Special Report
Education Funding

26 States Earn ‘F’ Grade on School Spending in Education Week Analysis

Equity and effort often mismatched
By Sterling C. Lloyd — June 06, 2018 6 min read
Tech director and secondary science, technology, engineering, and mathematics teacher Jesse Smith, left, works with high school sophomore Perrin Fullmer, 15, at the Maker Lab in Shoshoni, Wyo. Maker Lab is part of Shoshoni Schools’ STEM program.
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At a time when money is front and center as an education issue—fueling a recent wave of teacher strikes and legislative wrangling over resources—Education Week‘s latest school finance analysis illustrates why the nation earns a mediocre mark on school funding and how fairly that money is divvied up within states.

This second installment of Quality Counts 2018, which digs deeper into the C rating the nation received on school finance in January’s top-line report card, reveals much better performance on indicators of funding equity than on measures of overall spending: a B (86.5) for equity, but a D-minus (62.3) for spending.

And the newly published analysis reveals some wide disparities among states. Wyoming, the consistent superstar in this category, earns the only A-minus (91.4). Five Northeastern and Mid-Atlantic states—Connecticut, New Jersey, New York, Rhode Island, and Vermont—received grades of B-plus. At the other end of the spectrum, Idaho gets the lowest score of 59.7 and a D-minus. Three other states—Arizona, Nevada, and Utah—also receive D-minus grades.

To keep state results in context, it’s important to note that the finance indicators in Quality Counts 2018 are based on data from 2015, the most recent available from the federal government. Reliance on uniform federal data sources means that more recent developments are not reflected in the grading, but it also better ensures an apples-to-apples comparison across states. To that same end, most of the analyses are also adjusted for regional cost differences and the concentrations of low-income students and students with disabilities, whose educational services might be more expensive than average.

A state’s overall finance grade is based on four measures of overall spending and four equity metrics. Grades are calculated using a best-in-class approach, which gauges a state’s performance on each metric in comparison to the nation’s top-ranked state on that same indicator. The leading state receives 100 points for the indicator; other states earn points in proportion to their performance as benchmarked against the national leader. The overall A-F letter grades reflect the average of numerical scores on a traditional 100-point scale.

Grades based on just the four spending indicators paint a relatively bleak picture. Alaska earns the nation’s highest score for spending at 96.4 or an A. Vermont (94.9) and Wyoming (93.1) also get grades of A. By contrast, Utah finishes last, with a score of 37.5 and a grade of F.

In all, 26 states receive grades of F for spending. That striking result, which is consistent with findings over the past decade, points to a funding hole that policymakers have not been able to climb out of as education struggles to compete with other spending priorities and to overcome political obstacles to state investment.

Spending Struggles

In this analysis, education expenditures are not evaluated based on raw dollars spent. Instead, a state’s spending is gauged by comparisons to national averages or to its total taxable resources. As the analysis looks deeper, a more nuanced perspective on state results can be revealed by examining performance on each of the four indicators in the spending category: per-pupil expenditures, the percent of students in districts spending at or above the U.S. average, the spending index, and the percent of total taxable resources spent on education.

Vermont has the highest per-pupil expenditures in the nation at $20,795, followed by Alaska at $20,640, as adjusted for variations in regional costs. At the other end of the scale, Utah spends the least at $7,207 per student. The national average stands at $12,526.

Overall State Grades

Catch up on how the nation and states fared on a broad range of K-12 categories, including school finance, as reported in this year’s first installment of Quality Counts, published Jan. 17.

The percent of students in districts with per-pupil expenditures at or above the national average ranges widely across the states. In seven states and the District of Columbia, 100 percent of students are in districts where spending reaches or exceeds the national benchmark. In 15 states, by contrast, less than 10 percent of students attend school in districts meeting that mark, including Florida where only 0.1 percent of students are in such districts (the lowest in the nation).

The spending index evaluates not only the percent of students served by districts spending at or above the national average but also the degree to which lower-spending districts fall short of that target. Eight states and the District of Columbia get a perfect score of 100 on the index. Arizona (65.3), Idaho (62.3), and Utah (59.4) receive the lowest scores.

Networking stacks and data cables in the Shoshoni district’s server room illustrate the district’s and state’s funding commitment to classroom connectivity.

The wealth and tax base in a state depends on a variety of long-term factors. In the short run, policymakers may not control the size of the budget available to them, but they can make choices about where to direct the resources they have. The share of total taxable resources spent on education ranges from a high of 5.4 percent in Vermont to a low of 2.3 percent in North Carolina.

More Success on Equity

Although this analysis finds that states generally fare better on measures of equity than on overall spending, it continues to highlight wide disparities across districts in many states. Florida earns the nation’s highest score for finance equity at 92.4, an A-minus. Seven other states also post A-minus grades, while Alaska scores lowest, the sole state to get a C (73.6).

A fuller picture of how states allocate funding across districts can be captured by looking at each of the four indicators making up the equity analysis: the wealth-neutrality score, McLoone Index, coefficient of variation, and restricted range.

State Snapshots From This Year's Analysis

Alaska—like many states—shows some sharply contrasting results when it comes to school funding. It’s the only state to provide higher funding for poor districts than for their wealthier peers. But it struggles on other measures assessing fairness in the allocation of resources across districts, finishing last in the nation for finance equity. In striking contrast, it gets the nation’s highest score on measures of overall spending and trails only Vermont in per-pupil spending, as adjusted for regional cost differences.
Statewide Enrollment: 133,400

California was one of only seven states that improved their overall school finance grades by a point or more between 2017 and 2018, demonstrating just how challenging it can be to move the needle on these metrics. California’s 3.5 point gain was largely driven by increases in per-pupil spending and the percent of students in districts spending at or above the U.S. average. The state’s finance ranking jumped from 39th in last year’s report to 32nd, the largest uptick in the nation.
Statewide Enrollment: 6.2 million

Idaho, which receives the nation’s lowest school finance score, with a 59.7 or a D-minus, struggles with both spending and the distribution of funding across districts within the state. Only Arizona and Utah spend less per student when adjusted for variations in regional costs. Just 2.8 percent of Idaho’s students are in districts spending at or above the national average.
Statewide Enrollment: 302,300

States in the top tier for school spending are sometimes at the other end of the spectrum for finance equity. Vermont leads the nation for perpupil spending at $20,795 when dollar amounts are adjusted for variations in regional costs. It also devotes a larger share (5.4 percent) of its total taxable resources to education than any other state. In stark contrast, Vermont ranks 48th on equity, with the state at or near the bottom on three of the four indicators of how even funding levels are among its districts.
Statewide Enrollment: 92,900

Wyoming posts the nation’s highest overall grade in school finance, with the only A-minus (91.4). It has remained at the top of the rankings for most of the past decade by pairing good results on spending metrics with strong performance on equity measures. At $17,700, its per-pupil spending is fourth-highest in the nation (adjusted for regional cost differences), and 100 percent of its students are in districts spending at or above the U.S. average. These results are aided by the state’s dedication of 4.7 percent of its taxable resources to education, the fourth-largest share in the nation.
Statewide Enrollment: 93,000

The wealth-neutrality score examines the relationship between school funding and the property wealth of districts. It indicates that just one state, Alaska, provides higher funding for poorer districts than for their wealthier peers. Results reinforce continuing concerns about the resources available in economically disadvantaged communities where students often have the greatest educational needs.

The McLoone Index, named after a school finance scholar, gauges actual spending as a percent of the amount needed to bring all students to the median per-pupil expenditure in a state. On this measure, Florida (96.0) gets the closest to perfect equity, which is represented by a score of 100. Vermont (79.2) is furthest from that target.

Another angle on the fairness and uniformity of school funding, the coefficient of variation, measures the disparity in spending across districts in a state. A higher result indicates more variation in spending, with a value of zero signifying that all districts spend the same amount. Florida (0.068) is closest to that benchmark, while Alaska (0.439) is furthest away.

The gap between the highest- and lowest-spending districts in a state also sheds light on equity. The restricted range is the difference between spending levels for the districts serving students at the 5th and 95th percentiles of the per-pupil-spending distribution. The range is largest in Alaska where $22,540 separate the top-spenders from their counterparts at the low end of the scale.

Few states are in the top tier for both spending and equity. Only Wyoming is in the top 10 in both categories. But many states that rank high on one dimension of finance fare poorly on the other. Alaska and Vermont, for instance, finish first and second for spending but fall to the bottom of the rankings for equity. Seven states that are in the top 10 for equity also receive failing grades for spending.

Challenges, Opportunities

A year-to-year comparison of finance results underscores the difficulty of moving the needle in the face of an unpredictable economic environment in which many priorities compete with education for limited state dollars. Just seven states improved their overall school finance scores by more than a point since last year. North Dakota saw the largest gain at 6 points, followed by California at 3.5. South Carolina (-1.2), Delaware (-1.6), and West Virginia (-2.5) were the only states to decline by more than a point.

As policymakers in many states consider changes to school funding policies, the looming debates present complex challenges but also opportunities to boost the resources available to students and teachers.


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