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Although there are many ways to approach education reform, UW-Madison Education Professor Allan Odden likes to focus on the dollars-and-cents side. Schools could teach students to higher standards, Odden says, if schools, rather than districts, had the power to determine how to best use the dollars in the education system.

Odden believes that providing schools their budget in a lump sum--school-based financing--should represent the next major evolution of school finance. Why? Because school-based financing is consistent with standards-based reform initiatives that set clear directions (such as standards and assessments) at the state or district level, and then give schools the responsibility and the authority for meeting student performance objectives. "Ensuring that schools have considerable control over the resources necessary for meeting students’ academic needs is critical to holding schools accountable for educational performance," Odden says.

Contrary to popular opinion, the education finance system has amassed considerable resources throughout this century. It has gained between 25 percent and 75 percent in real per-pupil terms each decade up through the 1980s. However, despite this increase in resources, the education dollar is neither distributed fairly nor used effectively. Odden and associate Carolyn Busch identified large disparities in education funding within and across states -- literally thousands of dollars per pupil.

"There are vast resources available for education," Odden says, "but in the current system, some students, by accident of their birthplace, get more and others get less, regardless of their individual educational needs. This strategy isn’t the best way to deploy resources so all students can achieve to high and rigorous standards."

Odden and Busch propose these strategies for reducing the most egregious fiscal disparities, focusing on the lowest-funded districts.

1. Within states. In keeping with current state-controlled education finance policy, the first alternative operates state-by-state to solve the school finance dilemma of unequal and inadequate funding. This strategy uses cost-adjusted per-pupil local and state general funding, thus excluding state categorical funding and federal funding. This equalization strategy brings all of the lowest-funded districts up to the funding level of the state median within each state. Busch says, "We chose the median because it provides substantial equity for the bottom half and because research in two Midwestern states found that the median was a sufficient amount to teach students to a state achievement standard."

The total revenues of all districts combined in the 1991-91 school year was $191 billion. The estimated cost of raising the lowest-funded districts to the state median was $8.5 billion in 1991-92 dollars, or $10.9 billion in 1996-97 dollars, which represents a 4.5 percent increase in basic education revenues. This policy would affect 37 percent of all districts across the nation. Thus, a fairly modest increase in funding could help more than a third of the country’s school districts, eliminate all of the "savage" fiscal inequalities in the country, and provide an adequate amount of finding at least in some states.

2. Nationally. The second alternative extends across state boundaries and addresses the educational system as a nation. Again using cost-adjusted per-pupil local and state general funding, this second equalization strategy brings all of the nation’s lowest funded districts up to the national median. This plan is more expensive--costing $16.6 billion in 1991-92 dollars, or $22.3 billion in 1996-97 dollars--but even so it reflects a relatively small 9.2 percentage increase in funding and helps almost 33 percent of all school districts across the U.S. The impact of this option would vary dramatically across states. Several states, such as Alabama, Illinois, Kentucky, Mississippi, Oklahoma, and Tennessee, would have revenues increased for more than 90 percent of their students. Other states, such as Alaska, Hawaii, Maryland, and New Jersey would have revenues hiked for none of their students, and several other states would receive additional revenues for fewer than 10 percent of their students. By focusing on states largely in the South and West, where funding for education is relatively low, the federal government would address the systemwide need for improving educational opportunity and results nationally.

For either alternative, the federal government could play an important role in reducing inequities in education funding, especially for the lowest-spending districts. A modest amount of additional money is needed for about a third of the nation’s school districts so that they have a sufficient level of resources. Nevertheless, as the common phrase goes, "throwing more money at the problem won’t fix it."

3. A new management approach. Accomplishing the reform goal of teaching nearly all students to high standards requires a doubling or tripling of current student achievement results. Odden concludes that a new management strategy is required to accompany the standard-setting, measurement of results, and accountability that are part of standards- and school-based reform. The new management approach would be a performance-based, decentralized system in which schools would be provided substantial authority and autonomy to accomplish results. The state and districts would set goals, standards, and directions, and administer a real accountability system. From research in both education and other settings, Odden and Busch find that providing budget authority to the school is a key element of this new management strategy.

For the majority of states and districts this will require a totally different budgeting system--budgeting dollars to schools in a lump sum rather than providing schools with district-determined resources such as teachers, teacher specialists, instructional aides, etc.

In their new book, Funding Schools for High Performance Management: School Site-Based Financing, Odden and Busch discuss how school-based financing has been implemented in charter schools in the U.S., the policies of the states of Victoria, Australia, and in England, both of which adopted a comprehensive form of school-based financing in the 1990s. Odden and Busch write explicitly about education finance and school-based financing, but their new book is implicitly about the entire education system. In fact, understanding the theme of the book depends on understanding how school finance must be constructed to support strong educational programs within schools.

For more information, contact Odden at odden@macc.wisc.edu or (608) 263-4260.