No country in the developed world funds its schools as inequitably as the United States. Property tax based school funding, which anchors educational resources to the wealth of the local community, produces per pupil spending that varies by factors of two to five within the same state. A student in a wealthy suburban district may attend school in a well maintained building with a full complement of specialists, small class sizes, and a rich extracurricular program. A student in a low income rural or urban district a few miles away may attend school in a deteriorating building with rotating substitute teachers, no art or music instruction, and overcrowded classrooms. These differences in resource availability are not random. They are the predictable output of a funding system designed around community wealth rather than student need.
How School Funding Works
School funding in the United States comes from three primary sources: local property taxes, state aid formulas, and federal funds. Local property taxes typically account for the largest share in wealthy districts and a smaller share in low income districts that have less taxable property. State aid formulas are designed, in most states, to partially equalize funding across districts by providing more state aid to lower wealth districts. But the equalization is rarely complete, and state aid formulas often include provisions, such as categorical funding for specific programs or hold harmless clauses that protect wealthier districts from funding reductions, that limit their equalizing effect. Federal funds, primarily through Title I for low income students and IDEA for students with disabilities, add modest additional resources to high need districts but are far too small to close the gaps produced by the local funding structure.
The result is a system in which the districts serving students with the greatest needs, those most likely to be low income, most likely to be English language learners, most likely to have experienced trauma and instability, typically receive fewer educational resources than the districts serving students with the fewest needs. This is the inverse of what an equitable or efficient system would produce, since students with greater needs require more resources to achieve the same educational outcomes.
The Research on Money and Student Achievement
For years, a prominent strand of education research argued that money does not matter for student achievement, citing studies showing weak correlations between spending and outcomes. That conclusion has been substantially revised in the past decade as researchers have used more rigorous methods, including natural experiments produced by school funding reforms and court ordered equalization programs, to isolate the causal effect of additional resources on student outcomes. The most influential of these studies, by Kirwan and others, found that a 10 percent increase in per pupil spending throughout the school years led to 7 percent higher adult wages, significantly reduced adult poverty rates, and increased educational attainment. The effects were concentrated in students from low income households, for whom additional resources had the largest marginal impact.
Reform Efforts and Their Limits
Court ordered school finance reform has produced meaningful equalization in some states. New Jersey's Abbott district program, ordered by the state supreme court in the 1990s, dramatically increased funding for the state's poorest urban districts and produced measurable gains in student achievement over the following two decades. Massachusetts, which substantially reformed its school funding formula in 1993, saw significant gains in student achievement that researchers attribute partly to the funding increases in low income districts. But court orders require sustained political will to implement and sustain, and many states have complied with the letter of court rulings while finding ways to limit their equalizing effect. Federal action remains limited by the political sensitivity of local control in education and the absence of a federal constitutional right to equal educational opportunity that would give federal courts jurisdiction comparable to state courts under state constitutional provisions.
