Education Funding Disparity

Jeffery Green

Jeffery Green, J.D., Ph.D. (ABD) Political Science

It is often the case that one does not need to travel a great distance to witness disparities in the distribution of public goods across a state. Since humans began clustering in organized societies, there has always been a hub and spoke effect between centers of trade and government and peripheral regions. Wealth and public goods historically center on the hub, while the remainder is often apportioned out to peripheral regions. To be clear, this is not always a product of greed or an act of thumbing the government nose at the hinterlands. Often there are bona fide reasons for distributing public goods in this manner. The hubs are often centers of commerce and government, and, therefore, attract more people. As such, more public services need to be provided, resulting in more funding.

This phenomenon is not fundamentally controversial or earth-shattering. However, throughout humanity’s historical experience with money and governance, we have become keenly aware of the fact that the allocation of public goods often does not follow a path purely dictated by equitable means. Communities that have historically received a wealth of public goods often continue to enjoy the bounty of public goods in perpetuity, whereas communities with a greater need often do not receive public goods in kind. The reasons underlying this perpetuation of inequality include any number of motivations, ranging from pure political largesse by those in power to benefit allies or benefactors to ineffective and/or outdated (albeit well-intentioned) policies. In some cases, it is simply the product of simple, garden-variety governmental stupidity.

An excellent example of the inequitable distribution of public goods is the method in which states fund their public education systems. Put simply, our world does not, and probably never has, functioned on a system of equity. This is illustrated by the many failed attempts at legislating equity by various utopian groups or left-wing ideologues. The blueprint for an ideal, equal society simply does not work in practice, no matter how nice of a sentiment it might represent. We as humans have varying levels of ability, drive and good fortune. As such, we tend to enjoy varying levels of economic status.

As social creatures that show a propensity toward congregating around those who are most similar to us, wealthy folks tend to live near wealthy folks because they have the choice to do so. Middle-class folks often live near other middle-class people, and poor folks don’t necessarily get to choose where they live, but more often than not end up near other poor folks. In the case of public education, local property taxes are the primary driver of funding. It is obvious that economically valuable property generates more tax revenue than less valuable property. Subsequently, in less-affluent areas, the tax base is considerably less than that in affluent areas. Thus, the potential revenue generated from local property taxes will largely vary in accordance with the socio-economic status of the area.

Ideally, funding should increase relative to the level of concentrated student poverty—that is, states should allocate funding to school districts according to need. Under the current system, however, the complete opposite happens. States employ a range of funding school schemes which can be classified as “progressive” or “regressive.” “Progressive” schemes allocates more funding to districts with higher levels of student poverty, whereas a “regressive” system allocates less to those districts. As such, schools in high-poverty districts will have substantially less access to state and local revenue when compared to lower-poverty districts.

Based on this variance in funding distribution, there are a number of states with striking records of inequitable distribution of education funding when compared with the rest of the country. These states display a trend wherein state and local revenues are lower in high-poverty districts, and are thus identified as having a “regressive” school-funding scheme.

STATE SCHOOL FUNDING DISTRIBUTION SCHEMES

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Source: Education Law Center (2014)

In the graph below, the horizontal axis represents the predicted per-pupil funding amounts as presented across the poverty slope, simulated at 10 percent intervals from 0 percent to 30 percent. For all years represented, the variation in within-state funding distribution is presented as a ratio between the highest poverty simulation and the lowest. A higher number represents a more equitable or “progressive” funding scheme, whereas a lower number represents a more “regressive” funding scheme. The vertical axis represents the state-level Gini coefficient, with a lower number representing a more equitable income distribution and a higher number representing greater inequality. As the data displays, a number of states performed poorly on both the state income distribution metric and the equitable distribution of school funding metric. Illinois, Vermont, North Dakota, New Hampshire, North Carolina and Nevada all displayed regressive funding schemes and high levels of statewide income inequality.

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When examining the distribution of states across both metrics, one is struck by the distribution of states in both the high inequality (regressive) funding schemes quadrant and the high-income inequality (high progressive) funding scheme quadrant. This would indicate that policy responses to the distribution of education funding have been mixed nationwide.

Since the majority of education funding is derived from local tax revenues, the impact of declining home values since the housing bubble burst during the financial collapse of 2008 has been significant. However, as the graph presented below shows, a vast majority of states that have experienced significant declines in home values also already had “regressive” education funding schemes.

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From these data, some cursory conclusions can be made concerning the role of education funding policy in attempting to mitigate economic inequalities within a state. When examining both levels of income inequality and declines in home prices over the last five years, it is evident that states that have experienced high rates of income inequality and a lagging housing market have failed to take the necessary measures to mitigate in-state disparities between high-income school districts and low-income districts. It is further apparent that as the foundation of property tax revenue continues to erode, there will be a tipping point at which the lack of local funds and already declining levels of state education funding will press some poor school districts into unprecedented conditions of austerity.

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About Jeffery Green

Jeffery Green

Jeffery Green, J.D., Ph.D. (ABD) Political Science

Jeffery is a freelance writer, researcher and consultant for technology startups and other interesting ventures.

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One thought on “Education Funding Disparity”

  1. Jeffery, just wanted to say that I am enjoying reading your articles.
    Am glad to have stumbled across them.
    Giving this ole gal much to ponder !!
    Please keep up the good work and thought provoking ideas based on facts with references.
    Looking forward to the2017 articles from u!

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