The (In)Equities of U.S. School Funding

Public education advocates have fought for centuries to achieve educational equity in the United States. For the last 40 years, much of that fight has concerned funding parity, but some experts argue that equal funding alone is not enough to achieve equitable outcomes for all students.

Publicly funded schools first emerged in the United States in the 1780s. Public schools expanded first in cities and northeastern states before gradually making their way to other parts of the country. By 1830, around half of children were enrolled in public schools. By 1870, more than three quarters of children attended public schools.

But public school has not always been accessible for all Americans. Before the Civil War, U.S. schools regularly excluded or offered inferior education to people of color. After the War, Southern states skirted constitutional protections for Black students by enacting Jim Crow laws that diminished or eliminated educational opportunities for Black students while claiming to treat them equally. This practice did not end until well after the Supreme Court struck down race-based school segregation in Brown v. Board of Education in 1954.

Funding disparities remained among the primary drivers of this historic inequality. For most of American history, public schools were funded almost exclusively through local property taxes. Proponents of local funding argued that, as a local service, schools would add value only to the local community and thus should be funded by local means. Federal funding was almost nonexistent until 1917, when the Smith-Hughes Act established the first federal funds for vocational school. Even after the expansion of state support for public schools, states supplied only around one-sixth of school funding.

But wide divergences in property values created significant funding disparities between school districts. Several legislative reforms and court rulings increased state and federal funding to equalize educational opportunities. Today, states and districts each contribute around half of their schools’ budgets, and the federal government subsidizes the remainder.

Funding affects the quality of education a school can deliver. Underfunded schools have fewer experienced teachers, fewer extracurricular activities, larger class sizes, and older facilities, all of which can negatively impact student learning outcomes. Adequate education funding, however, can mitigate these and other adverse consequences, such as violent behavior and criminal activities.

Some data, however, suggest that such historic funding disparities between rich and poor districts have largely abated. Several studies even indicate that most economically disadvantaged students attend schools with more funding than their more affluent peers.

But other data suggest that U.S. education remains highly unequal in outcomes, if not in terms of funding. Indeed, there is evidence that the United States spends more per student on education than almost any country in the world. Income inequality explains some of the differences in student outcomes, but race is a much more powerful predictor of educational outcomes. One study indicated that reading scores of white and Asian U.S. students were among the best in the world but that Black students’ scores lagged behind those of students from other developed countries. Data suggest that the lingering effects of segregating Black students into relatively underfunded school districts drives this difference.

Ultimately, experts disagree on whether the U.S. education system has achieved equality. In this week’s Saturday Seminar, scholars discuss the inequities of the U.S. public school system.

• In a recent article for the Minnesota Law Review, Derek Black of the University of South Carolina School of Law argues that localism and inequity in independent school districts contradict the original intent of public education systems. Black contends that state constitutional conventions adopted provisions to assign educational responsibilities to states, not localities. According to Black, after Reconstruction, white Southerners undermined state funding and leadership of education systems and achieved school segregation by championing local control and funding. Black notes that legal arguments for localism rest on the false assumption that localism is “necessarily a legitimate government interest.” Black argues that Southern states’ discriminatory intent in localizing education funding raises Equal Protection questions about current school funding practices.
• In a Journal of Education Finance article, Michael Heise of Cornell Law School and Jason Nance of Southern Methodist University Dedman School of Law use per-pupil spending to explore school administrators’ views on whether inadequate school funding limits school crime prevention efforts. Heise and Nance examine how school and district spending affects school safety investments. Heise and Nance find that the amount of per-pupil spending and administrators’ fears of being sued affected whether the administrators believe they have enough funding for school crime prevention programs. Heise and Nance argue that existing literature on school violence too often avoids examining how school funding variations help to explain how schools prioritize and implement crime prevention programs.
• In a recent paper for the Federal Reserve Bank of Chicago, Lisa Barrow, Sarah Komisarow, and Lauren Sartain argue that private fundraising by affluent parents offsets the benefits of progressive school funding plans. Barrow, Komisarow, and Sartain explain that some school districts have transitioned from funding based on estimated teacher staffing needs to plans that allocate funds based on the needs of the individual students in each school. Barrow, Komisarow, and Sartain argue that because school funding consequently has shifted from more affluent districts to poorer districts, wealthy parents often conduct fundraisers to offset the decrease in funding. Barrow, Komisarow, and Sartain conclude that such fundraising entrenches funding disparities and diminishes less-affluent districts’ ability to hire and retain experienced teachers.
• Bo Zhao, in a working paper for the Federal Reserve Bank of Boston, proposes a school funding formula meant to minimize the differences in learning outcomes between schools. Zhao uses Connecticut as a case study to examine the effects of his proposed policy. He notes that Connecticut schools rely on a relatively high proportion of property taxes for school funding. Zhao argues that Connecticut and states with similar school funding schemes should instead adopt a funding formula that redistributes funds to minimize the differences between education costs in each school and the funding each school receives. Because this formula would require additional state funds, Zhao suggests that states adopt minimum funding thresholds to make such plans politically feasible.
• In a CATO Institute handbook, policy scholar Neal McCluskey argues that education has become too centralized to meet children’s diverse needs. He advocates greater latitude for families to choose the primary education options that work best for them. According to McCluskey, allowing schools to compete to attract students would encourage schools to improve, leading to better outcomes. To facilitate greater choice, McCluskey proposes that states adopt a school choice model that allows government funding to follow students wherever they enroll. McCluskey also recommends giving scholarship tax credits to families and third-party funders who pay private school tuition. McCluskey warns against heavy regulation and standardized testing because both lead to homogenous curricula, which limits the breadth of options for families.
• In a forthcoming article for the Michigan Law Review, Carter Brace of the University of Michigan Law School explains that the Supreme Court in Milliken v. Bradley deferred to a “tradition of local control” over public education. Brace argues that Milliken chilled future federal desegregation efforts by prohibiting federal courts from providing remedies that affect multiple school districts. Many scholars have characterized the tradition of local control as a mere policy preference, but Brace contends that the court rooted its decision in constitutional doctrine. In Brace’s analysis, the Court grounded the tradition in parents’ substantive due process rights to direct their children’s upbringing, citizens’ democratic participation rights under the Equal Protection Clause, and federalism principles under the Tenth Amendment.