“Effective resource allocation means optimizing limited resources,” said Allovue CEO Jess Gartner. “At Allovue, we believe student success is the bottom line, which means that every dollar must connect to student achievement. We’re building the tools and providing the training to help make those decisions more data-driven, evidence-based, and easy to understand.”
Last week Baltimore startup Allovue announced a $5.1 million round of financing to extent their financial analysis platform for K-12 public school districts. Matt Greenfield of Rethink Education led the round and joined the board. Red House Education, Serious Change II, Kapor Capital, and Baltimore Angels also participated.
Balance, the Allovue platform, is used by districts across the country, including New Haven Public Schools, Pueblo District 70 in Colorado, and Santa Ana Unified School District. Balance helps districts streamline budgets, vendor transactions, general ledger balances, and other accounting data into a single dashboard. Additionally, education leaders can analyze spending in the context of non-financial metrics, such as attendance rates, student achievement data, and demographic data.
Founder Jess Gartner taught in schools around the world, including Thailand, South Africa, Philadelphia, and Baltimore. She was named one of Forbes Magazine’s 30 Under 30 in Education (2015), The Baltimore Sun’s Women to Watch (2013), and Baltimore Magazine’s 40 Under 40 (2013).
The new round of funding brings total funding to $6.9 million and will be used to hire 35 people, tripling the size of the company. The raise adds to the success of the thriving EdTech community surrounding Baltimore’s Inner Harbor.
We asked Gartner and Greenfield about the path forward.
TVA: Why district budgeting? What problem are you solving?
JG: I believe education finance is going to become one of the top issues in education in the next few years. We’re seeing a convergence of several trends: rising costs of pensions and debt, reduced state budgets, attention to funding equity, and calls for increased financial transparency. School districts are asking tough questions about whether their spending is truly aligned with their top priorities for student achievement, and that’s very difficult to do when financial data is sequestered from all other education data.
We have to stop pretending that budgets and spending are unrelated to academics. Spending drives everything: ability to hire highly-qualified teachers, professional development, how well students are supported with wraparound services, the type of curriculum, the safety and cleanliness of school facilities, extracurricular offerings, technology infrastructure, food, field trips, library resources, and college prep. Are we stretching every dollar for students? Are we analyzing the cost-benefit ratio of these resources? Are we considering trade-offs? We spend $600 billion on education annually in this country, and we do not have a $600 billion education system to show for it.
MG: We think that at scale Allovue will free up tens of billions of dollars for teaching and learning. The payback could easily be 50-100x. Allovue will also help us do a better job of measuring what kinds of expenditures have the biggest impact on teaching and learning. For principals, the tools will also free up a huge amount of time and reduce frustration levels. A principal is the CEO of an enterprise with a budget that can be north of $5 million…but usually with zero training in management and budgeting. It can take them hours to answer simple financial questions. They would much rather spend that time on coaching teachers. Allovue will also allow boards, district administrators, and principals to study the best practices of particularly successful budget allocators.
TVA: What is Allovue’s unique contribution?
JG: Allovue was founded by educators, and built for educators. School and district administrators are under extreme stress to allocate limited resources for maximum student benefit. We work with districts that manage over 220,000 unique accounts each year – most of which have their own various guidelines, restrictions, and deadlines. At an absolute minimum, managers of those accounts should be able to pull up detailed information on any of those accounts in a matter of seconds, using plain English. Allovue has spent years working with principals, CFOs, budget directors, grant managers, school secretaries, and superintendents to understand what they need from an EdFinTech solution. We designed Balance with those decision-makers in mind, and we work to continuously improve the product based on their feedback.
Technologically, Balance is unique because of the way we import and store financial data. We’ll work with any chart of accounts, any financial management system, and in most cases we’ll have district leaders up and running in a staging environment in about a week. We also start with a diagnostic assessment of financial processes and skills across the district so that we can create a professional development plan that meets each district’s unique needs.
MG: Like a lot of our favorite companies, Allovue is deeply rooted in the character and values of its founder. Jess is a budget-maker to the core. When she became an entrepreneur, she converted her house to a bed and breakfast to ensure that she did not miss a mortgage payment. She bought the house while still in TFA. And she started the company to solve a problem that really upset her. She was wondering why a neighboring school had plenty of money for tech and supplies while her own school was strapped. The answer was really poor allocation of budget dollars, which in turn had a lot to do with charts of accounts filled with incomprehensible codes, funding streams with constraints not modeled anywhere in the accounting software, and generally unfriendly ERP software. No amount of training or institutional change would help without better tools. This turned into a jihad for Jess–she became increasingly outraged that no one was interested in solving the problem. Allovue is a company that is driven by empathy and passion. Jess is hiring many district finance people to embed a deep understanding of the customer in her organization. There is also an esthetic component to the company’s mission: they value simplicity, clarity, speed, responsiveness, empowerment, and rationality. Those things all just give the Allovue team pleasure.
TVA: What will help spread this category of financial management tools? What can advocates & foundations do to help?
JG: Financial data are more complex and less standardized than any other type of data in education, which makes this data especially difficult to extract and store in a traditional database. It’s even more tedious to track and analyze manually, with clunky Excel spreadsheets often being the best-case scenario. And until recently, most financial technology in education settings has been built and used for accounting, not decision-making.
We call this new category of financial management tools “EdFinTech” because our tools are designed specifically with educators in mind. We combine the power of financial technology with education data, empowering administrators to connect spending to student achievement. Like any new category, one of the biggest challenges is educating school districts and other stakeholders about what is now possible through EdFinTech. Most administrators have been working with inadequate, siloed data solutions for so long that it’s hard for them to even imagine what’s possible with this new category of tools.
MG: The Gates Foundation is already funding the use of the software in San Francisco, and other foundations could follow in their footsteps. I think there is a lot to be done on the advocacy front as well. Once mayors, governors, school boards, and legislators understand the possibilities, they will want Allovue to get used in their schools. I can easily imagine legislative action that nudges states and districts toward Allovue use. Simply giving Allovue customers the chance to present at various convenings will also be very helpful.