New Report Focuses on Funding Inequities Nationwide

A new report that provides the most up-to-date data on the extent of funding inequities nationwide was released this month by the Education Law Center (ELC) in New Jersey. “Is School Funding Fair? A National Report Card” grades states on their level of school funding through four statistical indicators. Aptly named “fairness indicators,” these interrelated measures are funding distribution, state fiscal effort, funding level, and public school coverage.

According to the report, which was written by Bruce Baker, Associate Professor in the Graduate School of Education at Rutgers University, David Sciarra, Executive Director of ELC, and Danielle Farrie, Research Director at ELC, six states are “positioned relatively well” on the four funding measures: Connecticut, Iowa, Massachusetts, New Jersey, Vermont, and Wyoming. The report also identifies four states that receive below-average ratings across the board: Illinois, Louisiana, Missouri, and North Carolina.

It is important to note that the data used to calculate rankings is from 2005-2007, prior to the start of the recession. The authors published, along with the release of the report, an update with figures from 2008, in which they find, “the results from the updated analysis are little changed from the originally published findings.” However, states on average had an increase of six percent in funding in 2008 over 2007. These numbers also do not include federal aid, only state and local revenues are analyzed. An addendum to the main report, “Data and Methods for Estimating Indicators,” notes that the nature of the financial data is that “they are, and will be for the foreseeable future, lagged by two full years.” The authors intend to continue to update the data in future years.

The fairness principles in this report are based on a number of assumptions, the most important of which is that a “fair” school funding system must “ensure equal educational opportunity by providing a sufficient level of funding distributed to districts within the state to account for additional needs generated by student poverty.” Accordingly, they label a funding system as “progressive” or “regressive” according to the extent to which the system increases funding to districts relative to their comparative levels of concentrated student poverty. On the funding distribution scale, Utah, New Jersey, Minnesota and Ohio received the highest rankings; for example, in Utah, a district with 30 percent students in poverty will receive over 50 percent more funding per pupil than a district with no student poverty. The states with the most regressive funding systems were New Hampshire, Illinois, New York and Pennsylvania. In New Hampshire, for example, a district with a 30 percent poverty rate receives about two-thirds the amount of funding per pupil than a district with no student poverty. (These findings do not, however, reflect recent changes in the distribution formulas adopted by the state legislatures in New York and Pennsylvania.)

The authors also make clear that they are not attempting to posit a dollar value for what would be “fair” school funding—rather, they hope to illustrate which states are making the strongest attempt at providing adequate resources for all students based on varying circumstances. Accordingly, “the sufficiency of the overall funding level in any given state can be assessed based on comparisons with other states, particularly those in the same region with similar conditions and characteristics.” The national average funding level, adjusted to account for student poverty, regional wage variation, economies of scale and population density, is $10, 123.

In terms of effort, the report found that Maine, New Jersey and Vermont allocate the greatest share of gross domestic product (GDP) on education, while Delaware, South Dakota, Louisiana and Tennessee rank lowest in their funding efforts for education.

The “coverage” category measures the proportion of children attending public schools versus private or parochial schools, and “addresses the income disparity between families using private, rather than public, schools.” States are ranked in this category according to both the proportion of students in public schools and the income ratio of public and private school families. The report finds that, on average, about 87 percent of students attend public school, and household income of students enrolled in private school is two-thirds higher than those enrolled in public school. Louisiana, Delaware, and the District of Columbia do particularly poorly in this measure (ranked number 49, 50, and 51, respectively), with about 1 in 5 students attending private schools.

While the “fairness indicators,” read together, are meant to give a broad picture of school funding policy in each state, the four measures do not necessarily correlate with one another. A high grade on funding distribution will not necessarily predict or affect a state’s fiscal effort. States’ funding distribution and effort are given “grades” of A-F and funding level and coverage are given ranks. Both the grades and rankings are relative to each other on a type of bell curve. This may lead to some striking disparities in states’ standing in the various categories. For example, the highest ranked states in regard to funding distribution—New Jersey, Ohio, Utah and Minnesota—spend anywhere between $6,500 and $17,000 on mean actual state/local revenue per pupil. One of these states, Minnesota, is given a “D” grade on effort, indicating that although state finance formulas provide more funds for low-wealth districts, overall effort to spend education dollars is woefully inadequate.

When discussing actual dollar values, the report uses state and local revenue per pupil. They do not use school budgets, in part because these budgets also take into account federal aid. The report states that state funding accounts for, on average, 46.5 percent of overall funding, local funding 44.4 percent, and federal aid 9.1 percent. This data, however, does not include the heavy amounts of federal aid received by all the states in recent years under the American Recovery and Reinvestment Act. The report also does not attempt to assess the extent to which funding in the states correlates with any measures of student achievement or other outcome measures.