Ohio’s fiscal transparency and accountability

Valentina is a legislative analyst for StudentsFirst, a bipartisan grassroots movement working to improve the nation’s schools.

The most recent data shows that the state of Ohio spends more than $23 billion annually on education, but Ohio students are still struggling academically, with 67% of fourth graders and 64% of eighth graders reading below proficiency[1]. It’s clear that Ohio is investing in its education programs, but it’s not clear whether these resources are being used in the most effective manner.

As I recently wrote, Ohio would greatly benefit from a school letter grading system, which holds schools accountable, empowers parents with information and choices, and improves student outcomes. To maximize the full impact of a school grading system, however, Ohio must pair this information with a strong fiscal transparency and accountability system so that policymakers and the public can understand the impact of their spending decisions.  By developing a statewide, five-star rating system that links resources and investment decisions with student and school outcomes, policymakers can make better decisions regarding school funding.

However, transparency and ratings mean little without accountability. Strong but measured interventions, such as changing who makes resource decisions, must be permitted for schools and districts found to be chronic underperformers. Over time, a robust fiscal transparency and accountability system will lead to improved spending practices, which in turn will lead to increased student achievement and, in times of financial decline, will allow administrators and policymakers to make informed spending cuts.

A meaningful five-star fiscal rating would address both traditional measures of fiscal health and incentivize schools to invest in programs and practices that provide a measurable benefit to students enrolled. Preferably, the rating system would issue:

  • A maximum of two stars for the overall financial health of the school or district, measured using best practices related to financial responsibility such as unqualified audit opinions, etc.; and
  • A maximum of three stars for predetermined outcomes measures related to programmatic interventions, the impact of professional development programs, and other elements deemed relevant by the state.

A strong fiscal transparency model also establishes “cost peers” – another school or district with similar socio-economic factors, geography, size, and student populations – that enable policymakers to make adept comparisons to identify schools and districts that are implementing financial practices that contribute to high academic achievement.  Cost peers place fiscal ratings in the appropriate context. Depending on their location, schools will have different, but legitimate, cost drivers.  For example, rural schools will have higher transportation costs than say an urban or suburban area. A good rating system will take these kinds of factors into consideration.

As mentioned above, it’s critical that the fiscal rating system include strong but measured interventions to support underperforming schools. In the first year, low-performing districts should receive technical assistance from higher-performing cost peers. In the second year, the state education agency (SEA) should be given the authority to review and approve budgets and spending plans. If fiscal issues still exist for a third consecutive year and beyond, the state department of education should be empowered to appoint a financial receiver with independent fiscal powers until the district has earned a three-star rating or higher for two consecutive years.

Fiscal transparency focuses policymakers where they should be focused. We know that not all students learn the same way, and not all schools offer the same services. Therefore, rather than prescribing what schools should fund, state policymakers should promote spending flexibility, while implementing a fiscal rating system that holds school administrators accountable for the spending decisions they make. By tracking how schools and districts are using their money, we can begin to shift the education funding focus from an “inputs”-based model to one focused on “outputs,” allocating funding based on the academic needs of schools and districts. Simultaneously, this type of system would allow districts to identify and implement smart business practices that enable schools to be more successful.

Just as school letter grades are made available to the public, it’s crucial that the fiscal ratings also be made available to parents through a report card that is sent home and posted online for all of the community to see. Increased transparency supports better decision-making and empowers citizens to understand district and school performance. It also gives voters the opportunity to monitor policymakers and public officials and promote better outcomes. Without linking financial and student achievement data in a thoughtful manner, policymakers and administrators cannot make well-informed financial decisions. These leaders – along with parents and community members – must be empowered with meaningful, accurate and compelling information in order to make the best possible decisions for Ohio students.

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