds, she plans to buy seven computers for a new media center and training programs that her teachers selected.

Overall, Ivey likes the new system because “It gives governance back to the school.” Many other principals do, too, says Laetsch. But some, particularly small, underenrolled schools can not afford basic services on their per-pupil allotment. “One couldn’t even afford a part time custodian,” he remarks.

Laetsch says per-pupil budgeting would have a better chance of benefiting all schools if the district stopped charging actual teacher salaries and consolidated under-enrolled schools that it couldn’t afford to keep.

Some problems are inevitable in any new initiative, he adds. “If you wait until you have the whole system figured out, you’re never going to get started. You push forward and you fix it as you go along.”

To contact Elizabeth Duffrin, call (312) 673-3879 or send an e-mail to duffrin@catalyst-chicago.org.