School finance equalization originated as a tax reform, and it empowered state governments to address the problem of interdistrict funding disparities. States finance and administer a tax effort equalization policy so that high-need local school districts with weak tax bases and high tax rates can operate at levels similar to those of more affluent school districts. Such a scheme equalizes per-pupil expenditure levels. The goal of equalizing tax capacity differences across school districts is known as equalization, and it is frequently used to establish horizontal equity across school districts.

Along with tax effort equalization, school finance equalization can sometimes allocate state resources to school districts to meet the needs of groups of students with conditions that can impair learning, such as limited English proficiency or physical ...