PK-12 Budgeting - Relative Cost per Outcome

Relative Cost per Outcome Example

Relative cost per outcome is defined as a school site’s actual cost divided by the expected cost of the school site if all funding were allocated purely on a per student basis. The quotient of this calculation is then plotted against the level of student performance achieved at that school site. The result is a matrix that compares school sites in the district on their relative cost and their relative achievement.

The expected cost is calculated by deriving an average dollar-per-pupil cost across the district for general students as well as specific categories of students such as English Language Learners (ELL), free and reduced lunch, special education, etc. This average cost per student is then multiplied by the actual number of students in each category at a given school site. This produces the expected cost of the school, if schools were funded strictly according to the composition of their enrollment. The school site’s actual spending is then divided by the expected spending to get a ratio. A ratio higher than 1.0 means the school spends more than the student-based funding formula would expect.

Student performance at the school should then be calculated by dividing the actual performance at the school site by the predicted performance, given the mix of students at the school (using the average student performance in the relevant groupings district-wide). A district should be able to adapt the method of measuring student performance that it already uses to this type of analysis.

The result is a matrix like the one below, where student outcomes are plotted against relative spending.

Each school site will fall into one of four categories relative to other schools:

  • High performing, high spending
  • Low performing, low spending
  • High performing, low spending
  • Low performing, high spending

The school site’s placement in these categories would suggest certain actions. For example, for high performing, high spending schools, the district might reduce funding or increase enrollment. High performing, low spending schools might be closely examined to see if their methods could be replicated elsewhere. High spending, low performing schools would be candidates for further-reaching interventions from the district.