State and federal resources

School or District Perspective: Budgeting all or most dollars to the school site in a lump sum would cast the district in the role of fiscal pass-through agent for state funds; that is, the district would pass through directly to the school site a fixed and high percentage of the state and local funds that it receives. Categorical dollars also would be passed through, based on student eligibility. Thus, a state mandate for districts to allocate a fixed percentage of dollars directly to school sites - the current practice in England and Wales - would give schools access to both state and local dollars.

State Perspective: Three additional strategies are potentially available:

• The first is enactment or expansion of charter school programs. Under these programs, the state either funds the school directly or funds it indirectly through the agency that provides the school with a charter. The fundamental fiscal result of a charter school program is that all dollars flow directly to the school in a lump sum.

• The second - and somewhat more radical - approach would be for the state to change from the current district funding structure to a school- based funding structure, under which all or most funds would be allocated by the state directly to each school site. Victoria, Australia; New Zealand; several other countries; and Hawaii already use this type of system. This approach would represent a radical shift for most states, but it is a feasible option for state policy.

• A third - and much more controversial - approach would be a voucher program. However, the less controversial charter school programs accomplish the same fiscal goal and avoid the politically and socially sensitive issues that come with state support of private and sectarian schools.

Federal Perspective: The bulk of federal funds are categorical funds. The implication of school-based financing for these dollars is that the federal government would allocate money in a lump sum to the school site, which to a substantial degree reflects current practice. A more direct procedure for accomplishing this objective would be to treat the school site as a "district" when allocating federal dollars. Depending on existing practice at the state and local levels, some schools would become eligible for more federal dollars as a result of this approach.