Financing entrepreneurial education: Part I

Patrick Gibbons

"Public schools can be great, they don't have to be mediocre and they don't have to be unresponsive," writes Dr. William Ouchi, author of Making Schools Work. Yet for half a century, public schools in Nevada and around the U.S. have stagnated in quality, despite a drastic increase in per-pupil spending.

What created this situation? What can be done to improve it?

Unfortunately, education has become a highly politicized issue, making it difficult to simply outline the problem and propose workable solutions. Today, education is a battleground fought between taxpayers, politicians, educators, bureaucrats, unions and corporations — with children trapped in the middle. Although opponents in the battle to reform education disagree on many issues, there is one solution that is gaining ground on both sides of the political divide: school decentralization.

For several decades, school districts, state legislators and the federal government have made numerous efforts to improve the quality of education. Through no shortage of good intentions, their efforts have woven thousands of complex rules into an oppressive net that forces teachers and administrators to focus more on complying with regulations than on the education of students. Today we worry more about what level of money is spent than how much students learn.

"Today's school finance systems fund programs, employ staff, sustain institutions and provide resources so that district and school administrators can faithfully execute the thousands of laws and regulations that have grown up around public education," noted the flagship report of the nationwide School Finance Redesign Project. But this complex patchwork of occasionally conflicting laws incentivizes a system that is "focused on maintaining programs and paying adults, not on searching for the most effective way to educate our children."

The multi-year project — conducted by the Center for Reinventing Public Education with support from the Bill and Melinda Gates Foundation — culminated in four recommendations for improving public education: 1) drive all funds to schools based on student counts; 2) keep linked data about uses of funds and results; 3) encourage innovation and experimentation; and 4) hold school districts accountable for student performance and continuous improvement.

Several other highly respected researchers and institutions have identified the same problem and made similar recommendations. Eric Hanushek, senior fellow at the Hoover Institution at Stanford University, found that "school finance continues to be seen in most states solely as the way to get necessary funding to districts in order to implement a variety of educational strategies independently decided upon by educators and policymakers."

Hanushek and Alfred Lindseth, authors of Schoolhouse, Courthouse and Statehouse: Solving the Funding-Achievement Puzzle in America's Public Schools, make several recommendations for improving the quality of public education. They include holding schools accountable for results, rewarding results-producing schools and teachers, and empowering local decision-making. Hanushek and Lindseth reason that "a performance-based funding system must give local school administrators flexibility over how they spend their budgets and how they run their schools."

The left-of-center think tank Center for American Progress and the National Education Association labor union both have concluded that school decentralization could positively impact public education. They also have agreed that the use of a weighted-student-formula — which drives dollars to the local school rather than to a central office — could increase funding equity between low-income and wealthy public schools. 

Decentralized school districts move control of school curricula, staffing and budgets away from central-office bureaucracies and down to the local school. Decentralization has many names, including student-based budgeting, weighted-student formula, site-based management, results-based budgeting, fair student funding, and empowerment schools. School districts featuring at least a few decentralized schools include Boston, Chicago, Denver and, here in Nevada, Clark County. But several school districts around the U.S. have taken the decentralization concept district-wide by granting greater autonomy to all their public schools. Baltimore, Hawaii, Houston, Oakland and New York City are examples.

Patrick R. Gibbons is an education policy analyst at the Nevada Policy Research Institute.

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