Hawaii’s Successful Experience With Weighted-Student Formula Has Improved Funding Equity
The weighted-student formula has provided a much more equitable, responsive and transparent way to fund Hawaiian schools.
by Satya Marar, Reason Foundation, March 31, 2020
During the 2006-07 school year, Hawaii began funding its public schools through a weighted-student formula to foster equity by more fairly allocating available resources to students based on how costly they are to educate while streamlining funding between schools and empowering school leaders, parents and community leaders with autonomy in educational decision-making.
The focus on increasing local autonomy in spending recognized that those closest to students should be more involved in instructional programming, that transparency encourages community support for school plans, and that including families in school funding decisions increases student and school success.
The state’s equity goals included both horizontal and vertical equity. In other words, Hawaii wanted to ensure that students with similar needs had similar funding levels allocated for their educations, while also ensuring that students with different funding needs attracted different levels of funding in cognizance of their differences.
Instead of traditional education funding models that attach funds to staffing positions and other centralized mandates from the state, weighted-student formula (WSF) allows dollars to follow individual students to their schools based on their individual needs. This allows for funding to be better tailored to the needs of each school while granting flexibility by allowing for customized spending by local decision-makers.
The experience of Hawaii, and the many other states and school districts across the nation that have adopted and benefited from WSF, offer valuable lessons in how education policy goals can be achieved through WSF, how to best implement or transition to a weighted-student formula and the challenges to be faced along the way.
The Transition to Weighted-Student Formula
Before committing to adopt weighted-student formula under the Reinventing Education Act 2004, the Hawaii Department of Education (HIDOE) had already made multiple efforts to decentralize education funding through adopting structures for school and community-based management (SCBM), lump-sum budgeting (LSB) and the creation of complex areas (CA).
Importantly, the HIDOE’s unique status among state education departments, in that it now effectively functions as a single state-wide school district that has direct oversight over schools, puts it in an especially adept position to streamline education funding.
SCBM was introduced in 1989 as a voluntary program that gave schools more flexibility in how to spend their allocated dollars in exchange for accountability in meeting certain educational benchmarks. Notably, traditional proscriptive school funding models with centralized mandates from the state prevent schools from being accountable for how resources are used as school leaders can’t make tradeoffs between different spending options. WSF also allows states to make comparisons between outcomes resulting from expending resources in different areas. Community stakeholders were involved by introducing SCBM councils which included community members in the decision-making of participating schools.
Lump-sum budgeting was introduced in 1992 and gave principals increased autonomy over spending funds previously allocated for statewide programs. It expanded the autonomy conferred by the voluntary SCBM program to schools not previously included and increased the resources over which local decision-makers had control. However, questions were raised about school principals’ capacities to make effective spending decisions, the need for training and guiding them, and whether the limits on spending discretion that remained meant that schools and principals had sufficient autonomy. The auditor of Hawaii noted that the actual amount of funds over which principals had control under this program were “relatively insignificant.”
Complex areas were introduced in 2001 and were formed by combining high schools and their feeder elementary and middle schools into ‘complex areas’ each under a single ‘complex superintendent.’ By eliminating school district superintendents, and devolving their duties to smaller units of management, CAs effectively decentralized administration without increasing schools’ autonomy over resource allocation.
Reforms Concurrent to WSF
In light of these wider decentralization efforts, the adoption of weighted-student formula through a system of weighted characteristics reflecting the cost of educating each individual child was facilitated by concurrent reforms that:
- Further increased principal autonomy over school budgeting and planning through a system of incentives, rewards, assistance, and sanctions pertaining to meeting certain benchmarks.
- Streamlined the education bureaucracy by reorganizing different departments and roles, thereby also streamlining the allocation of resources to schools in order to make their decision-making more responsive.
- Replaced the previously voluntary SCBM councils with mandatory SCCs (school community councils) at every public school in order to include community stakeholders in making key decisions about school budgeting, programming, and interventions backed by transparent financial reports and planning. For the sake of balance, 50 percent of each SCC is comprised of internal stakeholders i.e. principals, teachers, and non-certified staff, and 50 percent is comprised of external stakeholders i.e. parents, students and community members.
- Committed to allocating at least 70 percent of state education appropriations directly to schools.
- Formed a Committee On Weights (COW) comprised of key stakeholders including teachers, parents and nominees from the Superintendent of Education and the Dean of the University of Hawaii School of Education among others. The COW determines the funding weights that are attached to different students and school characteristics, as well as recommending the revenues to be included in WSF allocation. They meet at least once every odd year (although they were required to meet at least once a year prior to 2011) to review the effectiveness and appropriateness of the weights so they can be modified if deemed necessary.
- Implemented a transition strategy that ensured cooperation and support from schools for the WSF by temporarily insulating schools that would lose significant amounts of funding relative to their levels prior to WSF from the impact of the transition. For 3 years, starting from 2006-07, these schools were to be provided with additional funding from the state at gradually decreasing levels to ‘ease’ their transition into WSF. These additional funds were to be generated by reducing the amount that schools set to gain funding after the implementation of WSF would receive over the same period. In 2007-08, the Board of Education adopted a COW recommendation to speed up the transition by implementing WSF sans transition funding from 2008-09 onwards. Instead, a ‘loss threshold’ was introduced in 2008-09 stipulating that no school would lose more than 4 percent of its funding between years due to declining student enrolment. In 2009-10, it was stipulated that this threshold, which was revised annually, could not cost any more than 1.5 percent of WSF appropriation for any year. Finally, in 2012-13, the threshold was eliminated entirely
Hawaii’s WSF Today
Since the inception of the weighted-student formula in Hawaii, approximately 50 percent of state education appropriations on average have been delivered through the WSF every year.
The weighted-student formula funding is based on enrollment projections made the prior fall of every school year. However, these are revised at the start of the school year and funding is adjusted accordingly. Additionally, mid-year adjustments are made in January and September. While these mid-year adjustments do not affect the WSF funding allotment of schools that see a decline in enrollment, they do cause schools that have increased their enrolment to attract more WSF funding and the HIDOE sets aside $3 million annually for this purpose. Any portion of the $3 million mid-year enrolment increase fund leftover once the adjustments are made is then distributed between all public schools in Hawaii.
Since WSF’s inception in Hawaii, the weights have gradually become more simplified and student-centered following regular COW reviews and recommendations. The importance of WSF to Hawaii’s education finance system is affirmed by Hawaii’s decision to insulate WSF funding from cuts to education which followed the 2008 financial crisis, whereby the state instead chose to cut funding from streams outside its WSF.
Hawaii’s WSF funds each student at a base amount with increases determined by weightings for either special characteristics of each student, which connote that they will be more costly than normal to educate due to additional needs, or special characteristics of the school that they attend, which render the students of the school more costly than normal to educate, usually due to the scale of operations inherent in their school. Additionally, non-weighted funding for each applicable student is provided through flat supplemental amounts in cognizance of certain features that don’t qualify as weighted characteristics.
In determining the characteristics that would attract weighted funding and the weights in question, the COW considered four main factors: the practicality of determining how many students the factor is applicable to, the feasibility of the factor, which was determined by reference to whether other states and/or school districts had implemented the factor successfully, the scale or number of schools and the number of students impacted by that factor.
As of the 2020-21 school year, weights are set to be applied to students who are attending grades K-2, are English Language Learners (ELLs), are transient students, are economically disadvantaged, and/or are gifted or talented. For ELLs, different and progressively heavier weights are applied depending on whether the student has full English proficiency (FEP), limited English proficiency (LEP) or no English proficiency (NEP). The COW recently sent a request to the HIDOE to accept a new weighting for homeless students to be incorporated from the next school year onwards.
Weights are also applied to students if the school they attend is a multi-track school or is located on a neighbor island (i.e. not Hawaii’s main island of Oahu.)
Additionally, a different lump sum is provided for every student based on whether they attend elementary school, middle school, high school or a combination school.
These features are a slight departure from the WSF’s original 2006-07 iteration which had a single weight for ELL students and weighted geographic isolation instead of using the simpler metric of whether the school is located outside Oahu. The original WSF also lacked weighting for gifted and talented students and lacked the lump sum component, it instead added weights to students depending on the type of school they attend.
Key Findings in Review
A 2013 review of Hawaii’s WSF found that it had gained widespread acceptance among school leaders and community groups while boosting funding equity, and had been provided these stakeholders with sufficient clarity about how funds are distributed.
The review noted that Hawaii now ranks amongst the top states in the country in terms of education funding equity. For example, the WSF significantly increased the funding allocated to schools with economically disadvantaged students in response to their needs which is an improvement from the pre-WSF years when there was no statistically significant relationship between economic disadvantage and resources allocated. As of 2012-13, economically disadvantaged Hawaiian students attracted 30-to-38 percent more funding than their non-disadvantaged peers.
While the review also found that Hawaii’s WSF had increased flexibility for school leaders to tailor programming to their students’ needs and simultaneously involve community stakeholders in school budgeting, it also noted that most school leaders felt they could make better use of the program through flexible and innovative decision-making if more funds were delivered through it. For example, there was a clear perception among principals that the amount of discretionary funding was insufficient for spending on innovative new programming once the costs of maintenance and operations had been covered. Increasing the funding provided to schools under the WSF, relative to what’s provided to state or central office administration, could address this issue.
Questions were also raised about whether the WSF currently provides sufficient weighted funding for geographically isolated schools as well as sufficient funding for schools that vary in size, given the variation in the cost of providing the same basic levels of service at these schools.
Future challenges for reviewing and developing the WSF include determining the ideal split of responsibilities for service provision and decision-making between state education administrators and schools in terms of practicality, accountability and efficiency. It must also be determined whether schools have sufficient discretion in hiring or dismissing teachers and retaining qualified staff by providing them with sufficient incentives. School principals surveyed in the review also noted that while they felt that discretionary WSF funds and consultations held with their SCCs as part of school budgeting and programming made them feel like they were being held accountable for results, they didn’t feel that SCCs themselves were being held accountable for the same, despite their involvement in the decision-making process.
Like other states, Hawaii continues to fine-tune its weighted-student formula in response to school leaders and community stakeholder concerns and issues as they arise. However, since its introduction, the weighted-student formula has provided a much more equitable, needs-responsive and transparent way to fund Hawaiian schools while boosting community engagement in key decisions about their local schools. It’s no surprise then that Hawaii’s WSF has been widely welcomed and hailed as a success for the state.
Satya Marar is a policy analyst at Reason Foundation.