Before you spend another dollar, your next budget should be performance-based

 
By Adam Pearson
co-founder, Glimpse K12
March 18th, 2019

The reality is many of us are creatures of habit and lean on previous experiences, familiarity, and instinct to quickly and efficiently make decisions.

This processing shortcut serves us very well as our hand approaches a hot iron by drawing on previous rules of thumb buried inside our brain “warm…hot…burn hand.” However, these cognitive shortcuts don’t serve us well when making annual budget decisions and allocating tens of millions of dollars to educate our students. Our inherent tendency to lean on previous experiences often blinds us to much-needed changes. These blinders result in some alarming facts each year.

Facts

According to our data, school districts typically purchase 80-90% of the same education products and services every year, regardless of whether or not there is tangible evidence they worked or achieved their objective.

Our data also shows that the average ‘ineffective’ education product is purchased 3.6 years in a row. Budgeting decisions are primarily made from a monetary basis (how much money we may allocate) vs. an efficacy and outcomes basis (how effective was it).

Districts today simply don’t look at student outcomes in terms of the allocated financial resources that generated them.

When you lose the context around the student outcomes, you lose the why. Losing the why causes us to make ill-informed budgeting decisions and ultimately repeat the same purchases that led us here, yet we sit hoping for a different outcome.

Achievement-based budgeting overcomes our cognitive bias

Achievement-based budgeting (ABB) solves a major challenge for our brains. ABB helps school districts optimize budgets around what’s working, identify what’s not working, and eliminate duplicate and (most importantly) ineffective spending. Following an annual ABB process optimizes our budgets around tools, resources, and strategies proven to generate the highest student outcomes for our students. By definition, if you can eliminate ineffective spending each year and reallocate those resources on higher yielding activities, student achievement will go up.

How do I know if we need ABB?

Inserting several simple questions into your budgeting process will identify if your organization can benefit from overcoming our internal human budgeting biases.

When presented with a budget request you should ask yourself:

  • Did the resource meet out our student goals for student outcomes?
  • Did this request generate the highest ROI vs. alternative options?
  • What are our historical student outcomes serviced by this action?
  • Is there evidence that this request contributed to our success or lack thereof?
  • Do we have verification that students actually used this product or are we relying on perception?

If any of the questions cannot be answered, it’s time to stop blind budget requests from entering the building and process budget requests through the ABB lens. ABB answers each of these questions in full, allowing you to conquer our innate human biases of ‘purchasing what we know’ vs. ‘what’s best for our students’. All stakeholders, parents, students, teachers, and administrators benefit from an annual ABB process as ineffective spending is identified and eliminated.

Getting started with ABB

The first step in ABB is to look at student outcomes in the context of what you did to generate the outcomes in the first place. Capturing all resources allocated across the school or district targeting student achievement creates a curriculum map foundation for your ABB process. Next, tie each of these resources, allocations, and strategies to the individual students serviced by them. Align target goals for achievement or growth and appropriate forms of measurement to each. Leverage an ROI engine to correlate the above to generate ROI analysis to make your budgeting process driven by student outcomes vs. cognitive bias and perceptual historical performance.

Without strategic alignment and an Achievement Based Budgeting process, it is difficult to understand the relationship between education spending and student outcomes. Failure to understand this relationship causes costs to rise while student outcomes decline. The ABB process overcomes these challenges by identifying ineffective spending each year allowing you to reallocate your resources to alternative activities proven to yield greater student gains.

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