Education Funding

How Much States Need to Pony Up to Make School Spending Equitable

By Mark Lieberman — December 08, 2022 6 min read
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America’s public education system broadly fails to adequately fund programs and services for students who could most benefit from them, conclude two new reports released this week.

The reigning consensus of research on school finance equity argues that school districts with large shares of students of color, students living in poverty, and students learning English as a second language need more money per pupil to provide services for those marginalized groups.

But when it comes to state and local funding, which make up the biggest share of school budgets, the opposite is often true, says the new analysis from the Education Trust.

Nationwide, districts with the largest shares of students of color get, on average, 16 percent fewer dollars per pupil than districts with the smallest shares of students of color.

The story is similar for districts with the highest concentration of English-learners: They get 14 percent fewer dollars than districts with the smallest share of those students.

    The gap for districts that enroll students from low-income families is smaller but still striking. Districts with the largest shares of students in poverty get 5 percent less, on average, than districts with the smallest shares of students from low-income families.

    A tangle of factors are responsible for these gaps: highly variable property wealth, volatility in states’ economic fortunes, and statewide funding formulas that haven’t been updated for decades. These issues often lead to yearslong lawsuits against states, like the ones currently underway in North Carolina and Pennsylvania.

    Resolving funding gaps such as these won’t come cheap. All told, states would need to pony up $95 billion a year to ensure that all districts nationwide achieve test scores equivalent to the national average, according to a separate analysis released this week by school finance researchers Bruce D. Baker from the University of Miami, Matthew Di Carlo from the Albert Shanker Institute, and Mark Weber from Rutgers University.

    Raising the benchmark for adequacy to meet the standards set by test scores in Massachusetts—among the nation’s highest—would send that annual cost figure soaring above $400 billion, the report finds.

    Some states perform far better than others

    The EdTrust report, a refresh of a 2018 analysis of the same subject, debuted online today with a handy tool that allows users to examine profiles of all 50 states and to see how much nearly every individual public school spends on its students, compared with district and state averages. The organization drew data from the Edunomics Lab’s National Education Researcher Database (or NERD$ for short), which draws on federal data that’s now mandatory for schools to report under the federal Every Student Succeeds Act.

    To develop their top-line findings, EdTrust researchers divided the nation’s school districts into four quartiles, each with a set of districts that collectively enroll a roughly equal number of students. The uppermost quartile is made up of the districts with the highest percentage of students in the marginalized group in question, and each subsequent quartile represents districts with the next-lowest percentages of students in that same group. All spending and enrollment data came from 2018-2020 federal sources.

    The disparities highlighted in both reports vary widely from state to state.

    In states including New York and Texas, state and local funds for districts in the uppermost quartile for all three groups—students of color, students living in poverty, and students learning English—exceed the sum for districts in the lowest quartile for all three groups.

    Other states are progressively funding districts with high shares of students in one subgroup, but regressively funding districts with high shares of students in another subgroup.

    In Oregon, for instance, the highest-poverty districts on average get 6 percent more state and local funds than the lowest-poverty districts.

    But Oregon districts with the largest shares of students of color get 2 percent less per pupil than districts with the lowest shares of students of color. And there’s virtually no difference in funding for Oregon districts with the largest and smallest shares of English-learners.

    Some states are massively shortchanging high-poverty districts

    The second report similarly highlights disparities in how far states have to go to achieve universal adequacy for K-12 schools.

    The three authors define adequacy using a model that estimates the cost of funding schools to generate test scores equivalent to the national average.

    The nation’s highest-poverty districts on average spend 13 percent less than what would be required to achieve adequacy, the report says. The lowest-poverty districts, meanwhile, spend an average of 32 percent beyond the adequacy level.

    “Lower-poverty districts in the U.S. are essentially funded to achieve better outcomes than are higher-poverty districts,” the report sayss.

    These disparities also represent opportunity gaps along racial lines. According to the authors’ calculations, more than half the nation’s K-12 students are enrolled in districts funded below the adequacy benchmarks.

    But the share of students of color in those districts is far greater, according to the report: Three-quarters of the nation’s African-American students, 71 percent of Latinx students, 55 percent of American Indian and Alaska Native students, 47 percent of multi-racial students, and 44 percent of Asian students, attend districts deemed by the report as underfunded. By contrast, 35 percent of white students are enrolled in those districts.

    The statewide view of these disparities can obscure further inequities. Several states, like Alaska and Connecticut, meet the report’s criteria for adequate statewide spending on average.

    For instance, the lowest-poverty districts in Connecticut get more than double the funding level deemed adequate, whereas the highest-poverty districts on average get barely above the adequate level.

    In states including Minnesota and Pennsylvania, the gap is starker. Lower-poverty districts get well above adequate funding, whereas the average funding for high-poverty districts falls just below the adequacy benchmark.

    What would it take to solve these problems on a state level? Eight states would have to boost funding by more than $3,000 per pupil to ensure that all districts are funded to provide an adequate education, the report says. Nine more would need to spend an additional $1,500 to $3,000 per student.

    State spending on education isn’t likely to radically shift overnight. But both of these reports argue that solutions to the massive inequities highlighted within lie in reimagined policies.

    EdTrust is pushing the federal government to provide incentives for states to make their funding formulas more equitable. Authors of the report on school funding adequacy want to see better federal monitoring of inequitable education spending and a more robust effort on the part of federal officials to target K-12 dollars to districts with the highest need and to states that struggle to raise enough revenue to provide adequate funding.

    A third report out this week from Bellwether Education echoes those recommendations and urges states to take control of local property-tax policies—itself a prospect rife with possibilities for chaos and confusion. Vermont and Nevada have done so in recent years to create a more uniform funding base for districts across the state.


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