EdBuild, a nonprofit focused on equity in school funding, defines an isolating border as one that divides one school district from another that is at least 25 percent whiter and receives at least 10 percent more funding per student. Across the United States, in 42 states, there are 969 of these isolating borders, according to EdBuild’s recently released report. The average disparity in funding along these borders was roughly $4,000 per student. As a report from the Lincoln Institute of Land Policy shows, roughly 36 percent of K–12 funding comes from these [local property] taxes. That means inequality is often baked into district lines; wealthier communities will have more money to spend on their students.
In 2015, the most recent year for which national data are available, only 12 states allocated more funds to districts in which student poverty is high than to districts in which there is little or no poverty. And of these 12 states, only five — Delaware, Massachusetts, Minnesota, New Jersey and Wyoming — also funded education at a level of adequacy that enables students to receive the resources they need. This article outlines steps that federal and state governments can take to make a difference in achieving greater equity and adequacy in school funding, including redesigning school finance formulas to focus on pupil needs, for example, through weighted student formulas that add additional funds for pupil characteristics such as poverty.
The state education department told the Education Institute of Hawaii that it didn’t have the technological tools to give a line-by-line accounting for much of the $2 billion in K-12 spending, including teachers’ and administrators’ salaries. State departments of education across the country this year have been under intense pressure to open their fiscal books to the public, a technologically and politically complicated feat. Hawaii also is among several states with antiquated data systems that can’t track the thousands of transactions school districts make throughout the school year. Department officials are blaming those data systems for high-profile glitches that have occurred this year as state legislatures seek to boost teacher pay and states look to comply with a new federal requirement to break out school spending amounts. “To have any sense of empowerment, you have to have an idea of the fiscal health of the department,” said former state assistant superintendent and 2018 gubernatorial candidate Ray L’Heureux.
Despite the charter school tax-exempt bond sector’s record volume for each year between 2012 and 2017, last year’s financing activity ended with a material decrease of 17.1%, at $3 billion, compared to 2017’s volume of just over $3.5 billion. For most market participants, this bond issuance trajectory reversal was expected due to the acceleration of deals that came to market in late 2017. The substantial 2017 increase in volume was primarily due to a reaction to congressional debate over tax reform that began in earnest in November and was driven by the fear of the loss of authority for private activity bonds (which ultimately did not occur) as well as advance refundings (which took effect on January 1, 2018). The extent of this sector’s 2018 decline, however, was not quite as pronounced as the overall tax-exempt market reduction of 21.6%—a nod to the continued high demand for affordable fixed-rate long-term charter school facility financing. Specifically, charter schools were responsible for 129 distinct transactions in calendar year 2018, totaling just shy of $3 billion of tax-exempt bond issuance. The range in par amount was extraordinarily wide this year—spanning from less than $2 million to over $350 million.
“We knew it going in, but we didn’t really understand how very local this work has to be,” said CEO of EdBuild Rebecca Sibilia. Every state needs a unique fix. Solutions have to be tailored to specific state funding policies. Each state has its own unique funding formula that dictates how it takes local and state tax revenue and divvies that money up among schools. What matters most when it comes to how much money districts have to work with is place. Districts are still heavily dependent on local property tax, and disparities exist mostly because many states have not managed to close the gap between property-rich and property-poor districts. Sibilia has pushed in recent years for states to rethink the way that districts’ lines, which she calls “gerrymandered,” are drawn.
A common myth is that principals are like CEOs of their schools, with authority to make key decisions and strategically deploy resources. The reality, though, is quite different. Principals typically are treated like middle managers, with little control over the $694 billion in annual U.S. public education spending. At the state level, school finance formulas determine how dollars are allocated to districts, virtually all of which contain allotments that are restricted for specific purposes. But perhaps the biggest impediment to giving school principals more autonomy are school districts, where most spending decisions are made by central offices. Instead of giving principals actual dollars to spend, most districts allocate staffing positions and other resources based on one-size-fits-all models. For example, a district might dole out one teacher for every 25 students, an assistant principal for every 250 students, and a social worker for every 500 students.
Where, exactly, do those billions of dollars taxpayers annually spend for schools go? In most states, policymakers really don’t know. That’s because state education departments don’t have the technology to track the tens of thousands of transactions that district officials, using a combination of federal, state, and local dollars, make throughout the school year. So instead, the departments give lawmakers a receipt that includes a summation of broad spending categories, a breakout of average salaries, and maybe a mention of whether spending is up or down. But overhauling education departments’ data-collecting tools…can cost millions of dollars and fan flare-ups between policymakers over student privacy and local control. It’s a price tag and an ideology battle few policymakers want to take on.
Regardless of what happens…at the ballot box, school systems know they can’t wait; they must use their limited resources as strategically — and as equitably — as possible to accelerate student learning. “How much” schools receive is important; “how well” resources are used is also key. Education Resource Strategies (ERS), a national nonprofit with a California office and focus, recently profiled eight school systems from across the country that used their resources strategically and are seeing tangible results for black, Latinx and low-income students. Among those, two California districts provide examples of how school systems can manage people, time and money effectively.
The government’s overall appropriation of funds for special education preschool programs has varied by year, but generally decreased between 2002 and 2015, from $390 million to $353 million, before getting a slight bump to about $368 million in 2016 and 2017. At the same time, the number of children served by the programs more than doubled from the early 1990s to 2017, when 753,000 children ages 3 to 5 were served. The growth in enrollment without adequate federal funding (for special education) means per pupil spending has decreased sharply, by 40 percent per child from 1994 to 2014. Without funds, states may struggle to offer a robust special education preschool program and services, which means kids who could greatly benefit from having a head start in school are missing out and losing valuable time to catch up with their peers.
While Afton recognizes that total federal preschool funding has increased substantially since 2008, this article points out the growth in special education Pre-K enrollment without adequate federal funding for Pre-K students with disabilities.
Raise the topic of education finance and most will jump to the revenue side of the equation. But the spending side is equally important and gets shorter shrift. Parents and educators have not been asking, Is the district giving my school a fair share of its money? And local leaders have not asked what is purchased with that money and whether those purchases make the best use of the money. Part of the reason so much less time is spent on the spending side of the equation is a lack of visibility into how the money is spent. But that is about to change, thanks to a new provision in the Every Student Succeeds Act. In this Q&A, Dr. Marguerite Rosa shines a light on the pressing need to better support district and school leaders in their work on the spending side of the equation.