A massive shift is about to occur in how California schools secure funding – and it’s poised to have a large impact across the state. To note, Average Daily Attendance (ADA) and Full-time Equivalent (FTE) are historically used metrics for funding schools in California. However, there is a rapidly evolving regulation that aims to shift funding models for schools to performance-based funding (PBF) models. 

PBF models allocate funds to schools based on their performance on a variety of metrics, such as student achievement, graduation rates, college enrollment, and career readiness. In reality, this approach is very ‘private sector’ in nature, and delivers a clear guideline for how schools can earn their allotment of funds. In fact, 31 other states implemented PBF models for their public higher education systems by 2020. With a growing push to have this model enacted across more schools, California institutions need to prepare or risk missing out on needed resources.

Lay of the Land

It’s important to understand the implications of current and evolving funding models. Notably, ADA and FTE models measure how many people are enrolled in a class or how many students take full-time courses, respectively. These metrics don’t account for student learning outcomes or real-world skill acquisition. Because of how ADA and FTE work, they actually incentivize schools to focus on enrollment and daily attendance, instead of actual learning outcomes and skill mastery.

PBF models are a more effective way to improve learning and ensure students have the resources to secure needed skills. Despite the highest jobless rate of any state at 4.9%, California struggles to fill jobs at state and local agencies, hospitals, school districts, and many more, showcasing a growing divide between workplace demands and the current talent pool. While some academics and administrators will be quick to state PBF models are a detriment for some underserved schools and communities, this thinking is actually near-sighted and misguided. I’m not saying making this funding shift will be without challenges – but the hurdles actually demonstrate the exact areas academic organizations need to double-down on. PBF models have historically not been supported in California, partially due to teachers’ unions lack of support.

By moving to a performance based model, this forces institutions to secure new resources for students in need. Ultimately it supports learners’ entrance into college and overall career readiness, making them competitive in the job market – an area of tremendous need in California.

Measuring for Success

PBF models result in more transparency and accountability across the board, and there are a few key metrics that accurately track the performance of schools:

  • Student Achievement – measured by standardized test scores, coursework completion, grades and portfolios
  • Graduation Rates – measured by percentage of students who graduate from high school or trade programs
  • Job Placement Rates – measured by students who secure jobs post-graduation
  • Equity and Access – measured by achievement gap reduction between different student groups and demographics; measurement of enrollment and success of underserved populations; measurement of faculty and staff diversity

It’s important to remember PBF models are constantly evolving, with new metrics being added and existing ones being refined not only based on research and the evolution of best practices, but also the needs of our local labor markets in California. At the end of the day, it’s taxpayer money supporting public education programs most of the time. It’s time communities start asking, “what’s the point of public education if we don’t emphasize positive impacts on local economies?”

Moving From Intangible to Tangible

As California adopts PBF, there will be a significant emphasis on using education to bolster the skills revolution and close the skills gap. A desired outcome of these funding changes is to provide students with equitable access to more resources, and frankly, help guide their journeys to the next chapter that makes sense for them – be it continued education or finding a job.

For these programs to actually benefit learners in the intended way, there needs to be a focused partnership between public and private sectors. For example, companies in California like The Clover Agency have introduced a grant model designed to support a student from career readiness to apprenticeships and job placement, while also providing wrap-around services for underserved students to support them on their journey. This model helps all students learn about themselves and what they want out of life; and how to create a pathway towards that. 

Programs like this help combat today’s well-known reality of students graduating but struggling to find work as they don’t have necessary workplace experience. This also has a direct benefit for private sector companies as they have access to a highly coveted talent pool, filled with interested and driven students. It’s critical for both public and private sector organizations to develop communication plans that explain the immediate and future impacts these programs will have. By getting ahead of the transition, it will encourage all parties to be open minded.

The notion of “it takes a village” is never more real than now. With both public and private organizations working together, new levels of career readiness and positive economic impacts are within reach.

Overall, the decision of whether or not to adopt PBF in California is complex. While there are both pros and cons to consider, there is growing evidence that PBF is the most effective way to improve student outcomes and to make the education system more equitable across the board. We’re going to see more districts adopting PBF in the years to come, and academic institutions need to begin exploring how to account for new PBF models that will be better positioned to make a greater impact on students and their local communities.