Is School Funding Fair? A National Report Card

Is School Funding Fair? A National Report Card

SEVENTH EDITION: FEBRUARY 2018

Bruce D. Baker, Rutgers University Danielle Farrie, Education Law Center David Sciarra, Education Law Center

About the Authors

Bruce D. Baker is a professor in the Department of Educational Theory, Policy and Administration in the Graduate School of Education at Rutgers University. He is co-author of Financing Education Systems with Preston Green and Craig Richards, author of numerous peer-reviewed articles on education finance, and sits on the editorial boards of the Journal of Education Finance and Education Finance and Policy. He also serves as a research fellow for the National Education Policy Center.

David G. Sciarra is Executive Director of the Education Law Center (ELC) in Newark, New Jersey. A practicing civil rights lawyer since 1978, he has litigated a wide range of cases involving socioeconomic rights, including affordable housing, shelter for the homeless, and welfare rights. Since 1996, he has litigated to enforce access for low-income and minority children to an equal and adequate education under state and federal law, and served as counsel to the plaintiff students in New Jersey's landmark Abbott v. Burke case. He also does research, writing, and lecturing on education law and policy in such areas as school finance, early education, and school reform.

Danielle Farrie is Research Director at the Education Law Center (ELC). She conducts analysis to support litigation and public policy for ELC and partner organizations. Before joining ELC, she conducted research in the field of urban education on such topics as school choice, racial segregation, and school segregation. She has also co-authored peer-reviewed articles on how race affects perceptions of school quality and on parental involvement among low-income families. She holds a Ph.D. in sociology from Temple University.

Please visit to download the report, explore findings with interactive graphics and download complete datasets for further analysis.

Copyright ? 2018 Education Law Center, Newark, N.J.



Table of Contents

Executive Summary ......................................................................................................................................................... iii Introduction ......................................................................................................................................................................... 1

Analyzing School Funding Fairness ...................................................................................................................... 2 The Fairness Principles ......................................................................................................................................... 2 Why Measure Fairness?......................................................................................................................................... 4

Existing Measures of State School Finance........................................................................................................ 4 Research Method ............................................................................................................................................................... 5

The Fairness Measures ............................................................................................................................................... 6 Resource Allocation Indicators............................................................................................................................... 7 Evaluating the States........................................................................................................................................................ 8 Fairness Measure #1: Funding Level ................................................................................................................... 9 Fairness Measure #2: Funding Distribution ..................................................................................................... 9 State Fairness Profiles ..............................................................................................................................................12 Fairness Measure #3: Fiscal Effort......................................................................................................................15 Fairness Measure #4: Coverage ...........................................................................................................................18 The Four Fairness Measures..................................................................................................................................20 Fair School Funding and Resource Allocation ....................................................................................................23 Early Childhood Education .....................................................................................................................................23 Wage Competitiveness .............................................................................................................................................23 Teacher-to-Student Ratios......................................................................................................................................24 How Much is Enough?....................................................................................................................................................28 Appendix A: Data and Methodology........................................................................................................................29 Appendix B: Fairness Measures........................................................................................................ 32 Appendix C: Resource Allocation Measures.................................................................................... 37 Appendix D: Student Poverty Measures...........................................................................................40



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Executive Summary

"Is School Funding Fair? A National Report Card" analyzes the condition of state school finance systems with a focus on the fair distribution of resources to the neediest students. The Report Card makes a number of assumptions about how school funding systems should be designed:

A fair funding system should provide levels of funding based on student need. Student poverty is the most critical variable affecting funding levels and can serve as a

proxy for other measures of disadvantage, such as racial segregation, limited English proficiency, and student mobility. Fair funding systems are designed "progressively" so that funding increases relative to student poverty. A sufficient overall level of funding is a crucial starting point for any funding formula to be successful.

The Seventh Edition of the Report Card examines the fiscal condition of the nation's schools using data from 2015.

The Fairness Measures

The report evaluates states on the basis of four separate, but interrelated, fairness measures. These measures are designed to provide meaningful comparisons among states by taking into account factors that influence education costs, such as geography, regional labor markets, and population density, where appropriate. The measures are:

Funding Level: Using figures adjusted to account for a variety of interstate differences, this measure allows for a comparison of the average state and local revenue per pupil across states. States are ranked from highest to lowest in per pupil funding.

Funding Distribution: This measure shows whether a state provides more or less funding to schools based on their poverty concentration. States are evaluated as "regressive", "progressive", or "flat" and are given letter grades that correspond to their relative position compared to other states.

Effort: This measures differences in state spending relative to a state's fiscal capacity. States are ranked according to the ratio of state spending on education to gross state product (GSP) and personal income.

Coverage: This measures the proportion of school-aged children attending the state's public schools and also addresses the income disparity between families using public and nonpublic schools. States are ranked according to both the proportion of children in public schools and the income ratio of public and nonpublic school families.

Summary of Findings The report's core findings include:

Funding levels continue to be characterized by wide disparities among states, with gaps between the highest and lowest funded states actually growing. The funding



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differential between the highest (New York) and lowest (Idaho) funded states is over $12,400. The majority of states have unfair funding systems with "flat" or "regressive" funding distribution patterns that ignore the need for additional funding in high-poverty districts. In 2015, only eleven states had progressive funding systems, down from a high of twenty-two in 2008. Whether measured in relation to a state's economic productivity or personal income, the fiscal effort that states exert varies widely. States with the lowest effort spend on schools about $25 of every $1,000 in economic productivity, while the highest effort states spend $50. Similarly, in relation to personal income, the lowest effort states allocate $29 for every $1,000 in aggregate income compared to $64 in the highest effort state. Coverage is a relatively stable indicator, but it demonstrates the degree to which wealthier families in some states opt out of the public education system, potentially affecting the public and political will necessary to improve school funding. The percentage of school-aged children enrolled in public schools ranges from 78% in Hawaii, to a high of 93% in Utah. Only two states, New Jersey and Wyoming, are positioned relatively well on all four indicators. California, Florida, Louisiana and Tennessee are poorly positioned on all four fairness measures. All three states receive a "C" in Funding Distribution (no additional funding for poor districts). They rank in the lower half of states on Funding Level, and have below average Effort levels and poor Coverage.

Resource Allocation Indicators

Fair school funding delivers adequate resources where they are needed most to support students' academic progress. The report explores the consequences of funding fairness, or lack thereof, for schools and students through the following three resource allocation indicators:

Early Childhood Education: Enrollment of low-income students in early childhood education lags behind that of their wealthier peers in nearly all states. The states with the greatest disparities in preschool enrollment are more likely to have regressively distributed funding.

Wage Competitiveness: A fair school funding system should provide districts with the opportunity to attract and retain high quality teachers. Competitive salaries are one way to attain that goal, but average teacher salaries in most states are below those of their non-teacher counterparts. States with higher funding levels are able to offer more competitive salaries, while in the lowest funded states teacher salaries are the least competitive with other professions.

Pupil-to-Teacher Ratios: An equitable distribution of school staff in districts and states is one of the most meaningful outcomes of fair school funding. Twenty-nine states had a flat or regressive distribution, meaning that higher poverty districts had the same



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number or more pupils per teacher. Unsurprisingly, the states with the fairest distribution of staff were also more likely to have a fair distribution of funding.

This edition of the National Report Card, like its precursors, demonstrates that school funding remains stubbornly unfair in most states. As a result, states have failed to create finance systems that support improved student outcomes, especially among the nation's low-income students.



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Introduction

The National Report Card was first published in 2010. Since then, a growing body of research has convincingly demonstrated that money does, in fact, make a difference in improving educational opportunities for the nation's schoolchildren. In just the last few years, a body of rigorous empirical studies has shown that:

Increased funding leads to greater and more fairly distributed education resources. When states make a greater fiscal effort to fund their schools, school spending goes up, and that translates into higher staffing levels, smaller class sizes and more competitive wages for teachers.1

States that invest in the resources that matter ? low pupil-to-teacher ratios, especially for high poverty districts, and competitive wages ? tend to have higher academic outcomes among children from low-income families and smaller income-based achievement gaps.2

Adequacy-oriented school funding reforms between 1990 and 2011 achieved their goals of improving educational opportunity by raising achievement among students in low-income districts. In fact, states with reform saw decreasing achievement gaps over the period studied, while states without school finance reform saw their achievement gaps increase.3

School funding reform also leads to improvements far beyond test scores. A study of school finance reforms of the 1970s and 80s finds that increased spending led to higher high school graduation rates, greater educational attainment, higher earnings and lower rates of poverty in adulthood.4

Money matters because the availability and level of resources in schools matter.5 Fair and equitable state finance systems must be at the center of efforts to improve educational outcomes and reduce stubborn achievement gaps among students. Yet in the face of compelling evidence, most states still have not enacted school funding reforms to meet the needs of all students, especially those who are most vulnerable because of poverty, disability, or lack of English fluency.

1 Bruce D. Baker, Danielle Farrie, David Sciarra. 2016. "The Changing Distribution of Educational Opportunities: 1993-2002." In The Dynamics of Opportunity in America: Evidence and Perspectives, eds. Irwin Kirsch and Henry Braun. Educational Testing Service. 2 Baker, Bruce D., Danielle Farrie, David Sciarra. 2016. Mind the Gap: 20 Years of Progress and Retrenchment in School Funding and Achievement Gaps. Educational Testing Service, Research Report No. RR-16-15. 3 Julien Lafortune, Jesse Rothstein, Diane Whitmore. 2016. Can school finance reforms improve student achievement? Washington Center for Equitable Growth. 4 C. Kirabo Jackson, Rucker Johnson, Claudia Persico. 2014. How Money Makes a Difference: The Effects of School Finance Reforms on Outcomes for Low Income Students. Stanford Center for Opportunity Policy in Education. 5 For a review, see Bruce D. Baker. 2017. How Money Matters for Schools. Learning Policy Institute.



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The National Report Card evaluates and compares the extent to which state school funding systems ensure equality of educational opportunity for all children. The goal is to provide data and information for a better understanding of the fairness, or lack thereof, of existing public education finance systems. Our hope is that, armed with this information, lawmakers, educators, advocates and citizens can improve resources and outcomes for school children in their states.

Analyzing School Funding Fairness

To effectively analyze how well states fund public education, one critical question must be answered: What is fair school funding? In this report, "fair" school funding is defined as a state finance system that ensures equal educational opportunity by providing a sufficient level of funding that is distributed to districts within the state to account for additional needs generated by student poverty.

The National Report Card measures the fairness of the school finance systems in all 50 states and the District of Columbia according to the definition above. The central purpose of the Report Card is to evaluate the extent to which state systems ensure equality of educational opportunity for all children, regardless of background, family income, where they live, or where they attend school. Equal educational opportunity means that all children and all schools have access to the teachers, support staff and other essential resources needed to provide them with the "opportunity to learn."

Fair School Funding is a State Responsibility

In the United States the responsibility for funding K-12 education falls to each individual state. As a result, the 50 states and the District of Columbia each have their own unique system for funding their schools. In total, revenues for public elementary and secondary schools are 9% federal, 46% state and 45% local. While the majority of funding is split between state and local revenue sources, the decision about how those revenues are allocated is wholly determined by state policy. Some state finance systems, such as those in Illinois and New Hampshire, provide the majority of revenues through local sources, while others, such as those in Vermont, New Mexico and Minnesota, are heavily reliant on state revenues.

One of the most important features of a fair school finance system is its effectiveness in accounting for the ability of local districts to generate revenue. A greater reliance on state funding does not necessarily lead to a fairer system. The central question is: Are state revenues targeted to districts that have weak fiscal capacity, or is state funding blind to local ability to raise funds, exacerbating inequities? It is critical for states to design systems in which the interaction of local and state revenues results in an adequate level and equitable distribution of funds. If this is not the case, it is the responsibility of state elected officials to enact reforms .to ensure fairness in the system.



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