A Future Not Determined by the Past

The stories shared in this report, and many others like them in communities whose borders are identified in our findings, are not inevitable. They are the product of government actions. These include choices over decades to support white residents and homebuyers while hampering and excluding those of other races, shaping America into a patchwork of divided and unequal neighborhoods, and decisions about the placement of school district boundaries against this segregated backdrop. State governments have opted to build school finance systems on a foundation of local property tax revenues, linking school budgets to local wealth levels. They’ve also given wealthy school districts in nearly every state the legal ability to raise vast amounts of extra local revenue, creating unreachable targets for lower-wealth districts. Taken together, these policies have segregated school districts and tilted the school funding system in favor of property-wealthy districts, which are frequently those serving communities with lower poverty rates and fewer students of color.

That state laws allow this ground-level inequality creates a new problem. In order to address the imbalance, state lawmakers must allocate ever more state aid to fill local gaps. Often, they cannot keep up. Even as states provide more money to higher-need districts, deep local revenue disparities mean that students of color and students in poverty wind up with less school funding overall. The failure to address local revenue inequality at the source sets states up to fail, overwhelming their efforts to allocate education aid fairly and well.

To allow students to learn in diverse school systems whose funding levels match student need, not local property values, states must address interdistrict divides at the source. The specific policies needed will depend on the particular state and the nature of its problems, but certain general policy concepts should be part of the approach. One option is to draw school district boundaries to purposefully include heterogeneous student communities and larger, more economically mixed areas. Another is to eliminate or reduce the role of local property taxes in the school finance system, such as by levying all education taxes (including any property taxes) at the state level, or by pooling local property tax revenues across multiple districts so that the budgetary benefits of property wealth are shared among communities that have historically had different levels of access to housing markets. If local property taxes are to remain a significant source of school funding, guardrails should be put in place to ensure that communities of different wealth levels pay their fair share toward school funding totals—no more and no less—and that local funds are appropriately constrained, to limit the kind of extravagant spending in high-wealth districts that creates ground-level inequality.

Consider what such policies could mean for the communities whose stories are highlighted in this report.

The quality of students’ education in Saginaw City depends on the health of the economy in a narrowly drawn local area. As local opportunities have dwindled, residents have left the city and the tax base has declined, which has resulted in less local education funding and a series of school closures. But Saginaw City School District is not geographically isolated. It immediately borders seven school districts that are much better off, and it is already partnered with the other school systems in its county in a limited way, because students from all county school districts can attend the Saginaw Career Complex. Imagine if the boundaries of the school district were widened to encompass not just the declining city, but some of its better-off neighbors as well, and perhaps all districts in the county. This would broaden and stabilize the district tax base, bolster enrollment while diversifying the student body, and free the district from its downward spiral.

Utica City School District, too, is closely bound to the economy of its city, and the city is bound to the fortunes of the district. Parts of the city still echo the descriptions and divisions of its 1936 redlining map, and some neighborhoods are full of rental housing and limited in the taxes they yield for the district. Many area parents, including some who grew up in Utica, choose to live and educate their children in nearby districts instead of in the city proper, further reducing the local homeownership rate and property tax base. Despite early signs of an economic upturn, Utica is in no position to match New Hartford’s property tax receipts. Instead, it has relied on state aid to narrow—though not close—the funding disparity, even going so far as to sue the state for greater support. Since local property tax revenue looms so large in New York school finance, the state must play a constant game of catch-up, attempting to fill ever-widening local gaps with state revenue. If New York instead worked to cut the tie between local wealth levels and school funding by widening district boundaries, limiting the amount of local property tax revenue in the school finance system, or even collecting property tax dollars for education at the state level, it would be better able to fund districts like Utica in a way commensurate with their students’ needs.

Dallas Independent School District (ISD) and Highland Park ISD are already subject to a policy for pooling some property tax dollars across district lines, since Texas’s recapture system sends a portion of excess revenues from high-priced neighborhoods like Highland Park to a state fund that is used to support other districts. This policy should be credited for the fact that the funding disparity between Dallas ISD and Highland Park ISD remains moderate despite the districts’ huge divides in home values. But Highland Park still maintains its discrete school district in the middle of Dallas, creating a predominately white island in the middle of a city district that serves almost exclusively students of color. This separation is only the starkest split in the midst of a divided city, which falls well short of the ideal of integration in its treatment of students from different backgrounds. Nationally, school district borders serve to define both student populations and tax bases; Texas’s policy lets some funding cross district lines, but when it comes to students, the state allows Highland Park ISD’s walls to remain up.

Not all cases of interdistrict racial segregation are as hyperlocal as that between Dallas and Highland Park, however. Wahluke School District, geographically isolated and composed almost entirely of students of one racial group, would be hard-pressed achieve greater integration. The predominately white Kittitas School District may border Wahluke, but their schools are miles apart. Even if the districts were formally joined, it is unlikely that students would be transported so far as to make individual campuses more diverse. Instead, Wahluke must focus on serving its students well within the confines of its borders. But because Washington affords local voters power over whether or not to levy school taxes, and because the interests of area taxpayers so diverge from those of local students and families, the district struggles to raise enough in funding to cover its considerable expenses. By allowing local property tax dollars to play a role in the school funding system but forcing districts to turn to voters to approve every levy, the state has created a steep financial challenge for high-need, rural districts like Wahluke. If Washington better governed its local dollars to ensure that property owners paid their fair share, these districts would be in a far more secure position.

The specifics of these cases are different. But they exist as facets of a single problem: the building of school districts, and school district finances, atop a divided and unequal foundation.

"The redlined neighborhoods of the past have produced redlined schools—and school budgets—in the present."

States need not continue to make policy choices that entrench these deep interdistrict divides. There are better options: for more inclusive district maps, more equitable and sensible approaches to raising school revenues, and funding systems that support students based on their needs, not their communities’ wealth. For too many years, students have had their educations defined by geographies of exclusion and difference. It’s time to draw the line.