Will LAUSD’s New Funding Plan Help the ‘School Choice’ Movement?

Even though it is flush with cash from several federal relief packages, the Los Angeles Unified School District (LAUSD) wants to switch funding models next year, instituting a controversial structure called Student Centered Funding (SCF) that ties a school’s funding to its student enrollment. Under SCF, schools are awarded a base rate for each child and receive additional funds if the student is considered needier — if they are learning English, for instance, or if they’re in foster care or qualify for free lunch.

If the student leaves the school, the funding goes with them as if they carried a “backpack full of cash.” This could pit schools against each other in a competition for students and the dollars they guarantee, critics say. The funding switch has its origins with Betsy DeVos, Donald Trump’s secretary of education, who instituted grants for school districts to explore Student Centered Funding. Los Angeles received one last year.

In an Aug. 31 Student Centered Funding presentation to the school board, LAUSD Director of Finance Strategy Erik Johnson explained the district will also ask the federal government for a waiver from Title I requirements. Title I supplies funding for the neediest students, and how the money is spent is highly restricted. LAUSD will accept more than $457 million in Title I funding this year.

On Sept. 14, the school board will vote to ask the government to waive limits on how that money can be spent so LAUSD can sink it back into the general fund and distribute it by the SCF model, on a per-pupil basis. The DeVos grant is worth just $2.3 million, an insignificant figure when compared to the numbers thrown around in America’s second largest school district. But as part of the process, LAUSD can apply to the Department of Education for a “flexibilities agreement,” as its Title I waiver is called.
 

Under a student-centered funding policy similar to the one being considered by the LAUSD, Chicago public schools went from 460 librarians in 2012 to 123 in 2020.

 
LAUSD board member Jackie Goldberg says Student Centered Funding will fuel downward enrollment spirals that will shutter underfunded schools in poor neighborhoods. The more students leave, the less money a school has, and parents and children begin jumping ship at an increasing rate. Proponents of the model say SCF gives schools more flexibility to spend their money on what they need rather than locking them into certain programs designed by remote authorities, like the school board or the state or federal government.

Goldberg disagrees. “[SCF] says districts don’t need to spend the money, individual schools do, by trying to assemble the right combination of kids with the right combination of money,” she says. “A child that’s learning [English as] a second language and has a disability, you might get a lot of money for that student. What do you do if you’re a principal? You start recruiting those students — because they bring their money with them.”

LAUSD insists Student Centered Funding furthers equity by placing schools in better control of how they use their money, and by more directly targeting money at the neediest students. “It really is that iterative process of contending with, what do we do now to better serve our students?” Deputy Superintendent Pedro Salcido told the board. “Student Centered Funding really is that next iteration: How do we deepen the work, how do we deepen progress in our schools?”

In LAUSD’s own calculations of how SCF would affect its school budgets under a “fully loaded” funding formula, 348 schools were found to lose money under SCF, while 367 schools would gain.

John F. Kennedy Senior High School in Granada Hills would lose the most, more than $3 million. Van Nuys Senior High School would lose over $2.5 million and Eagle Rock High School nearly $2 million. The biggest losers per student were the Boyle Heights-located Carmen Lomas Garza Primary Center at -$5,188 per student, South Gate’s Stanford Avenue Elementary at -$4,510 and Hancock Park’s Van Ness Avenue Elementary at -$3,700.

Sorting the data by percentage of students qualifying for free or reduced lunch reveals further inequities. Ann Street Elementary in Downtown Los Angeles, which tops the list with 100% of its students receiving free or reduced lunch, will lose $3,197 per student and $268,568 in total. It’s not alone: Of the schools with 95% to 100% of students qualifying for free lunch, 29 will lose money under Student Centered Funding, the district found. Between the 85th and 94th percentiles, 141 schools face cuts.

Under a similar student-centered funding policy (lower-cased when we refer to the broader policy; capitalized when we refer to the LAUSD model), Chicago public schools went from 460 librarians in 2012 to 123 in 2020, according to the Chicago Teachers Union. More research on the implementation of student-centered funding in Chicago found teachers felt pressured to take on extra classes because of tightening budgets, while some teachers were just laid off.

“As we lose students, we have less and less resources for the things we need,” one participant says. “The librarian got pulled from being a librarian to be a special education teacher because it was cheaper and because she was certified in that area. So, staff don’t teach what they love, and arts education has to be sacrificed because they are deemed as less important.”
 

“As our school communities get back into the classroom with additional funding to help the COVID recovery process, it’s an opportune time to examine and discuss whether our existing funding model equitably supports our students who are most in need.”

~ Nick Melvoin, LAUSD board member

 
Having spent the last decade never quite recovering from the 2008 recession, the LAUSD is seeking to switch to SCF at a time when it is enjoying rare financial security, if not outright wealth. The school board approved a more than $20 billion budget for this school year, up from $14.7 billion the year before when post-COVID  tax projections decimated state budgets. With its windfall, the district plans to hire 2,190 teachers (an 8% increase), 770 custodial workers (a 25% increase) and 930 psychologists and psychiatric social workers (a more than 80% increase), according to the Los Angeles Times.

“There’s more money than God right now,” says former LAUSD school board member David Tokofsky. “I think the better thing to be doing is the hard work of governing, supporting teaching, getting the teachers back to school and kids back to school in numbers that we need to have.”

Board member Nick Melvoin, seen by critics as part of the school board’s four-person pro-charter majority, applauds the district’s timing. “As our school communities get back into the classroom with additional funding to help the COVID recovery process, it’s an opportune time to examine and discuss whether our existing funding model equitably supports our students who are most in need,” he said in a statement to Capital & Main.

Melvoin sees an opportunity — but his opponents are poised to call him an opportunist.

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Student Centered Funding has been around for years under different names, like Student-Based Budgeting or Weighted Student Funding. Under Donald Trump, Secretary of Education Betsy DeVos seized on the idea and issued a grant program for districts to explore SCF. Only six districts had applied for the grant as of 2019, prompting an inquiry from the Congressional Research Service into the program’s lack of interest.

After Puerto Rico’s school district was awarded its grant, it tried to obtain a waiver from Title I spending requirements but had its grant rescinded when it pressed forward without federal permission. Cleveland was awarded a grant along with Los Angeles in 2020 but has not yet received a waiver. If awarded the waiver, Los Angeles would become the first district in the nation to waive Title I for Student Centered Funding.

As it grappled with COVID-19, LAUSD applied for and won its SCF grant, then used the grant in part to pay Erik Johnson to oversee the SCF program. Johnson made more than $281,000 as a consultant for the district between May 15 and Dec. 31 of 2020, according to his contract, after which he was hired full time. Some of Johnson’s pay as a consultant came from funds designated for the district’s COVID-19 response. (In addition to his work on Student Centered Funding, Johnson would “develop financial and testing models to support COVID-19 testing efforts,” the extension says.)

Erik Johnson and LAUSD Chief Financial Officer David Hart both oversaw a Student Centered Funding system in the Denver public school district, though at different times. In late 2013, Johnson joined the district as director of financial planning and analysis just as Hart was departing the CFO position for another stint in corporate America, according to their LinkedIn pages. Both had backgrounds in finance before switching to education. Johnson would ultimately rise to Hart’s rank as Denver CFO just months before Hart became CFO in Los Angeles. In Hart’s first year as LAUSD CFO, the district hired Johnson and applied for DeVos’ Student Centered Funding grant. Neither Hart nor Johnson returned requests for comment.
 

“For advocates of greater school choice, Student Centered Funding is an important step along the way because it facilitates the movement of students between schools.”

~ Kevin Welner, professor at the University of Colorado Boulder School of Education

 
Prior to the teachers’ strikes in Colorado, Denver Public Schools faced teacher turnover of 20% under student-centered funding, according to Rob Gould of the Denver Classroom Teachers Association. When schools tightened their budgets, their problems cascaded, leading to more cuts and more departures by parents and teachers.

“We have schools that don’t have full-time nurses in the middle of COVID,” he says. “It makes no sense at all. We’ve had so much damage done here we’re just trying to undo it.”

Student Centered Funding is at its core a “school choice” model, according to Kevin Welner, a professor of educational policy and law at the University of Colorado Boulder, and has drawn a lot of excitement from right-wing think tanks like the (libertarian) Independence Institute and the American Legislative Exchange Council (ALEC) as well as school-choice advocacy group the California Policy Center. Broadly, school choice advocates want to introduce private competition into public education.

“When you restructure a funding system to facilitate the movement of children outside of their neighborhood school, that oftentimes accompanies an aggressive school choice system,” says Welner. “For advocates of greater school choice, Student Centered Funding is an important step along the way because it facilitates the movement of students between schools.”

Proponents of SCF “know what it does,” Rob Gould says. “They’re clear on it. This is another mechanism to create that competition.”

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Jill Wynn saw student-centered funding up close. The former San Francisco school board member says the system can flourish — as long as it includes strong protections for low-enrollment schools.

A self-proclaimed charter skeptic, Wynn is a “big fan” of student-centered funding models, which she believes can guarantee extra funding for schools with the neediest children while freeing them from restrictive requirements on how that money must be spent.

But the system works only if it sets in place rules the schools must follow with their money, she explains. When it switched to its own student-centered funding model, the San Francisco School Board mandated that all schools had to use their allotted funds for library services and some music and arts programs, and schools were guaranteed a minimum amount of funding to protect small schools from closure.

What advice would she give to LAUSD if it adopts the model? “Put the guardrails in and make them high,” she says.
 

“Do not let them get away with saying this is not about free-market competition. This isn’t about equity, this is about bringing free markets into the public sphere.”

~ Scott Baldermann, Denver school board member 

 
Erik Johnson’s Aug. 31 presentation included recommendations for guardrails, like a minimum funding floor, but the details, like the  Student Centered Funding formula itself, are yet to be written.

Some language in Johnson’s presentation will give Student Centered Funding opponents fresh reason to worry. While one proposed protection would limit gains and losses for schools within a certain range, the presentation recommends phasing out the guardrail in one to three years due to concerns that policies totally protecting against school funding loss “would limit improvements to funding equity.”

Denver School Board member Scott Baldermann says he has heard the talking points before.

“Do not let them get away with saying this is not about free-market competition,” he says. “This isn’t about equity, this is about bringing free markets into the public sphere.”

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Goldberg is proposing an alternate plan at LAUSD’s next board meeting, on Sept. 14, that would deliver funds to schools without attaching restrictions on how to use them. The plan would use LAUSD’s Student Equity Needs Index (SENI) to choose which schools were most deserving of additional money but would not distribute the funds based on individual students and would not touch Title I.

While composing just 2% of LAUSD’s budget this year, Title I funds can fuel underfunded schools. At Pacoima Middle School, where 90% of its student body qualifies for free or reduced lunch, more than $867,000 Title I funds provides the school with a variety of programs, according to data from LAUSD’s Office of State and Federal Programs, including extra tutoring time, an English language arts class-size reduction teacher, two teachers assistants, a school counselor, a Title I Coordinator, a PSA counselor, a psychiatric social worker, a middle school college and career coach, a computer lab instructional aide, an office technician, additional technology equipment, supplemental instructional materials and a Toshiba printer. Under Student Centered Funding, such programs and benefits would have to be reconstituted through a general fund, distributed per pupil.

Goldberg worries Title I programs will disappear. “If you’re going to give more Title I money to the highest needs schools, you’re going to take it from somewhere,” she told Johnson at the Aug. 31 board meeting. “And you’re not going to take it from the 95 to 100% [Title I] schools, you’re going to take it from the 85 to 90% schools. Or you’re going to eliminate it altogether from schools that are under that amount. So schools will lose Title I funding they are counting on if you put it into the formula, isn’t that correct?”

Johnson seemingly could not find the words to answer. Superintendent Megan Reilly stepped in. “When you choose a funding formula in a zero-sum game, there will be a reallocation and some will lose funds,” she said. “And some will gain funds. It will be based on a student-centered formula that assesses equity, designed by all of us.”

A 4-3 pro-charter majority on the school board means opposition to SCF is, for now, probably futile. But with a year until implementation of the new model, and an outraged and organized teachers’ union, the fight over Student Centered Funding is likely just beginning.

 
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