Special Report
States

Spending Index and Equity Indicators

January 03, 2006 5 min read

Spending Index

While no consensus exists about how much money is necessary to provide an “adequate” education, it is clear that districts with certain characteristics tend to need more aid. Specifically, districts enrolling more students with special needs require more money. The National Center for Education Statistics estimates that students in poverty, for example, need 1.2 times as much funding as other students do. The Center for Special Education Finance estimates that students with disabilities need 1.9 times as much money.

After adjusting per-student-spending figures for each school district in the United States to reflect regional cost differences and student needs, the Editorial Projects in Education Research Center found that the average per-pupil expenditure in the nation for the 2002-03 school year (the most recent data available at the district level) was $6,786. We use that amount as a benchmark against which to gauge each state’s spending.

Our spending index takes into account both the proportion of students enrolled in districts with spending at the national average, and the degree to which spending is below that benchmark in districts where per-pupil expenditures fall below the national average.

Each district in which the per-pupil-spending figure (adjusted for student needs and cost differences) was equal to or exceeded the national average received a score of 1 times the number of students in the district. A district whose adjusted spending per pupil was below the national average received a score equal to its per-pupil spending divided by the national average and then multiplied by the number of pupils in the district.

The spending index is the sum of district scores divided by the total number of students in the state. If all districts spent above the U.S. average, the state attained a perfect index of 100.

Example
District Enrollment Per-pupil spending
1400$8,000
2450$7,000
3500$6,000
4300$5,000
5350$4,000
Total2,000

Districts 1 and 2 are the only ones providing at least an average level of spending on education (i.e., equal to or above $6,786). Scores for those districts are equal to their respective student enrollments.

DistrictScore
1400
2450

Then the number of students attending schools in these districts (850) is divided by the total state enrollment (2,000). This indicates that 42.5 percent of students in the state attend schools in districts spending at least the national average. The calculations below account for how close spending levels in the remaining three districts are to the U.S. average.

Districts 3 through 5 have spending below the U.S. average, so assigning a score to each district will tell us how “far” it is from average spending across the nation. The score is equal to the district’s average spending, divided by the U.S. average, and multiplied by the number of pupils in the district.

DistrictScore
3442.08 = ($6,000 / $6,786) * 500
4221.04 = ($5,000 / $6,786) * 300
5206.31 = ($4,000 / $6,786) * 350
Total1,719.43 (for all five districts)
Spending index = (1,719.43 / 2,000) * 100
= 85.97

That value represents an index against which we can compare the relative spending of the 50 states and the District of Columbia. This year, values for the spending index range from 66.6 to 100.

Equity Indicators

WEALTH NEUTRALITY SCORE: The wealth-neutrality score shows the degree to which state and local revenue are related to the property wealth of districts. This year, wealth-neutrality scores range from minus .198 to .253. A negative score means that, on average, poorer districts actually have more funding per weighted pupil than wealthy districts do. A positive score means the opposite: Wealthy districts have more funding per weighted pupil than poor districts do. Only 10 states have negative wealth-neutrality scores in the 2002-03 school year.

McLOONE INDEX: The McLoone Index is based on the assumption that if all students in the state were lined up according to the amount their districts spent on them, perfect equity would be achieved if every district spent at least as much as that spent on the pupil in the middle of the distribution, or the median. The McLoone Index is the ratio of the total amount spent on pupils below the median to the amount that would be needed to raise all students to the median per-pupil expenditure in the state.

For example, the median-level expenditure per pupil (adjusted to reflect student needs) in Florida is approximately $ 5,512. The total amount spent on students who are below that mark is about $7.23 billion. To spend $5,512 on each of those pupils below the median, the state would need to spend $7.61 billion.

McLoone Index = Amount spent on pupils below the median / Amount needed to be spent to achieve “equity”

= ($7.23 billion / $7.61 billion)*100

= 95.1 percent

This indicates that Florida is spending about 95 percent of what is needed to raise all students to the median expenditure. McLoone Index values range this year from 84.4 percent to 100 percent, where perfect equity is represented by 100 percent and the greatest inequity by zero percent.

COEFFICIENT OF VARIATION: The coefficient of variation is a measure of the disparity in funding across school districts in a state. The value is calculated by dividing the standard deviation of adjusted spending per pupil by the state’s average spending per pupil. The standard deviation is a measure of dispersion (i.e., how spread out spending levels are across a state’s districts). Per-pupil spending figures have been adjusted to reflect both regional differences in the cost of education index and the needs of the student population.

For example, the standard deviation for spending in Oregon is about $804.13. The average per-pupil spending for Oregon is $6,154.76.

Coefficient of variation = Standard deviation of adjusted spending per pupil / Average adjusted spending per pupil

= ($804.13 / $6,154.76)*100

= 13.1 percent

This year, the range of values for the coefficient of variation is 5.9 percent to 35.9 percent. If all districts in a state spent exactly the same amount per pupil, its coefficient of variation would be zero. As the coefficient gets higher, the variation in the amounts spent across districts also gets higher. As the coefficient gets lower, it indicates greater equity.

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