Researchers gained information through interviews that could not be discovered in the PEIMS financial data. Interviews with chief financial officers, personnel directors, and superintendents enabled researchers to gain insight into different philosophies behind resource allocation practices, systems of communication, budget collaboration processes, and innovations developed by districts to raise student achievement. Seven common themes emerged from the interviews. These were:

• Teacher supply, recruitment, and retention

• Collaborative decision making

• Needs-based budgeting

• Use of data in decision making

• Performance pay

• Characteristics of finance officers

• Equity issues

Teacher Supply, Recruitment, and Retention

The concern expressed most often by superintendents, personnel directors, and financial officers centered around teacher supply. Many interview subjects felt this was not only an issue in Texas, but also nationwide, with one personnel director stating, “There are so many teacher needs that they tend to overshadow anything else that may be happening in a school year. We are just lucky to get a teacher anywhere.” This statement is supported by literature on teacher supply (State Board for Educator Certification, 1999; Fetler, 1997).

Interview subjects offered multiple views on why teacher supply appears to be diminishing. One personnel director attributed the reduction of entrants into the teaching field to the perception that changes in characteristics of school children and their families make the field less desirable. Children of school age may be considered difficult to work with, and families may appear to be unsupportive or overly demanding. A personnel director of a large district attributed the diminished teacher supply in Texas to the requirement of state-imposed tests like the Examination for Certification of Educators in Texas (ExCET) exam.

In addition to fewer entrants into the teaching field, interviewees cited teacher turnover as a growing problem. One personnel director of a large district stated that his district experienced teacher turnover every day. He attributed this to factors such as “stress, perceived lack of support, incorrigible student populations, incorrigible parents, new requirements for certification, noncompetitive salaries, and increased costs for health care.” Numerous other interview subjects from all three performance levels also stated the same concerns. Rural districts were concerned about the availability of local housing and the flight of new teachers to metropolitan areas. Other interview subjects noted that small districts located in regions where people tend to settle and stay did not seem to have as much teacher turnover, except in specialized areas such as bilingual education or foreign language instruction.

According to some interview subjects, scarcity of teachers has created competition for high-quality teachers amongst neighboring districts. Almost half of the districts interviewed mentioned that they set their teacher salaries according to what surrounding districts pay. One large level one district attracts teachers by offering one of the highest paying salaries in the area for beginning teachers. The administrator stated, “We’re above $30,000 starting pay, and if you look at the market, that’s pretty high compared to other school districts of our size in our market.” However, this district still reports problems retaining teachers because of high housing costs and the amenities offered by communities in surrounding areas. This was illustrated in one personnel director’s comment:

You get a teacher that comes in the first year, they live in the district, and then decide to get married and buy a house. Well, there’s not very many homes out here left, so they move to areas where housing is growing.

This district offset new-teacher attrition by offering an attractive pre-tax retirement plan in addition to the plan provided through the state. The district matches contributions teachers make, making those matching contributions subject to a five-year vesting schedule. The structure of this program, with additional benefits and a vesting period, makes it more attractive for teachers with six or fewer years of experience to stay in the district. If they leave before they are vested, they lose some or all of the matching portion of the plan.

Financial incentives and stipends are a common mechanism for increasing teacher supply in shortage areas like special education, mathematics, science, and bilingual education (Texas Center for Educational Research, 1999; Fetler, 1997 ). Many interview subjects said that they offered bonuses to teachers in these high demand areas. However, when asked if this method was effective, some felt the bonus was not large enough to attract enough teachers or retain them in fields of demand. One finance officer postulated the following:

Offering stipends was effective when schools first started doing it, because not everybody was doing it. But now that everybody is doing it, it is not effective. If we all stopped, it would be a tremendous savings to us and we’d all get the same number of employees. Everybody’s chasing math, science, bilingual, and special education teachers, offering $300 to $1,000 [stipends]. Is it effective? Not truly.

Another personnel director said that his district does not offer many stipends to reduce teacher shortages because “I’d be increasing somebody else’s shortage, and so, locally, we’ve all not offered much in the way of stipends.”

The topic of recruitment yielded a variety of approaches. Small districts with stable communities tended to rely on recruiting applicants locally. Mid-size and large districts spent more time and effort recruiting, often going out of state and to the Internet to find applicants. To obtain minority teachers, one large level two district recruits heavily out of state, with a particular emphasis on universities with high African American and Hispanic enrollment as well as conferences and conventions that African American and Hispanic educators attend.

In addition to looking outside for recruits, many districts have initiated internal programs to “grow” their own candidates. One large district’s internal growth program paid teacher aides to attend school and obtain teacher certification:

They get full aide salary, but only have to work 20 hours a week. The other 20 hours they must go to school and we pay for all their tuition and all their books.

This district also encourages personnel to serve on boards at different universities to find out about grants and other programs to assist their recruitment efforts. This effort has led to a field-based program designed for pre-service teachers. Field-based programs are ones in which a classroom is set up for university student-teacher programs so that some of the university coursework is conducted on a public school campus. Other popular internal programs used by districts are alternative certification programs and partnerships with local universities to help pull in qualified recruits needing additional training for certification.

Districts also focused on retaining existing teachers to maintain teacher supply. One large level two district initiated a program to help new employees by inviting different organizations in town to describe the programs and services they offer to teachers and the community. This information dissemination service tells teachers “what’s available in the community, hoping that as they make these relationships and friendships they like the community.”

Providing mentors for beginning teachers was another frequently used technique to retain teachers. However, some districts mentioned that state-mandated mentoring programs do not work. One personnel director attributed the problem to the mentor requirement being an unfunded mandate. He added that mentor duties extend teachers’ already numerous responsibilities. One large level one district reported having a successful mentoring program that truly supports new teachers. The program pays mentors $500 per year. This district also felt it retained teachers by offering 26 instead of 24 pay periods. These incentives are offered, according to the personnel director, because, “if we care for the teachers, it’s our hope that they’ll care for the kids. Our business is very service oriented.”

One district personnel administrator also discussed administrator supply shortages. Small districts did not report concerns over administrator shortages, except in districts where large cohorts are near retirement age. However, personnel in mid-size and large districts saw a decrease not only in the number of administrators, but also in the quality of applicants. One personnel director attributed this to lack of experience, lack of support for professional growth of administrators, and competition from the non-education labor market. Several interview subjects mentioned having difficulty finding minority administrators, particularly Hispanic principals.

An insufficient supply of well-prepared teachers and administrators is an obstacle for many districts as they struggle to provide quality instruction for their students. Districts of all other sizes continue to work to find solutions for supplying, recruiting, and retaining qualified teachers.

Collaborative Decision Making

The school board and superintendent retain primary responsibility for developing and adopting a budget, but other activities occur before the board and superintendent begin final budget deliberations, usually in late summer. Districts frequently convene a community budget committee during the winter or spring to identify budget priorities for the coming year. The process of implementing the priorities and working through the details may first fall to individual campus and program administrators who prepare draft budgets. This work may then be combined into a draft budget for the entire district. Some districts convene staff committees to work out differences among campuses and programs, but many more do not engage in collaborative budget work.

Many of the districts interviewed expressed concern over the inability of staff members to place the overall needs of the district above the needs of their individual campuses, programs, or classrooms. The chief financial officer from one level three district noted that campus principals are “always complaining [that] a certain campus gets more [resources] than others.” The focus on individual campuses is reflected in budgeting processes where campus administrators review their needs or draft budgets only with the finance office, and not in a structured committee setting. The majority of the focus districts described this type of budget process. Within this framework there is little room for staff members to develop a deep understanding of the needs of the district as a whole, because they never have access to information about other parts of the system.

Some focus districts described processes that were more open and collaborative. Sometimes these processes were structured and other times unstructured, but generally the free exchange of ideas through conversations among individuals from different parts of the system is viewed to be important.

Administrators reported that these conversations also included discussion of the educational impact of resource allocation. Odden and Archibald (2001) documented similar processes at the campus level, noting that many of the successful schools they studied engaged school-level educators as well as parents and community members in a self-study process. Such a process can enable individuals to better understand the needs of the district as well as their individual school.

One rural level one district reported making tremendous strides in creating a culture in which everyone attempts to place the good of the district above the good of their particular program, campus, or classroom. This district’s chief administrator employed this principle when scheduling an interview with researchers, recommending that a group interview be conducted with the entire central office staff. The administrator explained that staff members could not separate their resource allocation duties, and, to understand how things work in their district, researchers would have to expand the number of interview subjects. During the interview, district staff members described ways in which their job duties overlapped, making it difficult even to assign titles and isolate responsibilities. One staff member noted, “We all are pretty much interchangeable, when it comes to budget, curriculum, personnel, or finance.”

This district’s budgeting process includes all district stakeholders. They meet as a group to determine the most effective way to allocate resources. In this district, the finance officer identifies the available resources and then works to involve others in the district in determining how to allocate those resources. Each campus is then granted a minimum amount of discretionary funds, and they may make requests above that amount. All of the information about the requests is available to representatives from other campuses. Individuals from campuses and programs meet to prioritize their requests based on the needs of the district as a whole. This district maintains that teamwork is a unique characteristic of the budget work in their district, and they attribute the ability to work in teams to open communication and to the stability of leadership:

From the beginning there’s nothing hidden. There are no secret agendas, we all just work together. I think longevity has played an important part, with all of us having worked together over a long time, and our campus leadership remaining very, very stable.

Another level one district with a collaborative approach explained the change of attitude that he has seen over the past few years:

We as a district have convinced people to see the big picture. I understand the interest that any individual or principal has about their site. But when they get in the group and they talk, they really realize that this district is more than just “A” Elementary. You know, there’s “B” Elementary there and there’s “C” Elementary. And they’ve got needs just like I do. So they’ve realized what the big picture’s all about and will probably work together more today than ever before.

Staff members from this district with a collaborative approach were unable to define specific guidelines under which allocation decisions were made, but they could explain that each decision was based on whether or not that allocation was necessary for student academic success. Although this district found it difficult to articulate exactly how it has been able to foster systemic thinking among the staff, they did attribute part of their success to leadership from the superintendent:

I don’t know how we’ve done it. We’ve done it for over ten years. But I think we’ve employed conscientious people that really care about the big picture. You know? This total quality theme of providing customer satisfaction, we realize at some point, we’re all customers. So we’ve got to be quality customers, if we’re going to provide a quality service. [Our superintendent] was a big stickler on that. You know, all systems—all components of the system working together, for the entire system.

The third district that serves as an excellent model of collaborative decision making is also a rural district. This district began using a collaborative approach in 1997, and is currently in the process of formalizing that collaboration. During the past three years, each campus presented their needs to the entire district decision making team, and the team then developed the district budget. The finance officer explained that this collaboration has helped individuals in this district think more systemically:

There are certain people who are protective of their area, and until they can see the whole picture, they aren’t going to be willing to work in the system … And that’s what we’ve been trying for the last several years, trying to get people to look at the whole spectrum as Styles ISD as a whole and not just think about your students today, but those students tomorrow.

In a continuing effort to improve, this district is now trying to ensure that it carefully evaluates budget decisions. This desire has led it to formalize the process. Staff members now organize their budget process using a team of teachers, administrators, parents, and members of the business community. Each campus is represented on the team. The district decision making team handbook describes the duties as “reviewing expenditures and preparing a budget that will best utilize available funds to create a systematic approach for managing accounts,” and notes that this may include planning, conducting needs assessments, reviewing expenditures, helping with the preparation of campus budgets, making sure that purchase orders are correctly submitted, and tracking expenditures.”

In the future, interview subjects report that this team will analyze proposals submitted from different groups across the district describing what they believe they could accomplish with specific amounts of money. The budget will be developed around these proposals. Individuals from this district expressed hope that the new process will help them keep the positive elements of collaboration that have existed in the district for some time, while moving to a more “scientific” approach to decision making.

Districts with collaborative budget processes involve many individuals from different parts of the district. All three districts profiled above are performing at high levels. Their leaders express the belief that collaboration has helped individuals in their district gain a deeper understanding of the total system. They also all expressed the importance of student academic need driving the budget process. Needs-based budgeting is discussed in the next section.

Needs-Based Budgeting

Interview subjects at successful focus districts were able to describe district goals for student learning. These districts reported more flexibility in approaches to resource allocation, whereas other districts used allocation formulas to distribute most resources. All focus districts reported using site-based budgeting and allowing campuses to have control over their budgets, but the degree to which campuses exercised real decision making authority varied greatly. For example one chief financial officer who described a site-based decision making process in his district also estimated that the amount of money over which campuses had control was somewhere around one half of one percent of the total district budget.

Districts that could be described as “formulaic” in their approach typically allocated personnel units based on enrollment. Other expenditure functions such as funds for maintenance, supplies, and professional development may also be allocated based on staffing or student counts. Some districts allocate resources to campuses based on the previous year’s allocations, and one finance officer from a level three district explained that even when monies were allocated to campuses for decentralized decision making, departments within campuses also typically used a historical approach to building their budgets. Another level three district noted that when it faced a budget shortfall, it used an across-the-board cut rather than engaging in an assessment of where resources were needed most to support student academic performance. The chief financial officer reported that across-the-board cuts helped keep the peace, but did not mention efficient or effective use of educational dollars as an important goal.

Many level one and some level two districts described flexible and outcome-oriented budgeting. These districts also reported that they were unique in this approach. The finance officer from one of these level one districts noted that “we make the decisions based on the business efficiency and effectiveness [model]” and said that two campuses with similar enrollments can have very different needs:

Where you have at-risk children, you may need more resources. And I think, traditionally, we have offered those campuses additional resources to use on whatever they’ve felt they needed to have to be successful.

Another level one district also discussed the importance of providing additional resources to campuses that may serve high-need students. These equity issues reveal some of the problems with formula-based allocation within districts. One level one district noted that it would have been unable to enforce the high standards that it had set without allowing for some flexibility in expenditures. An interview subject commented on this by noting that campuses without the power to manage resources in meaningful ways can use this lack of control as an excuse for failure.

Before districts can implement needs-based budgeting, they must have accurate information regarding performance. The next section of this report describes the ways in which districts are gathering information to help them identify areas of need.

The Use of Data in Decision Making

Districts that are engaging in needs-based budgeting (as opposed to formula-based budgeting) are also using data to measure the effectiveness of their programs and identify areas for growth. According to many of the twenty-one focus districts, the implementation of the state accountability system and state-mandated tests may have served as a catalyst for change to a more data-driven approach to decision making.

Although many focus districts were unable to point to formal evaluation processes, they could describe the importance of using data in decision making, and virtually all of them mentioned the TAAS as an important measure of success. Others, including the districts described as engaging in collaborative decision making, could articulate more formal evaluation processes. The personnel director from a level one district described how the accountability system has changed both the role of campus leaders and the types of individuals that fill those positions:

The accountability measures from the state over the past seven or eight years have weeded out the . . . campus managers as opposed to instructional leaders. . . . I think when that big shift came with all the accountability, people became aware of what is needed [to be successful].

The finance officer from another level one district described how information from TAAS performance has helped move district personnel toward a more equity-focused approach to education. The information has forced them to examine performance data disaggregated by racial/ethnic group and by income level. He explained that “TAAS has put accountability. . . into the system. No longer can you educate [only] a specific segment of the population and get away with it. . . . We are going to show that we educate [all students].”

However, TAAS performance information was not the only data that district personnel reported examining to help them make decisions. Two level one districts described other information-gathering techniques (such as survey research) conducted on a broad variety of topics. These districts were examining the reasons for teacher turnover by surveying teachers who had decided to leave the district, measuring the attitudes of current teachers with respect to work climate, and measuring the attitudes of students who had graduated from the district.

All three focus districts whose information gathering techniques were described above reported that information gathering was part of the planning and budgeting process. They used it to identify problems and to measure their successes. These districts also spent time recognizing those successes, sometimes through simply acknowledging one another’s work and sometimes through monetary awards.

Performance Pay

There is growing acceptance both in the educational community and among the general public of performance-based pay, with districts across the nation beginning to experiment with the idea of moving away from the single salary schedule (Odden and Busch, 1998, p. 197). Though many of the focus districts reported considering the use of performance pay, only three were using a form of merit pay, and the merit pay systems were based on the Texas accountability system.

A school-based compensation system may provide a salary bonus to individuals employed in a school that meets or exceeds student performance improvement targets. According to school finance experts, performance awards can be beneficial not only because they provide motivation, but also because they clarify district goals (Odden & Archibald, 2001, pp. 59-72). Two of the three focus districts had implemented a school-based performance award system, and both of these were level one districts. These districts allowed the campuses to determine how to spend their awards, although there were norms established in both districts that strongly encouraged campuses to spend this money on bonuses for all staff. In fact, one of these districts reported that last year, between 1,100 and 1, 200 of the district’s 1,600 employees (about 70 percent) received some form of monetary compensation linked to performance.

The performance award system for schools in one level one district had been in existence for three years and involved paying salary bonuses to schools that were rated either exemplary or recognized by the state’s accountability system. In this district, campuses had money to distribute as they saw fit based on the campus ratings, the percentage of students participating in the accountability system, the percentage of students passing all parts of the TAAS, and the percentage of students whose performance exceeded a certain score. The specific amounts of money to be allocated to each campus are presented in Appendix E. This district was unique among the focus districts because it also used a form of sanctions. All administrators whose campuses did not achieve a rating of recognized or above (new administrators were given a three-year period to achieve this goal) had their salaries frozen until they were able to improve performance. However, none of the other districts interviewed used any form of sanction.

Another level one district using performance-based awards was also allocating money to campuses based on campus accountability ratings. However, this district made adjustments to their awards based on campus demographics. Awards were dependent, in part, on performance of specific student populations (performance results for racial/ethnic and low-income populations are reported by campus). For example, campuses that serve larger numbers of economically disadvantaged students receive larger awards. An administrator from this district also noted that some campuses had elected to use their awards to buy technology or other needed equipment for their campuses.

The third district using a performance-based award program was a level three district and also granted awards based on campus-wide TAAS performance. However, this award was available only to principals and was only $300 to $400 per campus. The finance officer for that district did not believe that these awards were large enough to provide significant motivation, but thought that they probably did send a message to those principals that they were appreciated by the district.

Finally, one of the level two districts is currently in the process of formulating a performance-based pay plan. However, this district has met with considerable resistance from staff. The district established a committee to study the possibility of implementing performance pay, but was unable to reach consensus regarding the criteria by which staff would be evaluated. This district also felt the need to use some measure other than TAAS for assessing the performance of non-teaching faculty. Although the personnel officer believed that all staff in the district were involved in the performance of students on the TAAS, she said, “It’s hard to tell a plumber, ‘you don’t get a raise because the school that you’re assigned to didn’t do well on the TAAS.’”

It appears that individuals in this district view merit pay as a punitive measure, whereas personnel from other districts seem to see it as a reward, at least with respect to non-administrative employees. It also appears that this level two district was experimenting with individual merit pay, whereas the two districts that reported having performance pay programs that were successful had implemented school-wide incentive plans.

Although the majority of the focus districts have no merit pay system in place, four had either implemented it or were studying the possibility of implementing it. Two of these districts reported that merit pay had a positive affect, while one reported a modest benefit and the fourth reported failure to gain sufficient support among staff members. The two districts that saw their programs as successful used whole-school success as the criterion for awards and also allowed successful campuses to determine how to allocate their awards. Many of the focus districts were able to name other Texas school districts that were using performance pay in some form. These reports suggest a developing trend in Texas schools.

Characteristics of Finance Officers

Several finance officers, particularly those in level one districts, displayed a high level of enthusiasm and dedication to their work. These individuals were knowledgeable about the state accountability system as well as the ratings their districts and schools were receiving. They expressed a commitment to district and state goals and showed a deep interest in the students that they serve and in broader educational issues. They were opinionated about educational issues and policies and had educational philosophies. Moreover, these finance officers reported that their work was directly related to student achievement in their districts, and often they were able to describe, in depth, the academic performance of their district’s students on state-mandated TAAS exams.

The finance officer from a level one district worked to change his district’s performance award system so that it would include central office staff as well as campus-level staff because he believed that all members of the district had an impact on student performance. He noted:

In the business office we were excluded from [performance rewards], which I didn’t feel very good about because I’m part of the student performance. It took me a while to get them convinced that we were part of it too and we needed to be included.

This finance officer expressed pride in the district’s performance, noting that “we keep raising the bar. We set a goal and we reach it and we raise the bar.”

However, this finance officer was not only passionate about providing adequate resources for the students of his district but also explained that it is important to spend taxpayer money in an efficient and effective way. When he was new to his position in the business office, he explained, he spent one day at the tax office, watching people come in to pay their property taxes:

We had all these retired people coming in and paying taxes with bags of coins. In other words they were giving me, or giving the district, the money they need to eat. They were not eating because they had to pay their taxes so they could keep their house, or that was the impression that I had. . . . But that just really brought to light what I was doing, that . . . there’s a human side to what we do.

Another finance officer expressed a commitment to district and state goals and showed a deep interest in students by saying,

In order for the students to be successful you need to provide them with the proper resources, and that’s not only human resources, but also finance . . . anything that makes the process work. So, I really feel that the main purpose, or the main objective of the business office is to support students.

In other focus districts, the finance officers seemed detached from concerns and operations of the school district that were not strictly finance-related issues. These administrators deferred questions about student performance, issues of equity, and special programs to others in the district. They were often unable to describe how their districts were performing compared to others in the state, and were less able to articulate an educational philosophy related to school and district goals for student learning.

Equity Issues

One recurring theme in the interviews was administrator concern over the relationship between economically disadvantaged students, resource allocation practices, and achievement. While most focus districts tend to allocate resources on the basis of school enrollment, researchers found some exceptions, primarily among level one districts that tried to ensure that economically disadvantaged students were successful. One finance officer at a large level one district reported that he factors in economically disadvantaged students in the allocations by changing the focus of his compensatory education funds. He explained his approach this way:

You’ve got at-risk students. The state funds compensatory education funds based upon the best six months’ free and reduced lunch count. But I allocate the funds based upon the at-risk students because the money comes in for at-risk students.

In an effort to see that compensatory education funds support at-risk students, this district now allocates these monies based on academic need. This type of distribution was also found in another level one district.
Other districts have solved the issue of equalizing resources by re-drawing boundary lines. A large level two district re-drew attendance boundaries to correct a situation where a single campus was homogeneous. The interview subject stated, “When you have four elementary campuses, you can’t have one that’s totally different from the others.” Once the campuses had a more equal demographic distribution, the district was able to set up programs “based on the same thing at each campus, without looking at specific populations.” The finance officer said the end result was that “the teachers are happy and the parents are happy.” He admitted that re-drawing attendance boundaries was a difficult process to go through, but explained, “You have to do what’s best for the kids and look at it from the district perspective and not build campuses that aren’t the same.”

A level three district also re-drew boundary lines to equalize the number of students receiving free and reduced lunches on each campus. The finance officer of that district also found some opposition to the process but explained, “the bottom line was, we had four very comparable campuses in the end, so we didn’t have concerns over which campuses children attended.”

Equity also became a factor when districts discussed the accountability ratings. Most level one districts did not take issue with the rating system, making statements like, “We don’t worry about districts around us. We want to be the best in the state.” Other level one districts felt the rating system was acceptable, seeing themselves as competitive. When discussing economically disadvantaged students, these districts felt that some students need more resources, but did not perceive this to be a problem. One level one personnel director illustrated the point this way:

There’re no excuses. We’ve actually eliminated excuses. With our data points and our performance continuing to rise, we no longer have the skeptics that say you can’t teach a kid because he’s economically disadvantaged or he’s of color or whatever.

However, the discussion of the rating system with some level two and level three districts not only revealed negative reactions to the system, but also the perception that the main influence on district ratings was the students in the system rather than the instructional approach or teacher expertise. One personnel director stated “you’re going to have a little less chance making an at-risk child successful than the child that comes from the home where both parents are educated. It’s just a difference and it makes your job harder.”

Overall, many of the focus districts were aware of equity issues in their districts and were taking positive steps, despite instances of opposition, to distribute resources to support high academic performance for all students. Some districts budgeted resources based on need, and others worked to restructure attendance boundaries or instructional programs to equalize the entire system. The districts that focused on maintaining high expectations for their students and staff, regardless of whom they were compared to, were most likely to be in the level one category. Other districts, mostly large level two or level three districts, felt that some of their students provided an overwhelming challenge to the district, and felt the rating system highlighted such disadvantages.

Summary

Based on interviews, researchers found that all districts recognize the teacher shortage in Texas and most have implemented some type of financial incentive to improve teacher recruitment or retention. A few districts have experimented with financial awards related to student performance, but most are hesitant to venture into this arena because it is controversial, even among teachers whom the awards are intended to benefit. Level one districts tend to focus more directly on finding ways to serve all students and achieve higher academic performance levels. They accomplish this using data to identify needs, planning collaboratively within the district, allocating resources to campuses in a manner dictated by student needs rather than allocation formulas, and making efforts to address past financial inequities among campuses.
In addition, the higher-performing level one districts were more willing to reallocate funds if there was evidence that a change would yield positive results. Personnel interviewed in the level one districts viewed their role in the district as an integral part of a larger system, and reported practicing student-centered administrative practices approaches such as needs-based budgeting. It is important to add that all three levels of focus districts displayed varying aspects of the same traits. The distinctions among higher and lower performing districts are shades of gray rather than black and white.

Conclusion

This study yielded consistent findings regarding how Texas school districts allocate resources with respect to the amounts of money spent for expenditure functions and program areas and with respect to district budget processes. Districts with higher student academic performance spend more per-pupil on instruction and regular education programs. Expenditures on instruction account for almost sixty percent of operating expenditures statewide. Program expenditures for regular education account for nearly two-thirds of program expenditures.

The analysis reported here provides evidence of a direct and positive relationship between resource allocation and district performance. Districts with the highest student performance, as measured by the Texas accountability systemæthe level one districtsæspend more on resources (measured in terms of per-pupil expenditures) than districts with lower student performance. Specifically, level one districts spend more on instruction, instructional resources, school leadership, general administration, and co-curricular activities. Their total operating expenditures per-pupil are also higher than those of districts with lower levels of student performance. In terms of instructional programs, level one districts spend more per-pupil on regular education and career and technology education.

A separate analysis of nine strong-improvement districts (districts that dramatically increased their accountability ratings between 1996-97 and 1998-99) also demonstrated a link between resource allocation and student achievement. Expenditures for strong-improvement districts are higher than the state average for most expenditure functions and higher than the expenditures for the group of 283 level one districts as well.

Interview data show that level one districts are more likely to use a needs-based budgeting approach than other districts. These high-performing level one districts often involve teachers and other staff and community members in their district-level budgeting process. They consider student performance data when developing priorities and establishing program and budget goals. Administrators in level one districts expressed a commitment to making decisions that ensure success for all students, even if that involves spending more on student groups that have greater needs as revealed in performance data.

Many focus districts also seek innovative ways to alleviate teacher shortages. Some are working within their own districts to help aides and paraprofessionals attend college and gain certification. Some focus districts explained that they are examining ways to retain the teachers already working in their districts by implementing mentoring programs. A few level one districts have also begun using campus-wide performance incentive programs that they believe help their districts maintain a focus on achievement.

These findings show that open and collaborative decision making processes can be used to support improved student performance. In addition, the research suggests that school administrators who participate in data-driven, student-centered, and results-oriented budget processes may be able to make more effective use of resources than administrators who follow more rigid allocation formulas for distributing resources to campuses and programs. Districts seeking to improve student academic performance should examine levels of expenditures for instruction (particularly in the regular program) to direct adequate resources to this function. Educators, administrators, and local policymakers should make every effort to examine the relationship between spending and student outcomes in their own districts and campuses with the goal of allocating (or reallocating) resources so that they directly support improved student achievement.