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School Funding and the Need for Resource Redistribution

Money matters in public education. It helps to improve educational opportunities and can lead to resource allocation that is more equal. Indeed, when states commit to financially investing in public education, students are more likely to better perform academically while in school and they are more likely later on in life to earn higher wages in the workforce (Baker et al., 2018). Yet, the way current education systems are set up in many states allows funding disparities to persist across school communities (Leachman, 2019). Public school districts, particularly those that have a student population that is primarily low-income, are consistently underfunded, and many school districts across the U.S., almost a third, are spending more money on districts serving wealthier students (Farrie, Kim, & Sciarra, 2019). Indeed, as Darling-Hammond (2019) states, “Public schools in the United States are among the most inequitably funded of any in the industrialized world” (p. 1). Moreover, as public school enrollment continues to rise, demographics shift, and income inequality and segregation persists (see Chapter 2), states are finding it harder to fund schools and their students’ needs and the funding decisions being made primarily at the local level can exacerbate these existent school inequities (Leachman, 2019). And while race may not be explicitly discussed in issues such as local control, resource redistribution, and how to effectively expend resources, it undergirds all of these issues (Ryan, 1999). Further, when states decide to change their school funding formulas and less money is allocated to districts, it becomes increasingly challenging for schools to address needs like overcrowded classrooms, teacher quality, or improving student outcomes (Leachman & Figueroa, 2019).

School leaders are in the difficult position of trying to navigate the budgetary constraints placed on them by state policy makers’ decisions on how to fund public schools. A recent survey conducted by Education Week shows that school administrators feel that their “budgets are being squeezed between political pressures with amounts dictated by outdated spending mandates and a cash flow that is insufficient and unpredictable,” which in turn, makes it very difficult for them to engage in any forward budget planning and has even led to some districts going through their savings (Burnette, 2019b, p. 3). Additionally, a recent report showed that some states are not even providing the state aid that is required of them under their own funding formulas (Farrie et al., 2019). In response, teachers have protested and gone on strike across the nation and lawsuits have mounted to challenge systems that are inadequately and unfairly funding public schools.

In the 2015-16 school year, the U.S. spent approximately $12,000 per student on public education, $706 billion total, of which only 8% came from federal sources, which is primarily for students with special needs and low-income students (Farrie et al., 2019; McFarland et al., 2019). While approximately the same percentage of education revenue comes from state (47%) and local sources (45%), we are seeing a growth in the contribution of local sources to total revenues, increasing by almost 30% from 2000-16 (McFarland et al., 2019). As we look at the status of education funding nationwide, according to recent research by the Center on Budget and Policy Priorities, state and local funding in 22 states plus the District of Columbia remains below pre-2008 Great Recession levels. In the 2017 school year, state and local funding was at least 10% below pre-Great Recession levels in seven states. In Florida and Arizona, where the deepest education cuts have occurred, funding was down by over 22 % (Leachman, 2019). As states continue to cut funding for public education, operational costs (e.g., transportation and facilities, staffing, salaries/benefits, and student costs) continue to rise as the need for special services to support a growing diverse student population (see Chapter 2, e.g., more English learners, students with disabilities, low-income students) also increases (Burnette, 2019a). Further, as schools rely heavily on local revenues to operate, unsurprisingly schools remain woefully unequal by income and race. Moreover, school and district leaders worry that if another recession occurs, the effects may be even worse for their districts than they were following the 2008 Great Recession (Burnette, 2019b).

In the U.S., local property tax is the key driver of school funding. At the local level, 81% of education revenues come from local property taxes (McFarland et al., 2019). As property tax bases are higher in neighborhoods with higher housing values, and because high levels of residential segregation by socioeconomic status exist, relying on local property taxes to fund schools creates an unequal distribution of wealth among school districts (Jackson, Johnson, & Pérsico, 2016)--property-wealthy districts have access to more resources while low-income districts are all but left behind. Furthermore, there is a lack of recognition of how federal housing policy, blockbusting, and redlining are responsible for ongoing housing discrimination, which is directly connected to property wealth, race, and subsequently school wealth and racial make-up (Rothstein, 2017). According to a 2019 EdBuild report, “on the whole, a student living within the geographic boundaries of a primarily White school district in the United States has a resource advantage over those enrolled in a heavily nonwhite system, regardless of geographic location or wealth” (p. 4). The report goes on to say,

Nationally, predominately White school districts get $23 billion more than their nonwhite peers, despite serving a similar number of children. White school districts average revenue receipts of almost $14,000 per student, but nonwhite districts receive only $11,682. That’s a divide of over $2,200 on average, per student.

(EdBuild, 2019, p. 4)

It is worth repeating that a $23 billion funding gap exists between white and nonwhite school districts in the United States. Yet, if we look back to how the education system was set up based on the idea of local control and leaving it up to local communities to make decisions about their schools (EdBuild, 2019), our current inequitable funding situation is not all that surprising. Further, although there has been some success in the courts when it comes to school finance equity, in many cases “the courts did not make a distinction between local taxes and local governance of schools,” which “further entrenched the idea that spending on school districts is an entitlement of local governance” (EdBuild, 2019, p. 1). This is further compounded by school leaders’ beliefs that the biggest challenge to funding in their districts and to making decisions that are in the best interest of their students is elected officials (Education Week Research Center, 2019). And so, here we are today still operating within a system that favors local control, which coupled with lawmakers’ inability to adequately fund schools and persistent residential segregation, results in schools where the student population is primarily nonwhite continuing to receive the least funding.

In this chapter, we provide an overview of how school funding has been litigated over time in the U.S. and how this has impacted current school funding policies, the relationship between school funding and race, and examples of school finance reform policies and programs in states and local school districts being implemented to provide more opportunities to students in low-income, racially segregated schools. In order to understand the different levels of funding and resources that exist between school districts—white and nonwhite—school leaders must be cognizant of why these disparities occurred in the first place, how they are racialized, and what they can do moving forward to create equitable school environments.

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