Moving Toward Transparent and Student-Based Funding Reform in Georgia

For more than three decades, Georgia’s system of school finance has handcuffed district leaders by dictating how state funds are used. More freedom might finally be in sight for frustrated educators, thanks to the promising recommendations from Gov. Nathan Deal’s Education Reform Commission.

The Commission has been tasked with overhauling the state’s Quality Basic Education (QBE) formula, created in 1985, which allocates over 90 percent of the state’s $8 billion in K-12 funding. If the goal of QBE’s architects was to achieve minimal transparency and flexibility, then it has been a riveting success.

QBE provides resources based on student needs, but it does so in a manner that is quite complex. The bulk of state funds are distributed via an inputs-based formula comprising segmented days, academic programs and staffing ratios. This makes it difficult to determine precisely how education dollars are prioritized and what impact they ultimately have on students.

Additionally, current policies force districts to pay teachers based on the state’s narrow pay scale, which only accounts for experience and education. Research indicates that these factors have little-to-no impact on student outcomes. This fails to reward the state’s best teachers for their great work.

To be fair, QBE isn’t entirely bad. An analysis by Education Resources Strategies found that it allocates resources in a relatively equitable manner among low-income and high-income districts. The report concluded, however, that there is still room for improvement. The inequity that does exist is primarily because the state’s formula does not directly account for low-income students.

Georgia needs a model that ties funding directly to students and allows schools to allocate resources flexibly. The recommendations by the Funding Formula Committee chaired by Dr. Charles Knapp are a big step in the right direction. It recommends using a weighted-student formula to allocate funds based on student characteristics.

In this system, each student is provided with a base amount of funding. Students with additional needs, such as special education and English language learners, would receive additional funding based on transparent weights.

Importantly, the Funding Formula Committee recommends providing a weight for low-income students.

The recommendations would also phase out Georgia’s top-down salary schedule for teachers. Districts would be able to determine how teachers are compensated, provided teacher effectiveness is incorporated as a component. This means that local factors, such as subject-area shortages, could be included in pay scales.

Overall, the committee’s recommendations should be applauded.

There are, however, several ways they could be strengthened.

First, a significant amount of funding in the proposed system would continue to be allocated outside of the student-based formula. Staffing for district offices would be standardized based on rigid ratios. For example, a district with 4,999 students would receive two additional staff members while a district with 5,000 students would receive four. This method is prescriptive and allocates resources in a “lumpy” manner. More than $2 billion of funding for Georgia’s teachers would similarly live outside the base formula.

A more effective system would roll these funds into the base per-pupil allotment, as the committee recommends for other resources. Burdensome regulations, such as class size requirements that many districts are still subject to, should also be eliminated altogether. These changes would promote even more transparency, maximize district-level flexibility, and ensure that funding equity is student-based.

Most importantly, however, the Funding Formula Committee’s recommendations fail to push the desired changes down to the school level. This means that once funds reach the districts, there is no guarantee that they will be distributed to schools in an equitable and flexible manner.

A study of education funding in Texas found that inequity among schools was, in fact, greater than among districts. Additionally, most of the nation’s districts provide principals with less than 5 percent discretion over how an individual school’s funds are used. A Reason Foundation analysis found that even a 1 percent increase in autonomy can have a significant impact on student outcomes.

Ideally, Georgia’s proposed system of student-based budgeting would tie funding directly to students. Short of this, student-based budgeting should be adopted at the district level, as is already done in more than 30 districts in the country.

Unquestionably, the Funding Formula Committee’s recommendations are a welcome change from the restrictive and opaque nature of QBE. But there is still work to be done to ensure that school leaders are empowered to meet the needs of their students and students enjoy maximum quality choices for education.

This commentary was written for the Georgia Public Policy Foundation by Aaron Smith, education policy analyst at the Reason Foundation and Lisa Snell, director of education at Reason.

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