Why we should send education dollars directly to schools

Ask an education expert about school finance and they’ll likely give an opinion about whether there’s enough funding. But two new studies suggest that another issue deserves attention: Who gets to decide how $694 billion is spent on public education each year?  

A recent survey by Pew Research Center gauged Americans’ perceptions about eight groups of leaders including legislators, journalists and tech executives, and the results paint a gloomy picture. For example, 81 percent responded that members of Congress act unethically, and fewer than half indicated that journalists cover all sides of an issue fairly. 

But America’s trust in institutions isn’t entirely broken. Public school principals shined brightly, with the vast majority of respondents indicating that principals care about students and provide the public with fair and accurate information. Most importantly, more than eight in 10 believe that principals handle resources responsibly; local elected officials and members of Congress ranked at the bottom of the list. 

Surely, this is great news — but there’s a catch. Although the public trusts principals, they don’t give them much power. Principals control only a fraction of education dollars. Most spending decisions are made by district officials and legislators. 

A new study by researchers at American Institute for Research and the U.S. Department of Education drives home this reality, finding that, in the districts examined, schools have discretion over a paltry 8 percent of operational spending. Decisions over things such as hiring, curricula and contracted services are made by those furthest removed from students. This is especially worrisome since research also suggests that limiting school-level autonomy over spending decisions creates inefficiencies. As one principal puts it, “I know what’s best for my school because I’m in the school.”

So what can be done to push funding decisions to those closest to kids? Here’s a bold idea for state policymakers: send education dollars directly to schools. 

Currently, education dollars are funneled through districts, which then dole out staffing positions and other resources based largely on one-size-fits-all models. Not only does this approach to funding restrict local autonomy, but it often creates funding inequities since it fails to account for salary differences across schools. Sending dollars directly to schools would solve both of these problems by empowering principals with spending decisions and ensuring that funds reach the students they’re intended for. 

Some districts in cities such as Indianapolis, Boston and Denver have taken positive steps toward putting principals in the driver’s seat by adopting student-based allocation systems that give  schools more financial autonomy. While this is encouraging — under this model principals typically have discretion over roughly 45 percent of operating dollars — the overwhelming majority of districts are reluctant to move in this direction, thanks in large part to bureaucratic inertia, local politics and restrictive collective bargaining agreements. 

The fact is, most districts can’t be counted on to give principals the discretion needed to align spending with school needs. 

Surely, going around the district-middleman will strike some as a radical idea, but it isn’t. Most principals in private schools and charters have this level of financial autonomy, and districts largely have failed to address funding disparities across schools. It would, however, require a radical re-examination of districts’ role in public education. Central offices still could support schools with services such as transportation, payroll and technology while superintendents and other leaders still could serve in supervisory and coaching capacities. 

For their part, school board trustees could focus more on compliance, accountability and capital needs, rather than school operations, about which they often know little. But principals finally would be the CEOs of their schools, rather than the middle managers they’re often treated as. 

To be sure, sending dollars directly to schools could present legal challenges in some states and teachers’ unions undoubtedly would fight to protect the status quo. That’s why policymakers might start by sending just a portion of operating dollars directly into principal empowerment accounts that principals control. Companies have developed technology to make implementation easy and several states have similar programs for families, often called education savings accounts. A great time for policymakers to pursue this type of policy innovation is when new dollars are injected into education systems, which many states currently are doing.  

It’s clear that Americans trust principals to do what’s best for kids — and it’s time for policymakers to do the same. 

Aaron Garth Smith is director of education reform at Reason Foundation, a nonprofit policy group advancing free markets. He previously was senior director of analytics at YES Prep Public Charter Schools, a charter management organization serving over 12,000 students in Houston. Follow him on Twitter @AaronGarthSmith.