Category Archives: School Funding

Three Myths I Often Hear About the Dreaded Financial Model

This is the sixth blog post in our #SGInstitute series, led by our Strategic Advising practice on lessons learned from advising schools, networks, and districts on growth and expansion.

Most people groan when they think about financial modeling, but it’s the part of strategic planning that I look forward to most. To be fair, I was the kid in math class who found it incredibly satisfying to see how numbers fit together in a clean and orderly way. A prime number is ALWAYS only divisible by one and itself. The angles in a triangle ALWAYS add up to 180. Algebra is like a riddle whose answer you can ALWAYS figure out — just isolate the X! (I know this makes me a nerd, but I embrace it.)

In my adult life, I get the same satisfaction from a good financial model that pieces together all the parts of a strategic plan in a logical way. For those new to the process, a financial model is basically a big, usually Excel-based, spreadsheet that lays out all the costs and revenue streams associated with a strategic plan, as well as the relationships between them, to calculate a total funding need. This spreadsheet can then be used as a “model” that helps you test various decisions associated with plan implementation, just like a blueprint is a model that guides construction of a new house or building.

Financial models help growing schools or networks understand their funding need, plan for the future, and justify budgets to potential funders. What I like about financial modeling is that it makes a strategy feel concrete. Before you get to modeling in the strategic planning process, the various goals, priorities, and action steps that make up your school’s plan for growth or improvement can feel like vague ideas. Once they’re in Excel and defined by real-world cost estimates, the ideas come to life.

For instance, let’s say you want to build out your data systems to support a growing organization. Okay, but what does that actually mean? Translating your ideas into spreadsheet form will require you to think through what the work will look like on the ground and what specific resources you will need to accomplish various tasks. You’ll probably need to invest in new or upgraded software, train your staff to use it, and perhaps bring a data expert on board to manage it. If you can make some informed guesstimates about how many of each thing you’ll need, when you’ll buy them, and how much they’ll cost, with a bit of math you can get to a reasonably realistic estimate of investment size.

Then you can use that estimate to adjust your strategic plan to better fit the reality of your day-to-day.  Back to our data systems example: Don’t think you can afford an investment of that size? To save costs, perhaps you can find less complex software, limit licenses to a few key staff members, or allocate time from a current resource to data management rather than hiring a new staff member. If you flex the inputs in the model to reflect those changes, what happens to the final number? I, for one, feel much more comfortable making decisions armed with numbers.

Now you’re probably thinking: “But financial modeling requires a skillset I don’t have (and don’t really have the time to build)!” Yes, you need to be comfortable with Excel, but I promise that comes with a little practice — and there are simple video tutorials readily available the internet. Beyond that, it’s much more approachable than you think.

Here are three common myths I hear about financial modeling from people unfamiliar with the process: Continue reading

Ten Lessons from Eight Cities

Over a year ago, I began an ambitious project to tell the stories of cities that implemented citywide school improvement strategies and saw student achievement increase — and to share these stories as lessons for other system leaders. The result was Eight Cities, a beautiful and information-rich website that does just that. It was a rare project that put my team in the fortunate position of listening to some of the brightest, most committed, and humble education professionals in the country. It’s difficult not to learn a lot under such circumstances.

Legacy Charter school building in Chicago with students and crossing guard outside

Legacy Charter School in Chicago. Photo credit: Alexander Drecun.

While each one of our eight stories provides a deep dive into different cities, there were a lot of macro lessons that emerged. Here are ten that I think are particularly salient for state leaders, mayors, superintendents, board members, charter leaders, and funders interested in exploring a similar approach:

1. Language matters. One of our first challenges was choosing a term that simultaneously described a complex citywide education reform strategy with many local nuances without creating a target for people who wanted to reduce it to a single word. What should we call these systems of public schools which shared central beliefs and strategic pillars and saw schools as the unit of change? These were widely referred to as “portfolio districts” until 2017, when the term was weaponized by opponents who took issue with the approach. The Texas Education Agency has adopted the term “Systems of Great Schools.” While I occasionally use “portfolio” as shorthand, I prefer the term “dynamic systems of schools” because it describes the core mechanism of systemic improvement: high-performing or high-potential schools replacing schools that have failed generations of students. But this phrase hasn’t caught on. After much discussion, the Eight Cities team decided to avoid labels and simply tell the stories we encountered. Whatever term is used, the reality is that language matters in rhetorical and political battles but rarely in the day-to-day work of students and parents.

2. There’s no one best way to implement a dynamic system of public schools. Washington D.C. and Newark have dual public education systems comprised of traditional district schools and charter schools, yet D.C. is under mayoral control and Newark was under state control but is now governed by an elected school board. Camden has 15,000 students and a neighborhood charter takeover model with relaxed accountability. New York City has 1.1 million students and moved quickly to give autonomy to all its schools and hold them accountable, while phasing out large failing high schools to make room for new small schools of choice. Denver Public Schools saw consistent leadership from an elected school board and single superintendent for a decade. Continue reading

Ideas for Idaho: Fairness for School Facilities Funding

On both state and national tests, Idaho’s public charter school students exceed the academic performance of their district counterparts, including students from traditionally underserved communities. With such strong student achievement results, shouldn’t these schools receive the same amount of money as traditional public schools to build new buildings or rehabilitate old ones? Unfortunately they don’t. On average, in fact, they receive roughly a third of what district schools do, and they are having to come up with creative ways to cover that gap.

Our latest report, Fairness in Facilities: Why Idaho Public Schools Need More Facilities Funding, finds that while district schools receive $1,206 on average per student from state and local funding facility streams, Idaho charter schools receive just $445 in state funding, without any local funding. As Fairness in Facilities details, lower charter school facility funding forces school leaders to make difficult choices, like cutting extracurriculars or support services, or making creative arrangements with other nonprofits to share facilities.

And in Idaho, the nation’s fastest-growing state, the problem is not going away. Enrollment in Idaho public K-12 schools has increased by nearly 50,000 students over the last 15 years. In the charter sector, enrollment has doubled from roughly 11,000 in 2008 to around 22,000 in 2018, with those students attending one of 52 Idaho charter schools. Thousands of students are on Idaho charter school waiting lists, adding to the demand for new facilities.

State- and local-level policy changes are necessary to alleviate this inequity. Fairness in Facilities makes a few concrete charter-specific recommendations: Continue reading

Bellwarians React: Michael Bloomberg’s $1.8 Billion Donation to Johns Hopkins University

photograph of Michael BloombergEarlier this month, Michael Bloomberg announced a $1.8 billion donation to his alma mater of Johns Hopkins University (JHU) to officially make the university “need-blind” forever. The largest donation to an individual college in history, the funds will also support other policies to make the campus more affordable for low- and middle-income families.

Internet and social media erupted with reactions, ranging from excited to skeptical to angry. Bellwarians, including two JHU alumni, took to Salesforce Chatter, our internal social media and collaboration tool, to weigh in. As a place that champions ideological diversity and doesn’t take organizational positions, Bellwether encourages staff to share — and to disagree. (More broadly, by maintaining an environment where divergent perspectives are freely expressed, we are able to generate creative solutions to our clients’ problems without falling into pre-baked camps or agendas. It’s something we’re proud of.)

Here are a few quick takes from across the Bellwether team:

Starr Aaron, executive & business systems assistant:

I am pleased to see these efforts. When I was at Hopkins, it was not known as particularly generous with financial aid. Some of the skepticism I’ve witnessed is from classmates who wonder if the money will reach those who need it. Others wonder if Bloomberg is running for President (maybe he is, but he’s been generous a long time). Some are smirking while they remember the time he gave a relatively small amount to “upgrade” all the walkways on campus to brick paths and how the university hopped right to it.

The current tuition is eye-poppingly high — I’ve already warned my own children that if they feel Hopkins-bound, well, good luck with that!

Bonnie O’Keefe, associate partner:

I think the skepticism and anger come from two places. One, a frustration that so many public and private institutions depend on the largesse of billionaires to fulfill what should be essential parts of their mission. Second, the idea that so much money is going to an elite institution where a billionaire has a personal connection — an institution that doesn’t serve the most at-risk students and could operate a lot more equitably with the resources it already has. (Full disclosure: I went to Hopkins for grad school and my husband worked there for several years).

All things being equal, I agree with Michael Bloomberg that alumni should direct donations to financial aid. Especially at highly selective and expensive schools, this seems much more urgent than rec centers or fancy buildings. And Bloomberg has done plenty in education outside JHU, so I don’t think he could be credibly accused of focusing only on his own alma mater. The backlash seems more symbolic of where elite colleges and billionaire philanthropy sit today than anything specifically bad about this particular donation.

Cara Jackson, associate partner:

Students who gain admission to JHU are probably going to succeed in life regardless of which college they choose to attend. And if Bloomberg wanted to target resources to help low-income students access higher education, he’d spend the money at a community college or cover the living expenses of low-income students attending public universities. My (admittedly skeptical) take is that this mainly benefits JHU…which is not to say that Bloomberg wasn’t well-intentioned.

Hailly Korman, senior associate partner:

I think it’s complex and I don’t disagree with anything that folks have raised so far, but it also makes me think about how Bloomberg got so much money in the first place. If we look under the hood, what are the links between the policies and systems that support that kind of wealth accumulation and the things that make low-income families low-income to begin with?

New Report: Benefit Spending Consumes Growing Share of Education Budgets

The recent teacher strikes in Arizona, Colorado, and West Virginia highlight a common problem: education spending is stagnant or in some cases decreasing. If teachers working multiple jobs to make ends meet isn’t bad enough, here’s worse news: skyrocketing benefit costs, such as healthcare and pensions, are consuming an increasing share of K-12 education budgets.

In a new report, “Benefits Take Larger Bite out of District K-12 Budgets,” I analyzed district education and benefit spending from 2005 to 2014. The results are troubling. Over that ten-year span, benefit spending increased more than 22 percent nationally. K-12 spending, on the other hand, grew less than 2 percent. As a result, more than $11 billion fewer dollars made it to classrooms in 2014 compared with 2005, after adjusting for inflation.

The problem of rising benefit costs varies significantly by state. As shown in the graph below, in the vast majority of states, benefit spending grew far faster than education budgets overall. In North Carolina, for example, benefits grew 48 percent while the state’s education spending only increased 2 percent. The problem persists even in states like Michigan that cut both K-12 and benefit spending, because they weren’t cut at the same rate. The Wolverine State cut education spending by 19 percent, but benefits were cut by only 2 percent. As a result, benefits eat up an even greater share of Michigan’s education budget than they did previously.

via “Benefits Take Larger Bite out of District K-12 Budgets”

Barring a dramatic change, the problem of ballooning benefit spending will only get worse. Due to many states’ histories of underfunding their pension systems while simultaneously increasing the generosity of the plan, costs will continue to rise. Legislators will need to find politically viable solutions that both meet existing obligations and mitigate rising costs going forward.

Read my full report here.