A June report from Brookings Institute reviews how school funding has changed through the decades using school district level data from1976 to 2021. Researchers aimed to answer two key questions: Do high-poverty and predominantly non-white districts spend less than their lower-poverty or predominantly white counterparts? How has that changed over time as policy preferences evolved and states reformed their school finance systems?
The analysis finds that between 1976 and the early 1990s, the average level of spending increased, but the distribution of that funding remained less equitable among student groups.
“After about 1995, spending within states was increasingly targeted to high-poverty districts, though between-state differences increasingly favored lower-poverty districts. That is, low-poverty districts were more likely to be in states where average spending was higher, but they had lower spending relative to high-poverty districts in the same state,” states the report. “We also find that low-poverty and predominantly white districts were more protected from spending cuts during the Great Recession, and high-poverty or predominantly non-white districts were the least protected. Finally, differences in average spending between states remain a major driver of spending inequality overall, even though policy conversations often focus on within-state differences.”
The report states that its findings that high-poverty or predominately non-white districts have lower-than-average spending work against a commonly held belief about school funding.
Researchers say the disconnect comes from an outdated understanding of how school funding works. “Historically, schools were financed primarily with local property taxes, though this varied across states. Over time, the contribution of state governments has increased. In 1940, 68 percent of school districts’ revenue was from local taxes and 30 percent from the state, with just 2 percent coming from the federal government. Since around 1980, state and local governments have contributed about equally, with some cyclical fluctuations,” according to the report.
Today, on average, state governments provide about as much support as school districts raise locally.
Key trends
Researchers compiled school district-level data on spending, child poverty rates and the racial composition of enrollment to find how spending increased or decreased based on poverty and racial composition.
“For each district characteristic, we divide districts into five quintiles, weighted by enrollment; that is, each quintile includes districts covering 20 percent of national enrollment. Districts vary dramatically in size, from less than a dozen to around 1 million in the New York City school district, so the number of school districts in each quintile is not equal,” researchers explained.
Trends by poverty rate
- Between 1976 and 2021, average spending grew substantially for all child poverty quintiles. Average spending increased substantially over the whole period for all poverty quintiles, ranging from about $6,000 to $7,300 in 1976 and $13,000 to $19,000 in 2021.
- Highest- and lowest-poverty districts spent more. The report describes this as a “U-shape” where both of these quintiles spent more than both of the middle quintiles.
- After 2000, spending increased faster for the highest-poverty districts. However, the Great Recession hit these districts hardest with average spending in the second to the fifth quintiles fell by around $500-$700 per student, students in the lowest-poverty districts only faced spending cuts of a little more than $200.
Trends by racial composition
- Districts with the highest non-white student population had higher per-pupil spending than majority white districts.
- Recessions affected spending in non-white majority districts more than their counterparts.
- Districts with the highest share of non-white students generally spent more than predominantly white districts.
Researchers clarify that their methodologies differ from other organizations that have come to different conclusions on school spending. “Our goal is to show how spending has varied across districts with different characteristics and over time, adjusting only for inflation, to provide a clear picture of actual resource distribution rather than assessments of adequacy or equity relative to estimated needs,” the report states.
Further sections of the report examine whether the identified trends in spending are due to between- or within-state changes in spending. Key findings include that high-poverty districts are more concentrated in lower spending states and within states, funding was progressive with respect to minority student groups since 1976.
