Analysis — What If We Personalized Education Funding? How Routing Dollars to Students Instead of Schools Could Fund a More Nimble System

This essay also appeared in CRPE’s 25th anniversary collection, Thinking Forward: New Ideas for a New Era of Public Education

In a more nimble public education system, all students would have equitable access to learning opportunities during the summer, outside the normal school day, and beyond the school walls. Students would also have access to these learning opportunities, supplemental support, and postsecondary education opportunities later in life. And students from special populations — those who are gifted and low-income, those with disabilities, those who are not native English speakers or who lack stable home environments — would have access to educational programs tailored to their circumstances.

Those ideas are covered in greater depth by other essays in this collection. One policy could help enable all of them: personalized education funding.

Rather than states and local governments allocating funding to specific public schools, students themselves would receive funding based on their needs and circumstances. Students and their parents could direct this money toward their educational needs: basic school attendance, tutoring, therapy, or supplemental learning experiences.

Former Florida governor Jeb Bush outlined one vision for such a system earlier this year at an event hosted by the American Enterprise Institute. A high school student could pay for a half-day’s attendance at a conventional school, come home and take an Advanced Placement class online, and round out the educational experience with an online music course offered by the Juilliard School.

Governor Bush was describing the potential for an “unbundled” education system, a concept theorized by John E. Coons and Stephen D. Sugarman 40 years ago, and which has become much more feasible with the advent of online learning. Technology opens up the possibility of students learning in a one-to-one relationship through a computer-based system, linking to a set of lectures and other presentation materials along with literally thousands of other students, receiving instruction through a mix of technology- and teacher-delivered approaches, or learning through internships, expeditions, and cohort-based discussions.

Private schools, largely free from current regulations restricting teacher certification, class sizes, and mandatory attendance hours, have begun to offer these kinds of experiences to families who can afford to pay for them. Regina Caeli, an online Catholic school, operates “hybrid homeschools” in 12 American cities. These schools provide classes two days a week, and students spend the remaining three days learning at home. In Fort Pierce, Florida, St. Andrew’s Episcopal Academy curates a mix of in-person learning experiences at surrounding art galleries and research labs, combined with online classes, in-person instruction, and — for some high schoolers — dual enrollment at a nearby community college.

To be available to all students, these kinds of learning experiences should be eligible to receive support from public funds. However, rather than replacing existing school districts, personalized funding can support a public education system capable of delivering a much more diverse array of learning opportunities and responding to the evolving needs of all students, including those with complex learning needs. At the same time, this goal must be reconciled with public accountability and the proposition that there are some things all students should learn over the course of their educational progression.

How it might work

A personalized funding system for public education might operate something like this. When children become old enough to qualify for a publicly funded education, they would receive evaluations similar to those that school districts are required to perform if they suspect a child may have a disability. The evaluation would allow the school system to assess a range of factors that might affect the level of support the child would need to succeed in school, including: Disability, household income, living situation (e.g., is the child in foster care?), and language status (does the child speak a language other than English at home?).

Based on those factors and others that a weighted student funding formula might take into account (for example, geographic variances in cost of living), each child would receive a funding allotment. As described in Paul Hill’s essay on governance, that funding allotment would be in an account controlled by the local Community Education Council, or CEC. At the parent’s or guardian’s direction, money could be released from that account to pay for education-related services, such as preschool fees.

Student allocations would include funds currently set aside for specific, non instructional purposes like facilities construction and maintenance. The same would be true of other capital costs. There should be no special set-aside for schools that lease a great deal of computing equipment, for example. Any school or provider of learning experiences would pay whatever capital costs it encountered using revenue it receives from students who pay for its services.

Even so, it is not obvious that online schools, or other providers without facilities costs, would come to dominate the market. They would likely incur other back-office, technology, or research and development costs. And in an unbundled education system, some families may still simply prefer the bundle. They might be drawn to conventional or hybrid schools that offer socialization opportunities, a rich mix of courses and extracurricular activities, and a strong identity.

To help guide the use of their funding allotment, parents would select a navigator — an expert or school that would help them identify needs and assemble coherent educational programs (as described in more detail in a later section). The navigator would receive a set percentage of each student’s funding allocation to cover the costs of its own advisory services. The local education agency could similarly deduct an administrative fee to pay for systemwide costs such as transportation and oversight.

Each year they remain eligible for publicly funded education, students would receive funding based on the amount their state would spend to educate them in public schools. Students could receive follow-up evaluations as circumstances, such as household income or the student’s need for disability accommodations, change. After they receive a high school diploma, students could continue using any funds left over in their accounts to pay for college, job training, or other lifelong learning expenses until they reach a prescribed age, perhaps 30.

When it comes time to enroll their children in school, parents could consult friends, consultants, and online information portals about their education options, similar to the enrollment systems that exist in school districts such as New Orleans and Washington, D.C., which allow parents to browse different schools and access information about them. Such portals would offer information on the wider range of educational providers that parents could pay for with their accounts, such as:

—Services offered

—Pricing

—Academic performance data, where applicable (e.g., student proficiency rates and academic growth measures, high school graduation rates, preschool readiness rates for kindergarten)

—Parent and/or student provider reviews

In Florida, the nonprofit Step Up for Students is piloting MyScholarShop, an online marketplace where parents using the state’s Gardiner Scholarship program can purchase items for their children such as curriculum, technology, and assistive devices. The Florida Department of Education has created a separate online catalog where students can browse the state’s plethora of online course options, which they can take alongside their courses in brick-and-mortar schools. Systems like these could be combined with district unified enrollment systems to give students a user-friendly way to explore the full range of available providers.

Parents could still choose to enroll their children in public schools using their entire annual funding allotment to pay for the full complement of services individual schools offer — from a full day of instruction to extracurricular activities to supplemental tutoring.

Low-income students or students with special needs who receive larger funding allotments under the weighted student funding system would be more likely to have money left over after covering the cost of school enrollment. They could use this funding to pay for supplemental services, such as tutoring or social and emotional support. A student with a physical impairment could spend some of these funds on an aide to help them transition between classes. A student with a language disorder could spend the extra money on speech therapy.

Parents would have a more versatile mechanism to respond to needs that arise during the course of their children’s education. For a student who can’t see the chalkboard, the most urgent and effective educational intervention might be an eye exam. For a student suffering from trauma, the most effective educational intervention might be access to a mental health counselor. For a young child with cerebral palsy, the most profitable use of educational time and resources may be helping them to walk and develop basic motor skills, but as they grow, their academic abilities are likely to warrant their placement in mainstream classrooms. However, they still might require mobility assistance to navigate the lunch line. For some students, especially those with disabilities, it might make sense to merge their education accounts with other pools of money, such as iBudget Florida, which allows families to purchase a range of services authorized under the state’s Home and Community-Based Services Medicaid waiver, giving families more flexibility to integrate educational supports with other medical and social services.

The unbundling of education would give rise to new challenges. What would school accountability look like in a system where a single school may no longer be responsible for a student’s entire educational experience, or even for all the instruction a student received in a particular subject during the course of a school year? Who would ensure students attain foundational skills in reading, writing, and math? Who would ensure students learn the basics of history, civics, or science? More broadly, would parents be responsible for assembling a coherent educational program out of a hodgepodge of learning experiences and support services?

Helping families: A critical role for navigators

A growing array of organizations is springing up to help families find suitable schools for their children or choose learning opportunities that already exist in their communities and supplement what schools provide. For example, ReSchool Colorado is developing a network of learner advocates who advise parents on enrichment opportunities that are available during breaks and after school. The program is helping students gain equal access to the “shadow education system”: the out-of-school experiences — from camps to work internships to trips to the theater to private preparation for college entrance exams — that can play an important role in every child’s learning, and to which the wealthy enjoy disproportionate access.

It’s possible to imagine a more comprehensive learner-advocate program that helps parents plot a holistic set of learning goals for their children. These goals can include conventional learning benchmarks, like state academic standards, as well as goals harder to capture in state accountability systems, like social-emotional objectives, job skills, or proficiency in art, music, or foreign languages. Learner advocates can help parents to identify learning opportunities that will help their children meet these goals and track progress toward achieving them.

Organizations like EdNavigator, or the school choice consultants some wealthy families already employ to help them make choices and understand their rights in decentralized public school systems, may be suited to similar roles. Parents, with the help of trained learner advocates, could then select the schools and providers that are best-suited to help students achieve their learning goals. There is some evidence that having a dedicated advocate can improve outcomes for students who have fallen off track academically.

This new role of learner advocate may hold the key to accountability in an unbundled education system. Advocates could serve as “mediating organizations,” providing the connective tissue between students and education providers. They would be tasked with ensuring coherence throughout a student’s educational progression, and making sure prescribed student learning benchmarks are achieved.

School districts, states, or other authorizers could hold mediating organizations accountable for the aggregate performance of students who employ them and codify their right to perform this role in contracts, similar to the arrangements that govern charter schools. The public could have access to information about the aggregate outcomes of students who select different mediating organizations, allowing parents to choose an organization they feel is well-suited to meeting their child’s needs.

Boutique educational consultants and individual learner advocates could serve in this mediating role, but other organizations also may be well-suited to it. In Florida, private scholarship funding organizations that help administer the Gardiner Scholarship Program, a major experiment in personalized funding and the largest education savings account program in the country, also could serve as navigators. Some organizations may choose to specialize by designing tailor-made educational programs for children with autism, for example. Others may choose to serve a broad array of students.

Another set of institutions that could ultimately serve as navigators are schools themselves. Some schools committed to the concept of personalized learning have already stepped into this role. St. Andrew’s Episcopal Academy has learned that the Indian River Lagoon can be an effective biology classroom, and local galleries can serve as art classrooms. The school, in other words, connects students with learning opportunities outside its walls.

This approach has the potential to place schools in a dual role in which they serve as both education providers and as navigators tasked with curating a customized mix of education providers for students. A relevant analogy arises from the world of finance. Regardless of what range of services they provide, a mediating organization — whether a school or a third-party navigator — must be willing to accept an obligation as a fiduciary, contractually bound to act in the best interest of the students they serve in this capacity.

Infrastructure and oversight

In addition to providing parents information on available providers and their performance, state and local education agencies should develop new forms of oversight, both for mediating organizations and for individual providers. This would include financial, health, and safety audits.

In a system that allows families to spend money on a wide range of therapy, tutoring, technology devices, and curricula, states should set policies defining which of these purchases constitutes a bona fide educational expense. In Florida, scholarship funding organizations vet individual parent expenditures to determine whether they meet parameters outlined in the state’s law. For example, a student may need to purchase one iPad to access online curricula, but the purchase of a second device may get flagged. Providers with poor outcomes, negative user reviews, or a history of purchases flagged by auditors could draw greater scrutiny, or ultimately be barred from accepting public funds, as described in this collection’s essay on governance and accountability.

School districts could continue functioning as providers, operating schools and offering other à la carte services such as tutoring, therapy, or extracurricular activities while serving as mediating agencies. Or communities could develop CECs, which would simply serve as authorizers of both providers and mediating organizations. Regardless of approach, oversight entities should attend to certain systemic issues: conducting the evaluations that qualify students for specific funding amounts, communicating with mediating organizations to identify gaps in locally available services and developing strategies to make those services available in their community, and assuring that local infrastructure, such as transportation services, are capable of meeting students’ diverse needs.

If they identify gaps in the services available in a community, state or local governments or private philanthropists might choose to financially support providers that excel at specific job training or special education functions or that focus on priority areas like elementary reading instruction or advanced math. But these subsidies would have to be temporary, with the expectation that student funds would provide the long-term revenue. Inevitably, public institutions with endowments, valuable buildings, real estate, or strong community reputations would retain some lasting advantages over their upstart competitors.

Meeting the real costs

A personalized education system, including all the learning opportunities and community assets described in the other essays in this collection, will almost certainly cost more than the current one, even for students who are of normal school age. Though online resources might cost less than in-person instruction, teachers will need relatively small student loads to permit close individual relationships with students and time to link them to personalized learning options. Providers of specialized learning experiences other than schools must also be paid, as will sources of social and health services, to resolve barriers to learning on a case-by-case basis. Without practical exemplars, we cannot know exactly how much these will cost, or how much costs will vary from one locality to another. The best examples available — specialized private schools with close student-teacher relationships and the capacity to arrange personalized learning experiences — can cost two to three times as much per pupil as local public schools.

Today, no arrangement provides public financial support for all these possibilities, much less with enough money left over for students to carry additional funds past high school graduation, where they might pay for skills training, postsecondary studies, or other lifelong learning opportunities.

Though volunteer and donated services such as mentoring, tutoring, and internship supervision might be provided free of charge in some cases, communities will vary tremendously on what is available. Private entities, including nonprofits, can be relied on to work pro bono on education only when they are financially solvent and believe the work advances their missions.

It is, however, possible to describe a feasible alternative public funding system that could support a great deal of personalization. It would combine the money traditionally available for K–12 education with funds from other sources.

First, additional funding for younger students could come from existing public programs dedicated to social and youth services. These funds come from many federal and some state and local sources. Annual federal funding for youth and family services from the departments of Labor, Health and Human Services, Justice, Agriculture, Education and Housing and Urban Development now exceeds the $16 billion available from Title I, the largest federal program supporting K–12 instruction.

Second, older students could receive funds from existing job training programs and state support for postsecondary education.

Third, the system could incorporate funds that states might otherwise set aside for expanded preschool programs, which, while politically popular, have seen mixed effectiveness. Parents would have the option of spending their early-learning allotments to enroll their children in preschool or setting the money aside for later years. Low-income students could receive a boost if they could also reserve their share of federal Head Start funding for this purpose.

Challenges of financial transition

Technically, these changes are not difficult to prescribe. But they would be politically difficult to enact. Like all funding reforms, this arrangement would take money away from those who get more than their share under the existing system. It would eliminate the guarantee of public funding for existing schools. It also raises questions about the transition. School systems face long-term cost burdens, from bonds that financed their facilities to promised retiree benefits. And these costs are financed through revenue, like dedicated capital funding, that would ultimately be placed in student accounts.

Further complicating matters, schools serve other community functions that should be preserved. Their buildings provide communities with playground equipment and athletic facilities. In some cases, schools are built to function as emergency shelters. State and local governments should be thoughtful about preserving these community assets.

It is hard to imagine how incremental changes in the current funding system can be thorough enough to provide the flexibility and transparency needed. Personalized funding can be accomplished all at once either by legislation that completely replaces prior funding arrangements, or by litigation that throws out entire state funding codes and requires their replacement.

Several states have adopted personalized funding arrangements that allow individual students to opt in. School voucher advocates have embraced this idea, known as education savings accounts (ESAs), and have found champions in statehouses from New England to Texas. But only five ESA programs currently operate, and all of them were enacted by Republican-controlled state legislatures.

The fate of a sixth ESA program, in Nevada, may illustrate the political difficulty of this approach. The Silver State created a program that, for the first time, gave every public school student a choice. They could remain enrolled in their current school or they could instead accept a sum of money — beginning at about $5,200, with slightly higher amounts available for low-income families or children with special needs — to fund customized educational experiences.

However, the state’s Supreme Court struck down the funding mechanism, which was approved by a Republican-controlled legislature and governor. While the litigation unfolded, Democrats took control of the legislature during midterm elections. Ever since, they have blocked attempts to create a new funding structure that would comply with the court’s ruling and allow the ESA program to operate. As a result, one of the nation’s most ambitious ESA programs remains in abeyance.

Opponents’ objections to the program would be familiar to anyone who has followed debates over school vouchers: it would take funding that otherwise would have gone to public schools and give it to families, where it would pay for private, often religious, education. ESA legislation in states like Iowa, New Hampshire, and Texas has failed for similar reasons. The early ESA track record does little to dispel these concerns. Initial research on the first states to create ESAs has found that the majority of program funds have been used to pay for private school tuition.

Nevada’s program was nearly universally available. However, it fell short of truly personalizing education funding in other important ways. The $5,200 allocations were based on the amount the state would have spent educating a student in public schools. It did not include local funds, including those set aside for capital expenditures.

Three alternative approaches may be more viable

The first alternative involves targeting special populations. It is likely no accident that four of the five currently operating ESA programs primarily target students with special needs or other disadvantages. It makes sense to target students whom existing public schools already struggle to educate. This approach has yielded limited political benefits for ESA proponents. For example, the 2014 legislation that created Florida’s Gardiner Scholarship program triggered intense partisan debate and multiple constitutional lawsuits. But subsequent legislation expanding and funding the program has consistently received bipartisan support in the state legislature — a rare occurrence in the often-fraught politics of educational choice. However, the Gardiner Scholarship program is funded through a separate line item in the state budget. That means that despite its political popularity, it is unlikely to achieve the scale to serve all eligible students. Incorporating the program into Florida’s funding formula, which combines state and local funds, would risk undermining the political popularity it currently enjoys.

A second potential path is currently less traveled. It envisions smaller pools of personalized funding that supplement the services public schools themselves offer. This year, Florida enacted Reading Scholarship Accounts allowing parents whose children attend public schools but did not pass third- or fourth-grade reading exams to apply for grants of $500. The grants can be used to pay for books, tutoring, and other goods or services that might help students improve their reading results.

In some school systems, existing funding streams could be repurposed along similar lines. For example, the decentralized public school system in New Orleans recently adopted a funding system that provides schools with funding allocations that supplement the base per-pupil funding for students with special needs. If parents had the option of instead placing this supplemental funding — but only the supplemental funding — into education savings accounts, they could choose to use it to pay for supplemental services for their children. This would allow parents to adjust the supports their children receive as their needs evolve. It would also make support services portable, allowing students to choose new schools within New Orleans’ decentralized school system while maintaining consistency in other supports, such as occupational therapy, that parents may choose to fund with their accounts.

A third possible change strategy would target specific localities. States could allow districts interested in fostering innovation to apply for waivers from state education regulations and apply for planning grants. These districts would be required to create a level playing field between incumbent schools and innovative new providers. They could adopt fully personalized funding systems and look to create ecosystems of innovative schools and mediating organizations. Some might choose to do this districtwide, while others might start only with students in 8th or 9th grade. Allowing a handful of districts to serve as laboratories would limit political resistance to sweeping, statewide changes. State leaders and other districts would also have a chance to learn from their experiences.

Lessons from the past

The use of parent-directed educational accounts to pay for supplemental services echoes a past effort. The Supplemental Educational Services (SES) program, created under the No Child Left Behind Act, allowed parents of children in low-performing schools to obtain supplemental tutoring services from providers of their choice, including private schools. Evaluations of the program’s effectiveness yielded mixed verdicts that varied by jurisdiction and provider but saw positive results overall. However, the system also saw its share of problems, ranging from provider ineffectiveness to more egregious cases of fraud.

Proponents of personalized education funding should consider how new efforts would improve on past attempts like the SES program. For example, participating parents had little information to vet the effectiveness of supplemental providers. They also did not have access to a wide range of potential alternatives, or access to information about them. Mediating organizations and online information portals would help address those shortcomings.

Smaller programs developed using one of the three strategies outlined above could help put this infrastructure in place. Other developments, such as the creation of the learner profiles envisioned as a centerpiece of personalized learning efforts, could help lay the groundwork for systems that enable students to not only guide their own learning, but also direct the resources that pay for it.

There are several policies states could pursue now that may one day allow them to give parents the ability to direct all of the education funding their children would receive. Among them:

—Implement weighted student funding that assigns per-pupil funding amounts based on students’ individual needs.

—Identify areas where students can choose between services their schools offer and “backpack funding” that they direct themselves, such as for supplemental services, career education programs, out-of-school enrichment, and special education support.

—Give students access to navigators, learner advocates, or other support resources that can help them set educational goals over time and make guided decisions about how to achieve those goals.

—Create the technological infrastructure that allows parents and students to develop nuanced learning goals and track their own progress.

Each of these endeavors may prove worthy in its own right. Funding reforms can distribute resources more equitably and help schools deal with enrollment fluctuations. Placing more funding in student “backpacks” can create more effective supplemental learning opportunities and facilitate access to programs, like career education, that school districts may struggle to develop on their own. Leveraging out-of-school learning opportunities can enrich students’ experiences. And better information systems that combine learner profiles with information about providers can help all families craft holistic education plans for their children.

Each of these policies could serve as a building block toward an education system in which students have flexibility to shape their learning experiences as they work toward common educational goals. In other words, states can create the infrastructure that may ultimately enable an unbundled education system while improving the bundles they already have in place.

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