The Broad Residency Capstone Project Overview:

Creating a Sustainable Fair Student Funding System

Submitted in fulfillment of the requirements of the Residency by

Jason Willis

TBR VI

May 6, 2010
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ABSTRACT

The fair student funding system in Oakland – results-based budgeting (RBB) – has been a

key component of a comprehensive reform effort in the city‟s 38,000-student school district. My

capstone project will describe how this urban school system has continued to refine and build

systems that will help to sustain this finance reform. The sustainability of this reform has resulted

in: (a) change in how principals allocate resources, (b) enabling principals to make decisions

more directly aligned to school priorities, and (c) using student performance data to drive

resource allocation decisions.

INTRODUCTION

Oakland Unified School District (OUSD) is an urban public school system about 10

miles east of San Francisco. The school district serves approximately 38,000 students within 104

schools. OUSD is by all accounts ethnically and socioeconomically diverse – 38% of the

students are African-American, 33% are Latino, 16% are Asian, 7% are White, and 2% Pacific

Islander. Similar to other California urban school districts, OUSD has a high free- and reduced-

price lunch population (68%) and English Language Learner population (28%). OUSD

employees approximately 6,000 employees with the vast majority unionized.

In the early part of the 2000s then Superintendent Dennis Chaconas agreed to a 24

percent pay increase for teachers over three years. This, along with a myriad of other structural

and fiscal challenges, resulted in the State of California finding that not only could OUSD not

afford the pay increase but they were also found to be financially insolvent. The state provided

OUSD with a $100 million loan in 2003. But in return the superintendent would be replaced by a
 OUSD Results-Based Budgeting 3

State Administrator who became the sole decision maker for the district. This in effect put the

Board of Education into an advisory capacity.

Up to 2003, OUSD had already begun some change efforts throughout the organization –

the most prominent of which being its small schools movement. The State Administrator, Dr.

Randy Ward, further accelerated the small schools movement along with a host of other

sweeping reform initiatives to usher in an unprecedented amount of change. In particular, he was

laser-focused on empowering and enabling schools to provide a quality education to the children

they serve. He very early on said to his staff …our centralized models sure didn't work here! …

fiscally it bankrupted the district, but academically things weren't happening as well...1Two

years later OUSD had developed the most progressive funding model for schools in the country

called Results-Based Budgeting (RBB).

SITUATION

For the vast majority of school districts in the nation, funding for their schools is done

through a staffing formula. For example, for every 25 students that a school enrolls they are

allocated one full-time equivalent (FTE) teacher. While this approach may work well for more

homogenous and stable school communities, urban school districts struggle to create a balance of

the type of teacher located at their schools. For OUSD prior to the implementation of RBB, it

was often the case that the more experience; veteran teachers were located in the hill schools.

The hill schools were a smaller group (approximately 9 schools) located in the Oakland hills that

socio-economically were much better off than the flatland schools. As a result, both the quality

of teacher and the money (because school district teacher compensation is based on experience

1
Ouchi, William. September 2009. The Secret of TSL: The Revolutionary Discovery that Raises School
Performance. Simon & Schuster. New York, NY.
 OUSD Results-Based Budgeting 4

and education) would be going to the higher-performing, more affluent schools. This created a

fundamental inequity in how dollars

were being distributed within the

school system.

In order to address these

issues, under Dr. Randy Ward

district staff designed and

implemented a cornerstone of

OUSD‟s reform movement. While other school districts at the time – including San Francisco,

New York City, Cincinnati, and Seattle – were implementing similar allocation systems; OUSD

was the only school district to use actual versus average teacher salaries to calculate the budgeted

expenditures for schools. 2

In addition to this

glaring inequity, the current

funding scheme also

created numerous other

challenges for schools

including inflexibility in

the use of what resources

were available to them,

inability to choose staff

most appropriate for the student and school‟s needs, no mechanisms to think more strategically

2
Ouchi, William. September 2009. The Secret of TSL: The Revolutionary Discovery that Raises School
Performance. Simon & Schuster. New York, NY.
 OUSD Results-Based Budgeting 5

about resource use, and no understanding of what resources were being spent at the school level.

RBB was able to address many of these challenges for OUSD schools in addition to the equity

issue. 3 In addition, it had implications for federal policy as well. OUSD‟s calculation of Title I

comparability – a measure of how equally resources were distributed among Title I and non-Title

I schools revealed that the use of actual salaries was one of the only true and accurate ways in

which to look at resource distribution. My other measures – teacher FTE, average teacher salary,

etc. – there remained underlying inequities in resource distribution.4

CONTRIBUTION

In the summer of 2007, I was appointed the budget director for OUSD. As budget

director, my team of nine other financial service associates and I managed the school district‟s

$650 million budget. In addition to building and institutionalizing financial structures to ensure

accuracy in our financial reporting and calculations, I also oversaw the implementation of

Results-Based Budget (RBB) on an annual basis with both schools and Central Office

departments. My work with RBB focused primarily on institutionalizing the system that (a) built

the capacity of principals and (b) developed a better technological solution that enabled the

school district to remain fiscally solvent in a dramatically declining revenue environment.

Building Capacity of Principals

This aspect of the institutionalization was probably the most fundamental for obtaining a

true culture change throughout the organization but also the most challenging. Upon coming to

OUSD, there were a lot of concerns among the principals about RBB including misconceptions

3
Willis, Jason. November 2008. Results-Based Budgeting Analysis. Presentation to the OUSD Board of Education.
4
Hill, Matt. June 2008. Funding Schools Equitably: Results-Based Budgeting in the Oakland Unified School
District. Center for American Progress. Washington, DC.
 OUSD Results-Based Budgeting 6

about the role of the system, misunderstanding about the benefits, and shortcomings of the

system. There were several key actions that we initiated to both capture these and other concerns

and formulate a method in which we could respond. First, I spent a tremendous amount of time

listening to all stakeholders but most importantly to the principals about their perspectives on

RBB. Second, the Central Office instituted an on-going, standing committee of principals in

which topics could be raised to solicit principal input. RBB was a primary topic of conversation

in these discussions. Third and finally, my department published the results of the “listening

tour” and generated a prioritized list of changes that could be instituted with RBB for the

upcoming 2008-09 budget development cycle.

Together there were close to a dozen changes that were instituted throughout the next

nine months (September 2007 to July 2008). However, there were two significant changes that

responded to consistent criticisms by principals. The first was the „strategic‟ nature of budgeting

and technological integration. The feedback that we received included …I have no opportunity to

consider how to use my revenue, where is the planning time …why should I have to input

information in one system over here then do it again three times, can’t you figure out a way to

put it all into one system? My department responded by working with School Portfolio

Management and Technology Services to overhaul the functionality of RBB to integrate the

functional activities of budgeting with more strategic allocation of resources. Further, we

instituted a longer and more comprehensive planning process for schools to develop their

budgets. For example, where budget development existed over two months with often

disconnected activities the new process was stretched over five months and involved

opportunities for principals to reflect on the current practice in their schools, consider the

implications for students, and propose changes in resources for the upcoming year as a result.
 OUSD Results-Based Budgeting 7

Further, staff produced a RBB school handbook. It was a short, to the point guide that helped

answer many of the questions that would arise throughout budget development (Appendix).

Better Technological Solutions

The second major aspect of reaching institutionalization for RBB was integrating the

web-based application with the school district‟s finance and human resource system (IFAS). The

challenge when I started is that the systems were two separate entities and any exchange of data

between the two systems were done with downloads and uploads of excel sheets. This method

while necessary was extraordinarily tedious and difficult to ensure quality control – particularly

with information as sensitive and critical as financial information. In the words of one of my

financial service associates …So essentially I’m spending two weeks migrating data from one

system to another that should be done by an automated system. Why haven’t we done this

already? In conjunction with critiques from principals to integrate other systems they were

interacting with we established an upgrade project schedule to make adjustments to both user-

facing aspects of the RBB web-based application and many of the functional tools that would

allow for a cleaner and more automated transfer of data files. Further, Technology Services‟ built

error reports into the transfer process to catch any changes in data as it moved from the RBB

web-based application and back into IFAS.

Ideally, we would have been able to build a module directly into IFAS to accommodate

the need to create a more integrated solution which would have fused the reform directly into

OUSD‟s core financial and human resource system. However, the vendor managing the system

did not have the expertise or system architecture to conform to the demands of RBB as a user-

friendly system that was intuitive for principals to use. The progress that was made was a good
 OUSD Results-Based Budgeting 8

step forward. For many of my staff their workload during budget development was greatly

decreased as a result of the system enhancement and there was a significant decrease in the

number of data errors in the transition from the web-based application to the core financial and

human resource system.

Lessons Learned

Throughout the campaign to institutionalize RBB into the school district there were

several lessons learned or greatest lessons learned on implementing a change such as this in a

traditional public school district.

1. Stakeholder Buy-In: It cannot be over-emphasized the power of stakeholder buy-in. This

is an absolutely critical element to help build the will and capacity to create a sustainable

change within a school district. In the case of OUSD, the support of principals has been a

primary driver and sustainer of this reform. They have been so critical because they are

not a single person but dozens of respected, school leaders who see value in what the

school district is doing. Just as important, being able to bring along detractors is just as

important – particularly if they exist among the senior administration or governing board.

At the very least, need to be able to surface their concerns about the project which would

allow the first step – an opportunity to address the issue with data and/or modifications to

the direction of the program.

2. Communication: Being consistent and relentless about the progress and direction of the

program is as important as the work itself. For stakeholders, knowing what is happening

with the program helps them to avoid feeling „out of the loop‟ or „isolated‟ from the work

and creates an opportunity for others to become ambassadors about the changes occurring
 OUSD Results-Based Budgeting 9

within the program. If there is a large lesson learned for my work on RBB it is in this

area. I feel like development of these changes would have gone much better had we

focused attention on communicating the changes more consistently over time.

OUTCOMES

Often I am asked if we can directly attribute a reform such as RBB to increased student

achievement. The clear answer – no. There are hundreds of variables interacting with our schools

and communities every day that impact the learning and growth of students. However, RBB has

been a tremendous enabling factor for principals to reconfigure their resources to meet the

unique and individual needs of their school communities to maximize student achievement. This

has been born out for OUSD schools over the past five years. As evidenced by this OUSD press

release in September 2009 about the latest results of OUSD schools‟ performance on California‟s

Academic Performance Index (API) (Appendix).

“Student achievement in Oakland Public Schools grew 27 percent faster than the

state average according to the 2008-09 Accountability Progress Report (APR) released

today by the California Department of Education (CDE). OUSD's performance on the

main index rose 19 points, the largest increase of all comparable districts, and a mark

which trailed only San Juan and San Bernardino among large, urban school systems.

The results extend OUSD's streak as California's most rapidly improving urban

school district to a five-year period. Since 2004, Oakland Unified has raised its

Academic Performance Index (API) by a total of 92 points, leapfrogging numerous

districts in the process. The latest round of API growth contained significant gains across

all levels and subgroups as 44 OUSD schools lifted their API by 25 points or more.”

Perhaps even more significant is this type of growth in the face of staggering reductions in

funding to K-12 public education in the State of California. Over the past two years (2007 to

2009) California school districts have lost approximately 20% of its funding. The claim is often

made that progress cannot be made – particularly in impoverished schools – without the

necessary resources. Yes, resources are necessary. However, they are not the only solution to

significantly increasing student achievement.

The other clear outcome has been the clear intention and desire by principals to want to

retain this funding mechanism in OUSD. In the fall of 2009, a committee of principals was

formed to assist the school district to understand the need and importance of RBB. In a survey to

principals, 83 or 80% endorsed keeping RBB as the method to distribute resources to schools.5

Drilling down even further, the survey showed the following:

93% of principals surveyed value having decision-making authority over their school

site‟s budget;

93% of principals surveyed responded that if budget cuts have to be made, the principal

with the school community should have the primary responsibility for making these

decisions;

87% of principals surveyed prefer to have control over the number and type of position at

their schools;

5
Great Oakland (GO) Public Schools. January 2010. Budget and School Portfolio Management Update.
www.gopublicschools.wordpress.com
 OUSD Results-Based Budgeting 11

78% of principals surveyed believe that General Purpose dollars should be equitably

distributed among all OUSD students; and

67% of principals surveyed feel that they have the ability, or are prepared, to completely

run their entire site budget, including personnel decisions

It was also clear from this survey that work continues to be needed to further build the capacity

and strength of this system to assist schools in accomplishing the goal of driving quality

instruction for students (Appendix).