White Paper: Student-Based Budgeting

May 29, 2016

“Aristocracy is society’s default position. For those who stand at America’s commanding heights, social and income mobility is precisely what must be opposed, and a broken educational system wonderfully serves the purpose.”

― F.H. Buckley in “The Way Back: Restoring the Promise of America”

The late Dr. Charlie Rice, a Notre Dame law professor and an adjunct scholar of this foundation, got us started thinking about better ways to organize Indiana public schools. That was fitting, for Charlie, a champion Golden Gloves boxer, was known as a “Philadelphia Fighter,” a style that requires the combatant to be able to take a punch.

“The conversation must dispense with the romance that normally informs discussions of public education and begin to address the realities,” he warned us more than a decade ago. “Only then can our state hope to arrive at the time when its political leadership can say that it had the courage to truly and sensibly ‘change the system.’” (1)

Punches indeed have been thrown, and legislative victory hasn’t come as surely as Dr. Rice had hoped. Indeed, it hasn’t come at all. But over the years he was joined in a vibrant, wide-ranging discussion on our pages by others: Dr. Sam Staley, Dr. Jeff Abbott, Dr. Maryann O. Keating, Dr. Eric Schansberg, Charles Feeland, Dr. Cecil Bohanon, Andrea Neal and Ron Reinking to name a few, all experts in one way or another on the topic of education reform. (2) And now we can report real prospect of change.

One of the ideas that kept popping up was a systemic reform that, if political self-interest could be put aside, is remarkable in its results and simple in its execution. “Weighted-Student Funding” or “Student-Based Budgeting” (SBB) allows taxpayer support to be channelled through individual buildings, teachers, patrons and, most importantly, students. (3) Our friends at Indianapolis Public Schools tell us that its installation here may be close to reality.

No longer would funds be turned over to district administrative offices, bureaucracies too often driven by incentives other than classroom learning. In Indianapolis, for instance, a two-to-one imbalance in funding for Crispus Attucks ($5,630 per student) and Broad Ripple ($11,581) existed for years. It was obscured by district budgeting models that grouped funds into categories such as building maintenance or school staff. (4)

As we wrote in the introduction to an earlier journal dedicated to this topic:

“Some elegant research and fancy concepts are scattered throughout this issue on education reform, specifically regarding a new way to weight funding per the needs of individual students. Broken down, though, there is nothing here but common sense. A school principal should be free to reduce what he pays a teacher to monitor the gym so he can hire one to teach calculus. And parents, even those who cannot afford private schools, deserve to choose where and what their children learn.” (5)

Why, though, should a Gov. Mike Pence or a Gov. John Gregg risk the political wrath of the status quo by taking this fight to the legislature as a statewide issue?

Well, because it’s not a governor’s money. It’s not a legislator’s money. It’s the parents’ money. It’s the money of the mothers, fathers, custodial adults and significant others of the children in whose name the state demands so much of everybody’s money. The taxes taken from us for “education” end up being spent foremost in the hiring of adults, not the teaching of children in a classroom.

And it’s a fraud, a switcheroo. Consider the very legislation governing Indiana’s public education system — the Collective Bargaining Act. Its unionization of not only the teaching profession but of administrative prerogative ensures that dollars dedicated to schools are distributed on a political rather than educational rationale. (6)

Let us assume, nonetheless, that realpolitik requires the next governor to ensure that every budgeted education dollar be preserved. Even so, Indiana’s competitive position would be greatly improved if we could only cap education spending at its current level, pegging any increase to the economy. Let’s go further. Let’s calculate how far we could stretch the same education dollars if we gave principals and teachers freedom to use their current budgets to meet the precise needs of the students in their particular building.

Finally, to keep the reformers themselves honest, what if we gave parents the freedom to choose which schools were doing the best job for their child?

With the help of Lisa Snell, director of education for the Reason Foundation, we have assembled the essential elements of this reform for an upcoming journal. It includes a digital reading list of the most up-to-date research on Student-Based Budgeting and related topics. If Indiana legislators would give it a close look, we think they would see an opportunity for Indiana to establish itself as the national model for effective public education.

“The growth of student-based budgeting in school districts and a few states mirrors a national trend toward more decentralized school funding where the money follows the child,” Snell wrote recently. “In the United States, we are in a transition period, moving from funding institutions to funding students. K-12 education funding is moving closer to the funding model for higher education, where the money follows students to the public, private or nonprofit school of their choice. We are moving away from a K-12 system funded by local resources and driven by residential assignment to a system where funding is driven by parental choice and student enrollment.”

So we can be excited about reforms built into the current strategic plan for the Indianapolis Public Schools (IPS). This spring, IPS announced that its three-year strategic plan includes a movement toward Student-Based Budgeting.

On a test basis, the system will allocate money to select schools based on the individual needs of their student population. Proponents say it will give those schools more freedom with their budgets and resources to provide better support for student achievement. This could provide more equity to schools with higher poverty by giving them more money and a better chance to hire more experienced teachers.

IPS tells us that the district is implementing the system in a pilot cohort of schools for the 2016-2017 school year. Administrators are training this summer in preparation for a transition to the new model. If all goes well in the IPS tests, the funding formula can be instituted citywide and eventually statewide. Indiana can realize the hope that Dr. Staley expressed in an early review:

“The formula creates transparency, a benefit anyone who has spent time trying to track dollars in the current system can appreciate. The money no longer goes into an accounting black hole that is almost impenetrable by the average parent. The money follows the child, and goes to the school where she is enrolled, not into a category or program to be distributed by a bureaucratic formula created by the district or state department of education. Moreover, because the funding formula is transparent it allows parents, teachers, administrators and elected school-board members to focus on the thing that they care about most — the quality of education that their children receive in the classroom. As such, this reform should appeal across political parties, ethnic groups and economic classes.”

Again, all that is left is to deflect self-interested politics, to find a leadership willing to take a punch or two, as Charlie might say.


  1. Charles Rice. “Public Education Without Romance.” The Indiana Policy Review, pp. 2-3, winter 2001.
  2. Lisa Snell, Michael Waelther, Marc Sternberg. “Scores Rise When Teachers and Principals Lead.” The Indiana Policy Review, fall 2007.
  3. Snell. “The Weighted-Student Formula — FAQ.” The Indiana Policy Review, fall 2007.
  4. Dylan Peers McCoy. “Which Schools Get the Most Money?” Chalkbeat.org. May 18, 2016.
  5. Introduction. “Government Schools: What’s Got to Change.” The Indiana Policy Review, fall 2007.
  6. Charles M. Freeland. “Public Education Without Romance,” The Indiana Policy Review,” fall 2001.


Lisa Snell and Katie Furtick. “Weighted-Student Formula Yearbook 2013. The Reason Foundation, Dec. 5, 2013: http://reason.org/studies/show/weighted-student-formula-yearbook

Benjamin DeGrow. “Colorado Student-Based Budgeting on the Rise.” Independence Institute, August, 2015:

Reason Blog: Weighted Student Formula (last viewed May 26, 2016): http://reason.org/areas/topic/weighted-student-formula

Lisa Graham Keegan and Snell. “School Finance Reform and Backpack Budgeting.” Office of Arizona Gov. Doug Ducey (last viewed May 26, 2016): http://azgovernor.gov/file/2310/download?token=ZMDy9Z0e

Meeting Agenda, Minutes and Related Material: Classrooms First Initiative Council. Arizona Department of Education (last viewed May 26, 2016): http://education.azgovernor.gov/edu/meeting-agendas-and-minutes

Savannah Robinson. “Indianapolis Public Schools Begin Student-Based Budgeting.” The Reason Foundation, Sept. 18, 2015:

Dylan Peers McCoy. “IPS Considering Big Change in School Funding Formula.” Chalkbeat Indiana, Dec. 10, 2015: http://www.ibj.com/articles/56164-ips-considering-big-changes-in-school-funding-formula

Marguerite Roza. Info Graphic: “Student-Based Allocation.” Edunomics, Georgetown University (last viewed May 26, 2016): http://edunomicslab.org/wp-content/uploads/2015/01/SBA101.pdf

Roza and Cory Edmonds. “Denver Public Schools: Making More Money Follow Students.” Edunomics, Georgetown University (last viewed May 26, 2016): http://edunomicslab.org/wp-content/uploads/2014/06/14_EL_001_DPS_Case_Study_F-2.pdf

Rosa and Edmonds. “Boston Public Schools: Weighting What Matters.”Edunomics, Georgetown University (last viewed May 26, 2016): http://edunomicslab.org/wp-content/uploads/2014/06/14_EL_001_SBA_Boston_F.pdf


Leave a Reply