The rollout of a Chicago Public Schools initiative designed to give principals greater spending authority and ensure budget equity across schools has slowed to a crawl.

Chief Financial Officer Pedro Martinez predicted three years ago that all CPS schools would, by this fiscal year, operate under per-pupil budgeting—a funding approach taking hold in urban districts across the country. But just 15 percent of all schools—most of which are charters—now operate under the model. The expansion of a pilot project, now in 14 regular schools, is on hold.

“It’s not dead,” Martinez contends. “It is part of our process of making sure that we continue to push for more equity throughout the system. We’re always doing that.”

Schools using per-pupil budgeting get a set amount of money for each student enrolled, with extra cash for low-income students and English language learners. Schools have the freedom to spend the money as they choose on staff and programs. Under traditional budgeting, spending decisions are made at the district level, where complicated staffing formulas and programming options lead to inequitable school-level funding. (See Catalyst , February 2005.)

Martinez blames the slowdown on the district’s budget woes. But noted expert, University of Washington’s Marguerite Roza, says that explanation doesn’t hold water and CPS, and other districts, are reluctant give up financial control to individual schools.

Martinez explains that, without an adequate, steady flow of cash—the district is getting just $97 million from the state this year, but has a $180 million deficit—moving forward with per-pupil budgeting now would be too complicated. The district cannot dole out enough money on a per-pupil basis to cover basic operations, he says, without losing money that now pays for special ventures like the Chicago Math and Science Initiative and High School Transformation.

“Per-pupil works if you have enough money,” Martinez says. “We’re still looking at it. But for us it’s even more important to get some of those initiatives in enough schools to have an impact. That way, when you go per-pupil, [those programs are] built into it, and that will make a big difference.”

Further, he adds, since schools are asked to create their budgets in the spring—before state funding is typically set—schools could end up in a bind if they create budgets based on one per-pupil rate, only to have their money slashed if state funds fall short.

Control issues?

But Roza, a school finance expert and an advocate of per-pupil budgeting, disputes CPS’ argument.

She suspects the district is simply shying away from transparency and is unwilling to give up control over spending. CPS could dole out the bulk of its money on a per-pupil basis, Roza adds, but hold back enough to run special district-level programs.

“If they did that, it would be very clear [what schools get more money],” Roza says. “I think they’re worried about that.”

And, she adds, if state money falls short, schools will be in trouble with or without per-student funding, and the district could simply adjust the allocation downward in the event of a deficit.

Other school districts have begun to experiment with per-pupil funding in recent years, including New York City; the Oakland, Calif. school district has fully adopted it. But opposition has materialized in some places, like Seattle, where some underperforming schools have struggled to attract enough students to stay financially solvent in a per-pupil system. In Seattle, education leaders have increased district-level spending on intervention programs at failing schools.

“Districts face the [accountability] consequences, so they want to control the money,” says Roza. Even in Edmonton, Alberta—the Canadian school district that pioneered per-pupil budgeting—district leaders have re-centralized some spending decisions.

Flexibility for schools

But local control over his budget is exactly what John Price likes about per-pupil budgeting. He is principal at Audubon Elementary school, one of 14 high-performing schools that have been piloting the approach in Chicago.

“The flexibility is real,” he says, especially with staffing.

As an example, Price notes one classroom teacher who is returning from maternity leave this fall and wants to work part-time. Price hired another part-time classroom teacher and has each of them work a 3-day week—a schedule that is easy to set up with the flexibility of a per-pupil system, but would have taken weeks or months to set up under traditional budgeting, Price says.

With per-student funding, Price has been able to better target his efforts to get outside grants. Instead of applying for every grant that might bring in additional cash and resources, Price now focuses on “easier-to-get” grants, such as those for after-school programs, and uses his regular budget to cover costs that he knows would be difficult to win grants for, such as class-size reduction.

Audubon considered using its budget flexibility to extend the school day and year in 2009, but that idea was nixed in favor of keeping class sizes small. Still, as Price puts it, “these options are things that are at least on the table.”

Switching to per-student funding might also help schools address another vexing problem: faulty enrollment projections that sometimes leave schools scrambling to fill teaching positions and pay for other resources. (See Catalyst, March 2008.)

Last year, a few of the pilot schools enrolled far fewer students than the district projected and had extra cash they were allowed to keep. CPS is capping the amount of money that schools can keep if it happens again this year.

But a per-pupil system could help, Price says. Schools can essentially gamble against projections they feel are too low; if enrollment does end up higher than expected, the extra money can be used to boost spending.


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