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Trickle Down Economics--How We Prevent Schools From Spending Their Money Usefully

Note: Greg Gunn, entrepreneur in residence at City Light Capital and co-founder of Wireless Generation, is guest-posting this week.

I had a fascinating experience several years ago attending a principals' meeting in a medium-sized school district. The district CFO had come to present a new purchasing policy that the principals would have to implement. The conversation went as follows:

CFO: "We've had a lot of problematic overruns in janitorial spending across our schools. To control this, we are now making you responsible for setting the janitorial budget."


Principal: "OK...do you have guidance for how we should set our budgets? We don't know anything about how much floor wax or toilet paper we need. Can you help us calculate those things?"

CFO: "No, you'll have to ask your janitor."

I also can't tell you how many times we've all seen classrooms and storage rooms full of expensive curriculum products that have never even been taken out of the box, or got used once and then were quietly put away again. Often these were products that were mandated at higher levels but then proved to be incompatible with the school's needs or instructional schedule. Or they were the result of a rushed June 29 spend of remaining budget money so that the money would not be lost to the school at the end of the year.

This, and hundreds of other examples of watching schools in all kinds of districts figure out how to spend money in a variety of areas, has led me to a couple of conclusions:

  • District financial staff are often more concerned about (and equipped to address) financial control and compliance than they are about helping educators make good investment decisions towards educational outcomes.
  • Much of the bureaucratic structure of purchasing practices at every level--from federal to state to local--is based on a fundamental distrust of other levels to spend money wisely.

The distrust factor has huge implications for how school spending works. While it is rooted in fundamentally important concerns (corruption, mishandling of contracts, and other abuses), it leads today to many schools having little control of their budgets, and districts and schools together trying to make good spending decisions while constrained by a bewildering array of federal, state, local, and external funding streams each with their own constraints, mandates, and reporting requirements.

In Wednesday's post, I discussed the importance of an "instructional operations" perspective for figuring out how to invest money well towards instructional goals. If a school thinks about its planned purchase in light of how it expands the capacity of its instructional operation, it can make stronger claims about the value of the purchase. For instance, rather than saying "we need more phonemic awareness instruction so we are buying this supplemental curriculum," they can say, "This phonemic awareness curriculum will require two hours per week that will be pulled from core time, but in conjunction with our additional tutors it will help us get 20% more of our first graders to benchmark." The latter statement is specific, compelling, and testable--and defines every dollar in terms of what the school is trying to accomplish.

So the problem becomes how to trade a finance/purchasing model based on distrust, control, and prescription for one built on transparency, goal-oriented spending, and useful guidance.

Admittedly, this is an "unsexy" problem, but I think it is an important one for innovators to be working on. There are many ways that this might be implemented in a purchasing system, but I'd expect to see some of the following elements:

  • Information for schools about what products and services serve different instructional goals well, probably less like a What Works Clearinghouse and more like Amazon user reviews
  • Purse for discretionary spending at the school level, directly funded by the district and relevant higher-level or outside funders
  • Instructional/operational goals, attached to every specific spend, defined by the school and visible to funders
  • Follow-up so that the school can record how well the purchased resource was used and how it did in achieving the intended goals

Funding sources--whether they are governments, foundations, or other sources, could relax their prescriptions and reporting requirements in favor of greater flexibility given to grantees combined with the more goal-oriented reporting offered by this mechanism. And ideally, this could be the basis of a more collaborative--rather than confrontational--relationship between funders and schools.

--Greg Gunn

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