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Resources

The Education Toolkit

chapter 04: yes. funding.

yes.
funding.

Instead of a transparent process that evaluates and funds student needs, education funding is an opaque process that few understand, and even fewer find effective. It is time to update unfair and outdated funding systems that focus on everything except what kids need to succeed. Funding systems should provide more funding to students with greater needs, reduce geographic and per-student inequities, and foster innovation so that providers can offer solutions that meet student needs.

Chapters

Introduction

A quick users guide to the toolkit.

yes. framework.

Good policy framework.

yes. opportunity.

Learning opportunities for families.

yes. students.

Student-centered education.

yes. funding.

Modern education funding.

yes. preparation.

Preparing students for life.

Student-centered funding

Fair and transparent funding based on student needs.

The funding a school receives should be based on two factors: the number of students it serves and the characteristics of students enrolled. There should be a base student amount and funding weights for different student characteristics, such as family income, disability status, and English language learners.

School-level financial control

Provide school leaders with the freedom to lead.

If we expect school leaders to lead, they need the freedom and autonomy to shape key aspects of school life. Freedoms around hiring, pay, schedules, and other powers granted to managers are taken for granted in our daily lives. Yet, school leaders usually have no control over these issues that have a direct impact on student learning, even the curriculum they teach. Districts and states across the country are giving power back to school leaders and granting more authority to those closest to the families they serve.

Funding portability

Fund students, not schools.

These kids are getting lost in the system and it’s sad.

— Parent, Nashville
Our outdated systems of education funding typically work like this: citizens are taxed for education, this money is allocated to a local school and district, then a catchment area is drawn by which all students residing within those boundaries are compelled to attend that particular school to meet compulsory education requirements unless their family finds an alternative through homeschooling or private school tuition.

This outdated method of funding focuses on funding particular schools —not on student needs. Instead, funding should be linked to the child and portable to the educational service of their choice. When paired with student-centered funding, this would mean that schools serving more low-income students and students with disabilities would receive higher funding amounts than schools teaching students with lower needs.

Pensions and capital costs are restricting innovation

Moving to an individualized education system is complicated by legacy costs such as pension obligations, capital expenses, and in some cases retiree health benefits.

This problem is especially acute for teacher pension systems. As unfunded liabilities worsen, resources are increasingly diverted to paying down accrued debts, which not only siphons dollars away from classrooms but also makes it more difficult to implement policies that are student-centered (as opposed to school-centered). The more that school districts rely on each child’s per-pupil revenue to pay off longterm debt, the more resistant the system will be to options outside of the status quo. Public education simply can’t afford to lose students when debt obligations consume a large share of the funding pie.

The pension problem alone is staggering in scope. At the end of the 2018 fiscal year, unfunded liabilities across all state pension plans covering K-12 teachers totaled $697 billion, and those plans were about 74% funded altogether. In the wake of the COVID-19 pandemic’s global market impacts, early estimates for FY2020 suggest that the unfunded liabilities in pension plans serving teachers could easily rise to over $1 trillion, depending on where investment returns ultimately fall. Worse, many pension plans failed to significantly improve their financial sustainability during the preceding decade-long, historic bull market, opting to keep chasing increasingly unrealistic investment targets instead of making the difficult—but necessary for the financial sustainability of public education overall—changes to pension plan design, actuarial assumptions, amortization and funding policies, and overall plan governance needed to create resilient systems for the future.

The unchecked growth of unfunded liabilities is more than just a fiscal crisis: it affects the quality and diversity of educational options available to families. Individualized education requires a student centered funding system in which dollars are flexible and follow the student.

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yes.
preparation.