Rhode Island…the Little State That Could

February 27, 2013 at 11:51 AM Leave a comment

Rhode Island has created what should be a national model for education accounting and data collection. Minor enhancements may be needed to aggregate information on virtual schooling among expenditures and to link city and town accounts for capital assets and pension liabilities. But the lion’s share of the work has already been done in Providence.

In 2004, the late Representative Paul Crowley, Senate President Paiva Weed, and Senate Education Committee Chairwoman Hanna Gallo collaborated to sponsor a better vision for education finance in Rhode Island. The result was a gargantuan effort to address the needs for transparency, uniformity, comparability, and accountability to mission in education spending. The system continues to evolve in its third year of full implementation under Commissioner Deborah Gist. But the Rhode Island Department of Education’s Uniform Chart of Accounts already could serve as a national model for K-12 finance data.

The US spends about $500 billion annually on education without matching the money to the mission of educating children. While the federal government only contributes about 10% of the funding, with state and local governments splitting the other 90%, financial reporting is only standardized with regard to a small number of federal regulatory line items.

The federal role in public education includes…

  • National data standards
  • Common Core standards for interstate portability of education
  • Management of “market” imperfections
    • Food and transportation for the poor
    • Disability benefits
    • Incubation of innovation
  • Funding adjustments for equity via specific grants

Autonomous state education authorities (SEAs) offer half the funding and carry the weight of decision support for the mission of educating the children. However, their informational common denominator is compliance data for federal reporting. Accordingly, most comparative analyses can go no further than aggregate data on general education, special student services, food, and transportation. Action items have been elusive; inefficiencies have been funded without intent or natural correction.

When Rhode Island began its data project, only six states – most notably New Mexico – had made substantive progress toward uniformity in financial data collection within their borders. Rhode Islanders gathered an extensive team of stakeholders. Together, they studied these exemplars of unified charts of accounts against their own needs for comparative analyses of local education authorities (LEAs) as well as internal assessment of the effectiveness of their spending patterns. The team paid close attention to every detail in analytics and created an incredibly robust decision architecture that addresses issues of money, mission, and regulatory compliance.

Two areas for development that I could see…

  • Virtual education resources have grown in unforeseeable ways as materials and delivery sites for education services. They need to be integrated into the system in multiple dimensions.
  • Balance sheet items concerning major assets, such as school buildings, and liabilities, such as unfunded pension obligations, need to be consolidated into school finance at least for analyses and decision-making. These line items do not have a consistent place in school or district finance, often falling under local government authority and residing in their accounting structure. However, complete understanding of these components of investment and their impact on scarce resources to support the mission of educating the children cannot be overlooked.

In addition, I am a believer in student-centered finance that goes beyond weighted funding to include direct linkage of expenses for case management. But that may be a generation away. In the meantime, hats off to Rhode Island.

Now can this best practice get shared…immediately?

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Entry filed under: Data, Financial data, Issues and Ideas.

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