With New Data, School Finance is Coming Out of the Dark Ages

By 04/11/2017

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Want to know what’s spent per student at a public school near you? Or whether it’s more or less than what’s spent at another school up the road? While it may seem crazy, in most communities you’d need to be a forensic accountant to get answers to such seemingly straightforward questions. That’s because what typically gets tracked and reported in this country is district-level spending. (And even that can take several years to be released to the public.)

But that’s all about to change.

A sleeper provision in the Every Student Succeeds Act—come December 2018—will serve up a motherlode of never-before-available school-level financial data. If we seize the unprecedented opportunity this data offers, we will be better equipped to tackle some of education’s most pressing issues—like the need for greater equity and productivity—and help schools across the country do better for their students.

Backed with bipartisan support, ESSA’s financial transparency clause calls on states to publicly report spending by school starting in the 2017-18 school year—and do so just six months after the school year ends. This wasn’t intended as some compliance thing, where the data get sent to the feds for review and a box gets checked on a form somewhere. The intent was to make spending data public and accessible to communities and school systems, unmasking systemic fiscal inequities among schools in the same district and making it much easier to investigate (and understand) the relationship between school outcomes and school spending.

Bottom line: This data bonanza has the potential to touch school leaders, students, and communities nationwide.

Edunomics Lab, our research center, undertakes the complex and time-consuming forensic financial analyses required to unearth and explore spending by school. So I can attest to the enormous value that large-scale access to these previously hidden figures will bring.

Here’s why they can have such power.

One: We need school-level spending to be able to understand school-level student outcomes in context. Yet we’ve been judging schools by their outcomes without any information on their access to financial resources. (For the last decade-plus, the federal government has required districts to report student outcomes by school. Spending was the missing piece—until now.) Two schools with a similar demographic mix of students might seem to be achieving similar outcomes, but if one is operating at double (or half) the public resources of the other, that’s a different thing entirely.

Two: Once school outcomes and spending can be matched up, that information becomes a powerful tool to uncover—and support—school productivity. This new data tool can help drive a more productive education system – one that wisely leverages money to get the most for students. When school leaders (finally) have complete information, they can explore what kinds of spending work best with different student populations and in different schooling contexts – say, a rural school with many students with limited English proficiency. And they can benchmark their own progress toward getting the most for the dollars they have.

Right now, in the absence of such full information, that’s not easy to do. Through our work with principals, we’ve come to realize that these school leaders often don’t know how much is spent on behalf of their students – save for their flex budgets or supply funds.

Without access to their own schools’ financials, these leaders are ill equipped to assess whether their own schools are doing well or poorly at getting the maximum return for each dollar spent.

They can’t set expectations with their staff about what’s possible to achieve with their level of spending, since they can’t see how it compares with their peers. And that means these leaders can’t be the best stewards of the public funds spent on behalf of their students. The new financial data could change all of this.

Three: This match-up of outcomes and financials can help spread cost-effective innovations. If one school surfaces an innovative practice that better serves students at lower cost, their success will show up in the data. Such data let schools learn from each other about what works best and at what cost. And it makes it easier to identify highly productive schools and school systems—those who get better than expected results given their mix of students and spending level. That tees up researchers to tease out what makes those schools more productive than their peers and what kinds of policies might trigger better productivity in schools generally.

Admittedly, states have a lot of work ahead to make the new data bonanza a reality by the 2018 deadline. Some might bemoan the lack of U.S. Department of Education guidance on what to include in the reporting and how to calculate per pupil figures. (Regulations were issued, then withdrawn.) While the regulations would have granted extensions for more time, the regulations weren’t going to guarantee consistency in data reporting across states or specify spending details that would help us interpret the data.

The absence of federal regs does not mean states are doomed to flail and produce shoddy or incomplete data. Many in an Edunomics Lab network of nearly two dozen state education agencies say they want to jointly develop financial transparency systems that are useful to their school systems, by connecting spending data with other school-level data like student outcomes and demographics. Several of these states plan to work together to develop common standards for reporting, making it possible for a school in one state to tap data from another state and draw apples-to-apples comparisons of how money is spent and what value it brings.

School finance is coming out of the Dark Ages. And it’s long past time.

— Marguerite Roza

Marguerite Roza, Ph.D., is the Director of the Edunomics Lab and Research Professor at Georgetown University.

This post originally appeared on FutureEd.

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