11 May 2018

The equitability of K-12 funding in the U.S.

Tory writes:*

Public school in the United States is funded through three main channels: the federal, state, and local government budgets. However, there is often an inequitable distribution of funding between poor and non-poor districts, limiting the country’s economic growth and development. To clarify, ‘equitability’ of funding does not necessarily mean that all districts will receive the same amount of money. Due to the diversity of socio-economic backgrounds of households, districts are at unequal starting points, and allocating the same amount of money to each district will not make up for existing differences. Matthew Chingos, director of the Urban Institute’s education policy program, suggests a focus on students living below the poverty line. Those students may require more funding to provide for social and education services that are more difficult for them to attain (i.e. recruiting high-quality teachers). Therefore, funding should be ‘fair’ and reflect the socioeconomic backgrounds of the households within a district, thereby ensuring all students have the same opportunity to achieve.

One reason for the regressive distribution of funds in the United States is due to local funding for education being financed through property taxes. The Chicago Tribune recorded that in 2016, local taxes made up 67.4 percent of funding for districts across the state. The reliance at the local level for funding places great importance on property values and businesses within a school district, widening the gap in per-student spending across districts. In Illinois, for example, affluent districts spend an average of five times more per-student relative to poorer districts. This occurs in many states [pdf] where a reliance on property taxes to fund education benefits districts with higher property values.

Chingos and his colleagues at the Urban Institute published a research brief illustrating how state funding often makes up for the regressive local spending by implementing a progressive state spending plan. Thus, attempting to make district funding equitable across a state by ensuring that poor districts can ‘catch-up’ to wealthier districts. The importance of state funding has continued to increase due to the decline in national funding for education. Currently, the state and local governments are nearly equal in their share of school funding, with an average of 10 percent coming from the federal government.

In her article [pdf] on the relationship between property taxes and school financing, Joan Youngman cites the complexities associated with a centralized education finance system as support for the ‘decentralization’ of funding. She argues for more focus on the local level, where representatives can focus on education without the challenge of coordinating other national needs. This decentralization can allow for greater attention to the differences between districts and the resources they need; however, a progressive state system must exist to account for these differences. In a policy brief examining the stability of the property tax as a source of revenue for school districts, Andrew Reschovsky highlights the importance of the state/local balance, hypothesizing that the U.S. will continue to see declining federal aid for education. He cites Trump’s proposed budget cuts to non-defense discretionary spending as proof of this. Policy-makers and government officials should pay careful attention to per-student aid, ensuring that districts are not only compensated (progressively) through state funding, but provided with sufficient resources in their schools. By focusing on equability, as defined above, students will have improved access to resources regardless of background, improving the quality of education across the country.

Bottom Line: Unequal local resources mean that decentralized funding of public education needs to be "balanced" by progressive spending at the state level to ensure that funding helps students whose socio-economic backgrounds differ within and across school districts.

* Please help my growth and development economics students by commenting on unclear analysis, other perspectives, data sources, etc. (Or you can just say something nice :)


  1. Well-written piece about an interesting and important issue. However, few other perspectives about school segregation came to my mind. First, I personally feel like the school-district funding can only solve part of the segregation issue, since there are plenty of other factors that also impact the performance of the students. For instance, in Helsinki, the city applies "positive discrimination" policies to school funding, and yet there still are differences: fewer students from poorer school districts attend to upper secondary schools than from better areas. For instance, peers may play a huge role in ones learning experience, and wealthier parents exploit different loop-holes to put their kids in schools in better areas (http://journals.sagepub.com/doi/full/10.1177/0042098015621441) Also, when I was an exchange student in Texas, I found that there was also a lot of segregation even inside the same school: The school counselor put me in AP English (although my English was far from advanced and I had never lived in English-speaking country before), because the other classes "would be so bad quality and only have black students", and based on my observations, the students in the AP-classes came from much better socio-economic backgrounds than those in the regular classes. (There's also data about this: https://www.theatlantic.com/education/archive/2014/11/modern-day-segregation-in-public-schools/382846/). So, while equal funding is definitely important, I would like also to hear your opinion on what other measures could be taken to minimize inter and intra school segregation.

  2. Nice work Tory. Wyoming mandates that school funding be equitable across counties. We also depend(ed) on federal coal lease bonuses for school capital construction. Whole new thread—wisdom of dependence on fossil fuels for state/local/school funding?


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