Category Archives: School Funding

Three Ways to Improve Education Finance Equity in the Southeast for English Learners

English learners (ELs) are an incredibly diverse group of students, representing about 400 languages spoken, and a wide range of ages and fluency in English. As EL enrollment in U.S. K-12 public schools grows, education systems must keep up with these students’ unique learning needs. EL language proficiency, length of time spent in U.S. public schools, age, and grade level are all factors that affect learning needs and the amount of funding required to meet those needs. But, a commitment to equitable funding for EL students is too often missing or minimal in state education funding formulas.  

This commitment is especially needed in the Southeast where ELs make up approximately 15% of the U.S. EL population, growing from 657,612 students in 2015 to 713,245 students in 2019. The number of ELs enrolled in the public school system in the South is rapidly increasing. Between 2000 and 2018, South Carolina experienced a more than a nine-fold increase in EL student enrollment — a rate of growth that is 24 times higher than the national average. Despite this increase in enrollment, the resources available to EL students in the Southeast have not kept up with students’ needs. 

In Improving Education Finance Equity for English Learners in the Southeast, Bonnie O’Keefe and I examine state funding systems for EL students across nine Southeastern states ​​— Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee — and offer a set of three key policy recommendations for how states can better support EL students.

  1. State funding formulas should move toward weighted, student-based systems with multiple EL weights. EL students with greater needs must receive more funding support through state funding formulas. For states that already have a weighted, student-based funding formula, policymakers should consider how to differentiate among a diverse array of EL needs. 
  2. The federal government should increase Title III funding of the Every Student Succeeds Act (ESSA). While increasing EL allocations at the state level holds the most promise for meeting the needs of EL students, federal funding has plateaued in recent years. Federal commitments must also keep up with the growing enrollment of EL students in the Southeast region and across the country. 
  3. State education agencies and the federal government should improve transparency of EL data. Although ESSA mandated annual reports of school-level spending, policymakers should increase the level of publicly available state and district data about funding for EL students. 

The region has an opportunity to be a national leader in providing more funding for EL students that is aligned to their unique learning needs. Tennessee and South Carolina are already considering funding reform proposals this spring, and there is room for other states in the region to follow suit and consider proposals to increase the resources available to EL students. Our analysis finds that just two states in the Southeast region — Florida and South Carolina — incorporate EL student weights in their funding formula. 

States have a federal obligation to ensure that EL students receive a high-quality education that allows them to meet their full potential. Although there are bright spots in many of the nine states we examined, more work must be done by policymakers to elevate the needs of EL students in the Southeast. 

Improving Education Finance Equity for English Learners in the Southeast is part of an ongoing Bellwether examination of how finance and inequity in education shortchange millions of students and families. 

How One-Time Funds Can Help or Hurt Your Organization

Photo courtesy of Allison Shelley for EDUimages

As recent news broke of several major gifts to K-12 organizations from philanthropist MacKenzie Scott, many education organizations and nonprofits, such as Communities In Schools, Latinos for Education, and NewSchools Venture Fund, among others, may suddenly find themselves in the unique and enviable position of determining how to prudently spend an unexpected windfall. This comes as many school districts across the country received one-time infusions of K-12 funding from the federal government’s American Rescue Plan Act of 2021 through the Elementary and Secondary School Emergency Relief Fund.  

With a network of ed sector clients across the country, Bellwether is often approached to advise on spending strategies, sustainable financial modeling, and strategic ways to make these funds stretch, impact communities served, and, importantly, last. Our team approaches this issue from a diverse array of viewpoints, offering a range of recommended practices and tips to strategically approach one-time funds and avoid common missteps.

Rebecca Gifford Goldberg, partner, Strategic Advising

Recommended practices:
First and foremost, take a moment to celebrate any gift as an affirmation of the work with communities, families, and young people — particularly during this extraordinarily difficult time to lead in the education sector.

Second, recognize that this is a one-time gift and not a source of ongoing capital. What are the things this funding enables you to test about broadening and deepening impact, centering community and family voice in decision-making, and/or improving long-term financial sustainability? Does this give you the chance to expand more quickly with quality? Explore whether there’s a different way to reach students (or families, or educators) you want to test, or a different way to deliver your service or product. Build in mechanisms to evaluate the work and grow your organization’s own capacity to measure progress.

Third, consider ways to use these funds to make the lives of staff members a little bit better or easier. Involve the team’s input into spending plans that best meet their needs. This could be hiring some short-term contractors to take on urgent priorities, investing in professional development, offering staff members access to mental-health supports, or supporting extra vacation days off this year. 

Finally, invest in your reserve. Allocating a portion of unrestricted one-time gifts toward that rainy day fund isn’t flashy, but is a sound investment in the long-term financial sustainability of your organization.

Potential pitfalls to avoid:
Three things stand out to me as cautionary approaches to spending one-time funds: 1) don’t increase your per-student cost or operating costs without a clear path to financial sustainability; 2) don’t forget to engage community stakeholders in a conversations about how you’ll use the money; and 3) don’t spend it all in one place!

 

Anson Jackson, senior adviser, Academic and Program Strategy

Recommended practices:
One-time giving affords single-site schools and school networks a range of exciting opportunities. Knowing where to start and prioritizing strategic decisions along the way is critical. It’s important to ask yourself and your organization: what can one-time funding buy us today to better enable using recurring funds in the future for something else. Make strategic trade-offs with the long game in mind.

  • Allocating funds for adult learning and professional development across entire teams is a smart investment. This is especially true during the COVID-19 pandemic as schools face a variety of virtual learning and technology challenges that impact all areas of a school building, from instructional teams to operations staff. And carving out funding to give adults in the building stipends for additional duties during the pandemic is advisable.
  • Similarly, strengthening learning and engagement for families as partners in student learning is critical. During the pandemic, this could mean allocating funds to offer short-term workshops on how to use technology. Funds can even be used to directly support the short-term technology needs of current families who may not have access to laptops and devices they’ll need to use throughout the pandemic.
  • Supporting time-bound interventions that can close a gap for good is a prudent use of one-time unrestricted funds. Consider using funds for interventions like learning loss and social-emotional learning recovery during the pandemic.
  • Applying funds toward infrastructure is often a good way to start setting a foundation for future projects and funds down the line.
  • Using one-time funds to purchase books and materials that will be used long after funds are dispersed can build up your single-site school or school network resources. 

Potential pitfalls to avoid:

  • Using one-time funds to hire additional staff without considering time constraints on their tenure presents downstream challenges (e.g., don’t hire interventionists for two years if you don’t want to lay them off once funds are gone).
  • When allocating funds to invest in interventions and/or programs, think about the longer-term ongoing costs associated with technology licenses, tools, management, upgrades, staff support, internal knowledge management, and more. Build that forecasting into any spending plan and be sure to budget for down the road.
  • Forgetting to be thoughtful about waste is detrimental. Having $1 million in one-time unrestricted funding doesn’t automatically mean you can get everything. Be mindful of resources you use and devise a strategy to use them. Have a resource, tied to a priority, tied to a strategy, tied to a clear timeline and set of goals.

 

Andrew Rotherham, co-founder and partner

Recommended practices:
I bring less a recommended practice than a recommended caution. The idea that a sudden influx of money ruins lottery winner’s lives is overstated. Still, it does happen. And the education sector has money absorption habits that make the most profligate lottery winner seem downright Scrooge-like. 

You have to believe one of two things: all billionaire philanthropists are simply greedy or it’s actually challenging to give away a lot of money responsibly. Why? Because many people who are seeking to give away the bulk of their fortune are nonetheless struggling to do it thoughtfully. It’s possible MacKenzie Scott is pointing up a grantmaking strategy that was out there in plain sight and will be transformative. It’s also possible other philanthropists know something, too. 

It’s fashionable lately to say that those closest to problems always know best. It’s unfashionable to point out that’s no more an iron rule than the idea that experts and those distant from problems can just swoop in and fix things. Most thorny stubborn social policy problems are more situational and complicated. 

All this might sound like a rationalization or justification for hoarding money, it’s not. I’m all for the super-wealthy giving away their money — and wish more would put philanthropy toward the kind of high-risk/high-reward pursuits the government is ill-suited to take on. But, large gifts can also lead to displacement and, in edge cases, cause or enable chaos as some of Scott’s are alleged to. A more pedestrian risk, conversely, is how the education sector has shown time and again an ability to absorb huge sums of public and philanthropic money with little change left behind. 

More resources can often drive positive change for organizations. And I’m not trying to be cute. We surely wouldn’t say no to Scott largesse. It would be impactful. Bellwether, and many other organizations focused on inequity could use this kind of financial support. But being cautious and appreciating the real risks must be part of the calculus, so we’d see such support as a risk as well as an opportunity.  

Won money spends better than earned money, and I’d argue something similar is true of found money. So, you need to be planful. My colleagues make some valuable suggestions here. I won’t repeat those, but here are a few guideposts for organizations (and some that apply for philanthropists as well):

  • Focus on your north star. How will this money help you achieve your goals? How will you curb an additive desire to immediately tack new goals onto the funding?
  • Pause and plan. Carpenters say measure twice and cut once, and that’s sound advice especially with the pressure of a huge financial gift.
  • Make sure your governance and systems are robust enough to absorb a huge unrestricted gift — money can help solve problems, it can also expose them.
  • Think long term and consider ways to leverage this money over time rather than only considering it as a one-time spend.

Potential pitfalls to avoid:

  • Resist the urge to rush into new things.
  • Don’t try to “prove” this money “works” or fits a narrative. That’s someone else’s problem. Instead, make the money leverage results for whomever your organization serves.
  • Just as Hemingway said of bankruptcy, mission displacement happens gradually, then suddenly. Keep a close eye on the “why” behind your work and your line of sight to the change you seek.

 

Alex Cortez, partner, Strategic Advising

Recommended practices:
Education organizations receiving support from MacKenzie Scott have just been blessed with the one thing virtually no organization ever gets funded to do — build their capacity and the power of the communities they serve to drive systems-level change.

Systems change involves investing in efforts to shift a combination of mindsets, relationships, and power to shift policy, practice, and resource flows. Education entrepreneurs have learned repeatedly that it isn’t enough to simply be well intentioned and get results to transform education systems, because education systems are not usually rational systems but rather political systems composed of a complex web of money, power, interests, and values. Most education innovations require disrupting the status quo of systems to get to scale, and systems are very good at preserving their status quo.

Further, systems change isn’t the thing that most education philanthropy funds — even as it’s the very thing education innovations need to be transformational. Funding systems change requires being unapologetic about power; it’s not linear but rather cyclical, and it’s not a marathon nor a sprint, but rather a commitment to walk 10,000 steps every day (which is counter to the usual narrow timeline of philanthropy).

With this kind of one-time unrestricted gift, education entrepreneurs can make an investment in systems change and on a timeline that many have never been able to pursue until now. However, doing this isn’t easy, and an additional challenge leaders will need to overcome, even with this gift, is wrestling with whose power they’re building, and towards what agenda. If education leaders and entrepreneurs are truly committed to changing systems, they have to invest in informing and organizing a community of students and parents so that they can exercise their innate power — individually or collectively — to craft the agenda for change, drive it, and sustain it.


If you have questions about one-time gift strategy and financial forecasting and modeling, please reach out to Rebecca Gifford Goldberg at
rebecca@bellwethereducation.org.

(*Editorial note: Communities In Schools and NewSchools Venture Fund are Bellwether clients.)

Splitting the Bill: Understanding Education Finance Equity

School finance poses a unique challenge for policymakers and advocates alike. The consequences of school finance policy are monumental for students — it has a direct effect on the educational opportunities they will be able to access. At the same time, the complicated mechanics of how dollars move from taxpayers to classrooms can rival that of high-end Swiss watches.

Changing how dollars are raised and distributed to be more clearly aligned with student and community needs is essential to building a higher-performing, more equitable system of public education. But doing so requires a deep understanding of the policy gears and springs that power the movement of educational dollars. It’s critical that policymakers and advocates concerned with educational excellence and equity build fluency in the details of school finance systems.

Splitting the Bill, a new series of Bellwether education finance equity briefs, serves as a crash-course to demystify complexities embedded in school finance systems.

A good place to start? Understanding that where the money for public schools comes from creates challenges for policymakers. The vast majority of funding for K-12 schools comes from state and local governments (federal funding accounts for less than 10% of public school revenues), but the combination of state and local dollars often looks different from district to district. That variance is a product of two important variables: 1) the taxable property wealth per-pupil within a district, and 2) the level of student learning needs. Districts that have relatively less taxable property wealth and relatively higher student learning needs should receive more funding from the state to account for those differences.

Unfortunately, that’s not always how it plays out in practice. State school funding formulas take many different forms and attempt to account for the different wealth and student learning needs of school districts, but often fall short. These shortcomings can have many sources, from opaque formulas disconnected from student needs to inadequate “weights” to support students with particular learning needs (e.g., low-income students, English language learners, and special education students). In many states, problems in state school finance systems have led to litigation that can catalyze policy change.

Reading our Splitting the Bill series is a good way to better understand school finance generally, but true fluency in your state’s school funding system requires analyzing a lot of data and legislation. That technical work should start with collecting, cleaning, and exploring district demographic and finance data from state and federal sources, paired with building knowledge of your state’s funding policies and any relevant litigation.

Building this understanding isn’t easy — it requires a strong technical and analytical skill set. It’s why we’re developing these skills through a series of school finance equity training sessions with a cohort of state-level policy advocacy organizations. We’re building their capacity to use R to clean, analyze, and visualize school finance data from their states with the goal of pursuing reforms that create more equitable funding systems.

Developing a command of the details within school funding systems can reveal both the benign and malign impacts of different policy choices. Spending on K-12 education makes up the largest share of general fund expenditures for state governments, but there are relatively few people in each state that truly understand how those dollars currently move and, more importantly, how they should move to better serve students.

It’s time for more equity-minded policymakers and advocates to take a deep dive into the wonky details of school finance policy.

How Inequities in Housing Affect Education — and Vice Versa

Photo courtesy of cottonbro for Pexels

As part of the Priced Out of Public Schools: District Lines, Housing Access, and Inequitable Educational Options release, Bellwether asked housing expert Malcom Glenn to weigh in on how finance and inequity in education and housing shortchange millions of students and families across the country.

There’s an old adage in politics, repeated in some form by everyone from Rep. Alexandria Ocasio-Cortez to Sen. Tim Scott to President Barack Obama: a person’s ZIP code should not determine their destiny. More often than not, the two factors at the intersection of ZIP codes and social determinants are fair housing and education. Policymakers tend to think of these as separate issues and address them in silos. But from an equity perspective, rarely do you find two issues as inextricably linked — or as generationally interrelated — as housing and education.

Housing is the foundation for much of what comes after in a person’s life — the Urban Institute called it “the first rung on the ladder to economic opportunity,” and the absence of stable housing has significant negative impacts on health outcomes, family well-being, and overall quality of life.

Discrepancies in quality related to both housing and education are unfortunately the result of intentional decisions: just a few of the countless outgrowths of America’s history of racial discrimination. Not all of them show up in concrete, government-backed policies. As author Richard Rothstein writes, much of these discriminatory practices amounted to de facto segregation, where private actors were free to discriminate without any engagement from policymakers. That began a cycle that persists today.

From real estate agents unwilling to sell homes to people of color to discrimination in appraisals to mortgage lenders offering significantly higher interest rates to prospective Black borrowers, racist policies depressed Black wealth creation for generations. As white families in previously more racially diverse neighborhoods were able to favorably engage in the house-buying market, they moved elsewhere, and Black residents maintained significantly less net worth than their white counterparts. Over time, key pieces of infrastructure were at best, neglected, and at worst, purposefully used to further separate, segregate, and subjugate Black families and neighborhoods.

As property values dropped, there was less tax revenue to help fund investment in improving public school quality, widening the gap between high- and low-quality schools. As students at underfunded schools continued to see lower educational attainment, it deterred families from moving to those neighborhoods and further exacerbated plummeting property values in these communities. Without significant growth in property values, families remained stuck in a cycle of limited housing options resulting in limited educational options — the limits of which were passed on from generation to generation. In the past decade, housing costs near high-performing K-12 public schools were more than twice as much as costs near low-scoring public schools, according to a 2012 Brookings Institution report.

Data from recent years shows the results of more than a half-century of policies, neglect, and cyclical marginalization, and it starts at the very beginning of a child’s educational journey and continues as long as they’re in school. According to a 2016 report, there’s an association between lower kindergarten readiness scores and “cumulative exposure to poor-quality housing and disadvantaged neighborhoods.” 

Research from that same year also found that household crowding — defined as having more people living in a home than there are rooms — has a direct impact on educational attainment, particularly during a student’s high school years. And passing rates in virtually every subject are lower for children experiencing homelessness than children in stable housing situations. It’s not just the students who suffer from housing difficulties, either. Increases in teacher pay have been outpaced by rising home prices, making many teachers significantly more likely to depart their jobs in high-cost school districts within just two years. 

Fixing this problem requires addressing the fundamentally interrelated aspects of fair housing and education. Policymakers, education advocates, families, and more should consider a range of solutions, including the following.

It’s these types of efforts that will make housing more equitable in its own right, while importantly creating better educational attainment. And it speaks to a philosophical shift that can and should occur, with a clear recognition of the impact of quality housing policy on good education policy. Too often, a person’s ZIP code still does determine their destiny. It’s only by unraveling the inequitable policies of the past and leveraging smart policies of today that we can provide better futures for America’s schoolchildren.

Malcom Glenn is a fellow at New America’s Future of Land and Housing Program and the director of public affairs at Better, a platform that makes homeownership easier and more accessible. He’s a former national director of communications at the American Federation for Children

Loan Funds Help Charter Schools Finance Facilities. Here’s What You Need To Know. “Infrastructure Insights: Financing Charter School Facilities” Series

Photo courtesy of Yan Krukov for Pexels

As the Biden administration’s historic infusion of federal education funds are spent in states, coupled with a potential $1 trillion bipartisan infrastructure package making its way through Congress — a package that could include money for K-12 building safety and technology upgrades — we must ensure that charter school facilities are included in the policy debate. This concludes the “Infrastructure Insights: Financing Charter School Facilities” weeklong series, where Bellwether Education Partners shared insights into a range of issues facing charter school facilities.

Charter school loan funds are more affordable ways for charter leaders to pay for a new facility without diverting funds away from the things that matter most: educating and serving underserved students. But they can be complex. That’s why I’ve done the leg work and can share key findings to help you understand options available for your charter school. 

What is a charter school loan fund?

A charter school loan fund is created when an investment manager pools together a pot of money from people who have excess cash and are looking for ways to invest it. These low-interest, short-term loans offer temporary financing during a time when a traditional lender would not extend credit to a new entity. Loan funds such as these exist in many sectors outside education (e.g. residential and commercial real estate and start-up companies, among others). 

How are loan funds specifically used in the charter sector?

A charter school loan fund helps new or growing charter schools finance the rental, purchase, or construction of a school building. Traditional lenders often don’t extend credit to a new or expanding charter operator because these schools haven’t yet demonstrated viability through meeting enrollment targets, proving financial sustainability, or reaching academic success. Other investors might not have the industry expertise to understand if a charter school is a good investment.

People with excess funds they want to invest, including philanthropic entities, will turn to a charter school loan fund investment manager, who then uses their background in the education sector — and knowledge of the challenges facing charter leaders — to act as a steward of the money. This trusted professional writes loans to several charter schools, often providing these loans at lower interest rates than other options available in the market. Like any loan, charters must pay back these funds within the term of their contract (this varies by fund and can range anywhere from one to 30 years; many funds trend toward a five-year repayment term). After this time, a charter will have a stronger track record and lower risk profile, enabling them to secure loans from traditional lenders who are now willing to play ball and extend credit to the school.

Charter school loan fund overview

Do different kinds of charter school loan funds exist?

Yes. Here are a few examples,* though it is worth mentioning that this isn’t an exhaustive list:

Across all of these funds, one common theme emerges: the willingness to lend at subsidized interest rates. The combination of the power of philanthropy, short-term investment timelines, and the investment manager’s education expertise enable lenders to extend a charter operator credit at below-market rates while the operator builds a track record of success and creditworthiness. 

This sounds great. How can I access one of these charter school loan funds?

To get you started, we recommend a few practical tips: 

1. Know your options: Research facilities funds that are actively looking for schools to finance; some of them may even be in your own backyard.

2. Understand your needs: Before speaking to a loan fund professional, define your charter facility needs with key inputs such as: enrollment, master schedule, specials and amenities offered, etc. Think ahead about what compromises you’re willing to make and which you’re not. 

  • Have you built a financial model to understand how much debt you’ll require and the interest rate you can afford? If so, are the assumptions in your model realistic based on what the investment manager has seen?

3. Ask Questions: Many of these funds are willing to provide technical assistance to navigate this process. Know what questions to ask to tap into the knowledge of these investment managers.  

  • Where are real estate prices in your target market? 
  • Are suitable school facilities readily available or is the market highly competitive? 
  • What have other charter leaders recently paid to secure a building? 

If you’d like more information on how to navigate the charter facilities financing process, or want to collaborate with our team, email contactus@bellwethereducation.org. And if you missed any installments of our “Infrastructure Insights: Financing Charter School Facilities” series, click here.

(*Some organizations listed include past or present clients or funders of Bellwether.)