Ellen Weaver

4 Ways to Fix SC’s Broken Education Funding System

September 22, 2017

Ellen Weaver

Palmetto Promise Institute has long been an advocate to Fund Students and Fix Systems.

This week, Dr. Barbara Stock Nielsen, South Carolina’s first Republican Superintendent of Education, testified to a South Carolina House Ways and Means subcommittee about four key ideas to fix South Carolina’s broken education funding system.  Below is a transcript of her remarks as prepared for delivery, reprinted with permission.

I appreciate you having me here to share some thoughts as you consider a very needed and complex task of reinventing how our schools are funded. I know you have had an excellent presentation by the Education Oversight Committee of the history and whole picture view of what has evolved into a duplicative and fragmented finance system.

While it was with good intentions, we find ourselves with several funding sources and a multitude of line items that have resulted in duplicative functions and administrative costs spread across many programs.

Districts and schools need the flexibility to leverage funds if they are to truly achieve the excellence we all want while personalizing learning to meet the individual needs of schools and all students. This flexibility needs to be aligned with appropriate financial and academic accountability.

School Finance is a system with many parts.  We cannot redesign one part of the funding system without addressing all the components.  A change to one part of the system impacts all the rest.

I offer the following thoughts for your consideration:

Redesign the Finance Formula
I have long advocated the rolling up all State funding for Pk-12 into one source.  This will free up dollars from administrative costs and duplicative functions. I would also exempt the lottery money from the roll up as it should be kept separate and solely used for scholarships for state universities, colleges and technical colleges as dollars for these have decreased while recurring program costs for K-12 have increased.

A new formula for the distributions of school funds needs to be developed that is equitable to all school districts.

The students in the public State Charter School District should be funded equally with all other public school students. This would eliminate the potential for a lawsuit down the road that we do not need.

I know that you will be reviewing several suggestions for distribution and weightings that many groups are working on that will be valuable to your decisions. My suggestions would include: early childhood, vocational, gifted and talented, special needs, technology, poverty, limited English proficiency, transportation and perhaps building maintenance or what we used to call “roof money.”

These weightings need to be distributed in an equitable manner to all districts. For example, poverty: all schools and districts have students in poverty. My county of Beaufort has 59% of students on free and reduced lunch.

I would caution you that whatever weightings you specify should be consistent and that standard definitions should apply to all districts.

Assessment of property also needs to be consistent among all counties. The definition of property needs to be clearly defined. Does it include homes (and at what percentage), cars, boats, etc…?  You may also want to examine when property reassessments are adjusted locally how this affects the present “ability to pay” calculation if you intend to keep that as part of the formula. Is this a loophole in the system?

My suggestion is not to keep “ability to pay” but to go to weightings with a set standard percentage paid by the state to all districts. This would also allow for dollars to follow the students as well as be based on the cost of living.

A rethinking of state tax exemptions also needs to be considered.

Simplify Budget Categories

The Budget needs to be simplified into categories. For example, Administration (with separate district and school staff line items), Instructional Staff (teachers, counselors, media specialists), Support Staff, Instructional Materials, Technology, Transportation, Capital, etc…

These simplified Budget Categories would provide flexibility for local districts as they meet their unique needs.

You may want to look at whether the money should follow the student who generates it to the school they attend, rather than spread across the district. There are legitimate expenses associated with administering different programs, but you also want to ensure that all students have access to excellent programs that meet their individual needs.

Align State Board Regulations and the South Carolina Funding Manua

There will need to be a review and updating of state curriculum regulations to include the areas all districts must offer. This would include insuring that all curriculum areas such as art and music must be offered. Accreditation standards should be reviewed and updated to ensure quality delivery of learning for all students.

The South Carolina Funding Manual will need to be reviewed and updated to support the new budgeting framework while still ensuring financial accountability.

Focus on Responsibility, Accountability and Return on Investment

Along with increased simplicity and flexibility, a system of financial monitoring and accountability needs to be crafted.

I would suggest that the State reinstitute the use of the In$ight Expenditure software program that was co-developed by the South Carolina Department of Education in the 90’s with the South Carolina Chamber of Commerce and Coopers and Lybrand.  The State Department of Education, every School District, the House, Senate and Governor’s Office was provided a free license to use.

This analysis software allows the required annual audited general ledger of each school district (including State and Federal funds) to be entered into a data base so it can be queried at the touch of a key to tell you what was spent, from what revenue source, budget category and detail level as aligned with the South Carolina Funding Manual.  It is an excellent tool for accountability, yearly budget analysis and planning.

I would recommend that the Education Oversight Committee take the leadership, in addition to their setting achievement goals and issuing annual school report cards, to develop a productivity model that links expenditures with achievement results. This would provide the Governor, Legislature, the State Department, Districts, School Boards, Schools and Community with a process to look at “return for their investments” (ROI). This would also enable them to make budget decisions on reallocation of funds based on results. We did a successful ROI test a few years ago in an Anderson School District and both Texas and Georgia could also serve as examples.

In summary, there are four parts of the financial system that I strongly recommend need to be redesigned and aligned.

  • Redesign the Finance Formula
  • Simplify Budget Categories
  • Align State Board Regulations and the South Carolina Funding Manual
  • Focus on Responsibility, Accountability and Return on Investment

Again, I appreciate the opportunity to share these thoughts as you work through a very difficult process. Change is always hard. If we keep our focus on excellence for every student we will have accomplished a lot.