Part One: Preparation
Superintendents and District Administrators - do you know where to start when it comes to fulfilling ESSA per-pupil reporting requirements? How will you know if your district is equitably allocating resources to schools? How will you use your ESSA data findings to encourage transparency and instill confidence amongst your district and stakeholders? This two-part guide aims to help school leaders do just that. We've compiled best practices from those who have walked in your shoes to help your district.
The Every Student Succeeds Act (ESSA) is a federal law that affects all public school districts receiving federal and state funding, designed to ensure that all students receive a quality education.
While ESSA allows individual states to set their own general education standards for their school districts, districts are tasked with creating strategic plans for how students achieve. Amongst the various benchmarks and metrics districts must now adhere to and report on, one of the most far-reaching is that of resource equity and transparency. Part one of our guide will help you get your finances into shape with tips to help you prepare for ESSA reporting.
ESSA and Fiscal Equity
If No Child Left Behind (NCLB) will be remembered as the era of testing and compliance, then the Every Student Succeeds Act (ESSA) may mark the era of equity and flexibility. While dollars aren’t the only factor in the equity equation, ESSA increases transparency and reporting requirements of how districts allocate funds to and across schools.
Fiscal equity is…
- fundamentally different from fiscal equality.
- a strategic district goal.
- measured in fiscal expenditures.
- answered through a district’s financial system
so that actual expenditures can be tracked
- analyzed by tying dollars to the level of use
(e.g., school, program).
Fiscal equity is fundamentally different from fiscal equality.
Do you provide equal resources to all students, or do you consider the individual needs of your students before funds are distributed? Fiscal equality refers to the equal distribution of resources for all students. Fiscal equity takes into consideration the needs of students before the allocation of resources. Fiscal equity across schools takes into account student characteristics, such as low-income, special education, and English language learner status, as well as school type (elementary, middle, high). In school finance, equity will mean greater resources for some students.
Fiscal equity is a strategic district goal.
In your district, is there a fair distribution of funds to students, independent of community wealth? This is an essential component of district, state, and federal fiscal education policy. While the mechanisms to ensure fair distribution are diverse, the pursuit of equity remains one of the primary goals.
When measuring fiscal equity, actual expenditures to schools must be available.
Does your district use input equity in budgeting to take into consideration the variable needs of your student population? While common, this practice allows for inequitable distribution of dollars, as staff compensation differs across locations. Even with an appropriate allocation of staff members, some schools may receive drastically different dollars than others based on the tenure and experience of the staff allocated.
Fiscal equity is answered through a district’s financial system so that actual expenditures can be tracked and reported.
How are actual expenditures reported? As districts move toward transparency and evaluation at the school level, districts have to piece together financial information from multiple systems and sources to meet reporting requirements. For example, a district typically estimates school expenditures by analyzing human resource and payroll system data for salary levels and staff locations and then estimates the dollars that go to schools.
Fiscal equity requires tying dollars to the level of use (e.g., school, program).
It is common for budgets and expenditures to be tracked at the central office, often to take advantage of economies of scale. But can your district tie its spending directly to the location where the funds are being spent? Evaluation of spending at the school level requires school-level expenditures, while evaluation of programs requires program-level expenditures. These resources should be tagged with the “location” of school/program use whenever possible to ensure they are captured for evaluation of effectiveness and fiscal equity. Accounts and transactions should be coded to the level of use to ensure an accurate understanding of expenditures.
Equity can be measured in many ways, such as access to effective teachers, advanced placement classes, computer equipment, and extra instructional resources. The necessary predecessor for these endeavors is the assessment of student needs and the availability of fiscal resources.
With this context in mind, are your district finances ready for ESSA?
Are Your District Finances Ready for ESSA?
When ESSA was signed into law, a new era for education policy began. If NCLB will be remembered as the era of testing, ESSA may be marked as the era of equity. While dollars aren’t the only factor in the equity equation, how districts allocate funds to and across schools will be under intensified scrutiny. Districts will be tasked with proving they are equitably distributing dollars before additional federal dollars can supplement state and local funds.
A district need to prove the following under the new fiscal regulations with ESSA:
1. Personnel resources are distributed equitably across high-achieving and low-achieving schools.
How It Works Today: Districts are required to report student-to-staff ratios and show equity in their distribution of staff. However, they do not have to report the actual cost of these employees. It is likely that school districts who have not done more than report those ratios, also do not have actual expenditures connected to locations in their chart of accounts.
How It Will Work Under ESSA: Salaries, benefits, and other expenditures (e.g., materials and supplies) will need to be linked to “cost centers” or “locations” of schools in order to show the distribution of federal funds across schools. ESSA regulations help ensure that, independent of staff ratios, the total expenditures in a school meet ESSA’s standard of equity.
2. Federal dollars are being used to supplement, not supplant local and state funds.
How It Works Today: The NCLB Act intends for federal dollars to supplement state and local funds to provide greater resources to schools with high populations of low-income students. But without strict accountability, some states and municipalities have used federal dollars to supplant funds that would have come from state and local sources (e.g. using Title funds to pay for ELL services provided for by state funds). Mandated transparency of school-level source-of-funding does not exist.
How It Will Work Under ESSA: The policy directive continues to be “supplement not supplant.” Federal funds are meant to provide additional money to underachieving schools, not replacement funds. With ESSA, districts will need to prove they are supplementing state and local resources by explicitly showing their local, state, and federal per-pupil funding for each school in the district.
3. Planned programs are “evidence-based.”
How It Works Today: While NCLB advocates for implementation of “scientifically based” strategies for struggling students, it includes no clear definition of what constitutes “scientifically based research.”
How It Will Work Under ESSA: ESSA is interested in the effectiveness of every dollar. The law includes provisions to implement programs with “strong,” “moderate,” or “promising” evidence, as determined by existing scholarly research. Further, ESSA allows applications to include program proposals that have research-based rationales, if not direct research evidence. This assumes that a program includes ongoing data collection to determine the strategy’s effectiveness and to ensure that costs and effectiveness are linked.
ESSA will dramatically increase a district’s need to build transparency and equity into their school and district finance structures.
Now that you know what to expect from impending ESSA regulations, what should leadership do to prepare?
How Can K-12 District Leadership Prepare for Financial Reporting Under ESSA?
As you prep for the financial reporting requirements under ESSA, there are two key considerations to keep in mind.
- Your current financial system may not be what you need tomorrow
- The public is now your district’s financial partner
To prepare for compliance with ESSA’s financial requirements, district leaders must first recognize the scope of technological changes that will be necessary to comply with the new law.
ESSA’s mandatory reporting requires user fluency in tracking and reporting financial data. Practically speaking, most districts’ financial data may need to be organized differently than it is now, and allow for funds to be directly linked to each location and funding source. Reporting must be made far less technical and more user-friendly so that a wide array of insights can be gleaned from the data. Your current systems may not be designed to easily supply this information, which means you may need to start investigating alternatives.
The Public Is Now Your District’s Financial Partner
The second new aspect that district leadership must consider are the public’s responses to seeing its district’s financial data published for the first time.
ESSA envisions a future where parents can easily compare spending among individual schools and across school districts by checking those numbers on a district’s website. If there is a disparity in spending, district leadership should be able to articulate the reasons behind it, or a plan to correct it (or, most likely, both).
In a post-ESSA world, district leadership cannot afford to be uninformed about inequities that may exist in their district. Parents want to know what resources a school is being given and how that funding compares to other schools. For many district leaders, who often have backgrounds in instructional practice rather than finance, training on how to interpret, analyze, and communicate this financial data in layman’s terms is critical.
How Can a Superintendent or Chief Financial Officer Prepare for ESSA?
Every school district is different, and some are more readily prepared to meet the ESSA reporting requirements than others. No matter where you fall on the preparedness scale, here are four tips for getting your district mentally and operationally ESSA-ready.
- Embrace the new era of financial transparency and accountability that ESSA has ushered in. ESSA’s end goal is to ensure that every district is offering the most support it can to the students that have the highest needs. This unambiguous goal is partly the reason why ESSA was passed with broad bipartisan support.
- Recognize that compliance with the law will likely require changes to the way your school district organizes and reports its financial data. This affects both data systems and financial processes. Most important is to know that modern software and technology can make this shift to location-based accounting and user-friendly reporting much easier.
- Anticipate the public’s reaction to seeing financial data available by school in a user-friendly format for the first time. Prepare for this by understanding how and why your district’s resources are distributed, and plan for how you will communicate and articulate the changes that may take place in the future.
- Find the right financial and technical partners to help you with this work. Sophisticated financial planning and analysis is not a core competency for most school district staff. There are great partners that can help your district with the software and professional services to do this successfully. Resist the instinct to try doing something new and complex with old static methods.
Getting leadership prepared for ESSA is only half the battle.
Keep reading to learn three tactical ways to get your financials ESSA ready.
3 Steps to Make Your Financial Data ESSA-Compliant
ESSA will change the way your school district manages and reports its finances. How do you know if your district’s data is prepared for ESSA’s new rules?
Here are three things to do today to make sure your school district is ready for ESSA.
1. Audit Your Financial Systems
Take inventory of your financial data systems and processes. Can your existing processes easily and efficiently deliver the data that ESSA mandates?
The statute requires that school districts report spending by location and publish this data in a financial report card. This is intended to help parents and community members understand spending at the school level, and to compare spending across schools. Financial data will need to be easy for a parent to understand and your financial system needs to be equipped to run the reports.
2. Examine Your Financial Processes
Reexamine your chart of accounts and financial processes. Does your district use obscure bookkeeping functions that have been developed over many years (or decades) of tradition or habit? Can a non-financial expert understand the data?
Districts must be able to precisely pinpoint where spending is making an impact, even if the impact is not where the spending originated. For example, if your district purchases ten million dollars worth of computers centrally, the impact of the purchase should be reported for each school receiving the computers. Since this is a new requirement under the law, districts will need to revise their accounting processes.
3. Invest in Financial Skill Development for Ed Leadership
Financial data represents a critical window into how your district is operating and whether your neediest students are receiving the necessary support to succeed. Sophisticated financial planning and analysis should be a core competency for your program and leadership staff. When your budget managers have a solid foundation and are prepared to analyze and evaluate multiple data sets, they can identify trends in spending over time and compare spending across schools or correlate spending to nonfinancial outcomes.
Finding the right partner— one equipped to offer both technology solutions and professional services— will allow school districts to implement the changes in a reasonable timeframe. These partners also may offer professional development training to help the users of your financial systems become even more fluent and proficient as financial managers.
Part one covered the basics; now let's put that knowledge to work. Part two of our Education Finance Guide will provide best practices your district can implement today to become ESSA ready.
Part Two: Implementation
Part one discussed the changes districts can expect to see under ESSA and provided actionable steps to prepare leadership and district financial data to meet the inherent challenges.
Part two of our guide will discuss best practices to help districts create their ESSA compliant reports with proven methodologies and strategies that work to advance resource equity and encourage transparency.
Financial Transparency - The Key to ESSA's Implementation
Insights in this section provided by Dr. Terry Grier, former Superintendent of the Houston Independent School District
In light of ESSA’s impending implementation, superintendents need to have a finger on the pulse of the goings-on of their school district more than ever. This wave of increased transparency can bring unprecedented levels of scrutiny to even the most basic processes within a school district, so it’s crucial that superintendents and district administrators aren’t caught unawares. School boards and community stakeholders may want answers to ensure that all district spending —beyond textbooks and field trips— is transparent, strategic, and engenders resource equity for students.
Here are five areas to consider:
How much money did the district spend annually on utilities—electricity, natural gas, sewer, and water?
Under ESSA, districts will be tasked with ensuring that all school funds are being spent in an equitable and meaningful manner. Reducing energy bills can increase the amount of funds available for instruction and maximize student opportunities.
Looking to reduce your utility spending? You have many options that are independent of each other, but can work together to collectively reduce cost. First, consider engaging an energy management company that focuses on changing human behavior; cutting off lights when classrooms are empty, efficiently managing temperatures when buildings are unoccupied, using technology and employing trained energy specialists to monitor energy use.
Dallas based Cenergistic leads the industry using this approach with their ‘no risk’ proposition. If they don’t save you money from reducing energy usage, you don’t pay them anything, and there is no retrofitting cost. Additionally, purchasing energy efficient equipment that employs sleep-mode settings can also reduce usage. Replacing older model equipment with a newer energy efficient version can greatly reduce overall energy cost in the short and long term.
Replace lights with LED fixtures, invest in sink controllers that automatically shut off after a certain time duration as well as low-flow faucets to conserve water use. While there are many new companies to choose from, traditional companies such as Trane, Siemens, and Johnson Controls remain popular choices for districts going the ‘equipment retrofit’ route. Several of these companies want you to finance the retrofitting or sign a 30-year contract that is repaid with energy savings.
Finally, if you are in a state that allows you to purchase energy competitively, consider using an energy broker to negotiate a reduced rate for your district.
Fuel and Transportation
How much money did the district spend on fuel to transport students to and from home to school this past year?
Unless your school district fully outsources your transportation needs, many superintendents will need to keep a tight watch on fuel and transportation costs as these can easily skyrocket and disrupt even the most well-planned budgets. The more a district spends on transportation, the less it has to spend on other programs. A thorough review of fuel and transportation costs should include insurance and liability costs, bus parts and supplies, fuel, vehicle maintenance plans, driver training, and transportation-related expenses.
Additionally, make sure you have a thorough understanding of your cost-per-route mile, as a less than average cost-per-mile may indicate a well-run program in a district.
Need to reduce your transportation budget without reducing services? Consider school bus advertising. Entering into a contract with local businesses to place appropriate advertisement on district school buses could generate needed income. Additionally, reach out to neighboring schools outside your school district to see if there is interest in your district providing bus services. This service could bring in revenue that helps your school district reduce cost and increase resources for students.
Finally, if you are not already doing so, consider running a multi-tiered bus routing system. By staggering school start times, you can use the same bus and driver to pick-up and deliver students to numerous schools.
How much money did the district spend on liability, theft, flood, and casualty insurance this past year?
While the cost of liability insurance varies widely, many district officials are noticing escalating premiums from longtime vendors, while other vendors are requiring policyholders to cover more of the cost, to the tune of thousands of dollars. Since many districts are required by law to hold liability insurance policies, it is important to thoroughly review how much your district has spent in these areas to better prepare you for questions from your board or community. Recent events have shown the importance of having such insurances in place, however districts should still ensure that these costs don’t take too much from other programs designed to benefit students.
Wondering how to reduce insurance expenses without sacrificing coverage? Consider a liability insurance pool. Collaborating with other school districts to purchase insurance can lower insurance cost by spreading the risk. Additionally, ensure that your district can show that you pose limited risk by explicitly defining a school sexual harassment policy or hiring additional security guards to protect students. Make sure that your flood insurance covers schools that are in the municipalities’ flood plain and that the deductions are set high enough that you can receive significant savings, but not so high that your fund balance could not cover a major disaster.
How much money did the district spend on recruiting, onboarding, and training teachers new to the district this past year?
In light of the recent turmoil that many districts are undergoing with teacher strikes and walkouts, it’s no surprise that the cost of recruiting and keeping qualified teachers will be a question top of mind with your board and community stakeholders. Take the time to review how much you have spent historically in this area and compare it with your recent spending. Be ready to account for any significant changes with transparent data and evidence to prove that adequate spending is budgeted to attract and retain the most qualified staff to benefit students.
Take a close look at where you are recruiting and which recruiting trips are resulting in good hires that stay with you. In a district I previously worked, recruiters were visiting the University of Hawaii. As it turns out, we had not hired a teacher from that university during the five years the recruiters visited the school. Needless to say, that wasn’t the best use of our resources.
How much money did the district spend per student on:
- Magnet versus neighborhood schools?
- Special education versus gifted students?
- The top 1/3 of the highest performing versus the bottom 1/3 of the lowest performing schools?
ESSA will make comparing a school district with its peers easier than ever as all public districts will be required to report identical information in an identical format for public consumption. Parents especially will be interested in how much public schools are spending per student compared to magnet or charter schools in the area to determine whether they should enroll their children in one of these latter options. Make sure you can clearly articulate how much you are spending per student in each of the areas outlined above with ample justification to support your decision.
Transparency is the key to financial support. When everyone can see how you are spending your resources, two things happen; (1) You will be more accountable for your district’s and school’s expenditures, and (2) when you need additional resources, your community will be more likely to support your request.
It takes a strong leader to demand financial transparency in a school district. Often, it’s the district’s financial officer that poses the biggest roadblock and it takes a committed superintendent to remove it. Ego, control, or the desire to hide money for emergencies, etc. should not be allowed to block the countless positive benefits to financial transparency.
The aforementioned provide a glimpse into how far-reaching your efforts may need to be to satisfy ESSA's transparency requirements. But the work doesn’t stop there. Ready to tackle per-pupil reporting?
Start the Conversation: Implementing ESSA's Financial Regulations in your District
Ask anyone in your school district to explain what the impending ESSA implementation will mean for their school and you’ll get a variety of responses. It’s not surprising that ESSA’s wide-scoping requirements mean many things to various stakeholders. District administrators are expected to not only understand ESSA’s far-reaching implications, but also communicate its impact to their publics. With all there is to digest and comprehend, how are districts to know where to start when communicating to their community?
Here are four questions that districts should consider to start the conversation with the public regarding their plans for ESSA.
1. What does ESSA entail? What changes will be happening as a result of ESSA?
Sifting through legislation can be overwhelming and time-consuming, so it’s important to have a simplified explanation of how each of ESSA’s eight components is likely to impact your community stakeholders. ESSA places an emphasis on transparency, so be clear about the impact that ESSA will have within your school district. Additionally, since ESSA requires that districts reserve at least 1% of Title I funds they receive for parent and family engagement activities, be sure to address these in specifics with members of your community. Detail your strategy for effective family and community involvement to instill confidence and trust with your public stakeholders.
2. What ESSA aligned resources, policies, and practices are you implementing to improve public schools in your district?
School districts are an investment for stakeholders. Once your district’s goals have been established metrically, stakeholders will likely want to know what actionable items are in place for the district to achieve those goals so that they can feel secure in the district’s commitment to improving their public schools according to ESSA mandates. For community members, especially parents, showing where your district stands and where it would like to be with clear and concise strategies will allow stakeholders the opportunity to feel engaged and informed about the changes that will occur as a result of ESSA. Be prepared to discuss how your district will address the conditions that are faced by your students and teachers on a daily basis, in very concrete ways. Meet with the students and administrators of your schools regularly to get their insights and perspectives, and let their input help you craft the action plan that you share with your public stakeholders.
3. How will your district address underperforming schools?
ESSA will require states to identify the lowest-performing five percent of the schools in the state that receive Title I funding, all public high schools that fail to graduate one-third or more of their students, as well as schools where any subgroup of students consistently underperforms. School districts will have to create and execute targeted support and improvement plans for these schools to address the resource gaps. Make sure your district can articulate your plan to improve the public school experience for underperforming schools in your districts. Since these plans will be monitored and reviewed by the state, be prepared to detail the specifics as to how you plan to help these schools meet the state-defined criteria for improvement with definitive dates for benchmarking and reviewing your progress.
4. How does your district plan on allocating resources equitably in the future?
To ensure equitable allocations for all students, districts will need to evaluate and refine their allocation methods. For the first time, per-pupil spending will be at the forefront alongside the school’s student performance. Per-pupil spending will understandably vary from school to school, and the varied allocation amounts may cause concern for many in the community. To keep generalizations and assumptions about the data at bay, make sure your district leaders, principals, and board members not only understand what the data actually means, but also the district’s strategy and plans for improvement.
To provide equitable learning spaces for all students, districts should create and implement strategies that provide additional time and assistance to students requiring it the most. Additionally, remember that transparency is the name of the game. Consider providing monthly budget updates to your board members and stakeholders so they can better understand how discretionary funding is being spent. Districts should also seek to provide annual reports to the community, either online or in print, that plainly answers what was bought with tax dollars, and outlines the results that taxpayers can expect from those investments.
Lastly, parents and community leaders may ask about the individual school budgets for books and supplies, computer equipment, professional development, or incidental expenses. While the answers to these questions may vary based on the amount of autonomy that principals and school leadership teams have in deciding how to spend their lump-sum budgets, be prepared to address questions like these with a satisfying and thoughtful response.
The work doesn't end once your ESSA report card is complete. Read on to learn three simple ways to use this data to maximize opportunities for students in your district.
Go the Extra Mile: Three Ways to Use ESSA Report Cards to Improve Schools
With ESSA implementations well underway, many districts have expended considerable effort creating ESSA mandated report cards highlighting the performance, progress, and goals of their individual schools. However, the heavy lifting required to fulfill this state requirement comes with a silver lining. These report cards help districts unearth a wealth of information regarding the health of their schools. Learn how districts can leverage their ESSA findings to improve their schools in three critical ways.
1. Start a Dialogue
ESSA brings student achievement to the forefront by highlighting the schools’ ability to provide quality education to students. If you were discouraged by how schools in your district have performed, let the findings from your data spur you to uncover the root causes behind those issues. Interview students to get their perspective on their school experiences, listen to the concerns of your faculty, and evaluate the ways in which at-risk students may or may not be receiving the help they require. Districts should encourage ongoing dialogue with schools and help them address their concerns using best practices to improve achievement.
Pro-tip: Allovue’s Balance Evaluate module guides schools and districts through tough conversations with visualizations that compare their distribution of expenditures against underlying drivers and performance measures. Let Evaluate help your district determine whether resource allocation processes are supporting fiscal equity. Contact us at email@example.com to learn more.
2. Principal Involvement
Did your per-pupil attributions raise more than a few eyebrows? That’s a good thing- depending on what you do next. Thoroughly revisit your allocation and attribution plans to ensure all of your schools are equipped to meet the distinct challenges of your students. The best way to start is by getting your principals involved! Principals who are given autonomy to allocate resources within the district’s strategic plan provide unique insights that can positively impact the school. Work with your principals, community leaders, and district administration to develop strategies that not only address your shortcomings, but engender mutual understanding and ownership.
3. Copy What’s Working
Your ESSA work up undoubtedly revealed not only the schools that may be at risk, but the schools that are meeting and even exceeding your state and district goals. What are these schools doing right? Look for replicable processes and procedures and work to create district-wide benchmarks to incentivize other schools to follow suit.