Report: State School Finance Systems Underfund Highest Poverty School Districts

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Nearly all roads leading toward improving schools and student outcomes require investment, especially for disadvantaged and low-income students.

The newly released School Finance Indicators Database School Year 2015-2016 report shows that states vary widely in their distribution of educational resources.

“Resources in most states tend to be allocated non-progressively or even regressively, that is, higher-poverty districts do not receive more funds — and in some cases receive substantially less — than do lower-poverty districts, even controlling for factors that affect costs, such as regional wage variation, district size, and population density,” the report finds.

The report uses an updated, public database of state school finance measures, and presents results for three key measures: effort, adequacy, and progressivity.

Effort: This term is defined as a state’s total K-12 education spending divided by total state and local spending. The average state in 2016 spent about 3.5 percent of their economic capacity on K-12 education. This average is unweighted, and the range of state effort is from 2.5 percent at its lowest and 5.3 percent at its highest.

Adequacy: This measure is defined as how much states would have to spend for their students (in each poverty quintile) to achieve the national average scores from the previous year. On average, the highest-poverty US school districts in 2016 spent only about two-thirds of the amount they would have to spend for their students to achieve national average test scores. Smaller, but meaningful gaps also exist for the middle (88 percent of the estimated required amount) and high poverty quintiles (67 percent of the estimated required amount).

Progressivity: This measure is the comparison of resources between higher and lower poverty school districts. A school finance system is progressive when school districts with more low-income background students are allocated more resources than districts with high-income background students. When comparing revenue in higher poverty districts to the lowest poverty districts, half of US states demonstrated some level of progressivity in 2016. However, research indicates that school districts serving higher-needs student populations — specifically those with higher poverty rates — require more resources per pupil than districts serving lower-needs student populations and this level of progressivity may not be enough.

The distribution of US public school finance is primarily controlled by each state, making the question of access to educational funding a state-level policy decision.

“State school finance systems should strive to be progressive: They should channel more funds toward districts with higher levels of student poverty, because that is where those funds are needed the most,” the report notes.

Without improved state support, academic preparedness and access to postsecondary education will be diminished for students with the greatest economic need.

Read the full report.

Gustavo Lara is NACAC’s project coordinator of educational content and policy. You can reach him at glara@nacacnet.org.

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