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Majority of States Shortchange Low-Income, High-Minority Schools

Although the principle of equal opportunity is frequently invoked by politicians and other state leaders, an examination of school funding practices shows that the schools that educate children with access to the fewest resources at home also receive less funding from the state. “The Funding Gap 2005” by the Education Trust details the funding gap that shortchanges districts serving the greatest numbers of low-income and minority children.

In 27 out of 49 states, the highest-poverty school districts receive less funding than the lowest-poverty districts; furthermore, nationally, per-pupil spending in the highest-poverty districts falls $907 short of spending in the lowest-poverty, the study reports. The states with the worst shortfall in per-pupil funding are New York, with a $2,280 gap, and Illinois, with a $2,065 gap.

The findings grow more alarming when accounting for a 40 percent increase for educating poor students, an adjustment commonly used by the National Center for Education Statistics and the U.S. General Accounting Office. Under these circumstances, the number of states underfunding high-poverty school districts jumps to 38, and the national average per-pupil spending gap widens to $1,436.


Schools that serve a large number of minority students also, on average, receive less funding than other schools. Nation-wide, per-pupil spending in the districts teaching the most students of color lags by $614 behind the spending of districts educating the fewest students of color. And in 30 out of 49 states, high-minority districts receive less funding than low-minority districts.
When the same 40 percent adjustment is applied, the national spending gap between high- and low-minority schools grows to $964.

Exemplary States

While the report cautions that increasing funding alone is not sufficient, it also praises states that combined increased funds with wise spending to increase student achievement. Before the 40-percent adjustment, Alaska, for example, spends $2,040 more in the highest- than the lowest-poverty districts, and $4,173 more per-pupil in its highest-minority districts. The report also highlights Minnesota, New Jersey, and especially, Massachusetts, for their funding practices.

In Massachusetts, strategic spending of adequate funding has resulted in improved student achievement. As a result of school funding litigation, the Education Reform Act of 1993 was passed, which increased state funding by 12 percent a year for 10 years. The state partnered rigorous state standards with targeted spending on tutoring programs, teacher training, small class sizes, and schools serving low-income populations. By 2005, NAEP results showed that Massachusetts’ fourth- and eighth-graders were outperforming students in every other state in reading and math.


The report recommends several mechanisms for fixing the funding gaps: the states should increase the amount of education spending to reach overall adequacy and be responsible for a greater share of that funding. Furthermore, the report states, the increased funding must be targeted to districts that need it most, and be distributed fairly within those districts.

The Study

The report examined 49 states but excluded Hawaii (which operates a single state-wide school district) and the District of Columbia, in addition to vocational, special-education, and state- and federally-operated schools. The study used 2002-2003 data from the U.S. Census Bureau and NCES for this analysis. More details can be found in the Technical Appendix.

Prepared by Katherine Lu, February 21, 2006