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Education Funding

Nation Gets a ‘C’ on School Finance, Even as Economic Downturn Takes Hold

Analysis flags wide disparities in spending, equity
By Sterling C. Lloyd & Alex Harwin — June 02, 2020 5 min read
QC SF 2020 Research IMG Isovector iStock

As educators and policymakers grapple with the unprecedented effects of the coronavirus on almost all aspects of their work, this second installment of Quality Counts 2020 provides crucial context: a nationwide snapshot of overall K-12 spending and how equitably it was distributed across districts in 2017, the most recent year of federal data available on a national basis.

The indicators included in the national and state-by-state grading illustrate differences in spending across states and the disparities between districts within states at that point in time. By highlighting these existing patterns, the data can be a useful tool for evaluating potential variations in the impact of future budget cuts across the states.

With those caveats in mind, the nation receives a C grade for school finance this year, with a score of 75.7 out of 100 possible points, up 0.8 points since last year. Nearly half the states (22) finish with grades between C-minus and D-minus.

The analysis sheds light on substantial differences between high- and low-performing states. Wyoming—a perennial standout—holds the top spot and earns an A-minus (92.4). New Jersey also posts an A-minus and is followed by four states at B-plus. By contrast, Idaho receives a D-minus and the nation’s lowest score at 62.3. Four states get D grades.

The school finance analysis is based on four measures of spending and four equity metrics. The four spending indicators are: 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. The four equity measures (the wealth-neutrality score, the McLoone Index, the coefficient of variation, and the restricted range) offer technical yardsticks for how fairly and evenly that money is shared among the wide range of communities within each state. More detailed definitions of these indicators are available in the glossary included with this report.

Nationally, scores are higher for funding equity than for measures of overall spending: a B-plus (87.0) for equity, but a D (64.5) for spending. Overall, 23 states get grades of F for spending, which continues a long-standing pattern of dismal spending results. Six states and the District of Columbia illustrate the potential for stronger results with grades of A or A-minus in the spending category.

To better ensure the results reflect an apples-to-apples comparison, the EdWeek Research Center relies on federal information collected using uniform standards. Results for most indicators are also adjusted for regional cost differences and take into account the additional costs required to serve students with disabilities and those living in poverty.

Point totals are calculated using a best-in-class methodology, which evaluates a state’s results on each indicator against the leading state on that particular measure. The top state earns 100 points while all others receive points based on their distance from the national leader. The average point totals across the indicators are used to assign A-F letter grades on a 100-point scale.

Here are the research center’s five takeaways from the school finance analysis.

1. Wyoming has been the top state for school finance over the past decade or so. It’s largely been the most successful in balancing strong spending with equity across districts.

Wyoming finishes first for spending (94.1) and third for equity (90.8). No other state lands in the top 10 for both categories. Maryland gets closest at fourth for equity and 14th for spending.

Wyoming posts a top 10 ranking on five of the eight finance indicators. At $18,221, its per-pupil spending (adjusted for regional cost differences) is fifth-highest in the nation. It also finishes second for its wealth-neutrality score indicating that it spends more on its property-poor districts than on their wealthier counterparts. These results are anchored by the state’s commitment to education funding. It devotes 5.2 percent of its total taxable resources to education, the second-highest share in the nation.

2. In stark contrast, Wyoming’s neighbor in the region, Idaho, has consistently received the overall lowest score since 2008. It’s the only state to rank below 40th in both spending and equity.

In fact, many states that rank high for spending are in the bottom-tier for equity (and vice versa). For instance, Florida is first for equity at 92.3 but 45th for spending at 43.9. And Vermont is sixth for spending (91.1) but 46th for equity (81.1). When regional costs are taken into account, Vermont has the nation’s highest per-pupil spending ($22,506 per student) and devotes the highest share of its taxable resources to education (5.4 percent). On the other hand, it has the second largest gap between its highest- and lowest-spending districts at $12,865.

Alaska has a similar pattern. At $18,493, it’s fourth in the nation for per-pupil expenditures. But the chasm between high- and low-spending districts ($21,306) is the widest in the nation.

3. Despite its relatively solid B-plus grade for equity, the nation has room for improvement when it comes to investment in high-poverty schools.

Only three states—Alaska, Vermont, and Wyoming—provide higher funding for property-poor districts than for their more-affluent peers.

Given the reality that students in high-poverty districts often have the greatest need for educational services and resources, the nation’s B-plus grade for equity signals some success but does not suggest that the mission has been accomplished. No state posts an A for equity.

4. Across the states, the commitment to school funding varies widely.

The percent of total taxable resources spent on education ranges from 5.4 percent in Vermont to 2.7 percent in North Carolina. This indicator provides an intuitive understanding of the degree to which states make school funding a priority. Findings may reflect both political will and structural factors that affect how states rank-order their spending needs as education competes against other programs, such as health care or transportation.

5. Virginia improved its overall finance score the most since last year, gaining 3 percentage points.

California, Delaware, South Dakota, Arizona, and Louisiana also boosted their overall finance scores by two or more points. No state saw a major decline in its score. New York and Michigan dropped the most but fell by only 0.9 points.

Virginia’s gains were fueled by an increase in the percent of students in districts with per-pupil expenditures at or above the U.S. average, which improved from 49.8 percent in the 2019 analysis to 70.3 in this year’s report.

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