Student-Based Budgeting in Service of Equity: A Q&A With Jess Gartner of Allovue

This interview was conducted just before the coronavirus pandemic upended schooling across the country. We decided not to publish this while educators, students, and families navigated the first phase of this crisis, but now, as district and school leaders develop plans for the 2020-21 school year, we believe this conversation’s focus on budgets and equity can inform their decision-making.

This post is also part of a series of interviews conducted for our Eight Cities project. Read all related posts here.

School funding. Are we spending the right amount? Are we spending it fairly? Are we spending it wisely? These questions get the most attention when state legislatures debate policies that involve millions or even billions of dollars, or when those policies are challenged in court. Those conversations are critical — state funding policies are foundational to how schools are resourced — but they aren’t the whole story.

Less often discussed is how funding is allocated from districts to schools, which can have a major impact on equity. Most districts build school budgets based on inputs required to run each school, largely reflecting compensation costs for the teachers, administrators, and support staff employed in a school, plus budget for materials and supplies. This method may sound logical on its face, but it can limit strategic spending decisions and result in inequitable allocation of resources.

An alternative approach that some districts are beginning to explore is student-based budgeting, which allocates funds based on the students served in each school, weighted for factors associated with their individual education needs (such as income status, disability status, or status as a dual- or English-language learner).

Student-based budgeting can be a driver of equity and support district innovations like those highlighted in our Eight Cities project. When equipped with a budget that reflects the needs of their students, school leaders can then leverage increased school-level autonomy over key decisions, including staffing and budgeting, and customize school programs and operations to the needs of their students.

Allovue, a Baltimore-based education financial technology (EdFinTech) company, works with school districts to build and support technology-based solutions to plan, manage, and evaluate spending. We talked with CEO Jess Gartner to get more insight into student-based budgeting, particularly with an equity lens, and the opportunities and challenges it presents to districts.

"I am a huge proponent of principal autonomy – it's actually what got me into this work. I think that students and communities are best served when you put decisions and dollars in the hands of leaders that are closest to them"

This conversation has been edited for length and clarity.

At the heart of your company’s mission statement is a focus on equitable budgeting. What does that mean in practice?

Equity is not a “one size fits all” thing. There’s not a single “answer” for an equitable funding formula. You have to take into account the needs and context of the local community and align that to the needs of students and the resources they need to be successful in that district. A lot of the work we do starts with a “steady-state analysis” and helping districts understand where they are today. We are then able to dig in at a deeper level and ask: “What are some things jumping out at you as potentially problematic or areas that you want to improve?” We often see either an inverse correlation between need and dollars that are allocated or dollars that are spent, or we see a completely equal allocation of resources. In an ideal scenario, the resources are correlated positively with the needs of students.

Our recommended approach is to use the first six to twelve months with a targeted group of internal stakeholders to see where they are today. We can’t inform your strategy one way or another until we all have some time to look at where you are today.

When you’re working with districts, what are some of the biggest challenges that you encounter? 

Some of the challenges are technical, and some of the challenges are cultural. Sometimes we go into a district and the leadership team is very forward-thinking, very open to change, very strategically aligned in terms of their goals for equity and resource management, and they purely need help with implementation, data clean-up, and process.

Where it can be more challenging is where that mentality is split on the leadership team For example, we’ve had administrators say, “I don’t think equity is a finance issue.” Another line of thinking is, “Well I’ve always done it this way and I’m not interested in making changes.” In these scenarios, we will work with the internal champions to help demonstrate why resource equity is important and relevant in their district to help get more buy-in from other stakeholders.

What advice would you give to an innovative superintendent or a forward-thinking CFO in a district who’s interested in these issues?

Start small. Don’t try to boil the ocean in year one. And on that point, the initial “steady-state” analysis can help win some people over in terms of why this work is important because it grounds the work in what this means for students in the district. I think that’s a really good start, particularly if you only have one or two folks aware of and championing this type of approach to resource equity.

In conversations around student-based budgeting, I often hear that stakeholder engagement is critical. How do you navigate that process when a shift in school finance may cause significant change in schools and communities?

Here again we have two ends of the spectrum. On one end, you have a district leader who wants to hold information really tightly. On the other side, we have district leaders who want total public transparency, and in that scenario, we actually pull them back a little bit. It can potentially create problems if you put data out publicly that your own staff has not even had time to process and internalize, because there may be some big surprises in there. We recommend starting transparency efforts with a small but diverse group of administrators and expanding gradually to more public sharing once internal administrators feel comfortable with the data and able to discuss it with the community.

Another thing we hear in our conversations with districts pursuing an autonomous school strategy is the challenge of providing budget autonomy to building leaders who don’t necessarily have training or experience in managing their own budgets. What would you say to that?

I am a huge proponent of principal autonomy – it’s actually what got me into this work. I think that students and communities are best served when you put decisions and dollars in the hands of leaders that are closest to them. I absolutely think that principals are abundantly capable of doing a great job if — and this is a very big if — you give them the proper tools, training, and support.

A lot of people want to start by [fully] bringing principals into the budget process, and I think that’s a really tough thing to do if they’ve literally never seen the historic patterns of spending for their school. That level of information can get overwhelming quickly.

We recommend building in scaffolding, and start by bringing them into the conversation and management of discretionary non-personnel dollars. This is usually a pretty small amount of money both percentage-wise and in terms of absolute dollars, but you would be shocked how impactful even $2,000 can be to a principal and their school. This gets them thinking more strategically, and pretty soon they’ll say, “I didn’t realize we were spending money on that.” We see those realizations happen all the time.

You can start small and give principals access to their non-personnel budgets and then bring them into the staffing conversation. We’ve worked with some districts in states where principals essentially have carte blanche over their staffing. In other places, the staffing is so prescribed by state law that there is maybe one position or half a position that they could hope to have an opinion on.

Even if you feel like state laws are so restrictive that you can’t risk a compliance error, there is still benefit in having principals involved and having their eyes on the staffing plans.

It is very painful to me when I hear people talk about failed principal autonomy efforts in which they gave principals a spreadsheet and then were shocked when test scores didn’t change. Did you give them training? Did you give them support? We have to ease administrators into new initiatives the same way we do with students and teachers.

What role should state policy makers play in making school funding more equitable at the local level?

It’s great that more and more states are thinking about equity from a state revenue standpoint and in some cases are completely revising how they allocate dollars to districts. However, that is only one part of the journey of dollars on their way to students. Dollars are allocated to districts, but then districts are allocating dollars to schools.

In that sense, the district is literally where the buck stops from an equity standpoint. You can have a really inequitable state funding formula but then a district that is really thoughtfully and equitably allocating the dollars that they have to schools, but you can also have the reverse.

When states are revisiting their funding formulas, it’s important that they’re also thinking about how to have some oversight and assurance that dollars are actually reaching kids as intended.

I want to caveat this by saying there is a danger in being overly prescriptive but I do think there needs to be some acknowledgment and oversight of the fact that these equities or inequities can be perpetuated or eliminated at multiple levels of resource allocation. We really have to think about how those levers and formulas are working at multiple levels of the system.