Policy Summary

The equitable education policy arena features two main elements: disrupting the reliance on local property taxes (or more equitably distribute the funds) along with state funding formula reforms; and an increased role for the federal government in education. Policy proposals usually include the following provisions:

  • Ensure Equal Access to Core Educational Services – provide equal access to high-quality learning opportunities for all students by linking state funding systems to these costs and monitoring the use of funds to ensure that they are put to the best use.

Provide Additional Resources for Low-Income Students – targeting additional funding to the services and programs that are proven to show positive outcomes from low-income students. Funds should not merely address disparities in educational funding between districts, but also be targeted to the students with the greatest needs.

Case for Equity

Education has become one of the best tools we have at our disposal to improve opportunities in America. Yet, across the country, there are huge disparities with respect to the quality of educational systems and individual schools. Children and families encounter a range of barriers to their ability to access quality educational services. These barriers are highest for children and families of color. The most fundamental barrier they face is inadequate funding. Our system of education funding is based on an inherently unfair system that is over-reliant on local property taxes and historically discriminatory funding formulas.

The average white school district receives $2,226 per student more in funding than nonwhite school districts (EdBuild 2019). Even low-income white school districts (that are receiving on average $150 less per student than the national average) receive $1,500 per student more in funding than their comparable low-income districts of color (ibid). This system is a legacy of racial and residential segregation that entrenched itself beginning with Reconstruction and has been exacerbated over the ensuing decades. The nation’s history of racially discriminatory housing finance policy served to further ingrain these disparities. Mostly as a function of court action, several states have been moving towards more equitable systems in the past few decades, but stark disparities still exist.

Issues to Resolve & Lingering Questions

  • If the federal role were to be expanded, it could potentially create major challenges due to varied capacities at the local level for implementation 
  • There is tremendous complexity in the state/local financing models and the interactions with the local context can be detrimental. Research shows that flawed finance reforms can serve to entrench existing inequalities
  • Recent history of federal involvement has not borne out in overall improvement of educational outcomes 

Return on Investment

Return on Investment for this policy is rated as HIGH due to the evidence showing positive benefits at both the individual and societal levels.

It is a well-established fact that higher spending on education produces positive outcomes for students, schools, and communities. When examined over time, results show returns in the form of higher school completion rates, higher earnings in adulthood, and reductions in adult poverty (Coleman et al., 1966; Hedges, Laine, & Greenwald, 1994; Borman & Dowling, 2010). It’s worth noting that much of this research was conducted on systems that had instituted funding reforms to ascertain the impact of improved system funding as a result of the deliberate financial intervention. 

Moreover, looking beneath the broad analyses of the effects of increased state-level spending to analyses of school-level expenditures, it is clear that there are huge benefits that derive from increased funding. Across a range of interventions, research finds that the cost-benefit estimates for both students and society consistently show magnitudes of positive returns for both. The Washington State Institute for Public Policy examined 52 different educational interventions and found 45 of the 52 showed a favorable cost-benefit. For those with a favorable estimate, the net benefits range from a low of $162 positive return to a $36,164 return. Their model includes projections for a range of benefits to both society and the individual participant. At the community [society] level, they estimate increased tax revenue as well as savings from reduced criminal justice system expenditures, child welfare, and other systems. At the individual level, they account for increased participant lifetime earnings and participant spending, as well as benefits that accrue to the community (e.g., crime victims).

Research Base

The research base is rated as being HIGH due to the soundness and credibility of the research literature.  

The landscape of research on education funding is broad and researchers have probed into the depths of this issue for decades. The topic consistently draws attention from economists in public finance, education researchers, as well as those concerned with issues like human capital and economic development. This research has looked at the geography of education funding, the historical legacy of policy decisions and social institutions, and the intricacies of state funding systems (budget mechanisms). On the whole, the research is both sound and credible, displaying a high level of sophistication and nuance (see Baker 2015 for a review).

Research consistently finds support for the relationship between increased funding and improved outcomes for children (e.g., reducing achievement gaps) and communities. That relationship holds most consistently for low-income students and school districts. Recently, research has turned to assess the true causal effect of additional funding. Moreover, the research indicates that it matters which specific strategies that funding supports because the simple increases in funding do not guarantee benefits will accrue to those students most in need. For example, researchers find that reforming the structure of education finance in a state is more impactful than merely allocating funds for class size reduction (LaFortune et al 2016).

State & Local Ease of Implementation

This policy is rated as having a HARD level of implementation difficulty due to the need for coordination across multiple levels of governance, the need for new finance structures/mechanisms, and the high level of political barriers.  

Major Policy Implementation Steps

Commission a report or gather evidence of the disparities in your community, particularly educational disparities in communities of color and low wealth communities. An equity assessment should be a component of that review. The Colorado Department of Education has a model assessment that features some great elements. Voices for Racial Justice offers a number of education data elements that can inform that process.

Gain an understanding of the funding landscape and history in your state/community and its history. EdTrust is a good place to start in that it provides an analysis of educational funding equity for all 50 states.  Additionally, the Alliance for Resource Equity provides a useful framework for examining funding equity.

Gain an understanding of the connections between educational investments, human capital development, and economic development. Enlist stakeholders from a range of sectors including private sector, secondary education, workforce/economic development, community leaders, legal experts, and higher education. You can find a great toolkit available from the American Institute for Research on stakeholder engagement, specifically focused on equity.

Given that the majority of the educational reforms that have been implemented have occurred through court action, it is imperative to understand the both the constitutional guarantees and legal history of education in your community.

 

Innovations Across America

Ohio | Ohio Fair School Funding Plan 

Action Space: State and Local  

Cost: $12.4 billion. However, prior to 2018, no state allocation existed. The new formula blends state and local funding 

Mechanism: Court Action and Enabling Legislation 2020 HB 305 

The Fair School Funding Plan allocates funding to local communities and makes significant changes to school funding.

  • The plan calculates the equitable portion of the state and local share to fund public education in each community and disrupts the historical over-reliance on local taxes.  The plan also calculates the actual base cost to adequately educate each child, as well as the cost to adequately educate students with different needs (economically disadvantaged, students with disabilities, gifted students, etc.)
  • The plan allows for greater local control and more predictability in state allocations to local communities.

 

New Jersey | 2018 School Funding Modernization Plan 

Action Space: State Level 

Cost: Varies by year 

Mechanism: Enabling Legislation 2018-19 SB2 

New Jersey adopted an equalization formula in 2018 that considers a school district’s property wealth and aggregate income to determine the state’s share of school district budgets. The policy aims to correct prior inequities by decreasing funding to overfunded districts while increasing funding to underfunded districts to achieve their appropriate levels of assistance under the formula contained in the School Funding Reform Act

  • The formula adjusts funding based on the number of at-risk students in a district (% of free and reduced-price lunch students). Additionally, in the highest poverty districts, funding is provided for high-quality full-day pre-k programs for 3- and 4-year-olds.
  • Additionally, the bill allows municipalities of populations greater than 200K to levy a payroll tax for school costs.

Major Policy Implementation Steps

Commission a report or gather evidence of the disparities in your community, particularly educational disparities in communities of color and low wealth communities. An equity assessment should be a component of that review. The Colorado Department of Education has a model assessment that features some great elements. Voices for Racial Justice offers a number of education data elements that can inform that process.

Gain an understanding of the funding landscape and history in your state/community and its history. EdTrust is a good place to start in that it provides an analysis of educational funding equity for all 50 states.  Additionally, the Alliance for Resource Equity provides a useful framework for examining funding equity.

Gain an understanding of the connections between educational investments, human capital development, and economic development. Enlist stakeholders from a range of sectors including private sector, secondary education, workforce/economic development, community leaders, legal experts, and higher education. You can find a great toolkit available from the American Institute for Research on stakeholder engagement, specifically focused on equity.

Given that the majority of the educational reforms that have been implemented have occurred through court action, it is imperative to understand the both the constitutional guarantees and legal history of education in your community.

 

Innovations Across America

Ohio | Ohio Fair School Funding Plan 

Action Space: State and Local  

Cost: $12.4 billion. However, prior to 2018, no state allocation existed. The new formula blends state and local funding 

Mechanism: Court Action and Enabling Legislation 2020 HB 305 

The Fair School Funding Plan allocates funding to local communities and makes significant changes to school funding.

  • The plan calculates the equitable portion of the state and local share to fund public education in each community and disrupts the historical over-reliance on local taxes.  The plan also calculates the actual base cost to adequately educate each child, as well as the cost to adequately educate students with different needs (economically disadvantaged, students with disabilities, gifted students, etc.)
  • The plan allows for greater local control and more predictability in state allocations to local communities.

 

New Jersey | 2018 School Funding Modernization Plan 

Action Space: State Level 

Cost: Varies by year 

Mechanism: Enabling Legislation 2018-19 SB2 

New Jersey adopted an equalization formula in 2018 that considers a school district’s property wealth and aggregate income to determine the state’s share of school district budgets. The policy aims to correct prior inequities by decreasing funding to overfunded districts while increasing funding to underfunded districts to achieve their appropriate levels of assistance under the formula contained in the School Funding Reform Act

  • The formula adjusts funding based on the number of at-risk students in a district (% of free and reduced-price lunch students). Additionally, in the highest poverty districts, funding is provided for high-quality full-day pre-k programs for 3- and 4-year-olds.
  • Additionally, the bill allows municipalities of populations greater than 200K to levy a payroll tax for school costs.

Houston, D. 2018. Public School Funding and Postsecondary Outcomes in Illinois: What is Reasonable to Expect from Illinois’ School Funding Reforms? Illinois Education Resource Council.  

Edbuild. 2019. $23 Billion. Accessed April 8, 2021.   

Baker, B. 2015. School Finance 101: On School Finance Equity & Money Matters: A Primer. National Education Policy Center.  

Coleman, J., Campbell, E. Hobson, C., McPartland, J., Mood, A, Weinfeld, F., & York, R. (1966). Equality of educational opportunity: Summary report. U.S. Department of Health, Education, and Welfare, Office of Education. (Vol. 2).  

Hanushek, E. A, Rivkin, S. G., & Taylor, L. L. (1996). The identification of school resource effects. Education Economics, 4(2), 105–125.      

Borman, G., & Dowling, M. (2010). Schools and inequality: A multilevel analysis of Coleman’s equality of educational opportunity data. Teachers College Record, 112(5), 1201-1246. 

Hedges, L. V., Laine, R., & Greenwald, R. 1994. Does money matter? A meta-analysis of studies of the effects of differential school inputs on student outcomes. Educational Researcher, 23(3), 5–14.   

Lafortune, J., Rothstein, J., Whitmore D. 2016. “Can school finance reforms improve student achievement? Washington: Washington Center for Equitable Growth

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