Starting in the late 1990s, large urban districts around the country began experimenting with student-based budgeting. Traditionally, districts would give each school a certain number of teaching slots and cover the cost of the teachers regardless of their salary levels. Under that system, the most attractive schools could recruit the most experienced and educated teachers, while the least attractive ones might be left with the least experienced. The district would cover the costs either way.
By contrast, student-based budgeting gives each school a fixed amount of money per pupil enrolled, typically with extra weighting for high school students and certain conditions such as poverty. Under this system, all schools would get an equal shot at hiring more experienced teachers. (In the tight budget climate CPS has today, some principals are bypassing those teachers because they take up too much of their budget.)
Districts frequently coupled student-based budgeting with greater freedom for principals to spend money as they choose, allowing them greater power over personnel and other spending than traditional budgeting formulas permit.
The Chicago Public Schools began to explore the idea in the mid-2000s, but by 2008 the district had fallen far short of its goal to have all schools using student-based budgeting. In that year, only 15 percent of CPS schools—most of them charters—were receiving funds through student-based budgeting. Only 14 traditional schools were involved, and plans to add more were on hold.
Then-CPS budget director Pedro Martinez blamed tight district budgets for the slowdown and noted that because schools create their budgets in the spring, before state lawmakers have finished theirs, schools could find themselves in the hole if state funds failed to come through as projected.
University of Washington school finance expert Marguerite Roza, a longtime champion of student-based budgeting, countered that CPS likely feared that changing to a student-based budget system would expose funding inequities between schools. A 2005 Catalyst budget analysis showed that large schools (1500+ students) with predominantly Latino students were most likely to be underfunded relative to district averages, while small schools, magnets and selective enrollment schools received funds at higher-than-average rates.
In these early days, CPS also was struggling to determine a fair way to fund special education services using student-based budgeting. A task force found that most special-needs students cost the district between $3,000 and $5,000 per year, and was working on refining that estimate.
CPS rolled out student-based budgeting district-wide in 2013, but not all school-level funds were thrown into the pot. The district retained control of supplemental funds for low-income, special-needs and bilingual students. It also retained control of funds for magnet and selective enrollment schools.
So far this year, CPS has maintained last year’s per-pupil funding amount, pending pension reform in Springfield. But it dropped the practice of holding schools harmless if their enrollments come in lower than projected. In those cases, CPS now plans to take back the funding attached to the no-shows.
It is important to note that the total amount of funds allocated through student-based budgeting remains relatively small. According to an analysis Roza conducted in January of 27 urban districts, Chicago Public Schools allocates just 31 percent of its total district budget to schools on a per-pupil basis. Meanwhile, Boston, Hartford and Houston allocate between 40 and 45 percent of their district budgets to schools through student-based budgeting, and the Recovery School District, which oversees 57 New Orleans charter schools, allocates all funds through student-based budgeting.
See “School budget cuts spread across city,” Catalyst July 2015 and “Neighborhood schools budgets decline with enrollment loss,” Catalyst June 2015
Watch for new ways that funds shift into student-based allocations.
For example, CPS is quietly moving ahead with a pilot program to allocate special education funds through student-based budgeting. The program, called All Means All, launched last year with two dozen schools and has expanded to 102. Some of those schools were unaware of the switch until their budgets arrived.
CPS could turn to Boston for guidance in how to make the transition. There, the district has created 11 categories to address students with the greatest needs for services, and weights funds for those students in a range between 1.6 and 6.0 times base funding.
See “CPS budget cuts hit special education students,” WBEZ July 2015