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
Too Many Initiatives, Not Enough Alignment: A Change Management Playbook for Leaders
Learn how leadership teams can increase alignment and evaluate every program, practice, and purchase against a clear strategic plan.
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
Artificial Intelligence Webinar
Beyond Teacher Tools: Exploring AI for Student Success
Teacher AI tools only show assigned work. See how TrekAi's student-facing approach reveals authentic learning needs and drives real success.
Content provided by TrekAi
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
College & Workforce Readiness Webinar
Building for the Future: Igniting Middle Schoolers’ Interest in Skilled Trades & Future-Ready Skills
Ignite middle schoolers’ interest in skilled trades with hands-on learning and real-world projects that build future-ready skills.
Content provided by Project Lead The Way

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 The Trump Admin. Says It Supports Career-Tech. Ed. It Canceled CTE Grants Anyway
Nineteen projects—many in rural areas—lost funding that was helping students prepare for college and careers.
12 min read
As part of the program, the Business students at Donald M. Payne Sr. Tech Campus in Newark, NJ on Feb. 26, 2026m have access to computers with subscriptions to the latest software to help them prepare for the workforce.
Business students at the Donald M. Payne Sr. School of Technology in Newark, N.J., work in a computer lab on Feb. 25, 2026. A U.S. Department of Education grant was helping students in business and other fields at the school access enrichment programming, college courses, and financial support after graduation. But the department terminated the grant, along with 18 other similar awards across the country, last summer.
Oliver Farshi for Education Week
Education Funding Educators Warn Flat English Learner Funding Falls Short of Growing Demand
Educators remain uncertain about the future of federal funds for English learners.
3 min read
Pictures show what mouth shape different sounds make on the walls of Diana Oviedo-Holguin’s class at Heritage Elementary School in San Antonio, Texas, on Sept. 3, 2025.
Pictures show what mouth shape different sounds make on the walls of Diana Oviedo-Holguin’s class at Heritage Elementary School in San Antonio, Texas, on Sept. 3, 2025. While educators feel relieved that federal dollars for supplemental English-learner resources will continue in the next fiscal year, they remain uncertain for the years to come.
Noah Devereaux for Education Week
Education Funding Congress Has Passed an Education Budget. See How Key Programs Are Affected
Federal funding for low-income students and special education will remain level year over year.
2 min read
Congress Shutdown 26034657431919
Congress has passed a budget that rejects the Trump administration’s proposals to slash billions of dollars from federal education investments, ending a partial government shutdown. House Speaker Mike Johnson, R-La., and fellow House Republican leaders speak ahead of a key budget vote on Feb. 3, 2026.
AP Photo/J. Scott Applewhite
Education Funding Trump Slashed Billions for Education in 2025. See Our List of Affected Grants
We've tabulated the grant programs that have had awards terminated over the past year. See our list.
8 min read
Photo collage of 3 photos. Clockwise from left: Scarlett Rasmussen, 8, tosses a ball with other classmates underneath a play structure during recess at Parkside Elementary School on May 17, 2023, in Grants Pass, Ore. Chelsea Rasmussen has fought for more than a year for her daughter, Scarlett, to attend full days at Parkside. A proposed ban on transgender athletes playing female school sports in Utah would affect transgender girls like this 12-year-old swimmer seen at a pool in Utah on Feb. 22, 2021. A Morris-Union Jointure Commission student is seen playing a racing game in the e-sports lab at Morris-Union Jointure Commission in Warren, N.J., on Jan. 15, 2025.
Federal education grant terminations and disruptions during the Trump administration's first year touched programs training teachers, expanding social services in schools, bolstering school mental health services, and more. Affected grants were spread across more than a dozen federal agencies.
Clockwise from left: Lindsey Wasson; Michelle Gustafson for Education Week