New reports from leading education researchers suggest K-12 funding, despite receiving a boost from federal aid in the past year, needs more intervention from both state and federal government if it is to be equitable and impactful.
A new report from the Education Law Center says the federal government needs to play a more active role in state K-12 funding systems to ensure more fair and equitable spending rates across the nation.
The report points out, for example, that pre-pandemic average per-pupil funding levels at schools in the South and West are behind the national average, and less than 2% of $764 billion spent on education is directed to Title I schools with high populations of students from low-income families.
District and state leaders are watching closely how their decisions on spending approaches affect outcomes, especially as pandemic relief funding infused about $200 billion into the K-12 education system, with spending targeted on supporting students most impacted by the pandemic.
“There are some students who live in states that may just need additional federal support in order to provide the resources that kids need in order to meet standards,” said Danielle Farrie, research director at the Education Law Center and co-author of the report.
Who's making the grade on funding fairness?
With about $200 billion in federal pandemic relief funding for K-12 schools, many are hopeful long-sustained inequities in school financing will begin to diminish. In addition to more federal financial support, states will need to document their reforms and plan for long-term investments to bring permanent changes, the authors of the Education Law Center’s Making the Grade report write.
The report grades each state with an A-F rating on three "fairness measures":
- Funding level: the cost-adjusted, per-pupil funding for state and local sources.
- Funding distribution: the extent of how additional funds are distributed to high-poverty schools.
- Funding effort: funding in support of Pre-K-12 schools as a percentage of the state’s economic activity.
Only Wyoming received an A in all three categories. Florida and Nevada got Fs in all three categories. Some states received a mix of grades. For example, Connecticut got an A in funding level and funding effort, but an F in funding distribution because of a 14% difference in average per-pupil funding between low-poverty ($22,604) and high-poverty districts ($19,400), according to an analysis of U.S. Census Annual Survey of School System Finances data from 2019.
Analyzing states’ funding levels, distribution and effort is important. If a state has high levels of funding and effort, but the funding is going mostly to wealthy school districts, “across the state, you're really missing basically, like the biggest part of the picture, which is that the system is disadvantaging the kids that mostly need that additional support,” Farrie said.
The 21-page report also highlights the cost-adjusted per-pupil funding level by state relative to the national average of $15,114. On that scale, New York provides $11,520 above the national average for a total of $26,634. Arizona provides the least, with $5,397 under the national average for a total of $9,717.
Although the report’s authors voice support for a significant increase in Title I funding, states will need to reform their finance formulas if they want to make long-lasting commitments to funding equity, they write. Approaches that target new funding to high-poverty districts or incentivize states to reduce spending inequities are a few examples of strategies that could address funding challenges.
"It'll be difficult for the federal dollars to sort of eradicate all of the disparities that we see across the country."
Danielle Farrie
Research Director, Education Law Center
Advocacy, political will and even litigation can move the needle toward more equitable funding practices, the authors write. But impactful change is likely a years-long process.
California, for example, had a history of underfunding school districts, but in 2013 implemented a weighted student formula that directed more funding for low-income students, English learners, and homeless and foster students. School districts in the state must have local accountability plans, created with public input, as well as demonstrate how the funding formula will achieve the district’s goals.
“It'll be difficult for the federal dollars to sort of eradicate all of the disparities that we see across the country,” Farrie said. “So what we're saying is, there's a bunch of states across this country who are doing a really terrible job of it. Perhaps the federal government can play a larger role in incentivizing them to improve the conditions in their states.”
Enrollment impacts funding as fiscal cliffs loom
Separate numbers released this week by Edunomics Lab, an education finance research center at Georgetown University, show federal dollars were enough to offset enrollment declines and related fund losses for most districts.
For districts with greater than 1,000 students that experienced declining enrollment from 2019-2021, approximately 82% received more in federal funds than they likely lost as a result of declining enrollment, according to the center’s analysis.
The remaining 18% of districts where federal funding — distributed according to Title I formulas — didn’t outpace enrollment and funding declines were mostly wealthier small or mid-size districts in large suburbs or rural areas.
“In some ways, I wonder if we’re going to learn something from smaller, wealthier or suburban districts,” said Marguerite Roza, director of Edunomics Lab and a research professor at Georgetown University's McCourt School of Public Policy. “They don't have this nice big check from the feds.”
These districts will likely hit the funding cliff first, Roza said.
However, schools that did get heftier checks and may hit the cliff later are still making mistakes in their spending, Roza warned. “They’re avoiding making hard choices now,” she said. “Instead of spending their money on kids, they’re spending it on protecting jobs. And I think that’s the concern.”
Districts seem to be investing their federal dollars in ways that will increase long-term financial commitments, according to Roza and the center’s findings. However, that federal funding — and, as a result, funding for long-term investments — will eventually run dry.
“When enrollment drops, it tends to keep dropping,” she said. “I think the concern is that it’s not going to bounce right back to what people had hoped. Going forward, states are not going to keep funding districts at what they became accustomed to.”
While states could target funding toward districts at financial risk in the near future — which are more likely to be the wealthier and smaller districts — that may "not be fair or make financial sense" and "might be rewarding inefficient cost structures," according to Edunomic Lab's findings.
"Hold harmless" policies adopted by a number of states to protect funding amid enrollment declines could also have a higher impact on the wealthiest districts, considering low-income areas already received funding to compensate for enrollment declines.
States may still eventually intervene on funding cliffs, however.
“States end up jumping into gear when more of their districts tend to be insolvent,” Roza said. “And we are anticipating that, in two or three years from now, there’s going to be much more state activity on jumping in on these insolvent districts.”
