Rethinking School Budgets: Principals’ Resource Allocation Decisions and the Promise of Equity

Can a financing system structured to provide students with the greatest educational need the highest distribution of resources improve test-based student achievement for English language learners, economically disadvantaged students, and special education students?

Recent research demonstrates that money matters for student outcomes, contradicting prior studies that found no consistent relationship between school resources and achievement. But the recent research has not addressed the process by which districts allocate funds. This study will fill this gap by focusing on resource allocation decisions in Metro Nashville Public Schools (MNPS), a district where principals have been granted autonomy to make budget decisions intended to benefit students. Candelaria will: 1) assess whether the distribution of funding across schools in one district is equitable; 2) explore the decision-making process by which school leaders make resource allocation decisions; and 3) analyze the extent to which budget decisions improve student outcomes, especially among marginalized and disadvantaged subpopulations. The study will also probe principals on how their resource allocation decisions have been affected by potential budget shortfalls in light of the COVID-19 pandemic and consequent recession. This mixed-methods project will leverage quantitative methods to assess whether student-based budgeting (SBB) has created intra-district equity across all 143 schools in MNPS that participate in SBB and to explore whether SBB has improved student outcomes. It will also include structured interviews with 10-15 school principals to understand how they make financial decisions to achieve equity in their schools. Student outcomes will be assessed using data provided by the Tennessee Department of Education, which includes math and English test score data for all tested grades from the 2006-2007 school year. Using a difference-in-differences design to exploit variation by student cohort and school, Candelaria will compare the achievement of older cohorts who were never exposed to SBB with younger cohorts who have, and will compare schools that were predicted to receive large increases in funding to those that were predicted to receive small increases.