Education Funding

School Funding Debates Are Raging in States, With Districts Caught in the Middle

By Mark Lieberman — July 14, 2023 6 min read
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School funding debates are raging right now in Pennsylvania—and the topics of debate resonate with what school systems nationwide are seeing.

The state’s lawmakers have been under pressure to deliver an improved approach to school funding since February, when a judge ruled that the state’s current school finance system is unconstitutional. Specifically, the current funding formula puts schools with large shares of high-need students at a significant disadvantage, the judge said.

The ruling came down just in time to collide with the state’s annual budget season, including big decisions about school funding for the upcoming academic year. Around the same time, newly elected Gov. Josh Shapiro, who supported the lawsuit’s plaintiffs while in office as the state’s attorney general, began pushing to establish a new school voucher program that would direct public money to parents who want to send their children to private schools. Shapiro also called the school funding ruling “a call to action” and vowed an “immediate down payment” to begin resolving gaps.

The governor’s voucher support helped attract votes for a state budget in the Republican-led state Senate. But he faced a firestorm of criticism from fellow Democrats, who control the state House and generally oppose private school choice. He eventually withdrew support for establishing the voucher program, pledging to veto it from the budget that both chambers have now passed, but vowed to bring it up again later.

In the meantime, the state is without a new budget because the Senate’s president still hasn’t signed the spending bill—a needed step to advance it to Shapiro’s desk— and the Senate isn’t scheduled to return until September. That leaves school districts in limbo, uncertain when they might receive their states subsidies. Meanwhile, they are already supposed to have finalized their own budgets.

This mess may be familiar to districts in other states—and it may become familiar to districts in states where it’s not already.

Here’s a look at the key issues at play.

Private school choice

Other states to watch: Arkansas, Florida, Iowa

Numerous states this year have dramatically expanded existing school voucher programs, broadened eligibility for education savings accounts, and established new programs that aim to subsidize parents’ choice to put their children in private school or homeschool.

These developments have buoyed proponents of private school choice, who argue that parents should have more freedom, on the state’s dime, to remove their children from public schools or maintain their ongoing enrollment in private schools.

But opponents, led by Democrats, argue these programs divert crucial dollars that could be strengthening existing public schools or closing longstanding resource gaps between schools in poor and wealthy areas.

In Pennsylvania, Shapiro was caught between those two factions, and ultimately tried to split the difference, withdrawing support for the current proposed bill but promising to return to vouchers at a later date.

Vouchers and other forms of private school choice were among the signature components of new legislation in Arkansas, Florida, Iowa, and Utah this year.

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Education funding lawsuits

Other states to watch: New Hampshire, North Carolina, Wyoming

Lawsuits over school funding are currently playing out in at least four states besides Pennsylvania. District leaders in Alaska recently discussed the possibility of filing a similar suit after the state governor vetoed part of a long-promised increase to state aid for public schools.

Each case is taking a slightly different approach to arguing a similar point: That the state is falling short of its constitutional duty to provide an equal education for all students.

A judge in Pennsylvania concurred with that argument earlier this year, kicking off what promises to be a lengthy and contentious legislative fight that could span years or even decades.

A key point: The judge didn’t spell out how the state should remedy its longstanding practice of failing to adequately fund districts in poor areas. That means lawmakers, educators, and advocates will have to wrangle over answering that question before they can even begin to implement reforms.

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The power of partisanship

Other states to watch: Arizona, Virginia, Wisconsin

The balance of political power in a state at any particular time can play a crucial role in the prospects for school funding.

Right now, Pennsylvania’s governor is a Democrat, and Democrats control one chamber of the legislature while Republicans have a majority in the other. There’s only one state dealing with a comparable split: Virginia, where a Republican is governor and the GOP controls one house of the legislature while Democrats control the other.

Eight other states—Arizona, Kansas, Kentucky, Louisiana, Nevada, North Carolina, Vermont, and Wisconsin—currently have a governor from one party and a legislature controlled by the other, according to the National Conference of State Legislatures.

Wisconsin recently saw the rocky results that partisan split can create. Gov. Tony Evers, a Democrat, used a creative veto option within his executive power to enshrine a permanent school funding increase of $325 per student in law every year for the next four centuries. Republicans had passed a version of the budget that only promised that increase for the next two years.

These laws could change again, of course, if political conditions change, or if Republicans successfully persuade courts that Evers overstepped his authority. But this situation illustrates the tensions that arise when politicians aren’t in step with each other.

So, too, does the current state of affairs in Arizona. Gov. Katie Hobbs, a Democrat, fiercely opposes the expanded private school choice programs the Republican-led legislature passed before she took office. She’s blasted the programs as wasteful and cautioned a budget crisis could be on the horizon as they see higher-than-projected participation and costs, but she hasn’t been successful in preventing the programs from taking hold.

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Funding predictability

All of this chaos leads to one unavoidable reality for school districts: The amount of money they’re getting, and where they’re getting it from, is constantly in flux.

Federal funds make up less than 10 percent of the money school districts spend every year. The rest comes from a mix of state and local sources. The proportions vary widely depending on a school district’s capacity to collect local property taxes.

States make varying efforts to cover the difference for districts that don’t contain enough property wealth to fund schools on their own. But major inequities persist in many places.

On a practical level, district administrators in many states have to craft budgets and present them to community members—sometimes for a vote—before they have all the information they need about what the state will offer them. Earlier this year, Virginia’s department of education prompted widespread headaches among school administrators when it revealed a major calculation error that resulted in school districts anticipating more money than the state had budgeted.

Meanwhile, every district in the nation is staring down the prospect of life after ESSER. The three rounds of federal COVID relief aid will have fully dried up a few months after this coming school year ends. Districts will have to consider raising taxes or soliciting more state aid to maintain programs and services they previously paid for with COVID relief dollars.

All the while, they’ll be dealing with turmoil at the state level about perennial questions like how much money their students need, how many strings should be attached, and who ought to pay for the complex operations of public schools.

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