Education Funding

How Efforts to Fund Schools More Equitably Actually Worsened Racial Inequality

By Evie Blad — September 11, 2025 2 min read
Vector illustration of two hands pulling apart money and it tears in unequal parts.
  • Save to favorites
  • Print

When states overhauled their school funding models to promote equity, they helped narrow the financial gap between high- and low-income districts, but those efforts did not narrow racial and ethnic gaps, a new study finds.

In some cases, differences in funding between largely white and more diverse districts widened. The inequality was most pronounced between states, rather than within them, researchers found, largely because wealthier, less diverse states typically fund their schools at higher levels.

“There’s been a lot of work showing that those reforms did successfully increase equality by student income,” said Emily Rauscher, a sociology professor at Brown University and a co-author of the study, published Sept. 10 in the journal Educational Evaluation and Policy Analysis. “I was expecting that these same reforms would also reduce inequality by race and ethnicity. To my surprise, they did not.”

Because funding for schools is largely generated by property taxes, districts with larger populations of students from low-income households, which often have lower property values, tend to have less local funding per student than districts with wealthier student populations.

States have sought to remedy those disparities by adopting school funding reforms that provide additional money to districts with lower local tax revenue and weighting per-pupil funding to provide additional aid based on characteristics like student disability, poverty, or English-learner status.

Researchers weighed the effects of finance reforms adopted by 40 states between 1990 and 2022. Those changes resulted from court orders in cases challenging the constitutionality of school funding models, legal settlements, ballot issues, and laws passed by state legislatures. The analysis used data from the U.S. Census Bureau and the National Center for Education Statistics to compare districts in the top quintile for child poverty and enrollment of Black and Hispanic students with those in the lowest quintile.

What they found: Across states, the funding-model changes reduced spending gaps between the highest- and lowest-income districts by an average of $1,300 per pupil—sending a bigger share of resources to lower-income districts.

But contrary to researchers’ initial assumptions, the funding gap between districts with the lowest and highest percentages of Black students widened by $900 per pupil following the reforms. Districts with the lowest enrollment of Hispanic students gained an additional $1,000 per-pupil spending advantage over those with the highest enrollment.

Within states, changes to school funding models were most effective at remedying racial and ethnic disparities when those gaps were already relatively narrow, Rauscher said. States with higher enrollments of Black and Hispanic students and more racial and ethnic segregation between districts often had lower per-pupil funding than their less diverse counterparts, researchers found, and changes to their funding models did not help narrow the nationwide disparities.

“What these states’ school finance reforms are doing is really admirable,” Rauscher said. “I think it’s great that state legislators are tackling this issue. What’s going on here is the variation in funding between states.”

Changing those persistent gaps at the national level would require more than state and local efforts, researchers concluded, including a more coordinated effort by the U.S. Department of Education to help level spending among states.

Rauscher discussed the study in this video produced by the American Educational Research Association.

Events

This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
School & District Management Webinar
The Principal's Role in Collective Efficacy and Student Outcomes
Learn practical strategies that help principals translate their confidence into stronger collective teacher efficacy and student outcomes.
Content provided by Otus
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
Education Funding Webinar
What Schools Need to Know About the Federal Education Freedom Tax Credit
What schools need to know about the federal Education Freedom Tax Credit: A practical guide from a licensed teacher and policy expert.
Content provided by LearningSpring
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
School Climate & Safety Webinar
Building Your School Safety Roadmap: Key Priorities for the Upcoming Year
What should be on your school's safety roadmap this year? Join experts to discuss priorities, preparedness, and best practices.
Content provided by Evolv Technology & IdentiSys

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Funding Trump's Education Funding Maneuvers Were Illegal, Judges Rule
Judges ruled in suits about teacher-training grant cancellations and withheld education research money.
4 min read
Collage of Trump signing an executive order, money, desks, torn paper, legal pad.
Collage by Laura Baker/Education Week with Getty + Evan Vucci/AP
Education Funding What 'Returning Ed. to the States' Looks Like as the Ed. Dept. Awards Grants
State leaders face requests for letters of endorsement from grant applicants under new priorities.
TahSoGhay Collah, right, teaches a third-grade English learners class at the 700-student intermediate school that serves grades 3 through 5, in Worthington, Minn., on Oct. 22, 2024.
TahSoGhay Collah, right, teaches a 3rd grade English learners class in Worthington, Minn., on Oct. 22, 2024. Researchers seeking federal grant funding to train more teachers to work with English learners requested letters of support from state leaders to submit competitive applications this year.
Jessie Wardarski/AP
Education Funding Ed. Dept. Risks Letting $180 Million for Research Expire as Deadline Looms
Spending by the agency's research arm has lagged most significantly compared with previous years.
6 min read
Russell Vought, Director of the Office of Management and Budget (OMB) testifies on the OMB budget during a House Appropriations Financial Services and General Government Subcommittee hearing on Capitol Hill in Washington, DC, on June 4, 2025.
Russell Vought, director of the White House Office of Management and Budget, testifies during a House Appropriations subcommittee hearing on Capitol Hill in Washington on June 4, 2025. OMB has been slow to release congressionally appropriated funding to the Institute of Education Sciences, the U.S. Department of Education's research arm. IES now has just weeks to spend $180 million before it expires.
SAUL LOEB / AFP via Getty Images
Education Funding Averting a Shutdown, Congress Punts Federal Spending Decisions to December
Federal funding talks will continue into December as Congress agrees to avoid a shutdown.
2 min read
Speaker of the House Mike Johnson, R-La., arrives for a closed-door meeting with Republican lawmakers as he prepares for a vote on a stopgap spending bill to keep the federal government fully funded through early December, avoiding the possibility of a shutdown before the midterm elections, at the Capitol in Washington, Tuesday, Sept. 1, 2026.
Speaker of the House Mike Johnson, R-La., arrives for a closed-door meeting with Republican lawmakers at the U.S. Capitol on Sept. 1, 2026, as he prepares for a vote on a stopgap spending bill to keep the federal government fully funded through early December, avoiding the possibility of a shutdown before the midterm elections. The continuing resolution carries over the current year's funding levels for education programs into the first two months of the federal fiscal year that starts Oct. 1.
J. Scott Applewhite/AP