Educational Economics: Where Do School Funds Go?

Marguerite Roza
Urban Institute Press, 2010

This book is an excellent synopsis of the work on school funding that Marguerite Roza and her colleagues at the University of Washington’s Center on Reinventing Public Education have done over the past decade. In short, accessible fashion (just 99 pages), the book lays out the fundamental and systemic problems with school funding. It also explains how the complexities of and multiple actors in schooling cause $500 billion spent annually on K-12 education in this country to flow in perverse and sometimes surprising ways. For example, those with the most resources tend to be “[m]iddle- and upper-class students, not poor students. Electives and athletics, not core subjects. Gifted and high-achieving students, not struggling students.”

Mandates and strings attached to state and federal funding surely tie local school leaders’ hands when it comes to how they spend the money, and as such those at the local level might be tempted to wash their hands of blame for funding and spending peculiarities. However, Roza does a great job of illustrating how local policies, practices, and personalities adversely impact school funding and spending.

For example, CRPE found school-to-school spending differences, in the same district, of $14,000 per student. In one school, the principal had control over just $4,000 of her school’s entire budget. Fordham found similar examples in our 2008 look at Ohio’s school funding system. In the Columbus City School District, the per-pupil funding gap between elementary schools was as large as $5,600, despite the schools serving similar populations of students and reaching similar levels of academic performance.

Locally negotiated teacher contracts add to the funding perversions. Though the mission of all school districts is to increase student learning, CRPE calculates that 19 percent of every district’s budget is spent on “eight common collective bargaining provisions with a weak or inconsistent relationship with student learning” (e.g., teacher salary increases based on experience and credentials, school days set aside for professional development, and class size limitations).

The book is chockfull of additional examples at local, state, and federal levels, the sum of which are termed a “wicked problem,” a phrase drawn from social planning literature. These “messy, circular problems” with “so many factors and conditions, all embedded in a dynamic context,” act like a “house of cards, and any effort to dismantle or overhaul one piece will always require a new prop.”

Roza dismantles a few of the worst reform ideas, including the 65 percent solution, “adequacy” campaigns, and funding schemes based on minimum staffing models and education inputs. Ohio adopted the lattermost of these last summer when the Evidence-Based Model was put into law (see Roza’s colleague, and CRPE director, Paul Hill’s excellent critique of Ohio’s new funding scheme here).

In the end, Roza rests some home on decentralized decision-making and weighted student funding, and proposes seven core elements of a better funding system:

  1. Standards,
  2. Pupil-based formula to allocate dollars,
  3. Weighted allocations for different student types,
  4. An accountability system that seeks the most effective use of funds,
  5. Open market for providers,
  6. Alignment of functions and clarity of roles, and
  7. Transparency in student outcomes and most productive practices.

She also acknowledges there’s no clear roadmap toward this new system. Hence a central contradiction of education reform—while these “wicked” problems might call for incremental, cautious solutions, to hedge against their unintended consequences, the depth and tragedy of the flaws in school funding cry for a more radical approach, even for a starting over. School funding reform, as Roza sees it, is not for the timid!

You can buy the book here.

Eric Osberg is a Vice President and Treasurer at the Thomas B. Fordham Institute