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The Design of the Rhode Island School Funding Formula

SOURCE: Flickr/Chensiyuan

The Rhode Island school funding reform experience shows that sound policy, backed up by independent, empirical analysis, can reverse years of political cynicism.

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Reforming the way a state distributes its funding to local school districts is clearly a challenging task. Even under the most favorable political and economic conditions, “losers”—those who see a decrease in their state aid as the result of a new funding formula—are going to block its passage. Because political risk is seen as too high, state leaders embrace major school funding reform only when they are directed by court decisions.

The Rhode Island General Assembly defied the odds—working in a recessionary climate and in the absence of judicial mandates—and enacted on June 10, 2010 its first major school funding reform in almost 20 years. Before the governor signed the legislation on June 23, 2010, Rhode Island had the dubious label of being the last state in the union without a state school funding formula. Lessons on how Rhode Island enacted the school funding reform are of national significance. Education reform has become increasingly polarized and established interests routinely block sound ideas. The Rhode Island legislative success suggests that highly politicized issues can be addressed with well-designed public policy.

This paper presents the Rhode Island story on school funding reform. First, the paper begins with a short history of Rhode Island’s school finance system and the key factors that called for school funding reform. Second, the paper discusses the design, the rationale, and the evidence associated with the new funding formula. Several features of the state’s formula are highlighted, including the cost of core instructional services that is grounded in school funding data in the New England region, the need to focus on students who come from low-income backgrounds, a consideration of local fiscal capacity in the context of concentrated poverty at the community level, and the effort to make sure that state funds follow the child when students leave a particular district or move to a charter school.

Needless to say, these issues are complex. Concerns voiced about any of these issues could have diverted the process of reforming the funding system. The process of enacting a funding formula goes beyond technical and substantive criteria.

There is the additional need for the formula to be implemented in a politically responsible way, an important issue that must be given attention in the design of the formula. For example, a multiyear, gradual phase-in process and the creation of several categorical programs helped ease the political tension in Rhode Island. The final section of the paper recaps how the key lessons learned may be applicable to other states that face the need for funding reform in the context of fiscal constraint. In the case of Rhode Island’s experience, this paper finds that:

  • Effective leadership widens the policy window. In the Rhode Island case, the state commissioner and the state board of education were able to gain gubernatorial, legislative, and stakeholder support for school funding reform when the state was prepared to compete for the federal Race to the Top funding. In most other states where funding reform occurred, court decisions and gubernatorial leadership often played the key role.
  • Independent analysis contributes to policy reform. The Rhode Island school funding reform experience shows that sound policy, backed up by independent, empirical analysis, can reverse years of political cynicism. A partnership of trust, data transparency, and coordinated communication between the state commissioner and the independent design team overcame seemingly insurmountable political and economic challenges to enact fiscally responsible reform.
  • School funding formulas must first serve the student’s education purpose and should not assume a need for additional funding. Rhode Island’s school funding formula offers a fundamental departure from the dominant paradigm that assumes that the state government must spend substantially more to fulfill its constitutional responsibility. The Rhode Island legislation offers a fiscally responsible approach that focuses on students and targets the most challenging conditions that affect student learning.
  • Accountability and transparency should be institutionalized in implementing the formula. The Rhode Island formula ensures data transparency to meet public demand for school accountability. Implementing a uniform chart of accounts that details local spending practices will help monitor state taxpayers’ money. Dollars are held accountable for meeting the expectations of the state’s Basic Education Program. The public and stakeholders can access the spending data at the state department of education website.

Download this report (pdf)

Download the executive summary (pdf)

Read the full report in your web browser (Scribd)

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