Volume 3 Issues 3

Student-Based Budgeting can Contribute to Gains in Student Achievement

by Lisa Snell, Director of Education, Reason Foundation

In the United States, public school funding systems at the state and local level are increasingly adopting a student-based budgeting (SBB) framework, where funding is attached to the students and “follows the child” to the public school he or she attends. SBB is a student-driven rather than a program-driven budgeting process, where dollars rather than staffing positions follow students into schools. In many cases, these resources are weighted based on the individual needs of the student.

Under the SBB model, schools are allocated funding based on the number of students that enroll at each individual school, with extra per-student dollars for students who need services such as special education, English language learner (ELL) instruction, or help catching up to grade level. School principals, with input from their staff and accountability committee, have control over how their school’s resources are allocated for salaries, materials, staff development and many other matters that have traditionally been decided at the district level. Accountability measures are implemented to ensure that performance levels at each school site are met.

Jefferson County Public Schools has recently joined the ranks of public school districts that use student-based budgeting to let local communities make decisions over and prioritize funding toward student achievement. As reported in an August 2015 Independence Institute study, Colorado Student-Based Budgeting on the Rise, in Jeffco, for 2015–2016 the base elementary per-pupil allocation is set at $3,580, with $3,710 for each middle school student and $3,380 for each high school student. The 25 percent of Jeffco students who are eligible for free (not reduced rate) lunch also bring in an extra $820 to ensure at-risk funding reaches the school level.  District leaders are working to keep the focus on the new program’s goals: greater flexibility, equity, and transparency in the allocation of funds to serve students throughout the district and empower Jeffco principals with input from their local communities to manage resources to meet unique school-level instructional goals and improve student achievement.

Research has shown that student-based budgeting has played a robust role in improving student achievement in districts that have switched to this student-centered budgeting system. A December 2013 study by the Reason Foundation, evaluated student-based budgeting districts using “The Broad Prize” methodology, which examines school district performance on student achievement metrics like closing the achievement gap and improving academic performance for low-income students. A promising finding, from a Reason Foundation analysis of 15 SBB school districts, is that both correlation and regression data suggest that higher budget autonomy—a larger share of district budgets allocated to the school level on a per-student basis—is associated with better school district performance.  Holding all else constant, a school district that allocated 50 percent of its 2011 budget to an SBB formula, where money follows the student, was nearly 10 times more likely to close achievement gaps than a district that only allocated 20 percent of its 2011 budget to weighted student formula.

For example, in Houston, a district with a strong commitment to student-based budgeting since the year 2000, disadvantaged students showed significant improvement across multiple student achievement indicators. Houston has outperformed all other SBB districts analyzed in the Reason Foundation study and had the smallest 2011 achievement gap in mathematics proficiency between white and African-American and white and Hispanic elementary school students. Houston is closing every achievement gap among middle school students, and disadvantaged students are increasing proficiency rates at a faster rate than other districts in the rest of the state of Texas. In 2013, Houston won the $1 million Broad Prize for the second time since 2002 for being the most improved urban school district.

Similarly, in Denver, which started SBB in 2008, trends in proficiency rate improvement since 2008 are some of the most impressive in the state of Colorado. For example, Denver Public Schools students posted the highest Median Growth Percentile scores among Colorado’s 20 largest school districts on the 2012 Transitional Colorado Assessment Program (TCAP). DPS also posted proficiency gains in the four core subjects that outpaced those of the rest of the state. The Median Growth Percentile measures year-to-year academic growth compared to peer students across the state, and the average score is 50. DPS students posted scores of 54 in reading, 53 in math, and 57 in writing. Prior to the start of SBB and other reforms in the Denver Plan, DPS had the lowest year-on-year academic growth of any major district in the state. Since then, DPS has consistently gained ground on the rest of the state in percentage of students performing at or above grade level; Denver schools have become the fastest-growing major district in the state in terms of year-on-year academic growth. 

Several school districts across the United States have been successful in empowering principals and local communities to manage their education resources to meet instructional goals at the school level and improve student achievement. SBB is one management tool that can help all education stakeholders to understand how resources are used at the school level and provide more transparency, equity, and local control over education spending with the goal of improving student outcomes.