Unintended Consequences of Cost Recovery: A Well-Intended Plan to Give Schools More Flexibility in Spending Leads to a Range of Unintended Consequences and Few of the Anticipated Advantages

What's the best way to organize a school district in order to offer the multitude of services that districts must provide? Organizational analysts tell us that a variety of different organizational designs each have advantages and disadvantages and that choice of structure may or may not interfere with how services are provided. A more interesting question, leaving aside the choice of organizational design, is how should services be delivered? Every district has goals and priorities, which may determine what sort of services need to be provided. But how are they to be made available to ensure they are effectively used? School districts probably want to distribute services in a manner that ensures that schools have ready access to necessary services. They may create formulas and ratios to equitably distribute services. They also may devise elaborate tracking systems to make sure the supply aligns with the percpetion of how much service should be necessary. Taking our questioning one more step, we might want to know the best way to determine which services to provide. School districts are mandated to offer some services, but there are others that they could offer because of their community's unique needs. Some services are necessary; some services may be only nice to provide. So, what do they need to offer based on their organizational goals and priorities? What will be sufficient to ensure that district goals will be met? Is there an optimum, rationally determined, and fully defensible mix, or must school districts continue to offer sufficient services based on beliefs, predictions, the musings of a powerful superintendent, the politically motivated directives from an elected school board, or the loudest voices from the community? My district--Edmonton (Alberta) Public Schools--has tried a model for 20 years. In this model, we try to determine the need for certain services by matching supply of services to the actual demand for services. In this model, schools have been allocated real dollars (redirected from certain central services departments, which otherwise would have received these dollars to budget for services and staffing) to buy certain district services, and only those services receiving sufficient support from schools continue to be provided. Most services that became cost-recoverable were those deemed to be directly necessary for reaching school achievement goals. Because principals were responsible for student learning and for the achievement of such results, they were responsible for determining and planning the type and level of services required to achieve their results with their newly devised service allocations. This was action research at a district level, designed to test a new model of service delivery. The pedagogical services included in this model were those for curricular and instructional support for teachers, for most aspects of teacher professional development, for program consultation and identification of students at risk, and for special needs specialized assessments to determine many of the student-driven allocations in school budgeting. Other support and nonpedagogical services remained relatively untouched, including payroll and benefits, personnel, facilities planning, financial services, and the like. The experiment was intended to improve the ability of schools to determine the nature and level of services required to achieve the results they wanted, to ensure an effective and efficient deployment of consultant staff, and to improve how services would be accessed, delivered, and distributed. This was called the cost-recovery model because some departments that had been centrally funded were no longer funded in that manner. Instead, their operating dollars were transferred to schools--based on a formula incorporating a school's weighted student population and its historical service utilization rate--and departments had to cost-recover their budget by charging service fees to schools. …

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