External Author Name: 
Paul T. Hill

Futurists have long regaled us with predictions about technology
dramatically improving education by giving millions more students access to the
very best teachers and deploying computer-based systems that allow students to
learn at their own pace at whatever time and place works best for them. This
vision is now becoming a reality, partly because tight budgets are forcing K-12
schools to employ fewer teachers and boost the productivity of those who

Saving money is only part of technology’s educational
potential, however. More important is individualization and rapid adaptation to
what a student is learning, leading to the possibility of greater and more
consistent growth. Managing equipment, web links, and vendor contracts is also
far nimbler than reorganizing people.

Our current education-finance system doesn’t actually fund schools and certainly doesn’t fund students.


All this potential notwithstanding, however, plenty of
policy and structural barriers stand in the way of widespread adoption of
technology in K-12 education. Perhaps the toughest of these is our traditional
approach to school funding.

Simply put: Our current education-finance system doesn’t actually
fund schools and certainly doesn’t fund students. Rather, it pays for
district-wide programs and staff positions. Much of it is locked into personnel
contracts and salary schedules—and most of the rest is locked into bureaucratic
routine. It’s next to impossible to shift resources from established programs
and flesh-and-blood workers into new uses like equipment, software, and remote
instructional staff. Yet to foster and maximize technology-based learning
opportunities, we must find ways for public dollars to do just that—and to
accompany kids to online providers chosen by their parents, teachers, or

Today’s school funding arrangement developed haphazardly, a
product of politics and advocacy, not design. Some of the money comes from the
state, some from Washington, and some is generated locally. This translates
into a labyrinth of rules and regulations connected to a maze of separate
funding paths, each with its own “allowable uses” and reporting requirements.
Education innovators get trapped in this maze—which is even harder to escape
when budget totals are flat.

coins standing on side photo

An innovative way to handle school monies.
Photo by Michael Ocampo

This is a particular problem for digital learning, because
today’s funding arrangements assume that a student will attend a specific
school, where salaries and other costs are paid by the district. Little money
actually flows through the school itself. Most of the budget is accounted for
by staff positions that are centrally allocated according to school size.

Because funds cannot easily be channeled into new uses,
promising innovations cannot be fully developed or persuasively demonstrated in
K-12 education. Which is good reason for visionaries and innovators to take
their best technological applications into realms other than education.

What would it take for education funding to be transformed
into a system that promotes digital learning and technological innovation? Public
dollars would have to go to the best possible instruction for students,
utilizing any means that can work. That means our system fur funding public education
would need to:

  • Fund education, not institutions;
  • Move money as students move;
  • Pay for unconventional forms of instruction as
    readily as for conventional schools;
  • Withhold funding from ineffective programs; and
  • Encourage innovation by ensuring people who have
    new ideas about instruction can, if families want to use them, access public

If states and localities (and Uncle Sam) would combine all
the money they now spend on K-12 education and divide it up by enrollment, with
the same or a weighted fraction of the total assigned to each child, and then
distribute these dollars to schools in the same way, they would sweep away the
major obstacles to innovation and improvement in today’s funding system. They
would also compel a dramatic reduction in overhead. Money would not be held
centrally to preserve particular schools, job slots or programs, but would go
wherever children are educated. This would allow new uses of funds, an
essential precondition to innovation and widespread use of digital learning.

A technology-friendly funding system would apply to all
students no matter where they receive their education and no matter how many
instructional providers serve them. To make this happen, some government entity—probably
the state—would need to assemble all of the funds available from all sources,
keep an account for every student, and faithfully allocate its contents to
whatever school or education program a student attends. Each student’s account
would, in a sense, constitute a “backpack” of funding that the student would
carry with her to any eligible school or program in which she enrolls—wherever
it may be located.

If her family decided to rely on one school or instructional
provider for all of that child’s education, all of the money would go to that
school or provider. Some youngsters, however, would enroll in courses provided
by different organizations, in which case the funds would be divided. Students
and families would be free to shop for the best combination of courses and
experiences their backpack of funds could cover. Providers would compete, both
on the quality and effectiveness of their services and on cost. States could
create a list of ineffective providers that were ineligible to receive public

Every school or independent
instructional provider would have to post its prices. No school or online
provider could charge more than the full amount in a student’s backpack.

This portable, flexible,
student-based funding system would instantly impact the budgets of existing schools
and create powerful incentives for them to improve their offerings so as not to
lose pupils to other institutions or course providers. At the same time,
innovators (educators and social-service professionals with new ideas) would be
encouraged by knowing that they could get full funding for every student
enrolled in their school or program.

To be sure, funding systems can’t cause innovation—they
can only interfere with or foster it. Whether innovation occurs, at what pace,
and to what ultimate benefit, depends on other factors. But a finance system
such as that described here would make promising breakthroughs much more
likely—and much more likely to scale rapidly. School finance would be placed
into the service of improved learning rather than left as a major impediment to

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