Funding Challenges and Action Steps for Policymakers to Support Education Transformation

Shopping cart of money in front of graduation cap to signify education funding. States and school districts around the nation are advancing policies to support the shift toward student-centered education models with personalized, competency-based learning. iNACOL is frequently asked to offer guidance on how to fund the initiatives and structures that support this transformation, and to that end, we released State Funding Strategies to Support Education Innovation. The issue brief presented several case studies showing the diverse approaches states have used to resource their innovation initiatives. Policymakers can start by examining their state’s funding formulas and how they might pose barriers and challenges that limit the flexibility needed for innovative, student-centered, learning models.

Funding Tied to Seat-Time and How Students are Counted

Traditional school funding models depend heavily on the way students are counted and how much time they physically spend the classroom. Policymakers could consider ways to create flexibility to allow for competency-based education and anytime, anywhere learning.

In 2018, 16 states used Average Daily Membership (ADM), where students are counted each day they are enrolled in the district, for school funding calculations. This is an improvement on the Average Daily Attendance (ADA) method, as ADA formulas require students to be in their seats for specific amounts of time to generate funding. Seven states use ADA in their funding formulas.

In 26 states, funding is calculated based on counting students either on a single day or multiple points during a school year. This method produces a mixed bag of results. Inherent to this strategy is some flexibility for competency education where it is based on membership rather than attendance. However, it creates an equity challenge in that schools with highly mobile student populations may not see an accurate reflection of their needs with this funding method.

Funding Based on How Key Terms Are Defined

How states conceive of, and operationalize terms such as “instructional hours” can influence innovative, student-centered education. In Competency-Based Education & School Finance, the Foundation for Excellence in Education provides useful examples to ensure flexibility in the definitions of key terms used for school finance do not impede competency-based learning environments.

For example, states can redefine instruction “to mean a teacher’s facilitation of student learning of specific competencies, using a variety of delivery mechanisms and through various partners. This approach does not require an arbitrary distinction between the time students are working directly with teachers, with community partners, in groups or in self-directed activities. Teachers still play a central role. However, they facilitate and validate the learning of students, supported by technology and community partners.”

School Funding Formulas Rife with Inequities

K-12 education funding in the United States is marred by deep, persistent racial, ethnic, geographic, and socioeconomic inequities. Historically, local sources of funding and property tax bases have disproportionately favored students living in more affluent communities. Through litigation, many states in recent years have pursued more equalized funding formulas that make up for lower levels of local funding in historically disadvantaged areas. However, equalized state funding formulas usually only create a floor for school funding. Wealthier localities can supplement those school funding levels more easily than poorer localities, creating additional disparities.

Inequities also persist because school funding calculations often do not adequately fund the supports needed for students with disabilities or English learners. State policymakers should analyze the inequities in their state school formulas and chart a path forward to ensure funding formulas generate the funds necessary for schools to meet the needs of every student.

Recommended Actions

In light of the myriad challenges around school transformation funding that require thoughtful, strategic solutions, there are several actions that state policymakers could take.

Be Informed. Policymakers’ first step should be to learn about and observe how other states are funding innovation pilots, professional learning communities, professional development, technical assistance, and other state initiatives to build educator and school leader capacity for transforming K-12 education.
Reach Out for Input. Personalized, competency-based education is inherently democratic and works best when everyone’s voice is heard. Policymakers should engage districts, communities and state stakeholders to identify the areas where funding is needed to increase capacity.
Start with Existing Funding Sources. As our case studies in State Funding Strategies to Support Education Innovation demonstrate, there are usually some long-standing funding pots that may be repurposed to begin and maintain this work. Policymakers should work with appropriate stakeholders to identify those sources, which may also lay the foundation for requesting new funding.
Forecast Needs. With the preceding steps, policymakers are now ready to identify the funding levels needed, the funding targets and the purposes and uses of those funds.
Broaden the Conversation about All School Funding. Approaches to funding should be studied at home and abroad to expand each community’s mindset about what is possible for their own schools. Policymakers could support this by creating a working group to study innovative funding approaches to school finance from other states and countries. They could convene the group to design education funding formulas to align with student-centered learning models and ensure equitable funding for all students.

The support of policymakers at all levels is mission-critical to the transformation of education systems to drive equity and ensure high-quality learning for all students. With sufficient capacity, school leaders can create and scale personalized, competency-based learning models for all students, making it possible to prepare every child with the knowledge and skills they need to succeed. The time is right now to do what is right on behalf of children’s future and our nation’s future.

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