State lawmakers who want to see more bang for North Carolina’s education bucks ought to consider shifting more spending decisions to the local level.

A study committee heard that message last week from Marguerite Roza, director of the Edunomics Lab at Georgetown University. Roza is also senior research affiliate at the Center for Reinventing Public Education.

Local spending flexibility emerged as a key ingredient in the “secret sauce” that helped some rural school districts across the country compile a high return on investment, Roza explained.

Generally, researchers have identified a poor relationship between overall education spending and student outcomes in these rural districts. Roza and her fellow researchers dug deeper into the data.

“We were mostly interested in this group that we called the ‘ROI superstars,’” Roza told the Joint Legislative Task Force on Education Finance Reform. “These were schools and districts that beat the odds for their students with the money they had.”

After controlling for other factors, Roza and her team learned that the “superstar” districts did not spend money in substantially different ways than their less successful counterparts. So researchers conducted follow-up interviews.

“What we found was a whole bunch of really squishy stuff that, if you’re a math major and a quantitative person, was kind of … painful to sift through,” she said. “But they talked about the importance of relationships. They talked a lot about seeing students as individuals. They didn’t talk about the system.”

“They talked about self-reliance,” she added. “In fact, they never mentioned one state or federal program for their success.”

People working in the successful rural districts understood the significance of spending trade-offs. “’We could have done this, but we chose to do this instead,’” she quoted school leaders as telling researchers.

“They had a lot of respect for cost,” she added. “They knew how much stuff costs. They were sort of responsible for that. I think the point here is to say when they were bought in — the superstars — on their own destiny, on their own responsibility, they had their cash and they had to make their trade-offs, they went about it in a way that somehow leveraged greater return for their students than if some of those decisions had been made somewhere else.”

The example of return-on-investment “superstars” fit with Roza’s larger theme. She urged legislators to consider moving away from the state’s current “antiquated” school funding system.

North Carolina uses funding formulas linked to school staffing and other resources. When the state determines that a school system has a certain number of students, it sends money for a predetermined set of inputs, such as teachers. The state also adds predefined amounts for particular programs.

Many states have moved instead toward “student-based allocation,” Roza said. Rather than funding a teacher or a program, the school district gets a certain amount of money per student. The district chooses how to spend the money.

“In North Carolina, the state says: ‘How many students are in this school? We think you need 21 teachers based on the number of kids you have. So I will now give you the money for 21 teachers,’” Roza said.

This can lead to drastic differences in funding between schools with similar students, Roza said. A school with more experienced — and more expensive — teachers might collect more money for serving the exact same type of student. “It’s like you put another formula in between the number and types of kids you have and the money you’re generating.”

“In other states, they simply say … every time you have a kindergartner or a second-grader come in the door, we give you another $7,557 for that kid,” Roza said. “You decide how you’re going to staff that school. Maybe you’re going to go with bigger classes. Maybe you’re going to go with smaller classes. Maybe you’re going to go with a lot of technology. Maybe you’re going to do something else. Those decisions about how to staff the building belong in the district and the school, not in the legislature. … Most states operate that way.”

California has seen positive benefits since a “radical overhaul” of its school funding system more than four years ago, Roza said. “The research is pretty clear that there has been an improved relationship between spending and outcomes after they switched to the student-based model,” she said. “The dollars they are spending are leveraging greater outcomes. That relationship between spending and outcomes — that we’re always upset that is frustratingly weak — … that relationship improved in California when they implemented this.”

Roza’s recommendations generated mixed reactions. “You’ve got to give flexibility,” said Sen. Jerry Tillman, R-Randolph. “You ask any superintendent in this state or any principal: What’s the biggest barrier to them succeeding with their school goals or their state goal? They will tell you the lack of ability to move funds where they need them.”

But while Tillman wants to allow local school systems to make more spending decisions, “then hold their feet to the wire,” others aren’t so sure.

“When you put that much flexibility on the local level, it really requires a total rethinking of the management teams at the local level,” said Sen. Rick Horner, R-Wilson. “I’m not sure that when I look at the depth and quality of the way we elect our school boards across the state that I have the supervision there … to say, ‘Here, take it. Good luck. We’ll check in in two or three years.’”

“Our sense is that people rise to the occasion,” Roza responded. “Over time, school systems attract and retain some of their better staff because they’ve trusted them to be part of the decision making. We find actually that many folks who think they were sort of comfortable in the old model — once they get the new model where they have more say — have no intention of ever going back.”

Lawmakers will have plenty of time to consider Roza’s ideas. The education finance task force will offer no final recommendations during the legislative short session that begins May 16. But co-chairman Rep. Craig Horn, R-Union, expects work on a new funding formula after the formal session concludes.

“The iron is hot,” he said. “Now is the time. And certainly the need is clear to ensure we’re getting the taxpayers’ money’s worth, and that we’re taking advantage of the tremendous talent that we have already in our system: teachers and principals.”

Mitch Kokai is senior political analyst for the John Locke Foundation.