Financing Entrepreneurial Education: Part III

Patrick Gibbons

Public education — where all is supposedly "for the children" — has a dirty secret: Its real organizing principle is jobs for adults.

The Clark County School District employs one adult for every eight students. In Washoe County, it's one adult for every 7.2 students. And don't assume those adults are teachers: Fewer than one of three Clark County School District employees are classroom teachers.

No, district administrators always like to hire … more administrators. That's one of the reasons why — absent fundamental reform — public education continues putting adults ahead of students.

One fundamental reform that strikes at the heart of this problem is school decentralization. It takes many forms. Student-based budgeting assigns dollar values to students and then issues dollars to a school based on the number of students who enroll there. Site-based management allows local schools the autonomy to decide how best to use the resources available to them. Combined, these methods lead to decentralized decision making and foster school innovation that better serves students.

The decentralization experiment pioneered by Mike Strembitsky in Edmonton, Canada, embodied both these strategies. Called "empowerment schools" here in Nevada, the model now operates in more than a dozen U.S. school districts. Clark County now has 17 empowerment schools, but such schools also exist in Baltimore, Boston, Chicago, Cincinnati, Denver, Houston, New York, Oakland, San Francisco, St. Paul and the state of Hawaii.

Genuine empowerment schools have much more control over their resources. The Edmonton public schools control 90 percent of the district's spending. Many central-office services depend entirely on the decisions of local schools to purchase that service from the central office. And because central must compete with private enterprise, it has streamlined operations and improved the quality of services offered to local schools.

How much of its budget a school controls varies from district to district — ranging from a low of 41 percent in Hawaii to a high of 90 percent in Edmonton. Before New York City moved to an empowerment program, a traditional public school there controlled around 6 percent of its own budget. After empowerment, it could control 85 percent.

When local schools control more of the budget, resources are used more efficiently and emphasis shifts from funding jobs at the central office to funding results at the local school. The Baltimore Public School system initiated its empowerment program with $165 million in central-office budget cuts, out of which $88 million was redistributed to local schools. Estimates are that by 2010 the district will have cut 489 jobs from the central office and have diverted 80 percent of the district's operating budget to the local schools.

The Hartford Public School District, with just 22,000 students, eliminated 40 central-office positions and reduced central-office expenditures by 20 percent as a result of the empowerment program. Meanwhile, the New York City Department of Education, which serves over one million students, has cut over $230 million from the central-office budget since 2006.

Moving to empowerment has also allowed school districts to protect classroom funds. Oakland Unified School District was forced to make significant cuts to its FY2010 budget because of California's sour economy and the district's declining enrollment. But while the central office budget was cut by 42.7 percent, local school sites saw a manageable revenue decline of just 3.7 percent.

When resources are rationed and controlled by district central offices, traditional schools have next to no control over their budgets and little ability to provide superior services at the best price. Thus, centralized control means fewer dollars, effectively, for local schools. Indeed, a close look at expenditures of the Washoe and Clark County school districts suggests the districts spend a mere 50 cents out of every dollar on school teachers and staff, textbooks and school supplies. So not only does limited funding finally reach the classroom, but even then, local teachers and principals have very little control over it.

Unless decision-making and budgeting are moved into local schools — where teachers and principals are in the best position to understand their students' needs — no amount of additional spending will translate into better results.

If done correctly, empowerment schools can increase effective funding to local schools as the control of the district central office is reduced. And student achievement, as further installments in this series will demonstrate, can also increase.

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

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