1. Presentation to the Board of Education Regarding Student Based Budgeting February 25, 2014

2. Student Based Budgeting (SBB) is a Key Component of the Cleveland Plan & a Portfolio District The 7 Components of a Portfolio Strategy 1.Good Options and Choices for All Families 2.School Autonomy 3.Pupil-Based Funding for All Schools 4.Talent-Seeking Strategy 5.Sources of Support for Schools 6.Performance-Based Accountability for Schools 7.Extensive Public Engagement

3. Why did we move to SBB? SBB supports more strategic school design and flexible academic solutions tailored to the unique needs of individual school communities by putting planning before staffing and budgeting SBB provides schools with increased levels of authority over the resources available to them (time, treasure and talent)

4. Flexibility School leaders define the resources they need to drive student achievement “Principals own their budgets” Student-Based Budgeting aims to strengthen the funding system in three ways Equity Resources are distributed equitably based on student need “Dollars follow the student” Transparency Clear and easily understood rules for where, how, and why dollars flow “The formula tells you what you get”

5. What is Student Based Budgeting? The Per Pupil Funding model was promised as part of The Cleveland Plan and during our budget hearings in May 2013 and in design over the last year SBB is a school revenue allocation approach. It moves control of dollars to schools. Schools are funded based on: – The number of students they have, and – The needs of those students SBB provides transparency and equity into funding SBB allows principals to plan for, manage and control the majority of their budgets BOTTOM LINE: Principals and schools move from controlling 2% of budget currently to over 55% with SBB

6. How did we build SBB? A district team: – analyzed past spending, resource use and outcomes – Identified key academic goals ( 3 rd grade literacy, graduation improvement) and funding priorities – Held design meetings from May 2012 to November 2013 – Visited Denver Schools to learn from peers SBB is an iterative process – the District will continue to shape the budgets in coming months and as needs change over time

7. CMSD principals were actively engaged in the design of our SBB system Nine principals and seven central office staff made up the CMSD Design Team, a group charged with creating our SBB system The Design Team worked for the past 6 months to shape the rules and processes of the system so that it best meets the needs of schools and the district Design Team Principals Heather Grant Dessie Sanders Dr. Irene Javier Phillip Schwenk Cedric McEachron Tianna Maxey Andrew Koonce Audrey Staton- Gerard Leslie Thompson Design Team Central Office George Anagnostou Russ Brown Luther Johnson Juan Cortes /Julie Snipes-Rea Dennis Kubick Maria Monroig

8. SBB implies a big shift in how schools and the district work together Source: ERS Increased strategic responsibility for school leaders District office assumes a “customer service” role Increased strategic responsibility for school leaders District office assumes a “customer service” role

9. Where does the money go? SBB allocations are based upon student enrollment and characteristics/needs, including: – A base allocation for all students – Resources allocated for Grades K-3 connected to Third Grade Guarantee – Resources allocated for special education students (cross-categorical, resource, and single class students) – Resources for English Language Learners (three levels depending on academic readiness) – Resources for schools serving students scoring below proficient in reading – Resources for schools serving students scoring advance or accelerated in reading – Resources for K-8 schools serving students with high mobility – Resources for high schools serving students with poor attendance – An additional allocation for high schools to offer diverse programming Additional resources beyond SBB are provided by the District (snow plowing, food service, security, transportation, maintenance) 55% of school-based funds are now allocated directly to schools and are in the schools’ control

10. Does SBB cause budget cuts? SBB is a “net zero” approach-- changes are managed within the total system SBB does not cause gains or cuts in total school spending SBB does distribute available dollars in a transparent and equitable way SBB creates transparency around how budget decisions are being made SBB does cause a shift in the allocation of dollars to ensure dollars are allocated equitably based upon an agreed upon set of identified student needs

11. Does SBB cause budget cuts? A school may experience a budget reduction for any or all of the following reasons: – district-wide reduction due to a gap between revenue and expenditures – declining school enrollment – The reallocation of resources based upon the agreed upon criteria for resource distribution

12. How was SBB rolled out? SBB methodology was piloted in 2012-13 with nine Transformation Schools Central office and schools have been engaged in training and support over the last 3 months Engaged CTU leadership during rollout (two 90 min meetings) Multiple workshops with principal and teacher teams (Principals and up to two staff members per school team) Captured questions from CTU and provided responses (including summary of budget)

13. How does the budget compare to last year? Two key drivers are impacting next year’s budget: – The District’s enrollment continues to decline; school by school projection trends were verified by principals – The impact of our negotiated agreement - 4% raise and no layoffs in FY14 in exchange for managing attrition in FY15 and FY16 This year’s per pupil funding is $9947 vs. next year’s currently estimated at $9747 – 71 schools are projected to see declining enrollment next year while only 25 are projected to see an increase – However, only 60 schools will have less revenue next year while 36 will have more

14. The importance of enrollment District enrollment declines are currently projected at approximately 1470 students $9747 X 1470 students = $14.3 million reduction Only way to get those dollars back are: – Retain our current students – Recruit additional students back Like charter schools, our schools can influence their enrollment, earning more dollars in the fall if enrollments exceed current projections

15. Budget reductions were forecast resulting from a reduced requirement for positions in our newly negotiated agreement: – Reduction of planning periods from 7 to 5 per week – elimination of required classroom size caps at Grades K-3 The District and CTU agreed to no staff reductions in 2013-14 with the knowledge that reductions through staff attrition would need to occur in 2014- 15 and 2015-16 The impact of our negotiated agreement

16. What happens next? SBB and District Budget Development Continues Draft school budget proposals are due this week; we will analyze and aggregate proposals in the next several weeks Charter School pass through expenditures are trending better than expected May have additional resources to make some adjustments; positive changes at the district level can easily go back to schools by adding to the SBB formula

17. We can do anything we want, but not everything Instructional Model Class size Time spent in core subjects Teacher teams # of electives offered Common planning time Master Schedule Tutoring There are implicit or explicit trade-offs in all school designs. Changing one element causes ripples through the whole system. 17

18. Closing thoughts SBB is a change from past practice; Change causes anxiety and questions The American Federation of Teachers’ position paper Reclaiming The Promise advocates for “address[ing] equity by directing resources to schools and students with the greatest needs” SBB makes our school budgets are much more transparent – people see the budget being made The process is iterative – we will continue to adjust school budgets throughout the spring We trust our principal and teacher teams to make good decisions and we will not let our schools fail