The report notes that school finance expert Paul Hill describes a “backpack” of funding—a portable system where each student would have an account holding information about what educational funding sources were available to him/her and the schools or providers where it had been or could be distributed.

This backpack of funding would allow each student to carry their dollars to any eligible school or course provider where he/she enrolls, allowing students and their families to “shop for the best combination of courses and experiences their backpack funds could cover,” explains Hill. This funding would “impact existing schools’ budgets immediately, creating incentives for schools to avoid losing students to other educational institutions or instructional providers.”


To ensure quality, a performance-based system creates incentives tied to student outcomes that reward performance and completion, explains the report. Options include attaching a portion of provider payment and/or eligibility to student achievement data.

Florida is a known example of a performance-based system. For examples, Florida Virtual School supports around 400,000 course enrollments annually. It receives half of the funding for each course enrollment up front, and the other half based on successful completion.

Utah, Indiana, and Arizona are other areas that support performance-based school funding.

The report’s authors stress that all those interested in school funding redesign begin with the Fordham Institute’s 10 recommendations listed in the report “Fund the Child: Tackling Inequality and Antiquity in School Finance.”

For the full list, as well as deeper discussions on school finance collections, the cost of educating a student, a schematic on evaluating school finance systems, and many more detailed state and local example of funding redesign, read the report:

“A funding system can’t cause innovation: It can only interfere with it or let it happen,” said Hill.

“However,” concludes the report, “if states and district followed the design principles noted in the report, this might cease to be the case. A student-centered system…would go a long way towards ensuring universal student access to innovations in teaching and learning that we are only just beginning to discover.”