Below is an analysis of variations in per-pupil spending on K-12 education within states—known as school finance inequity— for 2009 of the 50 states and the District of Columbia. The analysis details how these inequities interact with other important education indicators, including student demographics and achievement.
Spending differences among school districts within states are an important piece of the education spending puzzle.
School finance inequity—or the degree to which per-pupil spending varies across districts within a state relative to the state’s average per-pupil expenditure—is an important factor in determining educational equity. The U.S. Department of Education calculates school finance inequity for each state in accordance with the Education Finance Incentive Grant formula, assigning each state an “equity factor.” The more equitable the distribution of education funding across districts in a state, the lower the equity factor. For more detailed information on the funding formula and the equity factor calculation, see No Child Left Behind Act – Title I School Funding Equity Factor.1
School finance inequity varies by region.
In 2009, Western states had the lowest average school finance inequity factor at 11 percent, or $1,098. This means that, on average, states in the west fund their school districts the most equitably and that this funding varies by an average of $1,098 (11 percent of the regional average of $9,983) per pupil across districts. States in the Northeast have the highest average school finance inequity factor at 14 percent, or $2,067. Based on their average per pupil expenditure, districts in the Northeast may spend as much as $16,829 or as little as $12,695 per pupil. The majority of the most equitable states are located in the South or West. In fact, only two states in the Northeast and four states in the Midwest rank in the 25 most equitable states. Additionally, as Hawaii and the District of Columbia consist of only one district each, their equity factors are zero.
Equity factors can be influenced by state funding formulas and other state characteristics. First, every state has its own formula by which it allocates state funds among school districts. These formulas, which vary widely across states, can create inequities among local school districts. Furthermore, the number and size of school districts in a state can affect the equity factor it is assigned by federal formula. Southern and Western states tend to have fewer and larger school districts than Northeastern and Midwestern states. State funding formulas generally distribute funds more equitably under this structure because the funds are aggregated into larger pools and distributed to school districts in a more uniform fashion. Additionally, in larger school districts, property tax collections are redistributed over a larger area, thus reducing disparities in local revenues.
In the Northeast and the Midwest, states generally have more and smaller school districts that vary dramatically in terms of wealth and demographics. State funding formulas, which typically take these factors into account, can create funding inequities by directing more funds towards certain types of school districts. In addition, local property tax collections can vary widely between small school districts, further increasing funding disparities.2
States with higher per pupil expenditures tend to have greater school finance inequity.
States with higher average per-pupil expenditures (federal, state, and local funding combined) tended to have less equitable funding structures than those with lower per-pupil spending in 2009. Each state’s average per-pupil expenditure can be heavily influenced by spending in a top tier of very wealthy school districts. These wealthy districts often spend significantly more than the rest of the districts in a state, skewing the state’s average per pupil expenditure. In doing so, they also increase the state’s school finance inequity factor because the difference between the state average and the per-pupil expenditures in the lowest-spending school districts increases as well.
School finance inequity measures do not account for intra- district (within district) inequities.
The data presented here represent inter-district inequities, or variations between school districts within a state. But it is important to note that funding inequities also exist among schools within a district for a variety of reasons. These intra-district inequities are largely driven by the uneven distribution of teachers and teacher salaries. More experienced, and thus higher paid teachers generally gravitate towards better resourced schools. As a result, these wealthier schools spend more on teacher salaries, further increasing the per-pupil spending differences between schools. For more on this issue, see No Child Left Behind Act: Title I Comparability Requirement.
- 1. For each state, FEBP collects three different numbers relating to the federal equity factor: 1. The average school finance inequity among districts in percentage terms, also known as the equity factor. This number represents the average difference in per-pupil state and local spending across districts from the state’s average per-pupil expenditure, expressed as a percentage. 2. The average school finance inequity among districts in per-pupil dollars. This number is created by multiplying each state’s school finance inequity as a percentage (described above) by its per pupil expenditure to express the size of each state’s school finance inequity in dollar-terms. 3. The school finance inequity rank for the 50 states and the District of Columbia. This number represents how a particular state ranks in comparison to other states on the equitable distribution of funding across districts. The state ranked first has the lowest school finance inequity in percentage terms and therefore least variance in funding across districts (i.e. is the most equitable), while the state ranked 51st has the highest school finance inequity in percentage terms and therefore the most variance in funding distribution (i.e. is the least equitable).
- 2. Regions. Northeast: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Pennsylvania, Rhode Island, Vermont. Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin. South: Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia. West: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon, Utah, Washington, Wyoming