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Ask Allovue: What is the Department of Education’s Student-Centered Funding System Pilot?

Our education finance experts break down what the Dept. of Ed is requiring for districts interested in participating in the student-centered funding pilot.

The US Department of Education (ED) is proposing an opportunity for school districts nationwide to participate in a funding pilot that could theoretically increase equity for students that may require additional support or have a demonstrated need in school. By creating a program that incentivises districts to center their funding on what’s best for students, ED is providing districts more autonomy over the allocation of funding by requiring that monies are targeted and differentiated based on student needs.

But what exactly does the pilot program entail and what is required of a district or education agency that desires to participate? Read on to find answers to these and other frequently asked questions.

What is Student-Centered Funding?

Student-centered funding allocates resources to schools based on their student population, typically factoring in student characteristics related to need, such as low-income, special education, or English-language learner status. These models are also commonly referred to as student-based budgeting, weighted-student funding, or student-based allocations.

How does the ED Student-Centered Funding pilot differ from existing models of student-based budgeting?

Federal funds have specific guidelines and restrictions on how dollars are allocated to schools and what resources can be purchased with those dollars. As a result, districts/local education agencies (LEA) that use some form of student-based allocation separate federal funds from their General Fund allocation formula. The Student-Centered Funding Pilot would permit districts/LEAs to combine all funding (federal, state, and local) into one pot and allocate dollars to schools using the same weights or formula, regardless of funding source. This would increase flexibility, reduce complexity, and simplify transparency of allocation methods.

Increased flexibility? Reduced complexity? Simplified transparency? This sounds amazing! What’s the catch?

The Student-Centered Funding pilot requires that districts allocate substantially more dollars to students with demonstrated need and that all funding dollars are allocated according to need. The pilot’s goal is to demonstrate that ED can delegate much of the monitoring and compliance responsibilities to the districts as long as the overall resource use is clearly need driven. By tracking the distribution and spending of federal dollars separately, ED can assess whether dollars are reaching their intended beneficiaries. Unfortunately, the allocation method required by ED may be dramatically different than the actual allocation of resources in your district today. If your district does not already meet this criterion, participating in the Student-Centered Funding pilot may require a redistribution of resources that may lack support within your community.

How will LEA’s be held accountable for the funds delivered through the student-centered funding system?

LEAs must ensure that funds provided through the system will allow the LEA to continue to meet all of its obligations to serve the students in its schools. They must continue to fulfill the obligations of each Federal program and must describe how it will do that in the application. For example, your application must detail how you will allocate supplemental resources to low-income students, which would typically be dictated by Title I regulations.

Can LEA’s include competitively awarded funds as dollars within their funding system?

Yes but they must still carry out the scope and objectives, at a minimum, at the level described in the LEA’s approved application under which the funds were awarded.

What should the goals be for an LEA operating a student-centered funding program? How will LEA’s tie the spending plan back to their overall ESSA plans strategy for student outcome improvement?

The key requirement to participate in the Student-Centered Funding pilot is ensuring “substantially more” dollars are allocated to schools with students with demonstrated needs. There is no clear definition or guidance on “substantially more,” so we would advise that LEAs clearly articulate how they plan to meet the intent of this requirement. LEA spending plans should detail what additional resources they expect will be most effective at meeting the additional needs of students, who will have decision-making authority over what resources are secured, and how that connects to their existing school improvement planning process. LEAs should define not just an allocation process, but also a process for communicating how resources are being used in alignment with the goals of the strategic plan. They also should be prepared to define how “success” will be evaluated. This will serve the dual purpose of demonstrating both the mechanics of additional resources meeting students in need, and the strategies being employed to use those resources effectively.

What’s next?

Understanding the requirements for participation in the Department of Education’s funding pilot is only half the battle. How can you be sure your district thoroughly understands the application process in order to be accepted into the pilot program?

Click the button below for first-hand access to part two of our ED Student-Centered Funding Pilot blog series where we’ll explore the nuances associated with the application, as well as a comprehensive breakdown on exactly what ED is asking for in the application, and recommendations on how to respond.


Need more context about the Student-Centered Funding pilot straight from the Department of Education? Access their latest resources and webinars here.