Still Trying to Measure School Funding Equity

Equitable funding for public schools is an often discussed topic in education policy circles. Every state uses a different school funding formula for its K-12 schools and many of them result in an inequitable distribution of funds across school districts and schools. On top of that, local funding, which is often based on property tax collections, also vary widely across school districts, adding greater funding disparities. Today, researchers from Rutgers University and the Education Law Center released a report that grades or ranks every state on four different measures of education funding “fairness.” However, the report seems to obscure the issue of funding fairness by focusing on funding levels instead.

Many entities release estimates that try to measure or quantify inequities in school funding. The U.S. Department of Education produces an annual school finance equity factor; Ed Week creates an annual weighted measure of per pupil revenue; and the Education Trust publishes estimates of funding gaps within states based on poverty. Each of these measures lacks either the transparency or consistency to paint a coherent picture of school funding equity.

The Rutgers and Education Law Center report, on the other hand, provides four complex measures of school funding which, when combined, are supposed to estimate the degree to which school funding is “fair” in each state. These measures include “funding level,” an estimate of per pupil funding in each state; “funding distribution,” a comparison of per pupil funding in districts with different poverty rates; “effort,” the ratio of per pupil funding to per capita gross domestic product (GDP) in each state; and “coverage” a measure of both the percent of school age children that attend public school in each state and the household income ratio between private and public school students.

The first measure, called “funding level,” is arguably the most complicated measure in the report. It ranks every state based on a predicted per pupil funding level. The predicted funding level is determined using a regression equation that adjusts the state’s actual funding levels for local factors like wage variation and population density, producing an estimate of what that state’s per pupil funding level would be without any of that variation. The regression also adjusts each state’s funding level to assume a 16 percent student poverty rate. In other words, it creates a per pupil estimate for each state’s school funding mechanism (both local and state funding) without the influence of any state or local characteristics, making each state’s funding level comparable at a poverty rate of 16 percent.

According to the “funding level” estimate , Wyoming’s funding mechanism provides the highest level of per pupil funding in the country — $16,947 per pupil – after removing the influence of local and state factors. In actuality, Wyoming’s per pupil funding averaged over 2005 to 2007 was $16,238, not far off from the estimate. Due to its high predicted per pupil funding level, Wyoming is ranked first. New Jersey, the District of Columbia, Vermont, and New York round out the top five ranking states in terms of predicted per pupil spending. However, actual average per pupil expenditures in DC, Vermont and New York were significantly different than their predicted per pupil expenditures. This means that variations in local characteristics in these states like poverty and wages have a significant effect on per pupil spending.

Tennessee, on the other hand, came in last in predicted per pupil funding at $6,839 per pupil, meaning that Tennessee’s funding mechanism produces the lowest funding per pupil even after removing state and local influences. Tennessee’s actual per pupil funding – $6,966 – was also close to its predicted level. Oklahoma, Utah, Idaho, and Mississippi round out the bottom five.

Alaska had the greatest disparity between its predicted and actual per pupil funding levels, $12,504 and $14,764, respectively. It is ranked 6th among the 50 states and the District of Columbia in terms of predicted per pupil expenditure.

The Rutgers/Education Law Center report takes a rigorous approach to comparing per pupil funding by adjusting for variations in local and state characteristics with a regression analysis. However, by rewarding states with the highest predicted funding level, the report automatically assumes that more money is always better. The report reinforces this idea by rewarding states that spend greater proportions of their GDP on education. However, years of education research suggest that it’s not just how much money you spend but how you spend it.

Admittedly, the report does go on to determine which states progressively fund districts with higher poverty levels and which states serve a higher proportion of their school age children in public schools. But overall, the focus seems to be on which states spend more, rather than which states spend that money most effectively, particularly for its low-income students. Clearly, we still have some work to do on how we measure and quantify school funding fairness.