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Author: Afton Group

Reimagining the School Funding Adequacy Study

Written by Afton Group on . Posted in Effective Governance, Funding Policy, Resource Equity.

In 2023, the Washington D.C. Office of the Deputy Mayor of Education (DME) sought to re-examine how schools in D.C. are funded and how the existing funding structures serve students.

Over the past several years, D.C. has made great strides toward adequate and equitable funding, striving to ensure that students have the resources they need to succeed. Even so, persistent opportunity gaps exposed a need for further exploration, especially given that different funding levels targeted to needs did not easily explain those gaps. Why aren’t the investment levels lining up with outcomes?

In light of COVID-19 and other pressing external factors, it became clear that supporting students and families through a global pandemic and intergenerational poverty will take all of us. Schools have been asked to meet increasingly comprehensive needs, without the formal charge or funding structures to support that charge. What is the role of the school, and how can education and community leaders come together to provide the services and resources needed for brighter futures in their respective areas of influence? It was in this spirit of enduring commitment to continuous inquiry and improvement that led us to co-create an innovative approach to guide school leaders’ next steps.

Complex circumstances require a context-sensitive approach

Like many states, DC completes a periodic, legislatively required ‘funding adequacy study’ to determine the resources needed for students to meet standards. Adequacy studies go back to the 1990s as part of the standards-based movement, and the approaches remain in use today. While this history is an important foundation for school funding policies, The Deputy Mayor for Education (DME) saw the 2023 legislative requirement as an opportunity to think differently and partnered with Afton to collaboratively meet the moment. Given the complexity at hand, we knew we needed to examine the problem from multiple angles. We also knew we needed to engage the expertise of those most affected by—and yet also typically excluded from—policymaking decisions: students, families, and school communities.

The desire for a data-informed understanding of current resource use and future resource needs led us to embark on a deep data exploration journey. As part of this journey, we developed archetypes of students and schools that helped us understand current funding and spending relative to student and community needs and outcomes at a far more nuanced level than is typical. This also positioned us to ensure adequate stakeholder representation across all archetypes developed, creating a ‘diverse by design’ approach to gathering input and feedback.

As a team, our desire to more fully understand the local context laid the foundation for a pioneering triangulation method that linked:

  • national expertise, economic modeling, and quasi-experimental research findings;
  • broad local stakeholder engagement from school leaders and staff, parents and caregivers, students, and community agencies; and
  • deep data analysis on student demographics, needs, outcomes, and LEA- and school-level spending data.

This triangulation approach offered significant improvements to traditional adequacy study methods alone. While traditional methods– including the national Evidence-Based (EB) and Professional Judgement (PJ) panels– rightly form the foundation of this work, the triangulation of additional methodologies provides a richer understanding of needs and opportunities. Combining existing methods with deep student- and school-level data analysis and abundant stakeholder engagement allowed us to meaningfully incorporate the insights and wisdom of the students and families experiencing the system every day. While typical adequacy studies offer insight into how much should be spent, this study had a keen eye on how resources can be more effectively allocated. We could better understand student and resource needs at a more granular level than typical need categories, and then take several steps further to determine the appropriate level of local investment that would support those needs.

The substantial stakeholder engagement also provided a better basis for contextual recommendations. We were able to identify levers that can support LEAs and schools and ensure that dollars are spent efficiently and in a way that serves students most effectively.

A research approach that honors nuance, highlighting tensions and common ground

Triangulating the three methods brings out agreements and tensions in the data sets that otherwise may not surface. Where agreements exist, we can see elements of the problem in high contrast and know that it’s a clear pain point. Multiple lenses also can help clarify cause(s) and identify viable solutions. Where tensions exist, we’re better able to design solutions thoughtfully, with higher regard for the possible unintended consequences or trade-offs that we wouldn’t have known to be mindful of otherwise.

Stakeholder voice through school leader interviews and parent surveys helped us understand that schools were being asked to do more than they ever have and, in many cases, without the formal charge or necessary resources to meet those increased demands. Thanks to our triangulation method, we could immediately see that local data backed up that insight.

For instance: on average, schools spend less than 50% of their resources on instruction. Notably, schools with the highest needs often spent the least funding on instruction, as their student population required more non-instructional supports.

Our data also showed that resources spent on mental health support were high, relative to other spending. Even so, school leaders told us they would use extra dollars for additional mental health support and staffing, suggesting that their base resources did not adequately meet needs. Administrators also noted the increased demands of the teaching profession, expressing the desire to find ways to mitigate increasing burnout and turnover.

Perhaps unsurprisingly, we heard from parents and families – across all wards and races – that they prioritize a positive academic reputation, highly qualified teachers, and a positive school culture. While we know from research these factors all directly impact student achievement, hearing directly from parents and families that they wanted to prioritize supportive measures to those ends created alignment. Leaders can now move towards pursuing well-informed additional investment and they strengthened the school-community connection having sought their valuable input on where the unmet needs exist.

A human-centered study facilitates better decision-making and promising outcomes

Our triangulation approach to the analysis provided a rich and diverse evidence base that informed a set of options and opportunities. Leaders are now equipped to make decisions for change that encompass immediately actionable shifts to funding levels within the funding formula, while also taking on related policy considerations to support change within and beyond the District.

In fact, change has already happened. Along with a 12.5% increase to the foundation level for teacher compensation, the weights within the funding formula are changing, too:

  • The at-risk weight will increase from 0.24 to 0.300
  • The alternative weight will increase from 1.52 to 1.58
  • The adult weight will increase from 0.91 to 1.00

Beyond the funding formula, specific recommendations also surfaced for additional funding outside the funding formula. These recommendations included support for mental health services, teacher pipeline development, and pilot programs for a neighborhood-based approach to school transformation. We also recommended specific avenues for pursuing improved system efficiencies, as well as enhanced financial reporting and transparency to keep a keen eye on spending patterns as they relate to outcomes.

In addition to the published report of the full study, the work informed an interactive website customized to various users to support broad engagement with study approaches, findings, and recommendations in a human-centered way.

At Afton, we put people first. Doing so results in stronger research design, more nuanced insights, and better decision-making. We are proud to come alongside communities to co-create both problem-solving processes and actionable solutions in a way that respects and engages those who stand to be most impacted. Ready to get started on yours? Get in touch.

Using Your Charter School Finance Committee for Impact and Sustainability

Written by Afton Group on . Posted in Charter Schools, Effective Governance, Financial Sustainability, Leadership Development.

At Afton Partners, we advise our charter school partners to follow the framework of the “5 Cs” when developing and evolving their organization’s financial governance. The “5 Cs”– Charge, Composition, Content, Collaboration, and Cadence– provide a roadmap for cultivating strategic thinking and effective decision-making with your board, all meant to elevate and sustain what’s working in your schools.

The 5 Cs of Charter School Financial Governance

The 5 Cs of school financial governance are arranged in a line.

Charge: Who is responsible for the financial decision-making process for charter schools?

To ensure a seamless sharing of responsibility, it’s an important first step to define everyone’s roles clearly. For instance, the leadership team is primarily responsible for the daily leadership and execution of the priorities set in collaboration with the Board. The Board provides oversight and accountability and ensures fidelity to the plan, including the financial plan. Blurred lines can lead to the co-managing of the budget–not an optimally effective or desirable approach. On the other hand, administrators should feel supported and not solely responsible for the organization’s financial strategy and health. Everyone has an equally important and distinct role in the stewardship of the school’s financial resources.

Setting shared expectations– with an understanding that roles will grow and evolve as the school network grows– builds trust and lessens confusion around how decisions are made and who will execute which pieces.

For example, when it comes to financial decision-making, the school board finance committee serves as a consultant, ambassador, and governing body. The CFO has the important role of collaborator, content creator, and guide to strategic decision-making. And, contrary to what some may believe, the CEO has an important role in ensuring a strong board composition, board engagement and collaboration, and guide in strategic decision-making alongside the finance committee.

Composition: Who should be on a charter school finance committee?

A charter school board finance committee carries out the principal aspects of the board’s financial duties. They set fiscal policies and expectations, continually assess the financial health and direction of the school or network, and make strategic financial decisions in alignment with the broader strategic plan.

To carry out these duties, a strong board finance committee should consist of diverse professional backgrounds and skills, including business strategy and operations; banking; fiscal planning, management, and analysis; and real estate. Board members leverage their expertise and connections in their respective areas to strengthen and sustain the school or network’s financial standing.

In our practice, we find that taking care to build and sustain your board’s financial skillsets and engagement translates to high impact.

Content: What information is important for effective financial governance?

The Finance Committee should have the materials and data needed to make decisions that support long-term sustainability and align the budget to the overall priorities. Examples include:

  • Year-to-date financial statements, compared to budget
  • Long-term financial projections
  • Cash flow monitoring
  • Current key performance indicators and up-to-date financial reporting on those metrics
  • Metrics on debt compliance and authorizer standards

With this information, the committee can then develop or revise standard metrics criteria across key performance areas (e.g., cash, enrollment, fundraising, net assets, etc.) and decide on targets. Part of each meeting should be devoted to evaluating progress towards the targets.

To mitigate challenges toward those goals, the committee should also monitor the organizational risks related to financial planning and decision-making.

The table details types of risks charter school finance committees encounter and examples of those risks.
Example categories that can be adapted to suit your school context, as each will affect financial position and forecast.

Collaboration: How should finance committee members work together?

First and foremost, the ability to collaborate well requires everyone to understand their roles regarding the organization’s financial management. Leveraging their various skill sets, committee members work together to build ongoing conversations with one another, the CEO, the CFO, and the full board. Engaging each member’s background and insights facilitates healthy discussion, leading to actionable strategic plans and informed decision-making. Effective finance committees should also commit to making adequate time for the work at hand, earning one another’s trust, and coming prepared to fully engage.

For best results, CFOs and Finance Committee Chairs should plan to work together one-on-one in advance of committee meetings. This ensures that the right priorities and information are presented to the group for productive discussion and strategic decision-making. Working in close consultation with the CEO, this trio provides leadership for the larger board to consider academic investments with respect to financial guardrails. Especially amid complexity during the budget cycle, their collaboration with one another and the meaningful incorporation of their respective vantage points is critical to impact and sustainability.

Cadence: What is an effective meeting plan for a finance committee?

Finance committees should meet regularly, with an eye toward the seasonal “arc of the year”.

A sequenced meeting calendar notifies the board of decision-making timelines. It also mitigates the risk of smaller–but no less important–agenda items getting crowded out by a waterfall of more discussion-heavy priorities.

Prescheduling board meetings for the year can aid in the planning process for each meeting and provide predictability for committee members. Prescheduling also allows the committee to allocate the proper amount of time to items requiring a deep dive, ensuring that multiple major discussions or approvals do not end up on the same agenda.

Putting Effective Financial Governance in Action

Intentional financial governance increases impact and improves sustainability. If you don’t have an engaged, effective finance committee, it’s not too late to make it happen. Use the 5 Cs to help you determine where to invest your time. Want more hands-on support? Reach out to our team!

As the national leader in charter school financial planning services, we understand the unique challenges charter management organizations commonly face. We have partnered with more than 80 networks of all sizes, from single-site operators just getting started to the largest charter school organizations in the country. Our services for charter schools build finance capacity, strengthen financial sustainability inform school resource allocation, and strategically inform organizational decision-making on growth, facility affordability, debt financings, mergers, and restructurings. To learn more, contact Fulton Breen.

*Check out this article.

Partner Interview: Fair Chance Hiring

Written by Afton Group on . Posted in Community Engagement, Workforce Development.

From January through September 2023, Afton collaborated with the Corporate Coalition of Chicago, Cara Plus, and the Chicagoland Workforce Funder Alliance to facilitate the inaugural Fair Chance Hiring (FCH) Initiative, a business-led effort to reduce barriers to hiring individuals with criminal justice involvement.

Afton: First, for those that may not know, what does the term ‘fair chance talent’ mean?

FCH Initiative: It refers to individuals who have either been incarcerated, have a prior conviction, or have a prior arrest. When folks hear this phrase, they often only think of people who have at some point in their lives served time in prison. However, one-third of the adult working age population has a criminal record. A person does not have to have been incarcerated; someone with a 10-year-old DUI falls into this category. Through this Initiative, we want to demystify who is part of a ‘fair chance’ hiring pool. We want to reframe the narrative and shine a spotlight on just how many folks have been and continue to be impacted by the criminal legal system.

Afton: What are some of the pervasive myths or perceived roadblocks employers cite related to fair chance hiring?

FCH Initiative: There are three main things that usually come up. First, companies often cite their industry’s regulatory requirement as being a barrier to hiring fair chance talent, but this blanket statement leaves out a lot. Sure, there might be some folks who won’t be able to be hired for a specific role because they possess a disqualifying record, however, there are many ways that organizations can make it work–regulatory requirements alone should not stop you from hiring individuals with prior convictions or arrests.

Second, companies have a lot of perceptions about risk, about what they’ll be liable for if their hire commits another crime. To address this, many companies set their background check lookback period to be 7-10 years, often disqualifying individuals who have a conviction within that timeframe. But why? Why are we looking at 10 years? Most people are not career criminals. They may have made one choice that led to an arrest or conviction, but they’re not necessarily repeating that behavior again and again. Often, individuals take these actions because of their limited economic opportunity, so having a job addresses this need.

Third, companies are subject to implicit bias and often have preconceived notions about what kind of worker someone with a criminal record will be. However, in practice, employers are finding fair chance hires have higher retention rates and are focused not only on keeping a job but in advancing, as well. As one example, fair chance hires at Dave’s Killer Bread Company outperformed traditional hires in attendance, policy, and behavioral violations, and were promoted faster over a three-year period.

Afton: How was the Fair Chance Hiring Initiative launched?

FCH Initiative: The Corporate Coalition decided to pursue a fair chance hiring cohort based on the interest of our Coalition members. In 2022, Jeff Korzenik, a thought leader in this space and author of the book Untapped Talent: How Second Chance Hiring Works for Your Business and the Community, presented to our membership about the hiring challenges many employers are facing, particularly coming out of Covid. The U.S. is currently experiencing a labor shortage that requires employers to look to non-traditional or ‘untapped talent’ pools– like individuals with prior arrests or convictions–for their hiring. In making this business case, our members expressed resounding interest in participating in a cohort that would help them examine their own hiring and retention practices related to fair chance talent.

Once our membership was on board, we were able to secure funding from the Chicagoland Workforce Funder Alliance, JP Morgan Chase and the McCormick Foundation to launch an inaugural cohort. We also partnered with Cara Collective—an organization with a long history of helping individuals impacted by the criminal legal system to secure employment—and its expansion arm, Cara Plus.

Afton: What were the goals of this first cohort?

FCH Initiative: The goals of the Initiative are to demonstrate and promote models of successful fair-chance hiring, to build a cross-industry group of local champions for fair chance hiring to scale the effort, and ultimately to increase the number of people with criminal records gaining productive, family-supportive employment. In this first cohort, we worked with eight companies that were largely national or global in scale, ranging from financial services and health care to transportation, academia, and retail. Over the course of nine months, we met monthly to discuss topics such as overcoming regulatory barriers, developing talent pipeline partners, revising background check processes, overcoming internal barriers and external perceptions, and offering supportive wrap-around supports to ensure retention and advancement of new hires.

Afton: What outcomes, successes, or results did you see from this first cohort?

FCH Initiative: So many amazing things occurred! Here are some examples:

  • The majority of cohort members have created internal stakeholder groups to continue to move this work forward, generate organizational buy-in, and influence culture change.
  • Many are drafting language to include in their job postings to indicate they are “fair chance employers” and encouraging those with arrests or convictions to apply.
  • One company is working to adjust their background check lookback period from 7 years to 5 years.
  • All cohort members identified two or three roles that could be suited for a fair chance hiring pilot and received feedback on these job postings to ensure they represent more inclusive hiring practices, such as highlighting transferrable skills and listing responsibilities in clear, jargon-free language.
  • Two companies are drafting additional content on their background check processes to communicate expectations more transparently with interested job seekers.

Afton: For folks reading this who may be interested, what actions they can take to hire more fair chance talent?

FCH Initiative: There are three things organizations can do right away to make change:

  1. Identify roles within your company that are fair chance friendly and make that known! Let applicants know you’re open to hiring individuals with records by posting transparent communication on your website and in the job descriptions themselves.
  2. Partner with workforce development organizations in your area that specialize in supporting fair chance talent. They will be able to provide resources to you and the employee to ensure the hiring, onboarding, and retention process goes smoothly.
  3. To the extent you can, conduct more individualized assessments for candidates based on the nature of the role you’re hiring for, the nature of the conviction, and the time that’s elapsed since the conviction took place. This individualized approach to your background check process will help you keep the door open to as many people as possible.

Afton: What comes next for the Fair Chance Hiring Initiative?

FCH Initiative: We are currently recruiting employers for our next cohort, which will kick off in January 2024. Reach out to Steph (steph.dolan@corpcoalition.org) for more information. And, for those interested in additional tools to support fair chance talent, check out The AdvoKit from Cara Plus or reach out to Liana at lbran@carachicago.org.

Eight Community Engagement Practices That Facilitate Stronger Decision-Making

Written by Afton Group on . Posted in Community Engagement, Effective Governance, Resource Equity.

We believe answers exist in the communities being served and it is our job to support our public sector partners in uplifting them. There is no “one-size-fits-all” fix to many of the issues we face, so successes must be driven by local champions who know the landscape and can commit to carrying out a vision, plus continuously improving it over time to strengthen its impact.

In short, we can arrive at better answers and make more progress when we work together as a community.

We recommend eight key practices to create meaningful engagement opportunities that result in rich and actionable insights.

PRACTICE #1: Come into engagement activities curious, without assumptions or predetermined ideas.

As facilitators of the Governor’s Workforce Commission on Equity and Access in Illinois, we started by exploring the needs of users of the workforce development system to understand their challenges and pain points. With our colleagues at MDRC, we created job seeker personas and journey maps and conducted many focus groups with workforce providers and job seekers. Notably, we uncovered specific issues for undocumented workers who felt they could not access good jobs because of work authorization requirements and the feeling that the education, skills, and work experience gained in their home countries were not appreciated or valued in the U.S. This, in part, led to recommendations to expand supports for those interested in entrepreneurship and self-employment, like the undocumented job seekers we spoke with.

PRACTICE #2: Include the most impacted individuals, with particular focus on historically underrepresented voices.

Supported by Afton Partners and UPD Consulting, the ReImagine School Funding Project is a Boston Public Schools (BPS) initiative that is redesigning the school funding policy to ensure the district’s shared values are clearly communicated and upheld in the allocations to school budgets. A Community Steering Committee, made up of principals, families, students, and community members is empowered to recommend a school funding policy to the Superintendent, in alignment with the BPS Racial Equity Planning Tool. The Committee has worked collaboratively with district and school leaders throughout the project and at the culmination, the new funding priorities and policy recommendations shared with the Superintendent and School Committee will come directly from this group, helping to ensure the recommendations reflect the unique and diverse needs of all BPS students.

PRACTICE #3: Make engagement accessible for participants.

With the Colorado Early Childhood Compensation and Benefits Task Force, focus groups and surveys were offered in both English and Spanish and at afternoon and evening times in an attempt to accommodate most providers’ schedules and primary languages. Based on levels of participation, participants were offered incentives and professional development credit. Feedback from the focus groups and the survey was carefully considered in the development of the Task Force’s recommendations, alongside quantitative data gathered locally and nationally. In addition, Afton values extensive communication among partners in multiple formats, sign language, ADA accessibility of print and online materials, as well as use of plain language (or avoiding use of acronyms and technical terms).

PRACTICE #4: Set norms and expectations from the start.

Afton facilitated the Great Start for All Minnesota Task Force’s establishment of Guiding Principles that shaped its facilitation and the eventual development of recommendations. The Guiding Principles reflected the Task Force’s values and beliefs and laid a foundation for the work. The Task Force was also grounded in several supporting concepts and processes, especially prioritizing equity in decision-making.

Members co-developed and agreed to norms and expectations to guide their discussions, work towards productive conversations, and aim to have all voices heard. These were revisited at all meetings. The norms and expectations included 12 points. They included, in part:

  • Members attend meetings prepared and on time
  • Engage in respectful dialogue
  • Everyone’s input is important
  • Assume best intent
  • Listen with an open mind, and for commonalities
  • Don’t say or type anything you wouldn’t want to have shared in public
  • Don’t just disagree, offer a doable alternative idea

The Task Force, its two working groups, the co-chairs, and the members all had clearly defined roles. Together, they created and held to specific voting protocols including:

  • Formal votes included only voting members and were held regarding formal recommendations that would be included in the report. In accordance with open meeting law, votes were held with a roll call.
  • Informal voting (ex. thumbs up) was used to engage all Task Force members on items such as a matter of process, or an item necessary to get to a vision statement or recommendation.

PRACTICE #5: Demonstrate respect, transparency, honesty, and genuine appreciation for all perspectives shared.

In any community engagement activity, people want their input to be heard, valued, and impactful. In our work with the Colorado Department of Early Childhood, our engagement with early care and education professionals is doing just that. Through our facilitation of focus groups, we have clearly articulated why their input is needed, what it will be used for, who it will be shared with, and how it will influence final recommendations. We make it clear that there is “no wrong answer” and guarantee anonymity in our notetaking to encourage sharing and disclosure. Additionally, to honor participants’ time, we offer them monetary stipends and the option to receive professional development credit through Colorado’s state system. Finally, to ensure we close the feedback loop with participants, we will share the final report with our summary findings and results. This way, they can see the outcome and know their effort was worthwhile.

PRACTICE #6: Pursue broad and diverse participation when analyzing and making meaning of data.

Individual, structural, and institutional biases can emerge in community engagement work, and it’s also important to consider statistical bias. For example, in our data analysis and financial modeling work for school districts and charter school networks, Afton emphasizes the significance of looking at site-level financial, academic, and student data in work around school-level funding allocation policy and budgeting. This must accompany district-wide data analysis to make sure important details aren’t missed. For example, certain schools may have higher or changing needs of students, or student outcomes on an unwanted trajectory. Examining how funding is spent differently across all sites with distinct characteristics and forecasting future expenditures and investments at the school site level can reveal unintentional inequities and issues in the school plan. Therefore, it’s critical to ensure broad participation from education staff, community members, and students and families in interpretive/analytical activities that are meant to inform decisions, to ensure that those with lived experiences related to the data can explain what it means to them.

PRACTICE #7: Conduct iterative engagement activities at various points in the project; consider a variety of methods or approaches.

The goal of our work for the Office of the Deputy Mayor of Education in Washington DC is to develop a funding policy that provides equitable and adequate resources to serve each student well, and to make a clear case for policy change. In collaboration with our project partners, we have identified four primary groups to engage with through a variety of methods. These include district leaders, school personnel, families, students, and the community, along with citywide leadership. The strategies to engage with each of these groups vary to ensure we are providing space to meet individuals where they are while also clarifying the why of the engagement. For example, a survey may be used to capture straightforward financial data from district leaders who deal with the funding policy daily. However, a focus group is a more inclusive engagement strategy for parents and families to allow for a nuanced conversation on the resource needs of their students. Finally, key school personnel and leaders may be worth investing time to interview 1:1, based on their deep understanding of the implications of the work. Some groups will offer foundational information while others will offer reactions to proposals as they take shape. The engagement completed across all groups will be used to raise up the recurring themes we see across the district and inform our final policy recommendations.

PRACTICE #8: Ask for feedback along the way and at the end.

It’s pivotal to hear from all participants regarding whether your process is working for them. Do they feel they have adequate opportunity to share? Do they walk away from each encounter feeling informed? Empowered? Or something else? What could be improved for the next community engagement activity? In addition to gathering responses to make short-term adjustments, collecting feedback at the end of a journey offers teams a tremendous opportunity for reflection on both the outcomes of a process and how they were shaped by certain approaches.

There are many questions that could be asked in all phases of a project but everyone feels survey fatigue from time to time, so it’s important to hone in on the most important questions and use formats that make responding easy.

IL Gov. Pritzker Touts Early Childhood Focus in 2024 State of the State Address

Written by Afton Group on . Posted in Noteworthy News.

Earlier today, Illinois Governor Pritzker delivered his State of the State Address, highlighting Smart Start Illinois, which is a historic investment in the state’s early care and education (ECE) system. Smart Start launched last year and is already improving access to quality child care and other critical services for young children and their families, while providing long overdue support for professionals working in the system.

This year, Governor Pritzker is seeking the legislature’s support for a $150 million increase for the second year of the initiative, bringing the total investment to $400 million. Key investments include:

  • $200 million for Smart Start workforce initiatives, including Smart Start Workforce Grants, to help child care providers meet a new, higher wage floor for their staff and stabilize the field.
  • $75 million increase in the Early Childhood Block Grant to increase quality and create new slots in preschool deserts.
  • $13 million to begin the state’s transition to a unified early childhood agency – the Department of Early Childhood.

Afton has a front row seat to Illinois’ efforts, working closely with state leaders to thoughtfully engage stakeholders in a way that centers equity and the human experience while also bringing our expertise in data analysis and cost-modeling for accurate and strategic allocation of resources. We are proud to support the design of the Smart Start Workforce Grants, ECBG allocation, Early Intervention payment reform, and the transition to a unified early childhood agency.

Smart Start Workforce Grants

Nationwide, ECE staff are drastically under-compensated for the important work they do, with an average wage of about $13/hour. Low compensation means child care programs struggle to recruit and retain qualified staff and families cannot find child care for their children. IL is one of a small number of states that has committed significant resources to address this issue. If approved by the legislature, funding for the Smart Start Workforce Grants (SSWG) would build on the previous investments.

Workforce Grants are an innovative approach to address the ECE workforce shortage, using the state’s general revenue to supplement ECE teacher salaries. Child care programs that participate in SSWG will receive funding to pay their classroom staff at least a base wage (the “wage floor”). In other words, these programs will be able to meet a higher wage floor for their staff without raising tuition for their families.

Afton’s Role

Afton supports the planning and design of the SSWG through facilitation of robust stakeholder engagement efforts that include ongoing advisory committee engagement, provider focus groups and surveys. We create opportunities for the state to meaningfully engage the providers who may benefit from these grants and ensure that the unique perspectives of Spanish-speaking providers, home-based providers, and others who have had less access to grant opportunities are considered in design and implementation.

Afton also led the development of IL’s child care cost model, a tool that helped determine the cost to meet the wage floor across different program types and regions to ensure that grant amounts are sufficient to cover the costs of raising wages. This critical support helped determine the parameters of the program so that SSWG can reach as many child care programs as possible within the budget.

Early Intervention

Early Intervention (EI) provides crucial support for young children experiencing or at risk of developmental delays. Unfortunately, payment rates have not kept up with inflation in recent years, straining the system and negatively impacting recruitment and retention among the EI workforce, which includes service coordinators, interpreters, and therapists (such as developmental, speech, occupational, and physical therapists).

Afton’s Role

Afton is supporting an innovative project to develop a cost model for Illinois’ EI system and consider options for payment reform. To date, hundreds of EI practitioners and families have participated in focus groups and surveys that Afton facilitated to give their input on changes they hope to see in the system. Using this input, Afton will work with the Bureau of Early Intervention to develop a cost model that reflects the true cost of providing EI services across the state. Afton is also supporting state leaders in considering short- and long-term improvements to its approach to payment to improve access to high-quality EI services for children and families.

Early Childhood Block Grant

As a critical component in this system, the Early Childhood Block Grant (ECBG) provides funding for early childhood and family education programs and services that help young children enter school ready to learn.  The Illinois investments are intended to increase access to programs, with a focus on preschool “deserts” – regions that lack access to ECE programming – and support quality improvement across new and existing programs.

Afton’s Role

To address inequitable access to high quality programs, Afton has partnered with ISBE to identify and prioritize preschool deserts for new ECBG allocations. Afton is also supporting ISBE to develop a “cost model” that informs equitable funding allocation decisions. Afton will leverage quantitative data and engage stakeholders to inform the cost model.

IL Governance Transition

So often, early childhood systems and structures are designed around funding streams, resulting in a patchworked system that places the burden on families to navigate a dizzying maze of programs and services. Last fall, at the recommendation of the Afton-facilitated IL Commission on Equitable Early Childhood Education and Care Funding, Gov. Pritzker initiated the transition to a new, unified Department of Early Childhood. The transition will provide the state with a unique opportunity to thoughtfully redesign and rebuild an equitable, accessible, family-centered early childhood system. The effort will require reorganization of programs and funding streams that currently span three separate agencies under the new umbrella.

Afton’s Role

Over the next three years, Afton will collaborate with several state agencies, state and local advisory bodies, and communities – particularly those that have been historically underresourced and underserved – to inform the design of the new unified state agency with a racial equity, family-centered lens. Given the complex funding streams involved, Afton will also leverage our deep funding design expertise to identify equitable funding strategies that support the redesigned system.

Impact

In IL and across the country, Afton is excited to collaborate with those who are most impacted by challenges in the early childhood system to create solutions that will work with appropriately allocated resources. Illinois’ work has tremendous potential to serve as a model for other states. We invite you to stay tuned as these initiatives advance and we analyze the impact of these innovations. We will continue to share our learning and resources that other states may find useful as they explore policy change and investments that support the best outcomes for children and families.

Fiscal Cliff Pressures – the Impact of ‘the Six Es’ on District Budgets

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

At Afton, we’ve referred to these interrelated challenges in a framework called ‘the Six Es’:

  1. Economy: States, localities, and districts are facing overall rising costs, and those costs are frequently outpacing revenue growth.
  2. ESSER: Many states and districts used one-time pandemic relief funds to cover recurring, increasing costs, but these funds are slated to end this year while the costs remain.
  3. Employees: Educator talent is more difficult than ever to find and competitively compensate, which can be especially challenging for roles and locations that have seen long-standing shortages.
  4. Enrollment: States and districts are experiencing uneven enrollment changes, complicating district revenue in the short-term, and enrollment is likely to continue to decline overall in the long-term.
  5. Exceptional Needs: Although overall enrollment trends are down, the share of students with greater special education needs, language learner needs, mental health needs, and learning loss needs is rising.
  6. Expectations: Increased needs have led to changing community expectations of the role of schools, and a desire for a higher level of baseline services at all schools.

States and districts will need to rely on one another to address these challenges:

  • States need strong districts to provide the best possible experience for all their students.
  • Districts need states to support their work by providing clear expectations and equitable, adequate, and sustainable funding and systemic solutions.

As both plan for the near- and long-term, neither can do it without the other. Understanding your unique state and district “6E context” is foundational to creating strong policies and programs as we move forward in 2024.

Interested in discussing the 6 Es in your context? Please contact Afton Senior Directors Heather Wendell and Kevin Wenzel to learn more about the work we do. We look forward to being in touch!

2023 Year in Review and Looking Ahead

Written by Afton Group on . Posted in Noteworthy News.

Every initiative we have supported has offered an opportunity to strengthen social systems with a focus on justice. We’ve expanded our skill sets to offer a comprehensive set of solutions to drive change in the public sector, including:

  • Community and family engagement
  • Financial planning, budgeting, and cost modeling
  • Funding policy design and implementation
  • Research and analysis
  • Strategic planning and implementation

Whether in early care and education, K-12 systems, workforce and economic development, or higher education, we put people first and drive changes that create a future where we all can thrive. Here are some highlights from 2023 that helped us learn and grow into who we are today: a team of committed collaborators prepared to walk beside you and take on the complex issues facing us in 2024 and beyond.

2023 Highlights

Look at our amazing team! We added close to 20 full time staff members in the last year who bring decades of diverse experience and skillsets to make Afton even stronger than before!

We conducted over 70 different initiatives last year in 22 states, the District of Columbia, and Puerto Rico—some big, some small, all of which are in line with our core values. We would love to tell you about each one but will instead zoom in on a few headlines that stand out as special:

  • We guided Boston Public Schools’ Reimagine School Funding project and grew tremendously through equity-focused, inclusive community engagement that allowed for deep reflection on the evolving role of the school.
  • We partnered with the DC Deputy Mayor for Education to develop a new approach to district/school funding adequacy studies, in collaboration with Augenblick, Palaich and Associates and Metropolitan Strategies and Solutions. We are excited to share the final report in the coming weeks—connect with us on LinkedIn to be the first to know.
  • We continued our support for Illinois’ historic efforts in early childhood through design and development of proposed Smart Start Workforce Grants, cost modeling and data analysis for state-funded preschool, cost modeling and payment reform strategies for Early Intervention, and facilitation of a stakeholder advisory body for a new early childhood state agency.
  • We supported dozens of charter networks in 15 states, the District of Columbia, and Puerto Rico on growth planning, facility affordability analyses, financial sustainability, and strategic resource allocation.
  • We developed ‘the Six Es’ Framework to acknowledge the unique context that K-12 public schools, including charters, are operating within. We approach our work with careful consideration of each of these factors, which have potential to destabilize systems if we don’t get ahead of them.
  • We promoted fair early care and education staff compensation and benefits through two separate projects in Colorado.
  • We have begun measuring the impact our work has on the field and use that data to be more strategic, reflective, and effective in the future. If you get a survey from us, please know that we deeply appreciate your comments and insights!

On that final note, we are so pleased when we hear that our service hits the mark, as some of you have graciously shared with us. Here are some quotes shared by our inspirational partners in 2023.

From all of us at Afton, thanks for joining us on the journey! Even in the face of systemic shortcomings, social and racial barriers, and shrinking budgets, when we work together, we can create a future where we all thrive.

Financial Stewardship in a Time of Elevated Pressures

Written by Afton Group on . Posted in Charter Schools, Effective Governance, Financial Sustainability.

We believe effective financial stewardship consists of three major pillars:

  • Enacting your mission through resource allocation,
  • Protecting your money with controls and governance, and
  • Making good resource decisions that can be sustained and leveraged toward achieving your desired long-term impact.

Leaning into your strategic fiscal oversight and operations is in tune with the moment – many public schools face elevated pressures related to enrollment uncertainty, ESSER funding expiration, student needs, and talent, all of which have significant financial implications. Further, charter schools have disproportionately complex funding and financial reporting and overarching public policy circumstances. Getting rigorous with your financial stewardship can be an enabler to navigating those waters, fending off sustainability problems and threats to your mission.

So, let’s unpack some practical ways to be more rigorous in your financial oversight…

Reflect the Mission: To do this well requires a thoughtful perspective on your instructional and operational priorities. Each year, the budget should highlight specific investments that are intended to make progress toward the school’s goals and achievement of its mission while sustaining a strong foundation. Given that personnel is likely to be your biggest investment, are proposed annual adjustments in talent aligned to your priorities for the year and the long-term mission? Which schools and grade levels require particular intervention, and how is that reflected in the budget?

Protecting Money Through Controls and Governance: The board, CEO, and CFO are responsible for providing a high-quality education for your students AND ensuring good stewardship of public funds. This includes ensuring financial health and sustainability day-to-day and week-after-week, as well as preventing fraud and misfeasance. So first, we’ll give a reminder you probably don’t need: you must do everything you can to prevent a crisis. Governance, controls, reporting, and compliance build your organization’s foundation for success, and must be a recurring focus. Let’s dig into what that looks like…

First, clearly delineate which aspects of financial reporting are led by senior management and what role the board plays in overseeing the financials of the organization. The roles must evolve as your organization grows, matures, and becomes more complex. Regardless of the approach, your money and resources must be protected, so the finance department will require resources. Additionally, enacting engaged board financial governance is a critical fiscal control and an enabler of sound financial decision making. As a rule of thumb, you’ll want at least three engaged board members who are well versed in financial statements and fiscal planning. The finance committee, made up of staff and board members, should meet monthly or bi-monthly and cover a standing agenda of monthly reports on cash position, budget variance, enrollment, other dashboards, risk management, and seasonally appropriate topics.

Making impactful resource decisions: Can you identify what you need now and later to generate your desired impact? Use your student data to inform prioritization of investments at each of your schools. Balance your instructional priorities with some financial planning, checking your assumptions on operational matters like:

  • Expected growth rates in state per pupil funding and/or federal funding shifts.
  • Enrollment data by grade-level.
  • Wage increases and any changes in the cost of benefits.
  • Needs for technology, curricula, professional development, maintenance, transportation, food insurance, audit, and legal expenses.

There’s a reciprocal relationship between focusing on the present and future of your finances: your fiscal health today will determine what you’re capable of tomorrow, and today’s decisions must be based on what you hope to afford in the long-term.

As a general guideline, you should utilize at least 2-3 years of historical trends to build a 3-5 year model that reflects your cash position and conservatively forecasts costs that might arise. With all this in hand, you’ll be prepared to navigate your work of delivering high-quality education with strong fiscal stewardship.

Download Afton’s slide deck on Financial Stewardship

FOX Fellowship’s Support for Strong Charter School Management

Written by Afton Group on . Posted in Financial Sustainability, Leadership Development.

Introduction

Afton’s co-founder and Managing Partner, Carrie Stewart, has been a coach for all three cohorts of the FOX Fellowship, a program for Chief Operating and Financial Officers of public charter schools around the country. A few weeks ago, we spoke with the fellowship’s co-founders, Irma Muñoz and DeRonda Williams, to hear about the intent and impact of the program. In our view, the FOX Fellowship represents an important investment in professionals who are great enablers of high-quality public education. Below we share Irma and DeRonda’s powerful perspectives on the work.

Guest Contribution: FOX Fellowship’s Support for Strong Charter School Management

Operations and finance functions are critical to the success of public school systems. While there are significant time and resources dedicated to high-quality instruction (and rightly so!), chronic underfunding in our public education systems leads to charter schools and public school districts alike being unable to fully invest in high-quality finance and operations functions. Therefore, in the charter school sector, we wanted to develop something that supported CEOs and organizations as they scale, not just in recruiting the right talent, but also in onboarding them and providing them an infrastructure of support, particularly in their first year in the roles. There are not many professional development programs for operations and finance leaders and not many networking opportunities other than Charter School Growth Fund’s CFO and COO community of practice. Outside of that, there really aren’t many opportunities for charter school finance and ops leaders to network and share strategies and tools. We also wanted to prioritize building the capacity and improving the retention of COOs and CFOs who are women and leaders of color. Charter schools serve Black and Brown children, so it is important to have the appropriate representation in our schools and in the C-suite.

Fortunately, Charter School Growth Fund recognized the need for a program and wanted to support a program like FOX. They provided funding to support our pilot in June 2022 and for subsequent cohorts. In October 2023, we kicked off our third cohort and plan to launch cohort 4 in September 2024.

Key Components of the Program

At the onset, we set very specific measures of success and committed to responding to data. One of them was around retention of leaders in their role because of the trends that we were seeing in the sector. I’m happy to say we have increased the retention rate within the organizations we’re working with. The early numbers point to retention in a leader’s role in the first year and beyond, which is rewarding and exactly why we developed this fellowship.

To plan for each cohort, we start by collecting a lot of data from the Fellows and their CEOs. We survey three times during the fellowship, beginning with a needs assessment, and tailor our offerings based on the needs of the cohort. We also do ad hoc things like focus groups if we see there is a particular need. We take the data as well as learnings from prior cohorts and embed them in the next cohort programming so that we’re responding to a defined cycle of continuous improvement.

As we were developing the fellowship program, another important thing to us was including coaching as a key component. We were fortunate to pull together a roster of top-notch, diverse coaches, many of whom have sat in the operator seat at high-performing networks. A unique aspect of our coaching is what we call the success triad (fellow, coach and CEO). The fellowship fosters a success triad, which develops a supportive environment that facilitates the work of each fellow. Coaches work with fellows on a dedicated one-on-one basis, while ensuring the deliberate and active involvement of a fellow’s CEO or Executive Director. There are three success triad touchpoints during the fellowship. We see the coaching component of the fellowship to be the linchpin of our offering and it has been very successful at helping Fellows accomplish that shift.

In terms of specific needs for the Fellows, there’s a mix of adaptive and technical needs to address. On the adaptive side, we help them clearly define roles and responsibilities, manage change, and manage up. We dedicate time at our in-person kick-off toward setting SMART goals that measure the success of the work they’re responsible for and ensure that the goals are responsive to the needs of the organization. This work often seems foundational and assumed. It really isn’t. A lot of our fellows throughout the three cohorts are spending a lot of time doing goal definition to drive change and impact throughout the fellowship and beyond. We also did a session ‘Get off the balcony and get on the dance floor.’ The programming provided strategies on how the fellows can get out of the weeds to focus more on strategy and impact. In terms of the technical side, our programming focuses on topics such as student enrollment, budgeting, facilities planning, and long-term financial sustainability. We go deep and cross-functional in each topic. For example, COOs know about enrollment and prioritize the work, but more often than not, they don’t understand the interdependencies between operations and finance or operations and the academic team.

In addition to offering programming, we share best practices, tools, and templates with our Fellows–we don’t want anyone recreating the wheel when high-quality products exist. Fellows also have access to on-demand classes that are virtual and self-paced sessions. They complement the core curriculum.

Challenges and Growth in Fellows’ Roles

COOs and CFOs are uniquely positioned to drive success within a Charter Management Organization, albeit in the format of eliminating distractions so that instructional leaders can focus on what is important, which is student achievement. We often hear that finance and operations teams sometimes don’t understand how their goals impact the overall big picture, due to their lack of direct contact with students. Some CFOs and COOs operate in siloes much moreso than their academic counterparts. That isolation, whether it’s inadvertent or self-imposed, is really harmful to the organization as a whole. The COOs and CFOs certainly see themselves as leaders of their function, but they often don’t assume that they are also stewards of the organization as a whole. Sometimes part of the obstacles around building an infrastructure for success, whether operational, financial, or academic, has to do with how the leadership team works together to ensure that however the problem solving looks and whatever solutions are being executed, it is taking a holistic view that includes a COO and CFO sitting at the table and advocating for the best interest of the kids from their position of accountability.

One component of our fellowship is designed to quickly turn any less-than-ideal dynamics around–it is known as the Capstone Project. We believe a new COO or CFO should have a tangible win within their first six months. This sets the tone for their tenure, it facilitates working relationships among their peers, and engenders trust among their team. Fellows select a project after consulting with their CEO and leadership team. Their Capstone represents a pressing need of the organization. Through the Capstone Projects, our fellows have made an early impact on their organization’s overall financial health and quality of operations services.

We have about 60 fellows who have completed or are currently going through the FOX Fellowship. Over the course of the program, we get to experience the joy of seeing Fellows grow! We’ve had several instances where folks join the fellowship in interim roles, with their CEOs wondering about whether or not a promotion will materialize, and at the end of the fellowship, that promotion happens. Another exciting outcome is the network of connections that are happening with each cohort; these are life-long connections. Being a new leader who does such difficult work is hard and doesn’t leave much time or opportunity to build a network with peers outside the organization. It’s been incredibly rewarding to see folks that came into FOX feeling isolated or alone leaving the fellowship with a built-in family that provides support and a lifetime of lifelines. What’s really great about the fellowship is that you have representation of 20+ charter management organizations. Everybody comes together with a unique perspective about how to approach a problem. We share examples of how a particular problem or focus area should be approached, but the biggest learning comes from fellows sharing and learning from each other.

Lastly, the connections that our Fellows have made with their coaches is also something unique and special. It is not uncommon to have a coach continue their work with a fellow after the fellowship ends, and thus they continue a relationship. This is a testament to how incredible our coaches are and how much value they add to the networks they support.

What’s next for FOX Fellowship

We launched the pilot very quickly and are already on our third cohort. We are building excitement about FOX. We have a wait list for cohort 4, which will launch in September 2024. We have other amazing CFO and COO leaders who are raising their hand to be coaches. We need to pat ourselves on the back because we feel like we’ve done an amazing job so far to make each cohort even more of a success. We simply want to make the fellowship as impactful as possible.

If you’re interested in participating, please fill out the FOX Fellowship Interest Form.

Affording Quality Schools – Solutions and Remedies 1 and 2: Reinventing Funding Formulas and Services with Costs That Seem Fixed

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

Solutions to Affording Quality Schools

At Afton, our work with school districts throughout the country affords us an opportunity to appreciate the complexities that school districts face to reduce costs during periods of enrollment decline. And our work with charter school operators also affords us the opportunity to appreciate how school choice can change the lives of students who have otherwise limited options.

So how can quality charter schools be afforded without financially harming district-run schools?

Afton identified 8 ways that school districts can mitigate the effects of enrollment decline (and these were highlighted in CRPE’s “Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment”):

  1. Uniform intra-district funding formula for district and charter schools
  2. Continued operational efficiencies, with an eye toward making costs more variable
  3. School closures and corresponding real estate transactions
  4. Redistricting / efficient enrollment planning
  5. End “last in first out” methods of reducing staff
  6. End unsustainable/unfunded salary commitments (step/lane/raise)
  7. End proliferation of long-term fixed cost obligations (pension/OPEB)
  8. District commitment to decision-making based on long-term planning

None of these actions are easy. All require changes to institutionalized policies and practices. These actions displease stakeholders in the short term, as the benefits are ones of avoidance of fiscal insolvency rather than gaining programming from what exists today.

In the next few parts of our series, Afton will provide some context for some of these remedies to the negative fiscal impacts of enrollment decline in school districts. Today, we will highlight remedies 1 and 2.

Affording Quality Schools – Remedies 1 and 2: Reinventing Funding Formulas and Services With Costs That Seem Fixed

Enrollment losses are challenging to districts financially. But when charters come into the picture, there are additional complexities to address in long-term planning. Not only is the District losing enrollment, it is also often adding the service of being an authorizer and changing services by being an LEA to a different kind of customer. To ensure they meet these obligations and do so cost-effectively, districts should consider (a) implementing a student need-based funding formula and (b) restructure central and shared services to adapt to the differing needs of charter schools vs. district-run schools.

(1) Implement a student need-based funding formula for all schools including charter schools. If the district cannot control the charter funding formula, then lobby the state to ensure an equitable formula is in place. It is critical that certain “city-wide” obligations are considered in the funding formula, such as SPED outplacement, adjudicated students, etc. Additionally, other fixed or semi-fixed costs should be considered, including debt service and legacy pension. Notably, equitable funding formulas must reflect student needs. Below is an example of a small district in Illinois with an authorized charter school. State guidelines for funding use historical data and do not differentiate by student need. As we can see in the chart below, this state funding method for charter schools did not demonstrate equity. The charter school has significantly lower student needs, but would have received more money out of dollars available for K-12 education. In an agreed-upon equitable formula between the charter school and the school district, the charter school receives less than the state guidelines, primarily because its student population is recognized as lower needs.

(2) Create efficiencies and opportunities for variable costs in otherwise “fixed” cost services. As charters become a bigger proportion of total schools supported by the district, districts have an opportunity to restructure school design and centralized services to accommodate (a) a loss of enrollment, and (b) a different type of customer with different needs.

As enrollment declines within schools, it does not typically reduce a whole classroom in a grade – it more often looks like several students leaving each grade, making it more difficult for traditional school structures to reduce costs (and staffing) in proportion to the enrollment loss. Schools with more flexible designs, such as multi-age classrooms, personalized learning instructional methods, and reimagined school staffing structures, experience more variable cost structures, serving as an advantage to preserving high-quality instruction as enrollment declines. Collective Bargaining Agreements should be reviewed to understand constraints that may be present to the District’s ability to reduce or move staffing as enrollment declines or fluctuates. Possible constraints include class size maximums, termination provisions, severance obligations, post-retirement health plan benefits, and shared service workload minimums. These constraints, if present, should inform priorities in future collective bargaining discussions.

Outside of schools, the same kind of reimagination is required as enrollment declines. Districts should review each central service and shared service department (HR, IT, finance, etc.) and align its staffing and structure to the anticipated needs of the charter schools. During this review, each department’s role should be defined – what is the department’s purpose, what activities is it responsible for related to charter schools, and what activities is it responsible for related to district-managed schools. Capital planning could be incorporated into this review process. Given anticipated changes in enrollment mix over the longer term, how will the levels and types of activities in each department need to change? Outsourcing certain non-core services becomes an interesting option as it shifts the burden of staffing and related fixed costs outside of the school district and enables the costs of these services to become more variable. To the extent that districts have contractual obligations with service vendors, they should ensure that any longer-term contracts do not have service minimum requirements and offer flexibility so that districts can reduce services as there are changes in the numbers of students served and buildings operating.

North Chicago CUSD 187: Progress after Injustice

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability, Resource Equity.

When the state put forth its new education funding system in 2018, it calculated each of the state’s ~850 school districts’ funding adequacy targets. North Chicago Community School District 187 had just 54% of the funding it needed to serve its students. Meanwhile, the surrounding communities of more affluent and whiter students had 288% (Rondout), 158% (Lake Forest), 137% (Lake Bluff) of their education funding adequacy targets.

North Chicago is a city about 35 miles north of downtown Chicago and has a population of around 30,000 people. The city is home to the Great Lakes Naval Training Center, which is the largest training installation for the United States Navy. Despite its proximity to some of the wealthiest communities in the state, North Chicago’s school district serves over 80% low-income students. The community has significant racial and ethnic disparities in poverty rates, with Black and Hispanic residents experiencing high rates of poverty.

In that context, it is not surprising that this school district failed its students as the community became more impoverished in the 1990s and early 21st century.

The state took over the schools in 2012. While there is much more to do, graduation rates have increased from 56% to 82% and 9th grade on track has soared to 94% today, compared to 2012. In particular, those graduation rate improvements have no significant gaps by race, and North Chicago Community High School has among the highest graduation rates for Black students than any other high school in Lake County (among 28 high schools). North Chicago is now home to a preschool which has received the state’s Gold Level of Quality two review cycles in a row. Further, the district has achieved the highest rating level of financial sustainability from the state for six years running.

What are the ingredients to progress, and what will it take to go much further for students? We are introducing you to Mrs. Dora King, chairperson of the school district’s independent authority, to tell this story. Our team at Afton has experienced Mrs. King as a North Chicago community hero.

Mrs. King, as a long-time community member of North Chicago and the chairperson of the North Chicago Community Unit School District 187 Independent Authority for the last decade, please tell us about your personal story.

My family came to North Chicago from Mississippi during the Great Migration in the 1950s seeking jobs at the factories. My street in North Chicago was full of strong Black men and women who were working hard and providing for their families. The community was segregated as were the schools. My church was my strength – it is where activities and structure were provided, and my church educated me and other children as much or more than the public schools did. In the 1960s, as young people in our church, we grew up in The National Baptist Convention around Baptist preachers and social justice advocate, Dr. Martin Luther King, Jr., and others. I saw parents and community members going to school board meetings, advocating for a better education opportunity for all of the children. So, I learned how to advocate for change from the adults around me. I went on to raise my three children, all of whom have been accepted into PhD programs and are a physicist, an educator, and a biologist. I, myself, went on to get my college degree.

What led to you becoming the chairperson of the state’s independent authority over the school district?

Assuming this governance role for the school district is an extension of my entire life’s work. During the time after I raised my children in the 1970s and 1980s, a lot changed in the school system and in our community of North Chicago. Industry started leaving in the 1990s, and families immigrated from the City of Chicago’s housing projects to North Chicago. Around the same time, more Hispanic families moved in. The culture of the city changed as well as the differentiated needs of the children. And our school district was unable to effectively serve the needs of the children. The state did a takeover of the school district, which by then was insolvent, and they asked me to take on this responsibility. I accepted the role because I believe in building something excellent for our students and can do so as a fair-minded, honest, respectful leader.

Here at Afton, we met you soon after the state took over the school district in 2012. A lot was written about the problems of the district at that time and what the community had experienced with regards to school failures, mismanagement, insolvency, and fraud. Since 2012, the school district’s academic progress has been improving and its finances are more stable. The community opened a brand new Neal Middle School this past year, and Superintendent Dr. John Price is being named Lake County Superintendent of the Year. By 2027, the district will transition to a fully elected school board. All of this has been done under your leadership. Through your eyes, what should our society learn from this history to better our service to the children of tomorrow?

This is a story about establishing stable and credible leadership, being accountable for student programs and governance processes, and being laser focused on taking responsibility for the children. After the first few years of building that trusted and stable leadership as a foundation, the ability to serve our students improved dramatically – including being able to attract the resources to invest in student services. What has been lifted off today was out of vision at the beginning because the school system was in such disrepair. Now, our children are college-going. We welcome parents into the high school for training. We have established a robust early learning center. We have business partnerships and community partnerships that have led to a new school facility and various student-serving programs after school and beyond.

What are your dreams for North Chicago’s students? What will it take moving forward to see those dreams through?

My dream is that each student in North Chicago is prepared for whatever they choose to be in life. My dream is that our students can dream and are prepared to fulfill their own dreams. This will require a continued child-centered focus. It will require that the adults continue to see the child and care for the child, and that decisions are made in that context. We have more to do to attract the funding and build the talent to be at our best. Right now, we have a foundation to build from.

*Link to report graphic.

Summer Charter School Enrollment Scenario Budgeting Advice

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

Summer recruitment can bring up to a 20% surge in enrollment depending on local context and organizations’ time, resources, and focus. To achieve that surge, it’s critical to invest in marketing and recruiting activities and in particular, to tailor your strategies to your greatest areas of need. Summer recruitment activities require discipline in a variety of proven recruitment strategies including immediate lead follow-up, family engagement activities, old and cold lead follow-ups, efficient and engaging family onboarding, and family referral encouragements.

No matter how well we enact these strategies, there are often forces that will prevent us from meeting our enrollment goals. There are significant financial implications to missing enrollment targets. From a fiscal health standpoint, our schools will suffer unwanted consequences if we wait until close to the beginning of the school year to plan for operational changes required by enrollment misses.

While it isn’t fun to prepare for the downside possibilities, doing so protects your school(s) and the quality of your student services in the long run. We recommend you:

  1. Develop your downside fiscal scenario – how much of a fiscal deficit might you have from enrollment shortfalls?
  2. Confront the reality – The downside fiscal amount is a leadership and communication tool – it is a brutal fact that requires buy-in before rallying to fix it.
  3. Identify your stakeholders and rally the team – Be clear on who owns what responsibilities in the process of planning for downside mitigation strategies, knowing often the finance team might inform rather than make the decisions.
  4. Set a timeline for decisions – What is your cutoff date to determine how many students you anticipate and when implementation of changes should start?
  5. Monitor and leverage data – Report daily and weekly enrollment by grade and by school; use the data to inform where changes might need to be enacted. Use student outcome data to guide trade-off decisions.

With the team and timeline in place and your values at the center, your school organization can identify budget mitigation strategies equitably and effectively. At Afton, we believe the answers lie within your school communities. They depend on your student needs, your organizational values, and instructional strategies. And, there are some common approaches to consider as starting points. Learn more about these approaches in our Enrollment Scenario Budget and Planning document.

Navigating Uncertainty and Preparing for the Education Fiscal Cliff

Written by Afton Group on . Posted in Financial Sustainability.

Our guidance includes:

  1. Understand and confront the reality
  2. Engage and empower stakeholders
  3. Identify, invest in, and prioritize what works for students, staff, and families
  4. Plan now for sustainability
  5. Remain flexible to what may change

The first step here is understanding and confronting the reality. This includes developing a multi-year financial forecast to quantify the fiscal problem. Identify and communicate the forces causing a forecasted fiscal deficit, which include:

  • ESSER funds: These federal relief dollars must be obligated by September 2024 and expire thereafter. These funds have been integral to learning recovery investments and providing stability for school systems as much else in the operating environment has been unstable.
  • Economy: Since COVID-19, the cost of facility debt financing has risen while inflation and the corresponding cost of services and personnel has skyrocketed. Uncertain economic forecasts lead to some question about how sufficiently future tax dollars that support state education funding with increase correspondingly
  • Enrollment: NCES forecasts that through 2030, only five states will experience increased public school enrollment. In fact, this year’s tenth grade class is the largest class in the K12 system, and there will be 4% less enrollment in public schools across the nation in 2030 compared to 2019.
  • Talent: According to the IES School Pulse Panel, 53% of public schools reported feeling understaffed entering the 2022-2023 school year. And Teaching vacancies are more prevalent in high-minority schools and schools in high-poverty neighborhoods.

However unjust this circumstance is, we must navigate the situation in student-centered and values-driven ways across stakeholders.

COMMUNICATION: Engage and Empower Stakeholders

Engaging and empowering stakeholders in the change process can provide a meaningful and comprehensive path for determining the appropriate changes for navigating the fiscal cliff.

  • Lead with your values. Set guiding principles for change grounded in your organization’s values. Make communication and engagement commitments you know you can keep.
  • Empower your team. Consider how those most impacted by change and those accountable for spending might lead this change work. How might your finance function inform rather than lead the work to address the fiscal cliff? Identify the roles you want each part of your organization and each stakeholder group to play in operational decision-making.
  • Communicate reality. Change requires buy-in on why it’s necessary. That communication on the problem is critical underpinning before jumping to the solutions. Maintain the discipline to communicate the facts of your current environment. Approach conversations about resources with empathy and transparency. Change requires buy-in on why it’s necessary.
  • Tell the story. Each stakeholder group has a potential powerful role in being the ambassador of your progress story. Leverage your ecosystem and advocacy support.

ACCOUNTABILITY: Know What Works & Prioritize It

  • Identify what works. Identify aspects of your schools and similar schools that are contributing to positive student experience and value for parents and students. Develop and implement a plan to organize your school community to gather and analyze this data.
  • Prioritize. Identify the resource implications – programs, staffing, schedules – of your strategies that are working. Use your remaining one-time funds to support high impact learning recovery investments and non-recurring commitments that you won’t be able to afford in the future. Leverage your stakeholders to identify aspects of your operations that might have to change (levers include school-wide schedules, enrollment, fundraising, cohort sizes, transportation, maintenance schedules, ancillary services, refinancing). Iterate with your financial planning toward finalizing your operating priorities.

SUSTAINABILITY: Plan Now

  • Protect & Grow Revenue. Focus on enrollment: Invest to ensure family engagement is a top priority and a core competency. Take advantage of opportunities to maximize grade level cohorts. Invest in relationships that can lead to fundraising investments.
  • Scenario Plan. Understand potential financial impact of recession on state revenues. Run projections for the years that ESSER funds go away. If you don’t change operations, what is the financial impact on the organization and each school? Build plans for up, base, and down scenarios in enrollment and public funding. Identify targeted opportunities to reduce expenses in downside scenarios.
  • Establish & Reinforce Guardrails. Clarify your school system’s most important financial guardrails – loan covenants, liquidity needs, financing goals, etc. Communicate with key stakeholders your approach to ensuring long-term health of organization while navigating today’s opportunities and challenges.

FLEXIBILITY: Prepare for Uncertainty

  • Monitor financial health. Develop a financial health dashboard and set a cadence for discussion of strengths and risks on at least a quarterly basis. Develop rolling 12-18 month cash flow forecast, as needed.
  • Build Liquidity. Increase your cash target (we recommend >90 days) to provide flexibility in times of high uncertainty. Establish or renew a line of credit or revenue anticipation note. Ensure you’re claiming federal and other grant funding regularly.
  • Stay Scrappy. Limit new ongoing commitments. For example, when possible/reasonable, make strategic one-time investments (contractors, bonuses, etc) to avoid paying for recurring expenses with short-term funds. Consider staging/scaling facilities projects, rather than taking on new debt during a time of elevated cost of financing. Budget conservatively on inflation and per pupil funding assumptions.

Contents of this post were developed in a collaboration of Afton Partners and Charter School Growth Fund.

ESSER: Our Latest Window to Unjust Public Education Funding

Written by Afton Group on . Posted in Funding Policy, Resource Equity.

Yet headline after headline places much of the blame on schools themselves for their spending struggles, arguing that they are too slow to distribute the billions of dollars they received from ESSER. But what’s going on behind the scenes is more complex than many recent reports lead us to believe.

Before districts spend their pandemic aid, they must submit a plan to their state education department outlining how they will allocate and leverage the influx of funds. These reports demonstrate that schools are struggling to design plans with investments in programs, resources, and initiatives that measurably move the needle for students. However, there are also legitimate reasons behind that struggle that need to be explored.

  • Historical Inequities Hurt Planning and Talent Initiatives: Many public school districts receiving ESSER funding are historically underfunded relative to student need. As a result, long before the pandemic, these districts have had the unjust burden of trying to attract and retain top teacher talent into high stakes education and care circumstances without the ability to offer commensurate teacher pay and wraparound support services. This injustice was only exacerbated when districts sought more staff with ESSER funding in a competitive labor market. Moreso, these districts have become accustomed to the mindset of doing more with less by prioritizing limited resources that don’t adequately meet the needs of all students. Shifting from this scarcity mindset requires both adequate time and proper training, neither of which were provided in any type of intentional, consistent way. This funding is thus an opportunity and challenge to build a new muscle, albeit on a long-neglected playing field.
  • Decision Risks with Funding That’s Not Recurring: Districts are experiencing pressure to spend quickly and also produce strong results. This leaves little time to think strategically about how to allocate these funds to maximize their impact. Any strategic leader recognizes the danger of allocating one-time funds for recurring operating costs, such as teachers’ salaries or instructional positions. If district leaders come to rely on this surplus of funds, they will be confronted with a deficit if the money isn’t available in the next year or two. With this context, many leaders struggled to identify the best course of action with the funds.
  • Navigating the Day to Day: While the pandemic caused educators to feel burnout, district leaders were faced with retaining staff who felt overworked and underappreciated. These district leaders were not only navigating pandemic-era schooling, but were also focused on preventing a mass exodus of teachers leaving the profession due to stress. In any given month, week, or single day, these same leaders were taking in new information and having to make quick, high-stakes decisions about closing schools, supporting remote learning, shifting masking, quarantine, and vaccination policies, communicating effectively with parents, and addressing learning loss and trauma. As schools reopened, many have seen unprecedented enrollment declines – making planning for student needs uncertain and the funding expected to be received, lower than anticipated. With so many high-priority decisions taking precedence, school systems used the funding in unanticipated ways, at varying paces, and in some cases, as a replacement for funding they had anticipated for a higher number of students.

Now we’re faced with a critical question: Where do we go from here?

The challenges we’re seeing with spending only reinforce the larger challenges of chronic underfunding relative to student needs. As a one-time investment with little infrastructure to support effective spending, the challenges with ESSER are our window into how we might solve systemic problems. If the funding did exist in a reliable, equitable, sustained way, our schools furthest from success would begin to thrive, student mobility would begin to stabilize, and there would be no limit to the positive impact we could make for the next generation.

Financial planning for remote learning: Afton’s lessons learned from hundreds of technology-enabled school models

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability, Resource Equity.

Students, teachers, and parents received a crash course in the spring to varying degrees of success, and this summer has allowed schools to evaluate that experience. As SY20-21 approaches and COVID-19 risks grow, more and more cities and states across the country are anticipating delayed in-person re-openings and creating fully remote options for some or all families. For many of these schools, the financial aspects of this continuation in technology-enabled instruction remains blurry.

While the types of technology-enabled learning employed today with remote and virtual learning may change after the pandemic, the experience will inevitably have lasting effects on how instruction is delivered in a post-pandemic world. School systems have made significant investments in hardware, software, and access, all of which will be accessible beyond the pandemic. And teachers will have learned new approaches to instructional delivery and student engagement which may inform their future practices.

For school business officials and boards across the country, now is the time to ensure that your new year’s budget and procurement planning fully captures the needs of your school system as it delivers technology-enabled instruction. And now is the time to understand what longer term investments may be needed to sustain aspects of technology-enabled instruction that will be relevant beyond the pandemic.

Since 2011, Afton has worked with over 200 schools, school systems, and school leaders in developing and evaluating long-term resource plans to support innovative school models, including those incorporating technology into the classroom. While most of these school models were not the virtual classrooms being employed during COVID-19, many of them require similar resources to virtual and hybrid learning. Much can be gleaned from the investments made by these schools to assist in financial planning today. As follows, we share three primary points of advice for school systems about financial planning for technology-enabled instruction.

Invest heavily in staff and their professional development.

For many, this is a new way of instructional delivery. The most critical thing to remember is that technology does not do the teaching – it enables the teaching.

Our advice:

Ensure the budget includes a material, recurring investment in professional development and teacher collaboration and planning time. Time and time again, in our discussions with school leaders and evaluations of their financial plans, investments in additional staff and professional development to support technology-enabled instruction proved to be the most important investments.

District leaders of schools implementing technology-enabled instruction invested more than 50% of one-time and recurring funding in personnel.

Following is a summary of actual and projected 5-year expenditures of Districts and Charter networks implementing technology-enabled school models. The data represent the resource allocation plans for 11 school systems, 110 schools, 850 classrooms and 36,000 students as of fiscal year 2019.

Be flexible and expect trial and error.

There will likely be some initial hardware and software choices that, when implemented, do not fully fit the needs of staff and students.

Our advice:

Ensure the budget includes a contingency for hardware and software and that procurement policies and practices are in place to enable swift course corrections. These often require significant changes in policy, but also culture shifts to ensure responsiveness, flexibility, and adaptability.

Plan now for hardware refreshes and sustaining software and professional development.

Because there are likely to be aspects of today’s pandemic-induced instruction that will forever change instructional delivery practices, school systems will need to plan for maintaining its technology and professional development investments into the future. Devices purchased during the pandemic will need to be refreshed in a few years, and there will need to be a provision for annual replacement devices. Learning management systems and instructional content may need to be enhanced or upgraded. Teachers and administrators will evolve in their use of technology as will their professional development needs. Post-pandemic, there will be school systems that will re-think how instruction should be delivered – including migrating to more competency-based approaches, changing classroom structures, and rethinking school scheduling and course offerings with a new view of in-person and virtual instruction at some grade levels. These considerations may completely change needs for school-level staffing, technology, and professional development investments.

Our advice:

Ensure you have a multi-year financial plan and include a contingency for renewing the current technology and professional development investments. As it is appropriate, begin assessing successes and opportunities that arise from this shift to technology-enabled instruction, and what implications it may have in the post-pandemic world. As you think ahead to long-term strategic planning, identify resources and services that could potentially be repurposed to meet post-pandemic instructional design opportunities.

How does this apply to your remote learning plan now?

As you think about the fall, and investments you might need to make, we can look at the types of investments that have been made by school in other models of technology-enabled instruction. Here we share the costs you can expect at the district and school level, alongside a few ideas for tradeoff considerations.

One-time costs: we define one-time costs as those that will expire or end after the school model has been fully implemented. An example of a one-time cost includes intensive professional development, or a program manager position that may be filled only during implementation, which may take anywhere from one to three years.

These findings are consistent with outcomes of a study our team led through LEAP Innovations in Chicago, wherein we evaluated the costs of implementing personalized learning across six schools. This study, Sustaining Innovation and Preparing for Scale: Financial Sustainability Research and Analysis of Personalized Learning School Models, found one-time investments ranged from $233 to $1,135 on a per pupil basis across the six schools.

Recurring costs: Our definition of recurring costs to support tech-enabled school models includes those investments that will be required to sustain these models in the long-term (i.e. after an implementation period).

Trade-offs: To fund these recurring costs, we have seen Districts employ strategies such as developing a long term staffing strategy, identifying inefficient technology spending and reallocating funding for textbooks and school supplies.

  • Long-term staffing plan. We recommend each district implementing a tech-enabled school model(s) perform a review of their existing position structure to identify opportunities to create positions required for long term success of these new models (such as blended learning coaches, data specialists) while also identifying opportunities for change in their existing structure (review of job descriptions, plan for turnover, etc.). When implemented effectively, a significant component of long term funding of recurring tech-enabled needs can be sourced with this approach.
  • Evaluate technology spending. Various studies have shown a significant underutilization of existing technology within school districts. Performing even a basic technology audit (such as one offered by Learn) could identify opportunities to more effectively leverage limited available funding for more impactful information technology spending.
  • Reallocate existing funding. More and more districts are reallocating historical funding from supplies and textbooks to software, content and devices. There is also an opportunity to evaluate central services and determine how to best support schools utilizing technology-driven instruction through re-evaluating large major contracts.

The specific impact this has on your schools depends on your start point, your approach to SY20-21, and what you envision for the future:

Given this, as you build your financial plan, consider these specific questions:

  • What is our starting point for technology? Should we (have we) conducted a technology audit?
  • What supports do our teachers need? What professional development could be provided to effectively support teachers in effective use of technology for remote learning?
  • What is our level of student access, and what do we need to do now to improve access (including devices, wifi, servers), if anything?
  • Do we have the right blend of online/asynchronous vs. synchronous materials and content? Should we (have we) conducted a software/content audit?
  • Can we improve upon student assessment and/or data systems? Should we invest in or support data-driven instruction PD or platforms for our teaching staff?
  • Do we anticipate these being short-term or long-term investments?
  • What sources of funding exist for one-time and recurring investments?

What have you learned about the financial aspects of remote instruction? Do these findings and recommendations ring true to you? What would you add or change? Let us know! Contact us at connect@aftonpartners.com.

Planning for “Re-Entry”: What public school systems can learn from the aftermath of Hurricane Katrina

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability, Resource Equity.

Also featured in The74

This is truly a unique and unprecedented time for society. For the two of us, in our respective roles in public education, it’s eerily similar to the days and weeks in New Orleans following Hurricane Katrina. While the scale and expansiveness of COVID-19 is different than Hurricane Katrina, we find some uncomfortable similarities in the immediate situation… there are scarce resources and no playbook, and we have an urgent, moral imperative to provide for students and their families.

Beyond the immediate similarities, there are some lessons from the “re-entry to school” in New Orleans that we share below that we hope are useful for school systems now as they are planning to one day “re-open”.

This “pause” of normal course education delivery is a once in a generation opportunity. How can public school systems seize the moment as we “restart”?

Beyond the potential for learning loss during this time – there is a unique learning opportunity. Almost never do we get to completely hit the pause button on everything we are doing and then restart – and we have that opportunity now. In New Orleans 2005, there was an unplanned, traumatic pause. This pause and devastation became the opportunity to end decades of neglect of public school students and to invent a new system of schools. That system of schools today, while far from where it needs to be, has provided for significant learning beyond what could have ever been possible in the former system. SO – what is the equivalent opportunity for school systems today? It doesn’t need to be an overhaul of school governance as in New Orleans. The answer will be very different in different communities. For some states and districts, it could mean a shift toward competency-based learning from seat time. For others, it could mean a shift toward portfolios and evidence journals from grading and testing. And yet for others, it could be the time to better foster intergovernmental partnerships between schools, libraries, and park districts to create better access to the internet, creative spaces, and physical activity. Most of all, it’s important for school systems to take the unique opportunity this spring and summer to listen to their families and staff and answer that very question of how best to seize this unprecedented opportunity. Returning to things just as they were – this may not be a good option.

Focus on a culture that supports mental health for school system staff and students alike.

Creating a supportive school and district culture upon return becomes paramount to enabling learning later on. Consider what adults and children have experienced during this spring and summer – for some they will have experienced loss of loved ones, extreme poverty, traumatic home environments, and a disruption in virtually every aspect of life. During our initial years in New Orleans, our work was rooted in a trauma-informed approach with partners from Save the Children. Also recognize that this spring, teachers have made a major pivot in instructional delivery all while grappling with their own changed personal circumstances. Celebrate their work and the work of other school system heroes as part of creating a supportive culture. It is equally important to realize that some have struggled to make the shift to deliver instruction in the many unique ways that our current situation demands, so be prepared to meet them where they are.

Prepare for enrollment fluctuations and higher levels of student need.

In many districts next year, some schools will not have nearly the same number of students they did in March 2020. We already know that low-income families were among the first to lose their jobs. In the months to come, families will have to make difficult housing decisions while looking for new work. Districts that already had high mobility will likely see even higher mobility. In New Orleans, we had no idea how many students to plan for and where – literally everyday for many weeks, we had no idea how many new students we would have and at which schools or how many existing students would need to change schools because their temporary housing shifted. Imagine planning teaching and learning, special education services, transportation routes, and food service for that situation. Districts and schools will need to plan staffing, services, and budgets with a great deal of flexibility throughout the first year of “return to school” post-COVID-19. Use this spring and summer to do in-depth listening in the community to understand housing and population shifts to plan and prepare to meet these shifts alongside greater student needs.

When ready, focus on a strong curriculum.

As mentioned, we see the focus on mental health for staff and students as the priority on re-entry. Alongside this, now is the time to step back to ensure that that current curricula choices can both adjust to meet individual learning trajectories and can do so in a blended learning environment, supporting a competency-based approach. This will also require significant tiered support for educators as they make the shift. Leverage and celebrate the early adopters and take steps to support those who need it. In our school network in New Orleans, we were able to make significant academic gains (four out of five schools demonstrated high growth and the fifth experienced average growth) in the first few years. This growth came from an emphasis on coaching teachers, heavily staffing key areas such as academic intervention and using one-time disaster recovery funding to develop solid core curricula.

Education funding equity is more important than ever.

The impending economic crisis will exacerbate pre-existing inequities in our society. State budget shortfalls will impact the poorest districts the hardest in most if not all states. Equity in public funding must be considered, at the state-level and within districts themselves, as dollars get further stretched. This means sharp focus on funding at the school level relative to student needs. Since Katrina and the initial performance growth of the system of schools, New Orleans now has increased expectations for student achievement via an ambitious and appropriate accountability system that has been met by a plateau in school performance scores. Additionally, the hurricane-related funding and much of the federal and philanthropic resources that poured into New Orleans have mostly dried up, and schools are forging ahead with the customary per pupil funding which is not adequate relative to the needs of students. In our experience, this serves as a significant point of reflection because what Katrina taught us was that anything is possible in urban settings when adequate resources exist.

Governance and leadership matter now more than ever.

The relationship between school system leadership and board governance matters now more than ever. Communication, alignment, and relationships matter as schools are faced with important and unprecedented decisions. It is critical that there is no daylight between boards and leaders on how schools move forward in this environment. Equally critical is the communication that boards and leaders provide to the communities that are served. In the aftermath of Hurricane Katrina, governance, especially in the charter school sector, was a sidecar to school leadership. Over time, through trials and errors, Orleans Parish schools have grown to better understand and respect the necessity of strong governance.

Kevin Guitterrez is the Governance Director of the Louisiana Association of Public Charter Schools and served as the founding Chief Academic Officer of the Algiers Charter School Association. Carrie Stewart is co-founder and CEO of Afton Partners, an education finance consultancy, and served as the founding Chief Operating Officer of the Algiers Charter Schools Association. The Algiers Charter School Association opened 5 public schools on December 14, 2005, to over 1,300 students. The schools welcomed 3,000 more students in the immediate weeks and months that followed.

* Tonn, Jessica. (January 18, 2006). New Orleans Charter Network Gets Underway. Education Week.

Deriving Value from ESSA’s Site-Based Expenditure Reporting

Written by Afton Group on . Posted in Effective Governance, Resource Equity.

Currently in Illinois, as in most states, public education finances are reported at the local education agency (LEA) / school district level. With the implementation of ESSA, school-level expense reporting will be required. ISBE has created an intentional process to make sure the state and its districts not only meet the requirement but find value in it as well.

Arguably, the most critical component of ISBE’s approach has been the creation of a value proposition for site-based expenditure reporting. An advisory group comprised of key stakeholders has been guiding this work from the onset, and co-created the following shared value proposition:

  • Site-level expenditure reporting provides an excellent opportunity for LEAs to maximize care for the whole child, in a whole and healthy school, nested within a whole and healthy community.
  • With site-level expenditure reporting, how resources are allocated will be more readily accessible and revealing to schools and stakeholders.
  • This reporting should ultimately lead to greater equity and improved outcomes for kids: it empowers LEAs and communities to assess and improve equity in funding between individual schools, and it enables a better understanding of the relationship between student outcomes and financial resources.
  • It will also enable LEAs, schools, and the state to identify evidence-based best practices and opportunities to foster innovation between peers.

ISBE is intentionally encouraging local responsibility and dialogue about resource allocation. Notably, because the advisory group identified the value as primarily for LEAs and communities (and explicitly not for the state agency), decisions forming the plan for site-based expenditure reporting have been made through these lenses.

As we get closer to the reporting timeframe in Fall 2019, ISBE and the advisory group have shifted our focus from developing Guidance (or “rules”) for reporting development to helping prepare districts for both completing the reporting and making meaning of it – thereby making strides in realizing the value proposition. Two key mechanisms are enabling this focus, and both are guided by the value proposition: data visualization and training.

Data visualization is “where the rubber meets the road” for this initiative – where our value proposition comes to life and the data become public, contextualized, and actionable. Our process to create visualizations was intentional, aiming to answer the following questions:

  1. What are the conversations that are aligned with the value proposition that we want to encourage?
  2. What data are necessary to contextualize and inform these conversations?
  3. Among these data possibilities, what should be prioritized for Year 1 Reporting?

ISBE and the advisory group worked through a framework containing a series of exercises to answer these questions. This framework is shown below.

Following this framework allowed ISBE to design draft visualizations grounded in a shared understanding of priorities.

Training is the other critical component enabling LEAs and other local stakeholders to make meaning of site-based expenditure data. ISBE believes district leaders are best positioned to lead their local communities in dialogue about data outcomes and making meaning of the data. While the focus of training can easily default to technical capacity building, our ISBE/Afton team believes that equipping district leaders with the tools necessary to understand what this data is telling them, in order to make informed decisions about future resource planning, is pivotal to the success of this initiative. Consider, for example, the following real data set from an Illinois district (anonymized).

Before this data becomes public through site-based expenditure reporting, ISBE is helping districts prepare to acknowledge the types of questions the data will beg – from themselves, and from other stakeholders. Through thoughtful analysis of site-based expenditure data alongside contextual data on student needs and academic outcomes, the goal is for local leaders to be able to determine if outcomes of resourcing decisions (seen through site-based expenditure data) promote equity and are aligned with their intended strategic priorities. If not, LEAs should be equipped to determine if resourcing decisions should be reevaluated or if strategic priorities should be reevaluated in light of actual data on equity and outcomes. By doing so, we will see meaningful progress toward the value proposition.

For districts considering how to make this new reporting requirement meaningful, regardless of your state’s approach to developing the reporting, Afton recommends the following:

  1. Develop a local value proposition for this data – what does your district and community want to do with the data? For example, evaluate equity, evaluate the relationship between spending and outcomes, or something else?
  2. Facilitate early exploration of your site-based expenditures.
    • What, approximately, has your district been spending by site?
    • Considering contextual data such as student needs and academic outcomes, what can you hypothesize about equity? About the relationship between spending and student outcomes? How can you explore these hypotheses?
    • Are there any intentional changes you may want to make during this year or in anticipation of budgeting for next year?
  3. Suggest Cabinet-level discussions of what the early exploration reveals. Don’t be caught off-guard when data becomes public.
  4. Acknowledge that data, when available, will need to be unpacked and evaluated, and be transparent in the process of doing this.
  5. It may be helpful to form an advisory group of stakeholders to guide this process to ensure community involvement in understanding and making decisions based on the outcomes of this work. At minimum, ensure transparency into the analysis process.

Defining “Principal Autonomy”

Written by Afton Group on . Posted in Effective Governance, Resource Equity.

For example, a school principal with an innovative instructional delivery idea might earn control over how many of what types of staffing positions their school will operate with (up to a defined cost ceiling) rather than be assigned specific positions by central office. School systems may provide principals with more of these kinds of “autonomies” as levers to improve lower-performing schools, promote innovation, increase hyper-local ownership, and/or for development of strong leaders.

Simply being intentional about assigning specific decision making authorities to school principals and central office can contribute to meeting district-wide and school accountability goals. As noted in the recent publication by Public Impact: “Autonomous District Schools: A New Path to Growing High-Quality, Innovative Public Schools” (full report here), school systems can consider formalizing autonomous relationships with their schools.

Without clear governance agreements, policies, or other formal establishments of decision making authority guidelines, there may be confusion over responsibilities, making it difficult to effectively oversee school improvement strategies. To get to a clarified view of decision making authority in a school system, consider this example below of a school system’s decisions matrix.

Four major decision categories were identified as Academics, Culture, Operations, and Finance and underneath each category, several types of decision areas were identified. For each of these decision types, the school system identified the role of the central office and the role of schools. Two examples of culture-related decisions and the corresponding roles of central office and principals were articulated as follows:

As school systems define their decision making authorities between schools and central office, they strengthen their ability to implement and oversee school improvements. School systems can take it a step further by aligning financial practices and policies to the decision making authorities. For example, if a school system decides to assign responsibility for student recruitment to school principals, the school system could provide them with the spending authority to repurpose funds toward any number of ideas they may have to recruit students. Compensation and procurement policies could also be reviewed to determine how they might further the implementation of these kinds of autonomy decisions.

After all, how can we reasonably expect district-wide and school improvements without giving clear lines of authority and resource allocation rights to those we ask to be responsible for the results?

Afton Provides Recommendations for State Education Agencies on ESSA Financial Transparency Requirement

Written by Afton Group on . Posted in Effective Governance, Resource Equity.

In February 2018, Afton Partners joined Edunomics Lab, the Building State Capacity and Productivity Center, and the Council for Chief State School Officers (CCSSO) who hosted a one-day conference for over 30 State Education Agencies (SEAs).

Afton led a session focused on how state agencies can play a role in fostering the usage of per-pupil financial data at the local level. In our session, members of state education agencies took on various roles within a district (teacher, principal, superintendent, parent, etc.) and reviewed a district’s site-level data from the lens of those roles. They looked at the data with questions in mind such as: “What do these data tell you? What more information do you need to play your role effectively?” The small groups convened as “districts” to discuss their data and then presented their site level data to neighboring districts.

Issues raised within the groups included:

  • Equity. Participants pointed to various reasons why school per pupil data within the district could be driven by student-need factors, while acknowledging potential misunderstandings in the community if the data is not communicated properly.
  • Context. Participants noted that more information is needed alongside the expenditure data to “tell the story.” Context such as student demographic information, teacher salary, and school-level outcomes would help in providing context for per pupil spending data.
  • Improvement & Outcomes. Participants recognized how this kind of site-level data can produce value for resource allocation decisions, smart programmatic decisions, and trade-off decisions – given enough contextual data alongside the data.

As the group stepped back from playing the role of district stakeholder or staff member, we reflected on the role of State Education Agencies in fostering effective use of school site-based expenditure reporting. Our conclusion was that SEAs can do a lot to encourage effective use of this data, including training, issuing reporting guidance, clearly defining roles/responsibilities between state/local, and leading dialogue on the value of the reporting.

Afton sees the bottom component – value proposition – as a critical grounding mechanism from which all other work on this initiative at both the state and local levels build. Having this stated purpose of the reporting moves the reporting beyond simply a compliance requirement. It guides the way the reporting is developed, visualized, and explained, and focuses efforts to use this data as complementary to other school-level data already available. Afton believes ultimately that site-based expenditure reporting promotes:

  • Transparency. Resource allocation will be more readily accessible to schools and stakeholders
  • Equity. Empowers LEAs and communities to assess and improve equity (and possibly define equity for their community)
  • Outcomes. Enables LEAs and communities to gain a better understanding of the relationship between student outcomes and financial resources
  • Best Practices. Enables LEAs, schools, and the state to identify evidence-based best practices and opportunities to foster innovation between peers

For more information on the ESSA financial transparency requirement:

Afton Facilitates Expert Panel on Sustaining Innovation at iNACOL 2017

Written by Afton Group on . Posted in Financial Sustainability.

Blog Summary:

The panel of national experts offered opinions and guidance based on their experience in implementing innovative school models. Some key takeaways from the session included:

  • Focus on change management and communications: move beyond individuals and change the culture – from students in the classroom to the board.
  • Expect success, but manage expectations: academic results will take time to measure and performance may decline initially. Set realistic expectations from the outset and focus on effective communication.
  • Don’t allow past practices or bureaucratic structures to inhibit innovation: find a point person to help innovative schools navigate central supports in the short-term, and identify structures that must evolve in the long-term.

In October, Afton’s Scott Milam and Katie Morrison-Reed participated in iNACOL’s annual symposium, which is a leading event for K-12 educators advancing the future of education through personalized learning. Afton Partners continues to be a leader in planning for the sustainability of innovative models, and has supported numerous personalized learning initiatives across the country over the past six years, including programs such as Next Generation Learning Challenges (NGLC) National Grants, Next Generation Systems Initiative (NGSI), Raising Blended Learners (a Texas statewide blended learning initiative), and Breakthrough Schools Regional Programs in multiple cities.

Afton led a highly attended panel discussion, “Sustaining a Breakthrough Model: Case Studies on How to Support Innovation That Lasts.” In this panel discussion, panelists shared their lessons learned in implementing, sustaining, and scaling personalized learning models. Our panelists came from a wide range of backgrounds, enabling a variety of perspectives, including district and charter leaders at both the school and central office level. Panelists included:

  • Sujata Bhatt, Managing Partner of Innovation, Boston Public Schools
  • Amy Dodson, LRC/Blended Learning Director, Cisco ISD
  • Jennifer Ferrari, VP & Chief Schools Officer, Distinctive Schools
  • Beth Rabbitt, CEO, The Learning Accelerator
  • Matthew Riggan, Co-Founder, Workshop School, School District of Philadelphia

Our panelists shared some strategies that have worked, and pitfalls to avoid, including:

Focus on change management and communications

Communications was emphasized by many on the panel as being crucial to successfully sustaining and scaling innovative school models. “Focus on the story, not the data,” says Amy Dodson. “Compelling stories can help communicate the purpose of innovation and the successes that are experienced along the way, even when it’s too early for conclusive data.”

Additional guidance included:

  • “Avoid making this [innovation] about a person or becoming personality-driven. Communication is really important. Don’t let positive OR negative personalities drive the process. Develop a consistent message and communications strategy.” – Amy Dodson
  • “When moving from initial pilots to scaling, the depth of bench is remarkably shallow. To deepen it, bring staff on board earlier in the process, share what has worked (and not worked). Having a clear, coherent vision is crucial.” – Beth Rabbitt
  • “Who is doing the work? If teachers are doing all the work, then the model is not sustainable.” – Sujata Bhatt
  • “Implement a valuable strategic planning process, not one that just leaves a pretty report on somebody’s bookshelf, gathering dust.”- Jennifer Ferrari
  • “Move to students from teachers and leaders. Students should demand a new way of teaching and learning, which can help sustain an innovative model.” – Amy Dodson

Expect success, but manage expectations

  • “We don’t celebrate mediocrity. When our football team goes 6-4 (or wins 60% of their games, like some of Cisco’s passing scores) are we holding a parade?” – Amy Dodson in explaining why expectations need to be higher.
  • “It takes a while to see results. Be clear with stakeholders and set expectations.” -Beth Rabbitt
  • “Innovation means results may DROP before they improve.” – Sujata Bhatt
  • “Value teaching as opposed to content.” – Matt Riggan

Don’t allow past practice or bureaucratic structures to inhibit innovation

  • “Coordinate across departments. Don’t overburden school leaders.” – Sujata Bhatt
  • “Identify a single point of contact within the organization (i.e. District).”- Matthew Riggan in discussing how central office can support innovative schools.
  • “When at (another district), we called the central office the “Death Star.” I now work at the “Death Star”, promoting innovation” – Sujata Bhatt noting that districts are evolving.
  • “Be careful of the playbook. As soon as you hand over a playbook, innovation can end. And also, do not demonize the past.” – Jennifer Ferrari

(Photo caption: Innovate interstate exercise)

We extend our heartfelt “Thank You!” to our panelists and all who joined us for this engaging session. If you are working on a personalized learning initiative, please see our case studies on planning for sustainability and scale of innovative models.

Affording Quality Schools – Remedy 8: Make a Commitment to Long-Term Planning

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

As we’ve outlined throughout this series, Afton identified 8 ways that school districts can mitigate the effects of enrollment decline (and these were highlighted in CRPE’s “Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment”):

  1. Uniform intra-district funding formula for district and charter schools
  2. Continued operational efficiencies, with an eye toward making costs more variable
  3. School closures and corresponding real estate transactions
  4. Redistricting / efficient enrollment planning
  5. End “last in first out” methods of reducing staff
  6. End unsustainable/unfunded salary commitments (step/lane/raise)
  7. End proliferation of long-term fixed cost obligations (pension/OPEB)
  8. District commitment to decision-making based on long-term planning

In the final installment of this series, we will highlight remedy 8.

Affording Quality Schools – Remedy 8: Make a Commitment to Long-Term Planning

Districts need to maintain a well-informed long-term plan including detailed projections of enrollment patterns, such that their planning can be adjusted to accommodate student needs. Almost all of Afton’s recommendations for school districts coping with financial challenges from enrollment migration stem from this long-term planning point, and almost all of Afton’s findings for school districts struggling with this issue could have been identified as issues and potentially mitigated through better long-term planning by school districts.

Policies, practices, and infrastructure that drive costs to be fixed or partially fixed take time to adjust – significant changes to contractual commitments, facility footprints and enrollment boundaries, school closures and openings, size and type of central and shared services to be provided, and capital/debt plans take time to develop and execute. But most districts are operating without a long-term plan for serving students that encompasses enrollment migration and the impact of potential charter school authorizations. As evidenced, most of the inefficient money is caught up in organizational policies and facility structures, which could be adjusted given enough time, making seemingly fixed costs more variable with enrollment decline.

Any capital bond program being contemplated by a District should be carefully balanced with the reality that many school buildings may not be needed in the future. One risk with this kind of financing planning is that Districts will incur long-term debt to make significant upgrades to buildings that may need to be closed or reconfigured in the next decade. Comprehensive long-term planning with an eye toward enrollment patterns can lead to better capital planning decisions.

And, while Districts typically have a small amount of perfectly fixed costs, they are still relevant in that the District must pay them no matter how many students it serves, and therefore the long-term planning of the District must ensure there is funding set aside to pay for these obligations. And sometimes there are off-balance-sheet obligations such as OPEB which further increase fixed cost obligations and must be considered as commitments that need funding during long-term planning.

Districts tend to focus on the annual budget and not the long-term enrollment and school-type mix forecasts. Districts need to consider the implications of potential enrollment shifts as they plan their organizational structure, building operations, capital investments, and financing plans.

Affording Quality Schools – Remedies 5, 6, and 7: Curb Agreements That Inflate Costs As Enrollment Declines

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

As we outlined earlier in this blog series, Afton identified 8 ways that school districts can mitigate the effects of enrollment decline (and these were highlighted in CRPE’s “Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment”):

  1. Uniform intra-district funding formula for district and charter schools
  2. Continued operational efficiencies, with an eye toward making costs more variable
  3. School closures and corresponding real estate transactions
  4. Redistricting / efficient enrollment planning
  5. End “last in first out” methods of reducing staff
  6. End unsustainable/unfunded salary commitments (step/lane/raise)
  7. End proliferation of long-term fixed cost obligations (pension/OPEB)
  8. District commitment to decision-making based on long-term planning
    In this part of our series, we will highlight remedies 5, 6, and 7.

Affording Quality Schools – Remedies 5, 6, and 7: Curb Policies That Inflate Costs as Enrollment Declines

Most districts have long-standing contractual agreements and debt agreements that inhibit a school district’s ability to make changes to operations. Making changes to those agreements and avoiding common pitfalls are critical elements to weathering the financial impact of enrollment decline, as highlighted below.

(5) End “last in, first out” methods of reducing staff. Most districts have collective bargaining agreements that require the most junior staff to be laid off. The resulting impact is an increase in average teacher salary, at a time when a district is trying to reduce costs in proportion to enrollment decline.

(6) End unsustainable/unfunded salary commitments (step/lane/raise). Another commitment that school districts often make is guaranteed salary increases in the form of the typical step/lane/raise teacher salary scale. These salary increases can only be afforded if funding increases proportionally either through economic growth or enrollment growth. Basically, growth can often mask the fact that a district made future commitments that far exceed funding that current and future levels of student enrollment will produce.

(7) End proliferation of long-term fixed cost obligations (pension/OPEB). Even if school districts reduce their staffing levels in proportion to enrollment decline, they are often left with future obligations to past employees. These obligations grow exponentially on a per-pupil basis and in proportion to a district’s overall budget in the wake of enrollment decline. To protect a district’s commitments to the students of today and tomorrow, commitments to support employees with pension and health care far beyond their service time at a school district need to be carefully weighed and front-funded.

Affording Quality Schools – Remedies 3 and 4: Infrastructure Changes and Redistricting

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

As we outlined earlier in this blog series, Afton identified 8 ways that school districts can mitigate the effects of enrollment decline (and these were highlighted in CRPE’s “Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment”):

  1. Uniform intra-district funding formula for district and charter schools
  2. Continued operational efficiencies, with an eye toward making costs more variable
  3. School closures and corresponding real estate transactions
  4. Redistricting / efficient enrollment planning
  5. End “last in first out” methods of reducing staff
  6. End unsustainable/unfunded salary commitments (step/lane/raise)
  7. End proliferation of long-term fixed cost obligations (pension/OPEB)
  8. District commitment to decision-making based on long-term planning
  9. In this part of our series, we will highlight remedies 3 and 4.

Affording Quality Schools – Remedies 3 and 4: Infrastructure Changes and Redistricting

School districts must plan and implement reductions in school infrastructure, staffing and operations to be fiscally responsible as new charter schools are authorized and enrollment is stagnant or declining.

3) School closures. School closures, if done effectively, are among the most financially beneficial actions to take; however, they are also the most complex and controversial given the value of schools in their communities, the turmoil they cause to staff, and the potential negative impact on students when hastily executed.

Yet, keeping under-enrolled schools open creates costs in instructional quality. School-level costs are primarily semi-variable, and often act fixed when enrollment decline happens unevenly across schools and within grade levels. These kinds of “hard to unfix” semi-variable costs include principals, assistant principals, instructional coaches, clerks, and custodians. Every school that is open needs at least one of this or that, and therefore the failure to close schools as enrollment declines drives up per-pupil spending requirements.

To the extent that turnaround schools (a charter operator takes over an existing school) are a compelling instructional option in a neighborhood, they carry with them a financial advantage to the school district in comparison to the authorization of traditional charter schools and corresponding school closure. This option mitigates the financial impairment created by uneven enrollment migration across many grades of many schools because the district is losing students from only one school. As a result, the district eliminates that school’s full cost of instructional staffing, school administration, and other services and goods associated with educating those students. It is also able to eliminate many facility costs such as utilities, janitorial, and repair services.

(4) Enrollment boundaries and redistricting. The financial impact of school closures is greatly enhanced by informed district-wide planning on enrollment. Redistricting and enrollment boundary planning in anticipation of enrollment pattern changes, coupled with school closures, will lead to improved efficiency and therefore better use of dollars in schools.

How Districts Can Afford High Quality Schools Despite Enrollment Decline: Defining The Problem

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

In 2017, The Center on Reinventing Public Education (CRPE) convened practitioners, funders, and researchers from across the country to contemplate the challenges that school districts face when in a period of enrollment decline, specifically when that enrollment decline is influenced by the growth of charter schools. Out of that convening and various research done by CRPE, Dr. Marguerite Roza at Edunomics Lab, Afton Partners, and others, CRPE released Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment.

Afton has completed many analyses with school districts of all sizes across the country related to the fiscal complications associated with enrollment decline, and in some cases, the decline was specifically attributable to students migrating from district-run schools to charter schools. Through our work, we have sought to answer the questions:

  • Why does the perception that “charters financially hurt districts” exist?
  • Is this issue just perceived, or is this reality?
  • If it is real, why, and what can be done at the local level to ensure (a) students in district-run schools do not end up under-resourced, and (b) quality public schools of all kinds can be supported going forward?

Our experience led us to define four major reasons that school districts with stagnant or declining enrollment could be financially impaired by opening and growing new charter schools.

  1. Inequitable Funding. School funding formulas used by some states and districts do not allocate resources equitably between charter school students and district-run school students, sometimes leaving district-run school students with less than equitable funding.
  2. Lack of District Cost Flexibility. Most school districts lack the flexibility and ability to reduce their cost structure when facing significant enrollment fluctuations; some of this stems from fixed-cost structures and legacy matters that are not possible or easy to unwind, and some of this stems from institutionalized policies and practices that districts need to change.
  3. Inability to Take Difficult Actions. Some school districts and stakeholders lack the willingness to take significant action necessary, such as school closures, to adjust to significant enrollment fluctuations.
  4. Lack of Understanding in the Charter Sector. Sometimes, charter operators have a difficult time understanding the challenges that enrollment migration presents to school districts, and are therefore hesitant to negotiate terms that would be beneficial to all students, district and charter.

THE PROBLEM: MANY PARTS OF SCHOOL DISTRICT COST STRUCTURES ARE HARD TO UNFIX

As part of work Afton conducted in a large urban school district with declining enrollment partially attributed to the increase in charter schools, we answered the question – is the district allocating more or less dollars for instructional spend than a decade ago? What we found was – yes, the district’s proportional spend on school-level expenses decreased from 58% in FY07 to 50% of the budget in FY14 while enrollment declined 27% during the same period.

We found that the fixed nature of district costs was a big driver of the district’s budget shifting away from instruction during the enrollment decline. A larger portion of this district’s budget went to “non K-12 commitments”, including pension obligations, debt service, and outplacement costs. The district has managed to shrink its staff along with enrollment: staffing decreased by 31% — including a 27% reduction in teachers, 37% in the central office, and 33% in all other positions. However, schools have not been closed at the same rate as enrollment has been lost, meaning there are dollars tied up in administrative staffing positions and operational staff (including maintenance, janitorial, security, etc.). School count decreased by 18% while enrollment decreased by 27%. Additionally, most buildings remained owned/operated by the district, with total buildings (including school buildings, offices, and vacant buildings) decreasing by only 6% – and these extra buildings need to be maintained. Finally, contractual costs for teacher salaries increased by 21% and the pension rate increased by 262% over this period.

This district’s situation highlights how difficult it is to cope with enrollment loss and maintain quality instructional programming and supports. Consider that in addition to the fixed cost challenges, the school district faces challenges with how to efficiently spend dollars left for instruction. Most salaries are contractual and will increase in average cost no matter the funding available, reducing the district’s buying power for teachers. Also, migration of enrollment to charter schools is uneven from grades and schools at the district, leading to inefficient class sizes, further draining resources in non-optimal ways. All of this contributes to a feeling in schools of ‘lack of resources’, as proportional district spending at the school level shrinks and buying power for services and supports gets squeezed.

In the Appendix to CRPE’s “Better Together: Ensuring Quality District Schools in Times of Charter Growth and Declining Enrollment”, Afton shows how and why it is difficult for districts to unwind their fixed costs.

Afton’s work has shown that very few costs in a school district are truly fixed; yet many behave as fixed costs due to district decision-making (for example, contracts, teacher and other staff allocation policies, and facility footprint decisions). By understanding the root causes of fixed or partially fixed costs, districts may be better able to address them. The rest of this blog series will focus on actions school districts can consider to mitigate the challenges.

Afton Leads Discussion on New ESSA Financial Transparency Requirements

Written by Afton Group on . Posted in Effective Governance, Resource Equity.

Although the US Department of Education has delayed the effective date of ESSA regulations until at least March 21st, States continue to release their draft ESSA plans. Though the federal regulatory framework is in flux, as evidenced by Afton’s session with several SEAs and LEAs, many leading states and Districts continue to support increased transparency and accountability, though identified challenges to address along the way.

The workshop

Afton Partners joined Edunomics Lab, the Building State Capacity and Productivity Center, and the Council for Chief State School Officers (CCSSO) who hosted a one day workshop for more than 100 State Education Agency (SEA) and Local Education Agency (LEA) representatives from nearly 45 different locations, who are leading the effort to ensure their schools are ready to implement and are in compliance to meet the proposed financial transparency reporting requirement in ESSA.

Afton led a session focused on LEA implications, challenges and opportunities stemming from the financial transparency requirements. The leaders from each District identified specific areas of concern or optimism in each of three categories – technical implementation, communications and engagement, and overall impact and outcomes of this reporting.

Technical Implementation

Overall, the area of greatest concern was on technical implementation of the reporting requirement, with general optimism regarding the potential outcomes of this work. The technical challenges ranged from developing, implementing and adhering to a unified expense coding methodology to the potential need for additional capacity to implement. Other concerns included how rural districts would be supported, and potential systems implications.

Communications

The group identified both a set of challenges and opportunities. LEAs saw the benefits of transparency, including opportunities to improve trust and provide a deeper understanding of how districts operate (and the constraints they operate under), but also expressed concern about potential misunderstandings if data is not communicated properly. Overall, the opportunity to engage and communicate with District stakeholders using meaningful, relevant and timely data was viewed positively, with a caveat that planning for the communications effort should start well before the analysis and reporting has been completed.

Outcomes

Impact on outcomes – both academic and financial – was an area of optimism from nearly everyone in the session. The group recognized how this kind of site-level data can produce value for resource allocation decisions, smart programmatic decisions and trade-off decisions.

As the conversation progressed, each district team shared their concerns and how states could help address their most immediate issues. There were a few districts, including those in Rhode Island and Indiana, who have begun to implement site-level reporting and their insights enriched the conversation for others in the planning process. Representatives from Rhode Island shared their experience transitioning to site-level reporting took five years from inception to implementation. It’s important for states and districts to recognize it will take time for a successful shift to meet the new financial transparency reporting requirement under ESSA.

For more information and our site-level per-pupil expenditure analysis, you can view Afton’s presentation “ESSA Financial Transparency: View from the LEA.”

Growing for Success: How High-Performing CMOs Use Creative Financing Solutions for Facilities

Written by Afton Group on . Posted in Effective Governance, Financial Sustainability.

Afton Partners spoke to the Chief Financial Officers at two high-performing charter management organizations (CMOs) – John Murphy at KIPP Houston Public Schools and Delphine Sherman at Aspire Public Schools– who have successfully found creative financing solutions to secure facilities and address their growing waitlists.

Founded in 1995, KIPP Houston Public Schools (KHPS) experienced significant growth from 2005 through 2016. Currently, KHPS educates 12,500 students from educationally underserved communities and is on track to serve nearly 18,000 students in the near future. Aspire Public Schools opened its first school in 1998 and is now serving 15,000 students in 38 schools throughout California and Memphis, Tennessee.

But regardless of school size or location, charter leaders share that facilities remain one of the biggest challenges in addressing growth for a variety of reasons, including: funding, access to capital, real estate availability, zoning and development requirements, maintenance, the political climate, and many other reasons. This pushes charter leaders to be as innovative in their facility planning as they are in their educational program to find creative solutions to meet their needs.

As an example, KIPP Houston Public Schools has integrated various types of real estate solutions, including: modular buildings, permanent structures, office buildings, shopping centers, hospitals, green field developments, leased district buildings, and space in churches and other temporary locations. Aspire’s situation in California is much different. Aspire found in the markets it was serving that buildings were in short supply. In order to support growth, building new facilities, especially for secondary schools, was their best option.

Because of different market circumstances, the needs of the two CMOs led to different facility planning and debt structures to support their growth plans. In 2010, Aspire issued one of the largest charter school bonds at the time – $93M for seven campuses and 10 schools. It included two schools buying out an operating lease, one refinance, and the rest were new construction. A new entity was established to separate ownership of the building from the CMO, allowing the CMO to receive SB740 funds, which are charter school grants for the purpose of paying for lease costs. The charter school financing sector was not mature at the time – and a guarantee from foundations was a critical component to make the deal attractive.

To support its various types of school facilities, KIPP Houston Public Schools has closed on a variety of different financing options, including: traditional long-term (30 year+) tax-exempt bonds, Qualified School Construction Bonds (“QSCB”), Qualified Zone Academy Bonds (“QZAB”), commercial paper, real estate/construction bridge loans, and LOC’s. At this time, KHPS has been fortunate to access capital at a lower rate – their current average borrowing cost is 2.7%. KHPS’ “Q” deals are particularly notable. They required creativity and persistence and their rates were approximately 0.30%.

Demand for seats in high-performing charter schools is growing across the country. Afton Partners shares five lessons from KIPP Houston Public Schools and Aspire Public Schools on facility planning and financing to meet their growth plans.

1. As always, lead with the academic plan

Strong academic curriculum is the backbone of any high-performing school system. It’s critical not only for the students served, but the academic flywheel ensures the financial stability of the organization. John points out that strong academics creates student demand and waitlists at KIPP Houston Public Schools, which leads to charter renewals and strong financial performance. This translates to an even more successful organization all around, which resonates with lenders and funders.

2. As growth plans evolve, so should the debt structure

With the help of consultants, such as Afton Partners, Delphine shares that Aspire was able to make more informed decisions on prioritizing schools with debt service challenges that needed to be addressed. This allowed Aspire to focus on building reserves and pay down specific debt over time, so they could eventually refinance and move schools into a more sustainable financial circumstance.

KIPP Houston Public Schools notes that its 2009 transaction was ironically one of the more expensive transactions from a rate standpoint. However, it is considered one of their best transactions as they were honored as a Bond Buyer Deal of the Year finalist. This transaction recapitalized their separate 501c3 corporation, and it may have helped unfreeze the capital markets for public charter school operators nationally. KHPS worked with the Bill & Melinda Gates Foundation and the separate 501c3 entity to create a guarantee program that allowed the CMO to issue and recapitalize. This was also the period when they transitioned toward more modular campuses in response to the upcoming state funding reductions that challenged all schools in Texas. KIPP’s adage of “Find a way or make one” was tested during the 2008 – 2012 timeframe, and they successfully navigated through those challenges.

3. Understand the consequences of debt covenants

State funding reductions and deferrals cause enormous pressure on organizations and schools. Delphine shared some context about the state financial crisis in California (2008 – 2012) and how that crisis became even more challenging due to Aspire’s debt covenants at the time. Aspire’s debt covenants were organization-wide, which meant all schools had to participate in meeting the debt service coverage requirements and not just the schools for which the debt was issued. This meant that every school needed to contribute to a targeted budget surplus, even during a time when state funding was cut 20-30%. The debt covenants forced changes at some Aspire schools that would have otherwise not been made, such as spending cuts to enrichment programs and staff raises.

4. Focus on flexibility and conservatism in long-term planning

As John says, plans and models are guides and not set in stone. Things change and you must be flexible to be successful. In Texas, where land is available for new construction, KIPP Houston Public Schools took a bottom-up approach by identifying capital needs based on “model” school development costs, which addressed real estate estimates and construction estimates based on a “model” campus footprint. KHPS built in operating models for each school (existing and planned new schools) and developed a capital and operating fundraising program based on those assumptions. However, a struggle exists between modular and permanent solutions. In the short-term, charter schools can grow faster and build more campuses with modular buildings but the cost of cycling through modular units is more expensive in the long-run. Unfortunately, charters are challenged with these types of questions continually.

Delphine reiterates the importance of flexibility and being conservative as charter schools expand into new terrain. She shares as Aspire expanded into higher-grade levels – a new experience – it became difficult to achieve enrollment targets in the early years. This puts more pressure on the finances and spreads the debt burden over fewer students with lesser funding.

Furthermore, as it relates to planning and conservatism, John shares there is a growing focus for CMO’s to maintain higher levels of cash on hand and urges charter school leaders to focus on reserves early by establishing internal goals. This is counterintuitive to the mission of our organizations, which is to push more dollars into the schools, but a rainy day fund is necessary for every organization. KHPS is keenly focused on their investment grade rating and the new financial ratings the state of Texas recently adopted. These two areas are critical to long-term sustainability goals because of the impact it can have on charter renewal and the cost of capital.

5. Build relationships with the investor community

As charter schools grow their presence in the investor community, both John and Delphine recommend that CMOs do more to build credibility and educate investors. Building a good package and telling your story is important. KHPS and Aspire both focus on consistently meeting or exceeding financial results. To do this, Delphine advises schools to be smart and disclose as much information to investors upfront. John adds that accurate and timely reporting is critical. Do not underestimate the value of consistent historical information and the ability to compare apples-to-apples information. He shares that developing relationships with underwriters has been important because they are invested in the success of charter schools both locally and nationally. In Texas, underwriters, bond attorneys and the financial advisor community worked together with CMO’s and the Texas Charter School Association to develop facility solutions. The most notable recent success is the PSF Guarantee. This guarantee, allows investment grade charters to utilize a state-backed guarantee, which increases the bond rating to AAA, reduces interest costs and puts more money into the classrooms.

No matter where CMOs are in their growth plans, smart and creative facilities planning and financing will continue to be a critical component to success. As schools adopt more innovative strategies and find solutions, it’s important to highlight what’s working, replicate best practices, and share the challenges so more schools across the country have the opportunity to meet their facilities needs.