How Are We Funding Educational Inequality?

by Justin Marquis Ph.D.

The vast inequity in the resources available in the Chicago public schools was the underlying cause of the recent Chicago teacher’s strike. A September report from the Center for American Progress, written by Bruce Baker and Sean Corcoran, The Stealth Inequalities of School Funding: How State and Local School Finance Systems Perpetuate Inequitable Student Spending, delves into such inequities in our educational system and reveals some troubling problems with our method of funding schools. Here is a look at the reality of how some children are bracketed into poor schools and what the consequences are.

How Unequal are Things?
The research question posed in this report is particularly interesting to anyone interested in education reform:
"The goal of this report is to uncover stealth inequities to explain why these states exhibit such regressive patterns in school spending. Is it the case that in the most regressive states, there is simply not sufficient state revenue in the system to target low‚Äźwealth districts in order to improve equity? Or are other factors at play?" (P. 9)

This map from the report (p. 10) color codes funding inequality, with darker reds indicating greater regressive funding disparity (poorer schools receive less money than wealthier schools). For the study, the researchers focused on six demographically diverse states -Illinois, Texas, New York, Pennsylvania, Missouri, and North Carolina.

The 15 worst states on the map all follow a pattern of regressive funding distribution in which schools with a greater percentage of poverty actually receive less funding than those with a lower number of poor students. The graph of average per pupil spending from North Carolina below demonstrates the general trend among these states.

As the graph shows, the schools in the lowest quartile of poverty receive the most funding per pupil. A majority of that funding comes from local and state sources. As the percentage of poor students in a school rises, the overall funding decreases, most dramatically from local revenue sources. It is not that those in poor communities do not want to support their schools, but rather that their tax base is lower and they are unable to support them. In North Carolina, for example, the general funding from the state remains the same, but overall funding varies because of local contributions.

The Causes of Inequality
According to the report, there are many "stealth" sources of this inequality beyond lower local tax revenues.

  • Political decisions – Politicians who advocate for their constituents fight to keep unequal revenue streams as the status quo. They are fighting for the resources of their districts and often refuse to compromise on measures that would allow for more equal distribution of resources.
  • Special taxes – These political decisions extend to allowing residents of some wealthier districts to impose taxes specifically designed to raise money to support their schools so that they can pay teachers more to attract the best ones to their schools.
  • Racial restrictions on property deeds – The report cites Kansas City as one example of historic racial segregation of housing that keeps housing prices (and taxes) higher in some areas than others, effectively segregating minorities from wealthier whites.
  • Paying more for experience – Some states have special provisions in place to pay higher wages for teachers in their districts to compensate for a higher cost of living. This helps areas where this is allowed to raise more revenue or obtain more funding to attract the best teachers.

While these are some of the main causes of the base inequalities, what the report reveals that might be even more disheartening are the mechanisms that are in place to maintain these discrepancies, even when states take active measures to redistribute resources.

  • Minimum aid – some states have minimum aid levels established for all schools regardless of their need. In this way, some schools with very low, or no need, still receive a fixed amount of need-based state funding. Funding that could go towards schools with greater need.
  • Baseline numbers – Another way of artificially locking these numbers is for funding to be "locked" based on a baseline year. In this way, even if reforms are enacted, funding at some schools can never drop below some historic level regardless of actual need.
  • Discretionary spending – Some states have the ability to allocate educational funding outside of consideration of local factors. Essentially, the state can decide arbitrarily that district X should get more money, for whatever reason they choose. These funds often go to wealthier schools to support programs specific to those areas.
  • Property tax reduction – This method of perpetuating unequal funding allows states to allocate money for schools to help diminish the local tax burden. While this sounds good, it allows wealthier districts to either maintain their higher tax rate and accept the funding to increase their overall school revenue, or it allows them to decrease their taxes and maintain the same level of service (increasing local wealth). In contrast, these amounts rarely offset the actual funding discrepancies between rich and poor schools, and do not allow people in poorer districts to diminish their tax burden or improve the quality of the schools.
  • Distributing aid based on attendance – Some states base aid on attendance records, so areas with better attendance receive more funding, while those with worse attendance receive less. Higher-poverty and higher-concentration of minority districts historically have worse attendance.

The actual report goes into great detail about these and other ways in which our educational funding system perpetuates inequality. Just knowing that something is a problem is the first step in remedying the situation, but what are the real effects of these discrepancies?

What Does it Mean?
The study has specific suggestions for equalizing the distribution of resources such as requiring states to run all of their funding through general equalization formulas, and curtailing alternative sources of funding in the process. If this can happen, funding would eventually look more like the ideal model shown below.

Ultimately, understanding that there is inequality in the system does not explain what the consequences of that inequality actually are. In my post for Dr. Martin Luther King Jr.’s birthday, How Educational Inequality Affects Us All, I wrote that inequity in our educational system affect the entire society by lowering our tax base, decreasing our global competitiveness, and weakening our democracy. If those aren’t reason enough to attempt to fix the unfairness in our funding of education, consider that giving every child an equal opportunity to succeed is just the right thing to do.

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