Financial Incentives in Schools

A few years ago, the BC Government changed how schools are funded. In the recent past, a school received full funding for a student who was registered at the school. Now, a school receives funding based on how many classes are being attended by students. On the surface, this seems like a good way to do things (Why should a student who is only registered in 5 courses require the same funding as a student who is registered in 8?). However, the result of this change has been harmful to schools. It fails to take into account certain realities. What’s worse is that this formula leads to a lowering of standards, as now there exists a financial incentive to offer easier courses in order to keep kids enrolled.

One reality left unaddressed by the per course formula, is the needs of students who have learning disabilities. Some students, more than you might guess, can not handle a full course load. These students will enroll in fewer courses, but they still need a place to go while they are at school. And they need extra learning support for the courses they do take. Even though they may only take five courses, they still need as much – maybe even more –  teacher time than a student taking eight.

Many students suffer from mental illness, which impacts their ability to cope with course loads. These students need counseling, sometimes hours a week, but there is nothing in a funding formula to reflect this fact. They may be spending fewer hours in the classroom, but they require more – much more – teacher, counselor and administrator time than the “healthy” kids. This need is something that I don’t believe policy-makers are aware of. In addition, with so many students taking online courses, kids are often at the school without a class to go to. They require supervision, and they use the facility. They use the washrooms, the weight rooms, the music room; they can be disruptive to classes in session as they walk through the hallways. They are really creating more need for custodial care, while the schools receive less funding.

Perhaps a more disturbing problem is the fact that when schools are funded according to the number of courses students take, they are incentivized to offer courses that students won’t drop.

I taught a Psychology 12 class a couple of years ago. The concepts in a psychology course are challenging. A large part of psychology is the use of science to evaluate the validity of social and philosophical constructs. To understand the epistemological, scientific, and philosophical premises of psychology, one must become familiar with a new vocabulary. Psychology requires a bit of understanding of statistics. It is not simply sitting in circles and discussing dreams. When I introduced the class, I had thirty-three students registered. After my first assignment, a third of the students dropped the course, realizing that it was going to require more than simply attending classes.

I felt terrible about this situation, but the problem was not me. I was assured by many teachers of “academic courses” (philosophy, physics, chemistry, calculus) that this was a normal phenomenon. Students realized that this would not be an easy credit, and they were simply not willing to do the work required. Because they didn’t need the credit, they dropped the course. After all, why would they take an elective that could harm their GPA if they didn’t put effort into it?

Because they dropped the course, the school lost funding. If I had structured the course to have no homework requirements, or no writing requirements; if I had structured the course to just be a fun discussion of psychological concepts, I might have been able to hold on to some of those students. But I would not have been able to effectively teach them psychology, and I would not have been able to evaluate their learning. Students know when a course is “a joke”, and many would have gladly accepted course credit for something that was “a joke”. Administrators do not like losing students (and their funding). A lot of administrator praise goes to teachers who have full classes, and who are “successful” with students who “struggle”. I was incentivized to “lower the bar”, in order to be such a teacher.

Governments have become obsessed with “efficiency”, but in their efforts, they can unwittingly overlook problems, or cause problems. Schools are large, cumbersome institutions that look after needs far beyond “imparting knowledge”. Governments need to re-evaluate the services that schools provide, and create funding formulas that properly incentivize schools. In a world that clamors for more individualization of education, this is going to require more funding than ever. In a quest for efficiency, the cuts have gone too deep.


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