Follow the money: ESSA's weighted student funding pilots

Matthew Joseph

Editor's note: This is the fifth post in Fordham's 2016 Wonkathon. We've asked assorted education policy experts to answer this question: What are the "sleeper provisions" of ESSA that might encourage the further expansion of parental choice, at least if advocates seize the opportunity? Prior entries can be found hereherehere, and here.

Of the many provisions in the Every Student Succeeds Act (ESSA), the weighted student funding pilot program may have the most profound impact on school choice. By maximizing the money that follows students, including those with high needs, the pilots could lead to the expansion of high-quality choice programs.

The basics of weighted student funding

Weighted student funding—also known as student-centered funding, student-based budgeting, and fair student funding—devotes a base amount of funding to each student. Additional funds (or weights) are then provided for students who need additional services, such as low-income or disabled students and English language learners.

Schools receive funding based on the number of students they enroll and the characteristics of those students. If a student moves from one school to another, the receiving school gets the money designated for that student. This is very different from the vast majority of current funding systems, which provide resources by staffing ratios and through specific programs. When a student changes schools, all or most of the money stays put.

Weighted student funding enjoys support across a wide political spectrum because it promotes equity, transparency, flexibility, and, yes, school choice.

How weighted student funding promotes school choice

Fair and adequate funding is one of the most significant obstacles to expanding high-quality choice programs. Right now, not enough dollars appropriately follow children. Often, only state dollars are put on the table, allowing districts to keep local and federal funds. So while a traditional district may spend $10,000 per student, public charter schools may only get $8,000, and parents may have access to just $5,000 through educational savings accounts.

In other words, schools of choice have to make do with less. This means that they may face pressure to cut programmatic corners, choose not participate in choice programs altogether, or not be able financially to serve students with greater needs.

The rules become fair with a strong weighted student funding program under which all local, state, and federal dollars are rolled into one formula and schools get extra money for students who need extra services.

The pilot program

Under ESSA’s weighted student funding pilot program, up to fifty districts can participate initially, with unlimited national expansion permitted for the 2019–20 school year. Districts can consolidate all of their federal Title I and II dollars, as well as other funding at various levels, into one weighted formula for schools. To participate, districts have to submit an application to the U.S. Department of Education, demonstrate annual compliance with certain requirements, and issue yearly reports on spending.

Underfunded school choice programs in these districts will have the opportunity to get a fairer share of money. At a minimum, the pilot program should mean that, for the first time, federal dollars will follow the student from school to school within a district. Under the current rules, Title I dollars are allocated by school, with the highest-poverty schools receiving money first.

Lessons from the pilots

While the pilots are confined to spending within districts, implementation will facilitate future portability of funds across districts. Districts will have to address the needs of small or shrinking schools that claim large, fixed costs. They also will have to account for district-wide spending on things like administration and transportation.

Districts will need to relearn how to count their low-income students given that many districts will no longer have to establish individual student eligibility for the free and reduced-price meal program. They may have to address personnel rules that force schools to hire certain teachers and pay them based on characteristics (such as seniority) unconnected to student learning.

Actions the Department of Education can take

For the weighted student funding pilot program to have maximum impact on school choice, the department can take several actions. First, it can move quickly to complete the application process. The current administration has not shown the intention to implement such pilots in its remaining months, but the department can still gear up to initiate the application process under a new president in time for the 2017–18 school year.

Second, the department can strictly apply ESSA’s requirement that a “significant” portion of district funds flow through the weighted student funding formula—meaning that schools receive and control the vast majority of district money. Some districts currently claim to have weighted student funding, but schools actually control only a fraction of total district spending.

Finally, the department can enforce the ESSA mandate that the weights result in “substantially” more funding for low-income and other educationally disadvantaged students. This will open up choice opportunities to the largest number of students by ensuring that schools get the resources they need to educate all students.

Support from states and others

All of the burden should not fall on the department, given that it has many other ESSA initiatives to implement. Other organizations can provide guidance about the application process, work with interested districts on their applications, and help districts implement weighted student funding effectively.

States can also align their funding systems and practices to assist districts in maximizing the portion of funds that flow through the formula. California recently collapsed more than fifty separate state funding streams into one weighted formula. Georgia may soon switch a significant block of state education dollars to weighted student funding while giving districts greater freedom on how to compensate teachers.

Making the program popular

Facilitating school choice is not likely the top reason most districts will want to participate in the pilot program; there must be other compelling benefits, such as increased spending flexibility and reduced paperwork.

The department can make the application process less onerous. This include special provisions for districts—like Denver and thirty others—that have already implemented weighted student funding and now want to incorporate federal funding. These districts are among the most likely applicants, but they may defer if forced to jump through too many hoops. For example, the law requires “consultation” with a panoply of interest groups and says that high-poverty schools should receive more funding than before. Many existing weighted funding programs have already addressed these concerns.

The department can also ensure that its new “supplement, not supplant” regulations do not throw a monkey wrench into the pilot program. Districts that adequately weight low-income students should meet the requirements of the regulations that are ultimately issued, even though the weight is funded through a combination of federal, state, and local dollars. That may mean adjusting the draft regulations that the department presented during the negotiated rulemaking process.

The bottom line: A boon for choice

If all goes well, the pilots will demonstrate that weighted student funding enables the most money to follow students down to the school level and provides incentives for schools to compete for students— particularly those with higher needs. It will show that portability of federal funding is possible and beneficial. Then, with expansion in 2019–20, choice programs across the country will face one fewer obstacle to their success.

Matthew Joseph is the director of education funding reform at the Foundation for Excellence in Education.