Budget & Finance

State-by-State Report Card Unearths Inequities in School Funding

By Holly Yettick — February 07, 2014 8 min read
  • Save to favorites
  • Print

Is school funding fair? A report by that name was released this week. And it answered its own question with a resounding “no.”

Is School Funding Fair: A National Report Card is the third in a series by Bruce Baker, an associate professor of education at Rutgers, the State University of New Jersey. Baker’s co-authors are David Sciarra and Danielle Farrie of The Education Law Center, a Newark, N.J.-based nonprofit organization that promotes equitable and adequate school funding. The report looks at four main indicators of equity and adequacy: level of funding, funding for higher versus lower-poverty school districts, percent of state gross domestic product devoted to schools, and public versus private school enrollment. It includes a nifty, interactive website where you can look up information about your state.

Level of Funding

The authors find that school funding was flat between 2010 and 2011, with about half the states making cuts and 14 spending less in 2011 than in 2007, even without adjusting for inflation. In addition, as in the past, families can dramatically alter the amount of money allotted for their child’s public school education simply by moving across state lines: In 2011, the highest-spending state, Wyoming, funded schools at $17,397 per pupil, a rate more than two and a half times higher than the funding in next-door-neighbor Idaho, which spent $6,753 per pupil, less than any other state in the nation.

If these figures seem different than others you might have seen, it’s because the report uses a methodology that accounts for differences among the states by pooling data from the past three years and considering poverty rates, regional wage variation, economies of scale, and population density. The report summarizes state and local per-pupil operating funds using the most recent federal data available, which is from 2011.

Adjusted Per-Pupil Funding Rate

Winners: Wyoming ($17,397), New York ($16,752), Alaska ($16,339)

Losers: Idaho ($6,753), Utah ($6,844), Arizona ($7,363)

Funding for High-Poverty School Districts

This year’s report finds, once again, that most states did not allot more money for high-poverty districts, where report authors contend that students have higher needs. In fact, between 2010 and 2011, the number of states that funded high-poverty districts at higher rates than low-poverty districts declined from 18 to 14, a level not seen since 2007. This occurred despite the fact that the number of children living below the federal poverty line (about $23,000 for a family of four) increased by nearly a third during that period.

How Much More (or Less) Funding Does a High Poverty District Receive than a Low-Poverty District?

Winners: Minnesota (+28 percent), South Dakota (+27 percent), Utah (+24 percent)

Losers: Nevada (-31 percent), North Carolina (-29 percent), New Hampshire (-23 percent)

Percentage of State GDP Spent on Education

All but three states spent a smaller percentage of their GDP on education in 2011. One explanation is that states did not replace one-time federal stimulus funds. Previous Center reports counted these funds as state and local revenue since they were supposed to offset recession-induced declines in these sources.

Education Funding as a Percent of State GDP

Winners: Vermont (5.5 percent), New Jersey (4.9 percent), New York (4.5 percent)

Losers: Oregon ( 2 percent), South Dakota (2.5 percent), Delaware (2.5 percent)

Public and Private Schools

A final factor examined in all three years of reports compared private school and public school families’ income levels while also considering the percentage of students enrolled in public schools. The authors believe this measure is relevant because high private school enrollment, especially among affluent families, “affects the public and political will necessary to generate fair funding through the state’s finance system.” The percentage of students enrolled in public schools ranged from a low of 78 percent in Hawaii to a high of 93 percent in Utah. Alaska had the lowest income disparity between private and public school families. That disparity was highest in the nation’s capital, where the median income of private school families is $232,817, nearly four times higher than the median income for public school families, which is $63,422. The report found that private school attendance is on the rise in nearly every state but that it has only increased by about 1 percent.

Private School Market Share and Public-Private Income Gap

Winners: Wyoming, Utah, Alaska

Losers: District of Columbia, Louisiana, Hawaii

What are the Consequences?

This year’s report contains three new indicators that are meant to demonstrate the consequences of higher and lower funding and equity. Here’s what they found: States that scored higher on fairness indicators tended to enroll bigger percentages of low-income families in early-childhood programs. They maintained lower pupil-teacher ratios in high-poverty districts. And their teachers’ salaries were more competitive when compared to other local jobs requiring similar levels of education.


This report did not undergo a formal peer-review process so I requested an informal critique from economist Nora Gordon, an associate professor of public policy at Georgetown University who was not involved with the research. Gordon’s overall reaction to the report was that: “There are significant and distressing disparities in district-level funding both within and across states, and it’s particularly worrisome that these disparities are sometimes regressive.”

However, Gordon thought focusing on funding as a proxy for school quality to the exclusion of other measures, especially at the district rather than school level, “does a disservice to poor students, the very ones the authors want to advocate for. An ideal comparison of how districts and states are doing would include data on student outcomes, like how the income gap in NAEP scores varies by state. Two states with similar levels and distributions of funding could have very different student outcomes depending on what they’re doing with their money, which is a lot harder to measure than their revenue levels. This is the line of reasoning behind recent federal efforts, like Race to the Top and ESEA [Elementary and Secondary Education Act] flexibility. Whether or not you’re a fan of the particular policies they’re trying to promote, it’s clear that the federal government is interested in changing how education agencies and schools run, not just in how much money they have.”

Danielle Farrie, who is one of the authors of the report, agreed that it would be interesting to explore whether states with equitable funding formulas also had smaller achievement gaps.

“It’s really complicated, obviously, to link the two,” she said. “But some really general analyses [have found that] the states that have more progressive funding systems are more likely to perform better on measures like the NAEP test scores...That’s a big, technically difficult research question to answer.”

To satisfy my own curiosity, I did a quick, back-of-the-envelope calculation that compared the report’s letter grades for equity and funding levels with the achievement gap between higher and lower-income students in each state. I defined the achievement gap as the number of scale-score points that separated higher and lower-income 4th and 8th graders on the NAEP reading and math exams. I did not find any statistically significant correlations between the equity and funding level grades and the reading or math achievement gap at either grade level. However, it’s important to acknowledge that this was a very unsophisticated analysis that did not control for any potentially crucial contextual factors. I hope that future Center reports will examine the link between funding and achievement.

Gordon also wondered how the report’s equity calculations might have changed if they had included federal funding from Title I.

“In my own research, I have found that in some contexts (in the late 1960s in the South, and in the mid-1990s nationally), Title I grants reduced local revenue generated for education over time,” she said. “Some part of the low state and local funding (which is what’s analyzed throughout the report--not total revenue) in poor states may well be due to districts in these states responding to federal funds targeted to them and not increasing their revenue for schools as much as they would in the absence of federal programs. Voters in states and districts choose funding levels within the context of how much federal aid they expect to be getting; looking at their combined state and local revenue doesn’t reflect their desired level of spending, which incorporates federal funds.”

Farrie noted that the first edition of the report did include an appendix that accounted for Title I funds.

“It really didn’t affect the outcomes,” she said. “It’s such a small pool of money.”

A final comment from Gordon was that it would have been interesting to examine inequities by comparing funding for different schools within the same district. The problem is, she notes, the strongest data is at the state and district level. She added:

“It’s important to remember that there is still more inequality across schools within districts, as the work of Marguerite Roza and others highlights. Given HR practices which make new teaching slots available first to candidates already teaching in the districts, high poverty schools experience a lot of churn and a lot of newer teachers. These teachers cost less given seniority-based pay scales, so even when a district spreads FTEs [full-time equivalent staff] equally across schools, that doesn’t mean it’s spreading dollars equally.”

The report provides several justifications for focusing on inequities between districts rather than inequities between schools within the same district. It notes that districts are the main operational unit for schools. In many states, they have a great deal of leeway when it comes to raising revenue. For instance, districts can generally issue bonds and collect property taxes. Finally, the report states that “funding differences and disparities are caused primarily by district misallocation among schools within districts, rather than the overall level and distribution of state and local revenues authorized by states through their respective finance systems.”

Related Tags:

A version of this news article first appeared in the Inside School Research blog.