“Laura Brown Image”

An incredible thing happened in the midst of House and Senate hearings to determine the future of education governance in Hawaii. New research by William G. Ouchi of The Anderson School of Management showed school systems that use a budgeting system known as “Weighted Student Formula” outperform more centralized school districts.

As fate would have it, Dr. Ouchi was in Hawaii visiting family when a local scholar linked up with him and informed Hawaii Reporter and members of the Governor’s staff such an expert was in town. Dr. Ouchi graciously testified at a House hearing on HB 289 and shared success stories experienced by Houston Independent, Seattle and Edmonton school districts under decentralization models using the Weighted Student Formula.

Then on Friday, March 21, Gov. Lingle’s policy advisors pulled together an impromptu meeting of education officials, legislators and community advocates to talk story with Dr. Ouchi’s about his research. He offered compelling evidence that the organizational structure of an education bureaucracy has great impact on student performance.

The multi-divisional — or M-form — has been the dominant business structure for over 50 years, because it outperforms centralized organization. Under the M-form, decision-making is decentralized, allowing adaptation to local needs.
Unlike businesses, most public schools operate as monopolies and therefore have no need to compete or improve performance.

Currently, nearly all public school systems nationwide operate under the U-form, or unitary, model. The U-form relies on a set enrollment formula for distribution of staff and resources, resulting in the loss of local control. Additionally, this system creates incentives for increasing staff instead of encouraging performance outcomes. Highly paid centralized jobs can be awarded under this system to those who will respond, in turn, with political loyalty.

Hawaii’s education system would operate more effectively under the M-form due to the dispersed geographic nature of a multi-island state as well as the unique needs of individual communities, Dr. Ouchi says.

”Comparison of Funding Mechanisms”

Centralized school districts use a funding methodology to individual schools called Enrollment Ratio Formula. The new system of budgeting in multi-divisional school districts is known as Weighted Student Formula. Enrollment Ratio Formula restricts a principal’s control over funds. Amounts are allotted based on enrollment and student types, which correlates into numbers of staff: teachers, paraprofessionals, librarians and so on. In contrast, Weighted Student Formula is used in Edmonton, Seattle and Houston

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