In 2009, several of Rhode Island’s mayors asked Public Impact, a national education research organization, to study the Ocean State’s K-12 funding system and make recommendations on how to improve it. Based on our strong interest in the increasingly dynamic Rhode Island education system, and our expertise in state funding policy, Public Impact agreed. The Rhode Island Foundation in turn agreed to fund this report, which summarizes our findings and recommendations for state policymakers.
Our overarching conclusion is that to ensure Rhode Island’s economic competitiveness, boost student achievement, and fulfill the promise of equal opportunity, the state must transform the way it allocates state funding for public education. Other states and leading large school districts around the country are moving towards education finance systems that distribute funds on the basis of carefully designed calculations that take into account the number of students served by schools and districts and each student’s needs. The Ocean State, by contrast, continues to fund K-12 education without a guiding formula. Instead, the state makes a line-item appropriation to each town, based largely on the previous year’s funding level. Over the last decade, a growing chorus of voices has raised serious concerns about this system because it does not meet the challenge of providing a quality education to every student in the state of Rhode Island under the state’s Basic Education Program.
How the state allocates funds is just one of a trio of important funding policy issues facing any state. The other two, simply put, are how much money to spend (the overall amount of money to devote to public education), and who should pay the bill (the relative contribution of state and local tax funds). This study does not tackle either of those questions, not because they are not important, but because devising a system for allocating money based on students’ needs is a critical precursor to subsequent policy decisions about “how much” and “who should pay.” The first imperative for state policymakers is to create a transparent, dynamic system of allocating funds – whatever the amount and whatever the sources. With such a system in place, policymakers are then in a dramatically more solid position to consider changes in the overall level of spending and the tax policies that generate the required level of revenue.
As a result, this report recommends a new allocation system that is budget neutral; that is, it does not change the amount of funding available for public education in the Ocean State. And it presumes that, for the moment, Rhode Island will continue to use a pre-existing method of determining the proper mix of state and local dollars for education. Once a new allocation system is in place, Rhode Island’s policymakers can – and should – turn to questions of how much and who should pay. This report has four major sections following this introduction. In the first section we introduce the concept of student-based funding. Next, we examine the shortcomings of Rhode Island’s current system for allocating education funding. The following section recommends four principles for a new allocation system in the state. Finally, we describe how the state could make the transition from its current model to one based on individual public school students and their educational needs.