Jose Rico

This September, Little Village will open the doors to four new high schools that the community, for the first time, can call its own. A grandmothers’ hunger strike in 2001 forced Chicago Public Schools (CPS) to reconsider the educational needs of this largely Mexican community on the city’s West Side.

Since then, a $63 million facility is being built to suit, and educators and organizers from the community have had their say over every detail related to the school, from curriculum to interior design (they call it earth, wind, water, fire) to a handpicked staff.

However, a citywide new-schools initiative backed by City Hall has thrown a last-minute wrench into their plans. Schools slated to open under the initiative—dubbed Renaissance 2010—will use a new funding formula that also gives them more control over their money, setting the stage for more transparency and equity in how funds are allocated to schools throughout the district.

It sounds like a community’s dream, but Little Village principals are balking. “We’ve looked at this from every angle and no one wants it,” says Jose Rico, whose Multicultural Arts High School is one of the small schools scheduled to open there this fall. “It’s more money the other way.”

Their response suggests difficult times ahead for a funding approach that CPS is looking to take districtwide by 2007. Renaissance schools will pilot the approach, which allots a basic amount of money per child and then supplements those funds with additional money for each child with special circumstances, such as coming from a low-income family or needing special education or bilingual services.

Called weighted per-pupil funding or student-based budgeting, the approach is getting increased attention nationally now that schools are being held accountable for student performance under the federal No Child Left Behind law. If schools are expected to teach all children, the reasoning goes, then they need resources to match their students’ needs.

That is not what happens under the budgeting system now in place in Chicago and the vast majority of school districts across the country. “I’ve looked at the data, and if someone asked me today how much it costs to educate a child, I have no clue,” admits CPS Budget Director Pedro Martinez, who’s leading the push for greater equity within the district.

Indeed, a Catalyst Chicago analysis of $1.7 billion in school-level funding in CPS found per-pupil spending ranges widely from school to school, from a low in elementary schools of $2,150 at Doolittle East to a high of $8,582 at Farren. Among high schools, it ranges from $5,404 at Westinghouse Career Academy to $16,757 at Lindblom College Prep.

The extreme differences between these schools, to be sure, reflect unusual situations. For instance, nearby school closings swelled enrollment at Doolittle East beyond expectations. Lindblom was relocated temporarily while its building was repaired and, for now, is not accepting new students. And Farren, located at 50th and State streets, has seen the number of students in its attendance area shrink as public housing is demolished.

But between these individual school extremes, patterns of inequity exist.

The Catalyst analysis also shows that small high schools, like those slated to open in Little Village, receive more funding from the district, on a per-pupil basis, than large schools. Magnets and selective enrollment schools are also funded at higher-than-average rates.

Common practices impact bottom lines

Dozens of factors can impact the per-pupil funding in an individual school’s budget, from enrollment size to the types of classes offered. But a few common budgeting practices—used here and elsewhere—can also dramatically impact a school’s bottom line.

First, schools get teaching positions based on the number of students enrolled, and the district picks up the tab for hiring those teachers no matter where they fall on the pay scale. The reality, however, is that similar schools may spend vastly different amounts of money on teacher salaries, producing unequal budgets.

For example, the average teacher salary at Paderewski Learning Academy is $44,000 compared with $58,000 at Kershaw. Both are regular elementary schools, but Kershaw is getting about 33 percent more in per-pupil funding this year than Paderewski.

Rigid staffing formulas play a role, too. Consider the art and music programs at Joplin and Haley elementaries. The district pays half the salary for Joplin’s art teacher, but it picks up the full tab for Haley’s music teacher because its total student enrollment squeaked by the minimum requirement of 750. Joplin fell short by 3 students.

In a strictly student-based system, the budgeting process would start with each school getting a certain amount of money based on the number and characteristics of the students it served. It would then have to live within those means, hiring teachers from varying levels of experiences as it can afford.

Another cause of inequity in school-level budgets is central office control over large sums of money that eventually get spent at schools. In Chicago, for example, CEO Arne Duncan and Chief Education Officer Barbara Eason-Watkins control the dispersal of some $200 million earmarked for district educational priorities.

About $50 million of that money pays for 600 literacy coaches who work in about half of the district’s schools under the Chicago Reading Initiative. Schools that are on academic probation get additional supports, but there are no clear rules to guide spending.

Chicago is not alone. “That’s the non-transparent part of many district’s budgets,” says school finance researcher Marguerite Roza of the Center on Reinventing Public Education at the University of Washington.

Roza has identified large-scale inequities within dozens of urban districts, including Houston, Cincinnati and Denver. Most of the districts she studied have adopted a semblance of per-pupil budgeting, and all those experienced political backlash similar to that now brewing in Little Village.

“In many districts, a few schools clearly receive more than their share of the district pie,” says Roza. “In order for district leaders to be strategic in allocating their dollars across schools and types of students, they need a clear picture of where their dollars are going.”

Achieving equity is painful

Leveling the playing field can be painful for schools that get more money under traditional budgeting schemes, especially in cash-strapped districts like Chicago and Cincinnati, which has been slowly implementing per-pupil funding under tough conditions for six years.

“It’s a mixed bag. The reality is we’re just spreading crumbs,” says Sue Taylor, president of the Cincinnati Federation of Teachers.

Cincinnati desperately needed to equalize its funding, she notes, but the district did not foresee a myriad of problems that accompany student-based budgeting. Some schools overstated their enrollment to get more money, Taylor says.

Principals and parents at some schools tried to scrap caps on class size—a major issue for the union-so they could cut staff and shift money to after-school programs, she adds. Arts programs got the ax as well.

Chicago Teachers Union officials, who were not aware that the district was considering the new budgeting approach, questioned the district’s motives. “Is the total amount of funding that’s going into the schools going to be enough to meet those schools’ needs?” asks Vice President Ted Dallas. “Are we trying to improve education or are we just trying to save money?”

It’s a lot easier for districts to convert to weighted per-pupil funding if the move is accompanied by an infusion of extra cash, Roza says. That way, the district can minimize losses at higher-funded schools as it balances the scales.

Charters push more per-pupil funding

Chicago’s move toward weighted funding owes much to charter schools rallying for increased funding.

Illinois law requires districts to fund charter schools at a minimum of 75 percent of the district’s average base educational costs. Existing charter school leaders complained that they were being shortchanged because they didn’t have access to millions of dollars in federal and state funds that are earmarked for special programs, such as special education and summer school.

In November, the district raised the basic per-pupil allocation for charters and other schools slated to open under Renaissance 2010. Elementary schools will get roughly $5,000 per student; high schools will get $6,000. On top of those funds, schools will get additional per-pupil funding to compensate them for small enrollment ($200 per pupil), extended-day programs ($260) and bilingual education ($520).

Still being worked out are per-pupil figures for special education services, where expenses can vary widely depending on the severity of a student’s disability.

CPS based the figures on rough estimates of the amount of money it spends out of central budgets and school-level budgets in regular schools, figures obscured by the district’s antiquated budgeting practices.

One result may be that Renaissance schools will have at their disposal more money per pupil than most regular schools. Diana Nelson, executive director for the Cross City Campaign for Urban School Reform, favors the move to per-pupil funding but wonders whether inequities will be exacerbated during the pilot.

‘All we want is parity’

Charter schools are clear winners in the district’s transition to student-based funding. Most significant will be the additional funds those schools will receive to pay for special education services, where charters are most pinched financially, says Chris Kelly, dean of operations for North Lawndale College Prep.

“All we want is parity in funding,” says Ron Manderschied, board president of Noble Street Charter School. “We get no funding for night school, after-school programs, summer school or sports. You start to add all that up and you’re starting to talk about some real, serious money.”

Parity is an easy sell to schools that stand to get more money, but not for those facing the prospect of losing it.

The Little Village high school principals compared the per-pupil rates the district was offering to Renaissance schools to the amount it spent at existing small high schools, and say they found the small schools were better off. The principals also wanted to avoid responsibility for paying teacher salaries, as charter schools do; regular public schools use staffing formulas that shift the financial burden for teacher salaries to the district. Finally, they noted that sheer numbers would initially work against them—as start-ups, each Little Village school would enroll only 100 or so freshmen this fall.

Martinez explains that new schools with artificially small enrollments could get additional funds to supplement their per-pupil allotment as they grow to full enrollment.

South Shore’s School of Entreprenuership, a small high school that is one class shy of full enrollment, for instance, is getting a basic allotment of $5,858 per pupil. If it were a Renaissance school, it would get $150 per pupil more.

To further make the district case for per-pupil funding, Martinez notes that principals using the new system would have increased purchasing power, much like charter schools have now. And he is eyeing a strategy that would mitigate the financial impact of more expensive, experienced teachers.

That’s an attractive proposition to Principal Bill Gerstein of the School of Entrepreneurship. “I’d love more control over the budget, but you’d have to be careful which schools you roll it out in,” he says. Experienced principals who work well with their local school councils and who know their students’ needs are the ones who will make effective hiring and purchasing decisions, he notes.

Gerstein warns the district to slow down the rollout of its budget reforms. School leaders need enough time to adjust to the district’s new computerized financial system, which is slated to come online this fall, let alone any newfound spending authority. Already, 10 principals are test driving the new computer program which streamlines finances and budget planning. CPS will train 60 more this spring and move every school online over the summer.

Since November, Martinez has also convened focus groups of principals to find out how much control and flexibility local leaders would like over their schools’ finances.

Finkl Elementary Principal Susan Jensen, who is participating in the pilot, says the new system organizes the school’s spending history and saves her a lot of time. A recent computer purchase, for instance, would have taken weeks to process under the old system, but the new system allowed her to shift $5,000 in the budget to make way for the acquisition.

Timothy Knowles, director of the University of Chicago’s Center for Urban School Improvement, suggests CPS go all the way with its budget decentralizing effort, citing a successful pilot schools program in Boston. There, he says, the district converted central office services offered to schools, such as art programs, into a per-pupil rate. Participating schools could then choose whether they wanted to buy those services from central office or elsewhere. “Not surprisingly, they didn’t buy much back,” says Knowles, formerly a Boston deputy superintendent.

Knowles offers that the district’s reading, math and science initiatives are good candidates for buy-back.

CPS is unlikely to take its project that far, says Martinez. Funds for the reading and math initiatives are controlled by Eason-Watkins, he says. “It’s not like we can say, ‘Here’s $250 a student, now go run your own reading program.'”

Nonetheless, Martinez says he’s ready for the challenge. “We feel confident that going forward with a per-pupil funding system is right for us. We’re going to do the whole thing and figure it out as we go.”

Can CPS stay the course?

Some longtime reformers, noting an erosion of local school councils’ authority, doubt that all of the district’s leaders fully embrace the idea of shifting most or all control over budgets to school leaders.

John Ayers of Leadership for Quality Education cites two recent examples. A small schools initiative in recent years created several autonomous small high schools to replace larger schools, but the district did not turn over the reins to the budget to the new schools’ leaders, he says.

Also, he says, the district recently reasserted its control over budgets in schools on probation. These schools must spend “discretionary” funds—state and federal supplemental poverty funds that go directly to schools—on a mandated reading program.

“We can’t afford to waste a single penny in our schools,” responds schools chief Arne Duncan. He envisions a system where area instructional officers make decisions about spending and instruction for schools that have poor academic and fiscal track records. However, district bureaucrats would step aside and allow better performing schools to make their own decisions.

“It’s really about trusting your stars,” he says.

For now, Little Village’s new school principals remain opposed to the new funding approach. Full autonomy from the start is overwhelming, says Martha Irizarry, principal of Infinity, one of those schools. “Having CPS hold our hands is not such a bad thing.”

New principals don’t fully understand what costs go into running a school, says Angela Miller-Perez, a consultant who helped Little Village. “If you’re a seasoned principal, then you would have a sense [of whether] this business of per-pupil funding will be sufficient,” says Miller-Perez.

Little Village will eventually have to reverse its position on per-pupil funding, says Martinez, who optimistically anticipates that every school will be converted by September 2007.

But political tensions between the community and the district show no signs of abating.

Jaime De Leon of Little Village Community Development Corp.-the group that organized the hunger strike-says the district’s per-pupil budget formula and other policies for Renaissance schools don’t fit the community’s needs. Neither does the Renaissance label, which he says implies that the district willingly created the new high schools, he adds.

Says DeLeon: “People know very little about Renaissance 2010. But the history of these schools is understood. These schools are a result of common struggle.”

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