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Another Voice: Schools need a funding model that rewards results

By Doug Mesecar

New York has a new state budget that increases spending to almost $25 billion for the state’s schools, a historic amount that comes with few – if any – expectations that the dollars produce demonstrable academic results. Of course, improved educational outcomes is the general expectation, but there are almost no requirements that it actually happen.

New York State spends more per pupil than any other state, but consistently ranks near the middle in academic performance nationally (as measured by indicators like the National Assessment of Educational Progress and graduation rates).

In this era of uncertain economies, with budgets tight across most communities, new thinking about how to fund public education is absolutely needed. The current system, which allocates funding based almost entirely upon student enrollment, is an antiquated one that misaligns incentives, accepts weak performance and diminishes the imperative for better educational outcomes. 

A growing number of states have moved to connect their education funding to producing results – the way most budgets in the world work. Performance-based funding, sometimes called “pay-for-success,” is a method of funding education and other social sectors in which public resources are directed to approaches that produce results.

Arizona, Michigan, Pennsylvania and Florida have all moved to pay-for-success funding models. Utah and Colorado utilize performance-based funding models called social impact bonds.

Now the federal government is following the states’ lead. In the recently enacted Every Student Succeeds Act, the reauthorization of the 1965 Elementary and Secondary Education Act, there is surprising innovation in two pay-for-success provisions.

These different approaches share the common-sense notion that public funding should go to those programs that are clearly demonstrating their impact through rigorous, outcome-based performance measures. Funding schools based on performance can provide an effective launching pad for scaling initiatives and innovations that produce measurable results.

The question is not whether we can afford to undertake innovative new approaches, but whether we can afford not to.

Over time, funding that considers outcomes can better align critical education funding with important outcomes to incent ongoing, improved performance of schools individually and systemically.

Doug Mesecar is an adjunct scholar at the Lexington Institute and a former senior official at the U.S. Department of Education and U.S. House of Representatives’ Education and Workforce Committee.