Making the Grade 2020 utilizes national data sets to analyze the condition of school funding in the states.

Data sources: The U.S. Census Bureau’s Annual Survey of School System Finances (2018); U.S. Census Bureau’s Small Area Income and Poverty Estimates (2018); and the U.S. Bureau of Economic Analysis’ State Gross Domestic Product reports (2018).

Funding Level: State and local revenue divided by student enrollment. Federal revenue is not included, except for Impact Aid and American Indian education revenue as they are intended to replace state and local funds. We also exclude revenue for capital outlay and debt service programs. These revenues tend to be uneven from year to year; one-time or short-term investments may obscure more prevalent funding patterns. Finally, expenditures for charter schools are subtracted because the students these funds apply to are not included in enrollment totals. The resulting per-pupil funding levels are adjusted for regional differences using the National Center for Education Statistics’ Comparable Wage Index for teachers.

Funding Distribution: We use a modified version of the regression-based method developed by Bruce Baker and published in Is School Funding Fair? A National Report Card (eds 1-7) to describe the pattern of funding relative to district poverty within each state. The analysis essentially asks, once differences in costs related to district size and geography are accounted for, do states provide more or less funding to districts as the poverty rate increases? Using district-level revenue data (as defined above for funding level), the model predicts funding in a high-poverty (30% Census poverty) relative to a low-poverty (5% Census poverty) district. States that provide higher per-pupil funding levels to high-poverty districts are progressive; states that provide less to high-poverty districts are regressive; and states where there is no meaningful difference are “flat.”

Funding Effort: Effort is measured as total state and local revenue (including capital outlay and debt service, excluding all federal funds) divided by the state’s gross domestic product. GDP is the value of all goods and services produced by each state’s economy and is used here to represent the state’s economic capacity to raise funds for schools.

Grades: Grades are assigned using the typical “curve.” A standardized score is calculated as the state’s difference from the mean or “average,” expressed in standard deviations. Grades are as follows: A = 2/3 standard deviation above the mean; B = between 1/3 and 2/3 standard deviations above the mean; C = between 1/3 standard deviation below and 1/3 standard deviation above the mean; D = between 1/3 and 2/3 standard deviations below the mean; F = 2/3 standard deviation below the mean.

For more detail on the report’s methodology, see the Technical Appendix.