The ABCs of School Funding

“School Funding” is one of those topics like “Trade Deficit” that many pretend to comprehend when, really, only few fully do. One of the reasons for this is that funding education in America has become (or maybe always was?) a nifty tool in many politicians’ bludgeoning arsenal; one side of the political spectrum typically bemoans our country’s lack of school funding while the other hones in on the waste or misuse of funds that already exist. The complexities of financing an American child’s education get reduced down to campaign slogans that neglect the proverbial forest for the trees, and the American voter learns to accept their rudimentary understanding of the system as a complete picture.

How do Public Schools Get Funding?

So how does public school funding in our country work, and what should one know about it? While school funding has looked different in the past few years due to an injection of COVID relief funds, it can still be broken down into three main funding sources. Let’s take a look:

  1. Federal Funding
    In 2021 (the most recent year with available data), the federal government contributed 10.5% of school funding nationwide (Lieberman). This was up three percentage points from the previous year due to the aforementioned COVID pandemic relief aid and the number is expected to decline in eventual reports for 2022 and 2023. These funds are primarily derived from Title programs and the Individuals with Disabilities Education Act, which districts must demonstrate compliance with to secure and keep those dollars. 
  • “Title” programs were first established by the Elementary and Secondary Education Act (ESEA) of 1965 and are intended to supplement state and local education funding. They essentially operate as grant programs for special populations and educator professional development (Rauch).
  1. State Funding
    State funding typically accounts for the bulk of public education financing (around 45%) and varies from state to state according to legislative priorities and budgets (Lieberman). Generally speaking, states determine funding through highly customized formulas that take into account things like district enrollment, community wealth, and special populations (i.e. special education, free & reduced lunch population, and English-language learners) (Gartner).

    Because funding looks a little different in virtually every state, it’s difficult to summarize exactly how and why different states take different approaches to funding schools, though a few notable examples — such as Wyoming, described later on — stand out.
  1. Local Funding 
    Excluding one-off grants and big-time donations from the likes of Zuckerberg and Gates, the final source from which public school funding derives is “local” — which is typically short-hand for property taxes. It stands to reason that properties in wealthier areas generate more funds for local school districts than properties in poorer communities, and this discrepancy is the driving force behind inequalities in school financing (Gartner). This model perpetuates a cycle wherein schools with more local funding typically perform better, which, in turn, drives real estate prices in those districts up, which then increases school funding, which then goes on to further increase property values. 

To close the gap between how much the district receives and how much it spends to educate students, school districts often ask the public for levies, or increases, to their property taxes. The success of levies, though, varies by voting demographic, and voluntary tax increases typically don’t appeal to lower-income communities already struggling with the burden of their housing costs. 

Once revenue funnels down to a school district, there’s no prescribed way in which that district has to allocate funds, though two common methods are the “Unweighted Staffing Model” and the “Weighted Student Funding Formula” (Gartner). The former aims to provide staff based purely on the number of students enrolled in a district while the latter seeks to account for the special populations represented in a district. Choosing the wrong model can lead to more inequalities within a local school district and can have the unintended consequence of supercharging political debates and public complaints around school funding. To understand funding within your local public school district, you should be able to locate a “Financial Transparency” page (or equivalent) on their public-facing website or by search engine.

Is School Choice a Possible Funding Solution?

Some school choice advocates believe that proposed voucher systems are a creative way to address school funding inequality by offering students the ability to utilize the per-pupil cost allocated for them by the state in the school of their choosing — private, public, or religious. The thinking goes that because each student would have the same dollar amount to spend at their chosen school, students in poorer areas could “choice” into better schools. In 2021, the national average spent on public schooling was just over $14,000 per pupil (Lieberman). Under a school choice model, a student could take that $14,000 and use it to pay for private-school tuition or use it towards their enrollment at a better-performing public school than the one to which they are geographically assigned. This working theory is disputed, however, and highly controversial. 

A Robin Hood Model?

State funding is, in theory, a practical way to equalize the differences between districts, but that rarely occurs in practice. For example, while Connecticut is one of the wealthiest states in the Union, its Bridgeport and New Britain School Districts are among the worst in the country (Semuels). These districts are not only located in a low-income area (property tax revenue can only go so far), but are also in need of far more resources to address things like social-emotional issues, special education, and other costly student services. Because money is tight, teacher pay is low, buildings are in bad need of renovations, and class sizes are notably large. 

A 2018 ruling by the Connecticut Supreme Court struck down the argument that inequality in school funding violated the State’s constitution (CCJEF v. Rell (2018) (CT Supreme Court decision)), just one in a long list of lawsuits advocating for state action to address school funding inequality (including a 1973 Supreme Court case which ruled that the Constitution does not prescribe equal education funding) (Stone)​​.  And so the predicament of Bridgeport and New Britain public schools is a self-perpetuating one: low property taxes lead to low school funding, which then leads to poor school performance and low desirability for real estate in the area. 

Although reallocating funds from wealthier districts to poorer ones failed in Connecticut, the same principle has had notable effects across the country in Wyoming. In 1995, the Wyoming Supreme Court instructed lawmakers to “treat the wealth of the state as a whole” when allocating education funding, which resulted in doubling the resources the state put into education (Turner et al.). Funding in every district across Wyoming exceeds the national average, though wealthier districts are still able to raise and spend money through local initiatives (Turner et al.). Critics of Wyoming’s model argue that the funding reallocations haven’t seemed to improve test score averages over the past two decades (Turner et al.), though, as my colleague Cedric Davenport has pointed out, the correlation between test score averages and quality education is murky at best.

Bottom Line? Get Involved!

Overall, school funding in the United States is heavily dependent on the wide range of attitudes, philosophies, and beliefs adopted not only by each of its 50 states but also by the thousands of districts educating young Americans.

As funding from the federal government is relatively fixed, activism at the state and local levels will be imperative in the coming years should community stakeholders seek to enact changes in their local school funding formulas. 

While shifting the proverbial needle always proves difficult, there’s really no time like the present to begin. 

girl in old fashioned dress standing in library holding books


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