Per-pupil funding pitfalls

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Per-pupil funding can bring greater transparency and more equity to the budgeting process, but at a price.

“When you move to per-pupil funding, the idea is to put more accountability [in schools],” says funding consultant Karen Hawley Miles, who was hired to advise Chicago Public Schools.

Student counts count When money is supposed to follow students, enrollment matters—a lot.

While it may seem a simple task, there are actually a number of ways to count students, and each has implications for a school’s finances. During the budget planning stage, enrollment is based on projections, figures which are then adjusted in the fall when actual student counts can be taken. CPS makes those counts on the 20th day of school, and for schools on per-pupil budgeting, the difference between those figures and projections can mean a net loss or gain in funding.

This year, Tarkington’s enrollment was underestimated by 90 students. Pershing West and Uplift found fewer students were attending than expected. Since all three are among the first to try the new budgeting system, the district is not taking money away. However, by late October, it had not yet determined whether Tarkington would receive additional money for its extra students.

For charter schools, CPS takes student counts twice a year—once each semester—and makes budget adjustments as necessary. High schools tend to be hardest hit when the second, and presumably lower, count is taken. Noble Street Charter anticipates losing a certain number of students by winter and enrolls more in the fall to ensure the school gets enough funding, says Noble Network COO Michael Milkie.

In Seattle, a switch to counting students twice instead of once per year hurt high schools the most. Taking money away from schools has resulted in some calling for an end to per-pupil funding, says budget expert Marguerite Roza.

How much do teachers really cost? Technically, schools using traditional budgeting do not pay for teachers. They receive teaching positions based on the number of students enrolled, and the district pays the full cost of their salaries and benefits. Schools that hire more expensive veteran teachers are on equal footing as those that fill the staff with cheaper novices.

In a student-based budgeting system, there are two ways to reimburse schools for teacher salaries. One method produces much the same result as traditional school budgeting. The other method, which CPS is using at three non-charters this year, is considered to be more equitable. It shifts the financial burden of teacher salaries to schools, having them pick up the actual cost for each teacher.

The latter method gives many principals pause, fearing they will no longer be able to afford to hire veteran teachers. Uplift found that their budget would stretch farther with inexperienced teachers. “We realized we had to hire new teachers because they cost less,” says Principal Stephanie Moore.

Only one other urban district using per-pupil funding—Oakland, Calif.—charges schools the actual cost of teacher salaries. That choice continues to be politically charged, drawing much opposition from teachers union leaders.

Special case for special ed Per-pupil funding aims to provide equal funding for students with equal needs. However, the wide and varied needs of special education students are a considerable roadblock to setting a practical funding formula. District officials estimate special education costs range from an average of $3,000 to $5,000 per student to a high of $30,000.

Last winter, a task force of CPS and charter school officials set out to devise a working formula. Their goal is to work something out in time for next year’s budget.

Elizabeth Evans of the Illinois Network of Charter Schools notes the team is taking a look at Philadelphia, which devised a comprehensive special education funding formula.

Another option on the table entails devising per-pupil rates only for the most frequently diagnosed disabilities.

So far, the task force has won a few concessions. The district raised the cap for reimbursing special education teacher salaries from $50,000 to $65,000. Funding has also been reconfigured so charters that hire more than one special education teacher may not be penalized if those teachers earn more or less than the capped salary.