Making the Grade 2020
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Introduction
As the coronavirus pandemic rages across the United States, the nation’s public schools are confronting the budgetary impacts of a second major economic crisis in just over a decade. Like the Great Recession of 2008, declining revenues and diminishing rainy day funds are pressuring states to reduce support for their PK-12 public school systems. Some states, such as New York, Georgia, and Texas, have already enacted sizeable “pandemic cuts” in their state budgets.[1] These cuts fall hardest on the poorest school districts with the greatest need and, as in the Great Recession, create a structural deficit that will impact state and district budgets in future years. While the cuts may be offset by one-time federal COVID-19 relief, the federal funds are largely intended to supplement existing state and district budgets to cover the additional costs related to the pandemic, not to fill gaps resulting from reduced state support.
The pandemic is also a public health crisis. As such, it requires increased technology to allow students to engage in remote learning and creates a plethora of new expenses connected to safe school reopening. According to one estimate, the average district needs an additional $1.8 million to cover the cost of cleaning, additional staff, personal protective equipment (PPE), transportation and child care.[2] That does not include the as yet unknown costs of remediation and academic support for students whose schooling has been disrupted, along with the cost of social and mental health supports for students dealing with economic hardship, family loss and the psychological stress of COVID-19.
This edition of Making the Grade draws upon data from 2018, the most recent year available. The report evaluates the condition of public school funding in the states preceding the onset of the pandemic in early 2020. This analysis demonstrates the alarming condition of school funding in most states, leaving school districts, especially those segregated by poverty, ill-equipped to weather the coronavirus crisis. What the pandemic has made strikingly evident is the glaring funding disparities that have persisted for years, if not decades. Poor households have disproportionately suffered the devastating health and economic impacts of COVID-19. As this report shows, children from these households are more likely to attend schools that are under-resourced and unprepared for transitioning to the new realities of virtual instruction, school health and safety protocols and unprecedented remediation for lost learning time.
The devastating effects of COVID-19 follow on the heels of a slow and uneven recovery from the 2008 Recession. In 2020, some states had yet to climb out of the funding hole left by the Recession, only to face the next fiscal crisis, one likely to extend for several years. As Making the Grade 2020 makes clear, most states face the challenges of COVID-19 with outmoded, unresponsive school funding systems that fail to meet the needs of their most vulnerable students.
How Fair is School Funding in Your State?
Making the Grade analyzes the condition of public school funding in all 50 states and the District of Columbia. Using the most recently available data from the 2017-18 school year, this report ranks and grades each state on three measures to answer the key question: How fair is school funding in your state?
The three fairness measures are:
- Funding Level – the cost-adjusted, per-pupil revenue from state and local sources (Fig. 1);
- Funding Distribution – the extent to which additional funds are distributed to school districts with high levels of student poverty (Fig. 2);[3]
- Funding Effort – the funding allocated to support PK-12 public education as a percentage of the state's economic capacity (GDP) (Fig. 3).
The rankings and grades on these measures provide crucial data to inform policymakers, business and community leaders, teachers, and parents and students about the equity and adequacy of public school funding in their state. Making the Grade is designed to assist state lawmakers, advocates and others working to improve the level and distribution of funding in their state's public schools.
What Is Fair School Funding?
We define fair school funding as the funding needed in each state to provide qualified teachers, support staff, programs, services and other resources essential for all students to have a meaningful opportunity to achieve the state’s academic standards and graduate high school prepared for citizenship, postsecondary education and the workforce. A fair school funding system is the basic foundational building block for high-performing, effective K-12 public school systems. Fair funding has two basic components: a sufficient level of funding for all students and increased funding to high-poverty districts to address the additional cost of educating students in those districts. These two components are dependent on a third: the effort made by state legislatures to provide sufficient revenue to support the public school system.
Why the States?
Unlike other countries, the U.S. has no national education system. Instead, states, under their respective constitutions, have the legal obligation to support and maintain systems of free public schools for all resident children. This means that the state is the unit of government in the U.S. legally responsible for operating our nation’s public school systems, which includes providing the funding to support and maintain those systems.
All states fund their schools through a statewide method or formula enacted by the state legislature. These school funding formulas or school finance systems determine the amount of revenue school districts are permitted to raise from local property and other taxes and the amount of funding or aid the state is expected to contribute from state taxes. In annual or biannual state budgets, legislatures also determine the actual amount of funding districts will receive to operate their schools. Some states, including New Jersey, New York, and Illinois, fail to provide in their budgets the amount of state aid required by the state’s own funding formula, a condition called formula underfunding.
State and local revenue account for, on average, approximately 92% of total funding for public education. The federal government, primarily through programs targeted for low-income students and students with disabilities, contributes the remaining 8%.[4]
Why Does Fair School Funding Matter?
Fair, equitable and adequate school funding is the basic building block of a well-resourced and academically successful school system for all students. A strong funding foundation is even more critical for low-income students, students of color, English language learners, students with disabilities, and students facing homelessness, trauma and other challenges. These students, and the schools that serve them, need additional staff, programs and supports to put them on the same footing as their peers. The research on the needs of vulnerable student populations for extra academic and academically related programs and services is compelling, as is the growing evidence that increasing investments in these students improves their achievement and other outcomes.[5]
Table 1. Making the Grade 2020
Funding Level
A state’s funding level is measured by analyzing the combined state and local revenues provided through the state school finance formula, adjusted to account for regional variations in labor market costs.
A state’s funding level grade is determined by ranking its position relative to other states; the grade does not measure whether a state meets any particular threshold of funding level based on the actual cost of education resources necessary to achieve state or national academic standards.[6]
Figure 1 shows, even after adjusting for regional cost differences, the extreme divergence in school funding levels across states, with the top states providing upwards of 50% more and the bottom states providing 30% less than the national average funding level of $14,548 per pupil. Figure 1a shows a clear geographic pattern, with states in the Northeast and Midwest generally having higher funding levels than those in the South and West.
Funding Distribution
The hallmark of a fair school funding system is that it delivers more funding to educate students in high-poverty districts. This means states providing equal or less funding to high-poverty districts are shortchanging the students most in need and at risk of academic failure. A central feature of fair school funding is providing higher levels of funding to districts serving large concentrations of students from households with incomes below the federal poverty line.
Figure 2 depicts funding distribution in each state as measured by the funding allocated to high-poverty districts relative to low-poverty districts.[7] States allocating more per pupil funds to high-poverty districts have a “progressive” distribution system, resulting in a higher grade on the funding distribution measure. States that do the opposite – where low-poverty districts receive more funding – have a “regressive” distribution system and earn a lower grade. States with similar funding levels in high- and low-poverty districts have “flat” distribution systems, clustered in the “C” grade range.[8]
As with funding level, states are also highly divergent in the progressivity of their funding distribution. Alaska provides 73% more, and Nevada provides 33% less, funding to high-poverty districts than to low-poverty districts. (Fig. 2)
Only 16 states have even modestly progressive school funding systems with at least 5% more funding, on average, in high-poverty districts. School funding is flat (+/-5%) in 17 states, meaning there is no appreciable increase in funding to address the need for additional resources in high-poverty districts. The remaining 15 states have regressive funding systems.
Funding Distribution v. Funding Level: There is no consistent correlation between funding level and distribution across states. States with progressive funding distribution may have low funding levels – Utah and New Mexico, for example. And states with regressive funding distribution may have relatively high funding levels, such as Connecticut and Pennsylvania.
Figure 2a presents state funding profiles. Use this customizable tool to compare and contrast funding level and funding distribution among states. Figure 2b provides district-level revenue data to allow a deeper dive into funding patterns in each state.
Funding Effort
Figure 3 ranks states on effort as measured by the percentage of state wealth or gross domestic product (GDP) allocated to support the PK-12 school system.[9] Depending on a state’s overall wealth, every tenth of a percent (0.1%) of state GDP invested in PK-12 public education can have a big impact. For example, that figure is $33 million in Vermont – the nation’s smallest economy - and up to $3 billion in California – the nation’s largest. Figure 3 juxtaposes a state’s relative effort (compared to the national average) with its per capita GDP to contextualize how the effort index interacts with the state’s relative wealth to produce high or low funding levels.
High Effort, High Capacity: States such as Alaska, Connecticut, New York, and Wyoming are high capacity states with high per capita GDP, and they are also high effort – using a larger than average share of their overall GDP to support PK-12 education. They generate high funding levels. (Fig. 3)
High Effort, Low Capacity: States such as Arkansas, South Carolina, and West Virginia have lower than average capacity, with low GDP per capita, but they are high effort states. Even with above average effort, they only yield average or below average funding levels.
Low Effort, Low Capacity: States such as Arizona, Florida, and Idaho are low capacity states that also make lower than average effort to fund schools. They generate low funding levels. (Fig. 3)
Low Effort, High Capacity: States such as California, Delaware, and Washington are high capacity states that exert low effort towards funding schools. If these states increased their effort even to the national average, they could significantly increase funding levels. (Fig. 3)
Advocating for Fair School Funding
Making the Grade 2020 documents the persistence of unfair school funding as public schools were on the precipice of the coronavirus crisis. In many states, funding had become so unfair that a growing grassroots movement of students, parents and educators was demanding fair pay for teachers, increased focus on social and emotional learning, and weighted student funding formulas. There were also signs of a new wave of meaningful and impactful school finance reforms in state legislatures.[10]
Since March 2020, campaigns for school funding reform in many states have pivoted to protecting current levels of state aid from “pandemic cuts,” even if those funding levels were already inequitable or inadequate. As a result of COVID-19, advocates have shifted to demanding that legislatures hold the line and not repeat the widespread disinvestment in state support for K-12 public education that occurred in the Great Recession.
As Making the Grade 2019 shows, our public schools are underfunded through the persistence of state finance systems that are flawed, outmoded and budget-driven. Public school underfunding is now so chronic and severe that a growing movement of parents, students, teachers and concerned citizens is demanding reform in many state capitols.
But the nation’s school children cannot afford to simply play defense in the coming years. It is imperative that the needs of vulnerable students be lifted-up and prioritized, especially when they need more, and not fewer, resources. Advocates must work to hold lawmakers to account on already agreed upon school funding reforms – such as in California, Kansas, Washington and Massachusetts – to ensure implementation remains on track. They must also keep push for follow through on promised reforms – such as in Maryland, Illinois, Nevada and New Mexico. And they must insist on a path to full funding of existing formulas on the books – such as in New York and New Jersey. The focus during the pandemic must remain on the most important school funding goal: systems built on the actual cost of educating all students to meet state standards. The pandemic must not be allowed to derail those efforts. In fact, the impacts of COVID-19 only raise the stakes.
The information in Making the Grade 2020 is a stark reminder that school funding is unfair because most states fail to adequately fund the education of all students and do not account for the extra educational needs of low-income and other at-risk children. Against this backdrop, threats to public education funding in the middle of an economic and public health crisis must be met with a strong and sustained demand that states not reduce – and in fact must increase – the investment in their public schools, not only to meet the unprecedented, short-term demands of COVID-19, but also to advance fair school funding over the long haul.
Endnotes
[1] See ELC’s Tracking State Aid Cuts in the Pandemic project.
[2] Association of School Business Officials International and The School Superintendents Association, What Will it Cost to Reopen Schools?
[3] This measure does not include figures for Hawaii and the District of Columbia which operate as single district systems. Vermont is also excluded because, as of 2014, the state does not report finance data at the same district aggregation as used for the Census SAIPE estimates. See the Technical Appendix for more information.
[4] See Table 1. Stephen Q. Cornman, Lei Zhou, Malia R. Howell & Jumaane Young, Revenues and Expenditures for Public Elementary and Secondary Education: FY17: Finance Tables. National Center for Education Statistics (2020).
[5] Mary McKillip and Theresa Luhm, Investing Additional Resources in Schools Serving Low-Income Students: Evidence for Advocates, Education Law Center, (April 2020).
[6] The variables used to construct the per pupil state and local revenue totals for districts has been modified in this report to reflect reporting inconsistencies related to charter schools. In some states, districts receive state and local revenue to support charter students, but those students are not included in enrollment totals, resulting in an inflation of per pupil revenue. To correct this, district-level payments to charter schools reported as expenditures are subtracted from the revenue total. For more detail, see the Technical Appendix.
[7] The United States has no established “opportunity to learn” standards that define the resources needed to ensure students have the opportunity to achieve common outcomes. It is, therefore, not feasible to determine the cost of those resources and funding levels across states.
[8] Poverty is measured using the Census definition due to reporting inconsistencies for the National School Lunch Program, the more commonly used metric of school poverty. Census poverty is a more severe measure than either free lunch (130% of Census poverty) or reduced lunch (185%) eligibility. We define high-poverty districts as having a 30% Census poverty rate among school-aged children and low-poverty districts having a 5% poverty rate. For more detail, see the Technical Appendix.
[9] Gross domestic product (GDP) is the value of all goods and services produced by each state’s economy. In this report is serves as a measure of each state’s capacity to raise revenue to fund schools.
[10] Weighted student formulas allocate funding to districts using student enrollment counts. Each student receives the “base cost” and then additional funding is provided to account for the educational needs of students with specific characteristics, for example low-income students, English language learners, students with disabilities, etc. The additional costs for these categories of students are expressed as a “weight” or percentage of the base cost. For an example of how a weighted student formula is developed, see Linking Standards to Resources: New Jersey’s School Funding Reform Act of 2008. Education Law Center, (March 2017).