MBA school budget exercise a win-win situation for all

Oakland Tribune, Mar 9, 2007

THE OAKLAND school district's bold and complex new budgeting strategy has taken plenty of fire, even though many of its critics admit they don't completely understand it. But last week an innovative contest allowed some bright MBA students to take a crack at making sense of it.

Called results-based budgeting, the strategy allocates money based on how many students show up each day. But the kicker here is that school with more veteran (read: expensive) teachers receives roughly the same amount of money per student as the schools that have more junior teachers.

Each school then sets its own budget based on the amount of money left after paying teachers' salaries. That means that a school with all veteran teachers would have less to spend than the schools with more junior teachers.

This system is designed to make rich and poor schools within the district more equal and to provide more local control over how money is spent.

Union leaders have criticized the idea because they say it treats teachers like a commodity and discourages schools from retaining experienced staff.

But the complexity of this system made it a wonderful clinical target for the Educational Leadership Case Competition, which was held March 1 and 2 at UC Berkeley's Haas School of Business.

In that competition, teams of MBA students from all over worked to make presentations that offered ways to improve the system.

Overall, the MBA students seemed to like the basics of the system, once they understood it, but they saw some flaws in actual practice.

In the end, this turned out to be more than just an academic exercise.

The district's budget director Barak Ben-Gal said he was humbled and impressed with the recommendations made by the students. And that he planned to use some of them.

"I think they saw some things that were really obvious from the outside," Ben-Gal said.

The bottom line here is that this was an exercise where everyone won.