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National Data

According to a 2015 study by the Education Trust, states spend on average $1200 less per student in high-poverty districts than students in low-poverty ones (dollars before adjustments for poverty).

In its current construction Title I of the Elementary and Secondary Education Act (ESEA) is seriously flawed in design. Although the section provides billions of dollars every year for additional educational services to support low‐income students, the loopholes in place allow within-district funding gaps for high-poverty schools to persist. New York City school districts offer prime examples of unfair budgeting practices, where comparability with non-title I schools is not being met.

Data Source

Education Trust, Funding Gaps 2015.

Summary

To examine the equity of school funding, The Education Trust annually studies funding gaps between high- and low-poverty districts. Using revenue data collected by the U.S. Census Bureau and the U.S. Department of Education, the Education Trust sorts the nation’s districts by poverty and then examines the differences in the amount of state and local revenues each district receives. The researchers adjust the data for differences in the cost of living between regions and the number of students in special education. Since there is typically an additional cost to educating children in poverty, the researchers also provide differences in revenues by including a 40 percent adjustment for educating each student in poverty where the funding gap would be approximately $2,200 per student between high- and low-poverty districts. They also provide the differences in funding without the adjustment, which is $1,200. These differences in revenues make it possible to determine whether high-poverty districts are receiving similar funds as low-poverty districts.

How to Use the Data

The data shows how equitably states have distributed their education funds. In order to examine state and local fiscal policies, the report excludes federal funds.

How the details were measured

The data is reported as the revenue gap between the highest- and lowest-poverty districts. So if a high-poverty district receives $100 per student and a low-poverty district gets $110, then the gap would be -$10. In other words, the high-poverty district receives $10 less per student than the low-poverty district. The Education Trust also shows the data with and without a 40 percent adjustment for low-income students. The adjustment accounts for the fact that it costs more to educate children from low-income families than high-income families. As part of the report, The Education Trust also shows the gap in per-student revenues in the highest and lowest minority districts.

Limitations of the data

The Education Trust data looks only at school district revenues, not expenses, and some districts might be far more efficient in how they spend their money than others. The methodology also doesn’t account for some differences in state context. For instance, some states like Nevada have almost all of their poor students in one district, so it might not be possible to get a good picture of how state funding is distributed among districts. Also, while The Education Trust uses the most recent data available, it’s from 2012 and slightly out of date.

Key Questions to Ask

Are districts getting enough money to meet the needs of their students?

The Education Trust equity measure looks only at state and local money coming into a district. It does not examine if the funds are sufficient to teach all students to high levels—or how that money is spent.

What is the local context?

While The Education Trust methodology is a reliable way to compare funding equity across the 50 states, it masks some local variation. You should be sure to examine your state and local context. You will want to look specifically at how much money is received from federal, state, and local sources and how those funds are distributed within your state and district.

What is the adjustment for poverty?

The Education Trust shows the results of its analysis both with and without a 40 percent adjustment for poor students. The adjustment is widely used by education researchers and accounts for the fact that it costs more to educate children from low-income families. Although the 40 percent adjustment figure is currently part of the federal Title I formula to determine whether state funding policies are fair to low-income students, some researchers believe that the adjustment is too low. Others believe it should not be used at all.

Learn More

There have been hundreds of studies looking at the equity of school funding over the past few decades. One of the more prominent pieces of research has been Education Week’s Quality Counts report, which grades the states on the equity of their funding system. The grading method uses a composite of three measures. The first is a Wealth-Neutrality score, which examines how local revenues relate to the wealth of the district. The second is the McLoone Index, which looks at how much it would take to bring all the low-spending districts in the state to the median level. And the third component is the coefficient of variation, which examines the disparity of funding across districts. In the journal Education Next, economist Robert Costrell examined the results of both the Education Trust and Education Week approach, and he appears to favor the Education Trust methodology, arguing that the McLoone Index allows states to boost their score by increasing spending on wealthy districts.

Inequitable funding is not just an issue within states. In a recent study, University of California-Berkeley professor Goodwin Liu found that the most significant funding inequality occurs between states. According to Liu’s research, the highest spending states paid an average of 50 percent more dollars per pupil than the lowest spending states. Researchers have also found significant resource inequalities within districts. Georgetown University professor Marguerite Roza has shown that within a district there can be large equity gaps between schools. In one large urban school district, for instance, she found that the average teacher salary in low-poverty schools was almost $5,000 less than in high-poverty schools. More information on Dr. Roza’s research can be found in The Challenge of Education Reform: Standards, Accountability, Resources and Policy.

Some of the debate over school funding has been moving away from the issue of equity and focusing instead on adequacy. The idea behind funding adequacy is a simple one. If states have established learning goals, then they should give adequate funds to schools to meet those goals. But while school finance experts have created various statistical models for determining how much it might cost to educate students to meet state standards, there has been no consensus on the exact amount. A summary of some of the different ways researchers have tried to figure out whether a state’s school finance system is adequate can be found on the University of Wisconsin-Madison’s Web site. Also,  Education Week devoted most of its 2005 and 2010 Quality Counts reports to the issue of the adequacy of school funding. The adequacy movement has also spawned a new wave of school funding lawsuits, and the National Access Network has been tracking the cases with an online database.

Additional Resources

Demonstrating success:

Accountability plan spurs achievement gains for Indiana district—Making accountability a matter of policy has helped this school district narrow the acheivement gap and raise students’ achievement scores overall.