New Focus on Ed. Finance, Data on the Horizon

Associate Editor


How districts allocate their funds, how companies can help schools with financial decisionmaking, and the impact of the new federal education law on schools’ budgeting were central themes at the recent Future of Education Finance Summit held here.

The conference, held last Friday, was also an opportunity for companies in the emerging “edfintech” sector to explain their work to state and district education funding leaders and nonprofit representatives.

“We see ‘edfintech’ as the intersection of education, finance and technology,” said Jess Gartner, CEO of Allovue, a Baltimore-based company that co-hosted the summit with support from the Reason Foundation, a public policy group that promotes choice and competition in education and other areas.

Combining the three sectors is partly about “pulling education data into the ‘fintech’ world, and making technology something useful for educators for the financial decisions they have to make,” Gartner told about 200 people gathered for the conference.

A former middle school educator in the Baltimore City schools, Gartner said her students didn’t have the resources they needed to learn, and she didn’t have the resources she needed to teach. She wanted to know why “some schools in my district looked like they were in a third world country, and some looked like they were in the richest country in the world”—despite having the same funding model and the same per-pupil funding.

“Education finance is one of the big civil rights issues of our time,” Gartner said. “We need to make sure our kids get the resources they need to learn.”

ESSA Adds Demand for Financial Data

Changes in the Every Student Succeeds Act, or ESSA, “will accelerate the accessibility of financial data,” said Marguerite Roza, director of the Edunomics Lab and a research professor at Georgetown University.

Having this data available, and being able to analyze it, can help spread “innovative spending options,” she said. Often, schools don’t learn about these options from each other. When financial data shows that a specific investment produces impressive results—such as a product that allows bilingual students to learn English faster—these findings can be shared, she said.

ESSA includes plans for a pilot with up to 50 districts to develop and implement student-based budgeting, said David Rosenberg, a partner at Education Resource Strategies, a nonprofit that works with urban districts in how they organize resources for equitable student success.

He predicted that this initiative will raise questions of equity by drawing attention to patterns where more inexperienced and lower-paid teachers are assigned to schools with more low-income students and students of color. It will also highlight specific schools that are over- and under-funded, and make clear where extra spending is focused on small and under-enrolled schools.

In Pursuit of ‘Effectiveness’

Cost-effectiveness is a “must” for schools, but too often they focus on “cost” and not “effectiveness,” said Bryan Shelly, president of Advanced Education Measurement, who talked about using research to make better purchasing decisions. “A system that does not provide what educators need is not cost-effective. It’s just cheap,” he said.

Shelly gave the example of a district buying teacher professional development that doesn’t accomplish its purpose. “You still have to do something to help your teachers grow, and you’ll have to spend more money to fix something that didn’t work anyway,” he said.

Likewise the efficacy of ed-tech products often goes unexamined in districts, pointed out Joseph South, the director of the Office of Educational Technology in the U.S. education department, in another session. “Once they’re in the system, they get renewed and renewed. No one’s checking,” he said.

The department is creating “sort of a Turbotax for ed-tech pilots” so schools are guided through the steps for a one- to three-month evaluation to see whether specific products have an effective impact on students’ performance, South said.

Companies Take on Challenges

The leaders of four companies working the “edfintech” space talked about what they offer schools, and the many challenges they encounter, from distrust to diverse technology systems.

Jamie Rosenberg, founder and CEO of ClassWallet, a company that allows schools to disburse and track funds via a digital wallet and e-classroom platform, was surprised “to be caught in the web around accountability” when selling his product to districts.

“We sell to CFOs,” said Rosenberg, “but part of our solution is to make teachers’ lives easier so they don’t have to save and remit receipts.” District business officials need to get approval to use the product from teachers’ unions, who resisted, Rosenberg said. Teachers’ concern was what they perceived to be an inherent distrust of how they are spending money, he said.

For Noodle Markets, the goal is to encourage better buying decisions by helping schools and education companies find one another online, while streamlining the bid and solicitation process.

Nicole Neal, Noodle Markets’ CEO, referred to her previous experience at Schoolnet, where she was an executive. Although Schoolnet was eventually purchased by Pearson for $230 million, it was far from an overnight success story, she said: “What people don’t know is that we spent the first eight years struggling to break into K-12.”

The company lacked a sales force to expand its user base, and relying on the RFP process often meant waiting for 18 months to get a decision from a district. A slow process like that can sink a startup company, she said. Better transparency into the buying process can help schools and companies, Neal said.

Allovue’s product, called Balance, takes information from districts’ disparate finance and enterprise resource planning systems and analyzes it to produce educational data. From her early research in how to extrapolate and translate data for useful district and state decisionmaking, Gartner said she “realized we have a long way to go in connecting the finance side of the house with the academic side of the house” in schools. Much of the information that has been aggregated in the past—comparing the state of Mississippi with the state of New York, for instance—is “so high up that it was useless,” she said.

Technology can now be “used for good to help districts and schools move to the next level,” said Karl Rectanus, a former teacher and CFO, who now runs Lea(R)n. a company that helps educators and their organizations track the ed tech in their schools to see which is working for their students, operations, or budgets.

“When efficacy matters, things change,” including policies, procurement and instruction, he said.

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