School Funding Is Complicated — So Let’s Do Something About It

K-12

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    One question I repeatedly get asked is, “Why are state school funding formulas so complicated?” My first answer to that question is that we need complex funding formulas to keep people like me employed. My second (and real) answer is that over time, state policymakers have made a series of decisions about how they want to fund public education, and it’s these decisions that have created the complexity in the system.

    Complexity Is Sort of a Necessity

    So how is it that state formulas became so complex? Well, it didn’t happen overnight. States first provided school districts with a flat amount of funding for each student. For example, states provided an amount — let’s say $300 per student — to all districts in the state regardless of their wealth or needs. This is a simple and easy-to-understand way of distributing funding, but it’s not really the best way to do it. Over time policymakers realized that they needed to adjust state education funding to take into account the unique needs of students and districts, including:

    • District wealth: Most states target additional funding to low-wealth districts — usually defined as taxable property value per pupil — but states have used other methods to measure a district’s wealth (which, by the way, adds even greater complexity).
    • Student needs: States have adjusted their formulas to provide additional funding to higher-cost students, including those who are at risk, English-language learners, gifted and talented, or in special education.
    • District size and location: Some states provide additional funding to small or isolated school districts, while others provide additional funding to large or urban school districts.
    • Cost of doing business: Funding formulas are adjusted in some states to take into account the cost of doing business in different parts of a state. (We tend to refer to this as a “regional cost adjustment.”)

    Each one of these funding adjustments has helped to better target state dollars toward those students/districts that need it the most, but each one also brings added complexity to a state’s funding system.

    So What Can States Do?

    There are steps that states can take that would allow the public to better understand these formulas:

    Work to clean up your state’s formula. Almost all states have funding programs outside of the primary formula; we refer to this type of funding as “categorical funding.” A 2013 study from the Center for American Progress found that, on average, states made use of 16 different categorical programs, in addition to their primary formula, to fund schools. Before adopting its new funding formula, California used 50 different categorical programs to fund schools. When it adopted its new funding formula, it dramatically reduced this number — which helped to streamline the funding system and make it easier for the public to understand.

    Create an overview of your formula (in plain English). Some states, like Florida and Minnesota, have created (relatively) easy-to-read summaries of their school funding systems. These write-ups allow both education professionals and the public to better understand how the funding system works.

    Allow public access to school funding tools. For various reasons, states have been reluctant to allow the public to access tools that would allow it to determine how changes to a formula could impact school districts. However, some states, like Tennessee, have made web-based school funding tools available to the public, which helps to eliminate the mystery around school funding formulas and make them a little less opaque.

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    Principal Contractor at Education Commission of the States | mgriffith@ecs.org

    Mike's policy expertise falls in the areas of K-12 and postsecondary school finance. Prior to Education Commission of the States, Mike worked with the consulting firm Augenblick & Myers and the Michigan State Senate. Mike is an expert resource to national news media and has been quoted more than 200 times by such outlets as CNN, Education Week, The London Times, NBC Nightly News, National Public Radio, The New York Times, The News Hour with Jim Lehrer and USA Today.

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