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financial transparency

Financial transparency can help leaders get the most out of education dollars while shining light on their spending decisions.

Technology has revolutionized how we live. Apps such Waze, Open Table, and You Need a Budget provide users with real-time information to help them avoid traffic, make restaurant reservations, and attain their financial goals. Yet public education stakeholders don’t have access to basic financial data that are vital to making sound decisions. In fact, most superintendents, principals, and school board trustees are in the dark as to how education dollars are allocated among their own schools. To make matters worse, taxpayers are also kept in the dark. While budgets and financial statements are publicly available, these documents are cumbersome and provide little context or meaning, making it difficult to compare trends across districts.

This is problematic. Research shows that district allocation practices often shortchange students in low-income communities. District officials also have no way of knowing whether schools are leveraging their resources effectively and could be missing opportunities to gather and share insights from successful principals. Clearly, public education needs more financial transparency. This is why federal lawmakers included a provision in the Every Student Succeeds Act (ESSA) requiring all states to publicly report school-level expenditures by June 2020. This is a step in the right direction, but it doesn’t go far enough.

Ultimately, robust transparency can be a means toward greater accountability for performance. As a growing body of research shows a disconnect between test score gains and later-life outcomes, policymakers can use financial data and other key metrics to evaluate how schools are doing in meeting the demands of parents and local communities.

ENHANCING FINANCIAL TRANSPARENCY

Below are six reporting ideas that address critical data gaps that exist in most states. Importantly, policymakers can tailor these suggestions to their needs. States should seek to create a robust system of financial transparency in which data are streamlined and actionable so that stakeholders don’t have to navigate public information requests or have advanced Microsoft Excel skills to access data on how public resources are being spent to serve children.

School-Level Spending Report

State policymakers should go above and beyond ESSA’s baseline requirements by providing robust school-level spending data that combines key data sources. Working with a consortium of state officials, Georgetown University’s Edunomics Lab recommends that states create three types of comparison reports: equity, efficiency, and productivity.

Spending Transparency Report.

State funding formulas often contain burdensome restrictions that prevent local leaders from aligning spending decisions with student need. A better approach is to give districts flexibility over education dollars and shine light on their expenditures and outcomes. As such, states should report per-pupil spending data by district and what these trends look like over time. These categories can be adjusted to align with state accounting practices and can be displayed by function, object, and program code.

Right-Sizing Report

Enrollment trends are critical for school districts. Not only is enrollment a substantial driver of revenue, but it can also serve as a proxy for demand and provide insight into parent and community satisfaction. These data are even more powerful when paired with staffing data. For example, a declining student population and a staffing surge might indicate an inability to right-size operations (i.e. adjust to changes in revenue) and raise flags about financial stability. Similarly, it’s also important to evaluate the growth of teaching staff in comparison to student population and other staffing positions. A right-sizing report will ultimately help stakeholders assess to what extent school districts are operating efficiently.

Funding Equity Report

In many states, local property wealth creates funding disparities among districts. Data that compare revenue, property wealth, and student demographics can highlight flaws with education funding formulas and can be difficult to obtain. A report that shows key metrics for each of these three categories can help stakeholders examine the extent to which property wealth contributes to funding differences. Other relevant data in this report might include local tax rates, expenditures, and additional student demographic categories such as special education and English language learners.

Open Enrollment Report

Open enrollment policies that give families options outside of their zoned school district are on the rise, with states such as Florida and Colorado leading the way. Nevertheless, many districts still have restrictive practices that prevent families from seeking greater opportunities even when seats are available. Given these realities, it’s critical for policymakers to publicly report open enrollment data. Stakeholders should know exactly what each district’s policy is, how many transfer applications districts receive, the number of transfer students enrolled, and how much revenue is collected each year from families in tuition payments.

School Capacity Report

It’s important for district officials to know exactly where they stand in terms of school capacity. Not only is this a foundational component of strategic planning, it can also help identify spending inefficiencies since districts often divert more per-pupil dollars to schools with declining or low student populations. But this information should also be publicly reported. Stakeholders should know the extent to which buildings are being used and whether available seats could be offered to transfer students via open enrollment programs. As such, districts should publicly disclose their capacity data by school. One model to follow is Florida’s Controlled Open Enrollment law, which requires districts to provide an annual report on how many empty seats exist at each school.

BENEFITS

  • Flexibility coupled with transparency: By shining light on spending decisions, policymakers can eliminate top-down mandates and push flexibility to the local level.
  • Identify funding inequities: Financial data can highlight flaws in state and district funding formulas that arbitrarily shortchange some students.
  • Support open enrollment: Student transfer and school capacity data support policies that put families in the driver’s seat.

Interested in learning more about financial transparency? Contact a member of yes. every kid. hello@yeseverykid.com.

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