ERIC Digest 131 - October 1999
School-Based Budgeting
By Margaret Hadderman
School-based budgeting (SBB) is the facilitative arm of school-based
management (SBM), which shifts decision-making responsibilities from the
district office to principals, teachers, and community members.
As the public demands that schools be more productive and be held more
accountable, a popular reform strategy is to give schools more authority over
their budgets. Some experts believe that site-level budgeting has the potential
to encourage innovation, enhance organizational effectiveness, and improve
financial equity among schools (Wohlstetter and Van Kirk 1995).
What Has Changed Since 1991?
Earlier studies and syntheses, including an ERIC Digest published by this
Clearinghouse in 1991 (Peterson), focused on interstaff power issues and
preliminary organizational/procedural changes wrought by SBB. Relatively little
was known about program design, effects, and implementation. Research from the
mid-1990s onward considers these practicalities and explores necessary
conditions for SBB to succeed (Goertz and Stiefel 1998; Wohlstetter and Van
Kirk).
The following sections discuss a contemporary rationale for decentralizing
fiscal decisions; comment on procedural, legal, and equity considerations;
review several studies of SBB implementations in urban districts; and identify
emerging policy and research directions.
What Is the Rationale for Switching to School-Based Budgeting?
Under a traditional, district-centered finance system, a school receives
resources (teachers, textbooks, and transportation), but rarely money (Odden and
others 1995). Critics of these systems have argued that standardized budget
allocations hamper efforts to design specialized programs, lack incentives for
staff improvement, inhibit the search for innovative instructional approaches,
and stifle educator and parent involvement (Wagoner 1995).
Private-sector research shows that decentralizing four key resources
(power, information, knowledge, and rewards) can enhance organizational
effectiveness and productivity (Wohlstetter and Van Kirk). In an SBB context,
say these researchers, highly involved schools need "real" power over the budget
to decide how and where to allocate resources; they need fiscal and performance
data for making informed decisions about the budget; their staff needs
professional development and training to participate in the budget process; and
the school must have control over compensation to reward performance.
Allan Odden and associates (1995) isolated two additional features of
effective SBM/SBB programs: use of an "instructional guidance system" (a school
mission statement and goal-achievement strategy) and a facilitative style of
principal leadership.
Goertz and Stiefel say that lump-sum, decentralized budgeting allows
schools to "determine the mix of professionals, spend or save money for
substitute teachers and utilities," and carry over unused funds to the following
year.
What Are Some Implementation Issues and Obstacles?
The SBB implementation process is arduous and time-consuming. Details must
be worked out concerning appropriate decision-makers and procedures; the scope
of decisions to be made at the site; staff training; accountability; resource
distribution; and SBB implementation resources and time tables.
Practical strategies must also be developed for handling cash flow, risk
management, interschool competition for resources, differing student needs, and
varied school organizational characteristics (Picus 1999).
Legalities must also be considered. Augustina Reyes identifies four "legal
implications for preserving due process and protecting civil rights and the
national interest in decentralized settings" (1994). These include overseeing
public tax dollars and preserving fiscal accountability; maintaining economies
of scale and district efficiency; ensuring the integrity of categorical
services; and avoiding personal liability problems.
Fairness is another important issue. As SBM/SBB becomes prevalent, with
more schools allocating resources according to their own core values and
programs, central-office referees may be needed to minimize disparities among
schools (Polansky 1998). Central-office staff will need to define and limit
roles, provide training, build consensus, promote inventory sharing, and assess
resource management.
To enhance equity among schools, district staff can also take these steps
recommended by Goertz and Stiefel: develop an integrated database for data on
dollars, positions, outcomes, and demographics; clarify horizontal/vertical
equity issues and funding mechanisms; and acknowledge thorny race, ethnicity,
and location issues that may arise under SBB.
Are Schools Successfully Implementing SBB?
Several recent studies paint a complex picture of SBB’s promise and
pitfalls. As part of an international OERI study, Wohlstetter and Van Kirk
examined exemplary SBB practices of eighteen schools in nine districts in
Chicago; Denver; Milwaukee; Bellevue, Washington; Edmonton, Alberta (Canada);
Jefferson County, Kentucky; Prince William County, Virginia; and Victoria,
Australia.
Although these districts had a "broadened definition" of SBB and a high-
involvement orientation, "there was still a gap between ideal and actual
practices." Some power was decentralized, but district and state constraints
allowed schools little discretionary authority. Information sharing was
restricted by district political culture; staff development was fragmented; and
reward structures played a marginal role. Researchers did note a "scaling up
process occurring as districts were working to use school-based budgeting to
help create high performance schools" (Wohlstetter and Van Kirk).
Alfred Hess (1995), executive director of the Chicago Panel, examined
finance reform in the Chicago Public Schools from 1989 to 1993. Assisted by
substantial new funding over five years, Chicago schools achieved one reform
goal-reallocating funds to reduce administrative bureaucracy and equalize
interschool finance. Schools with low-income students now have more resources
and significantly greater discretion over choosing and providing programs.
A recent Mellon Foundation study of school-based budgeting in four large
urban school systems (Chicago, Fort Worth, New York, and Rochester) came to more
disappointing conclusions (Goertz and Stiefel). In all four cities, SBB occurs
at the margins, since the district limits the schools’ discretion to allocate
funds and personnel (Goertz and Hess 1998).
SBB seemed to provide no "impetus for schools to do business differently,"
say Goertz and Stiefel. Monies were used in traditional ways-to reduce class
size, expand social services, enrich art and music programs, and purchase
equipment and materials-not for major program restructuring. Regardless of the
participatory structures adopted, principals seemed to retain considerable power
over expenditures.
Equity remains a problem. In all four districts, researchers found "a
negative relationship between average teacher salaries and percentages of poor,
and sometimes minority, students" (Stiefel and others 1998).
The Consortium for Policy Research in Education studied resource-allocation
decisions at thirty-one elementary schools in eight states (California,
Colorado, Florida, Kentucky, Maryland, Michigan, Minnesota, and Texas). The
schools were using student-achievement data to decide how to use discretionary
funds, whether for professional development or for allocation of new staff
(Goertz and Duffy 1999).
Schools in the CPRE study tended to choose quantity over quality; they
hired instructional aides to expand reading services in every classroom, instead
of using certified teachers for intermittent, but more "expert" classroom
coverage. Moreover, "schools with considerable budgetary authority generally
used their resources in the same ways as schools with more limited flexibility"
(Goertz and Duffy).
These studies suggest that the mere creation of formal SBB structures may
not be a sufficient change to strengthen teacher and parent involvement.
Limited access to budgeting information exacerbates the problem. So do
sanctions imposed for poor performance. Also, deregulation and decentralization
offer no guarantee that schools are meeting students’ and taxpayers’ needs
(Goertz and Stiefel).
What Are Some Emerging Policy and Research Directions?
Clarity is needed about SBB’s purpose and goals. According to one view, the
improvement of school productivity (student achievement) by increasing
participation and altering authority structures is SBB’s primary aim (Peterson;
Goertz and Stiefel). Others view decentralized budgeting as a strategy "to
improve school funding by increasing revenues and reducing systemwide costs"
(Chan 1997).
Researchers have found only a weak link between SBB/SBM implementations to
date and improvements in student achievement (Odden and others). In the OERI
study, the most successful implementations occurred in schools that were
actively restructuring their curricula and instruction. More large-scale,
comprehensive studies are needed to explore SBB/SBM’s effects on student
learning and performance. SBB’s capacity-building possibilities should also be
studied.
Inconclusive research and imperfectly implemented changes are only part of
the problem. Odden and associates see a need for redesigning the entire school
organization, particularly the finance system. One radical approach, employed in
some charter schools and in New Zealand and Australia, is for states to provide
lump-sum budgets to individual schools. Alternatively, districts might provide
85-90 percent of all general and categorical dollars to schools in a lump sum
(Odden and others; Picus 1999).
Current research efforts concentrate on developing new school-level data-
collection and financial-analysis models and examining the strengths and
limitations of the varying uses of such data (Picus 1997).
Research into pay-for-performance initiatives, reallocation of teacher
resources, and redesigned teacher-compensation plans may also affect the future
of decentralized school budgeting as a viable reform initiative.
Resources
Chan, Lionel. "School Based Budgeting: A Cost-Benefit Model." 1997. 12 pages. ED 422 628
Goertz, Margaret E.; and Mark C. Duffy. "Resource Allocation in Reforming
Schools and School Districts." In School-Based Financing (Twentieth Annual Yearbook of the American Education Finance Association), edited by Margaret E. Goertz and Allan Odden. 215-41. Thousand Oaks, CA: Corwin Press, 1999. 254
pages.
Goertz, Margaret E., and G. Alfred Hess, Jr. "Processes and Power in School
Budgeting Across Four Large Urban School Districts." Journal of Education
Finance 23, 4 (Spring 1998) 490-506. EJ 565 086
Goertz, Margaret E., and Leanna Stiefel. "School-Level Resource Allocation
in Urban Public Schools. Introduction to Special Issue." Journal of Education
Finance 23, 4 (Spring 1998) 435-46. EJ 565 083
Hess, G. Alfred, Jr. "Reallocating Resources for SBM: Creating an Engine
for School Reform." School Business Affairs 61, 5 (May 1995) 32-41. EJ 506 504
Odden, Allan; Priscilla Wohlstetter; and Eleanor Odden. "Key Issues in
Effective Site-Based Management." School Business Affairs 61, 5 (May 1995) 4-12, 14, 16. EJ 506 499
Peterson, David. "School-Based Budgeting." ERIC Digest. Eugene, OR: ERIC Clearinghouse on Educational Management, University of Oregon, 1991. 2 pages. ED 336 865
Picus, Lawrence O. "Site-Based Management: A Nuts and Bolts Approach for
School Administrators." In Margaret E. Goertz and Allan Odden, editors. School-Based Financing (Twentieth Annual Yearbook of the American Education Finance Association). 22-39. Thousand Oaks, California: Corwin Press, 1999. 254 pages.
Picus, Lawrence O. "Using School-Level Finance Data: Endless Opportunity or
Bottomless Pit?" Journal of Education Finance 22, 3 (Winter 1997) 317-30. EJ 539 129.
Polansky, Harvey B. "Equity and SBM: It Can Be Done." School Business
Affairs 64, 4 (April 1998) 36-37. EJ 562 529
Reyes, Augustina. "The Legal Implications of Site-Based Budgeting." Paper
presented at the Annual Meeting of the National Organization on Legal Problems
of Education, San Diego, California, November 17-19, 1994. 15 pages. ED 379 753
Stiefel, Leanna; Ross Rubenstein; and Robert Berne. "Intra-District Equity
in Large Cities: Data, Methods, and Results." Journal of Education Finance 23, 4
(Spring 1998) 447-67. EJ 565 084
Wagoner, Robert V. "Site-Based Budgeting: A Critical Factor in the Success
of Decentralized School Management." School Business Affairs 61, 5 (May 1995)
43-48. EJ 506 505
Wohlstetter, Priscilla, and Amy Van Kirk. "School-Based Budgeting:
Organizing for High Performance." Paper presented at the annual American
Educational Research Association Conference, San Francisco, April 1995. 34
pages. ED 384 953.
This publication was prepared with funding from the Office of Educational Research and Improvement, U.S. Department of Education, under contract No. ED-99-C0-0011. The ideas and opinions expressed in this Digest do not necessarily reflect the positions or policies of IES, ED, or the Clearinghouse. This Digest is in the public domain and may be freely reproduced.
Ordering Information: Single paper copies of this ERIC Digest are available from the Clearinghouse while supplies last. Although there is no charge for the materials themselves, a postage/handling fee of $3.00 is required to cover the Clearinghouse's expenses. This fee is waived if (1) you enclose a stamped, self-addressed envelope or (2) you order other materials for which there is a charge. Send orders for paper copies to the ERIC Clearinghouse on Educational Management, 5207 University of Oregon, Eugene, Oregon 97403-5207. Make checks payable to University of Oregon/ERIC.
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