School Funding

Sources of Funding

Unlike most industrialized nations, the United States relies heavily on local property taxes to fund its public schools. These revenues, which account for about 45 percent of total school funding, create significant disparities among school districts because local property values vary so much. Even when property-poor communities tax themselves at higher rates than property-rich communities, as is often the case, they cannot raise comparable revenues because property values are so much lower.

State revenues are another significant source of funding for public schools. Because budget priorities and tax policies differ from state to state, the size of the state share varies considerably, but on average, it is about 47 percent of the total. Some states allocate funds in such a way as to reduce the disparities created by local property tax revenues, but many do not. A report by The Education Trust, a research and advocacy organization, found that in the six years it has been tracking the funding gap, the disparity between high- and low-poverty districts has remained unchanged. In 2003, in the nation as a whole, low-poverty school districts received approximately $900 more in state and local funds than high-poverty districts. (High-poverty districts were defined as the 25 percent of districts with the highest levels of poverty, and low-poverty districts as the 25 percent with the lowest levels.)

The third source of funding for public schools, federal revenues, comprises only about 8 percent of the total. These revenues come primarily through Title I of the Elementary and Secondary Education Act (reauthorized most recently as the No Child Left Behind Act). Although Title I funds often are used to bring spending in schools in poor neighborhoods up to par with spending in other neighborhoods, some funding is diverted to schools in wealthier neighborhoods.

Widespread Disparities

How large are disparities in school funding? In its 2006 Quality Counts report, Education Week reported that in 2003, average per-pupil spending (adjusted for regional cost differences) ranged from a high of $11,031 in Washington, D.C., to a low of $5,087 in Utah. Gaps among districts within states and among schools within districts exacerbate the state-to-state differences.

Funding disparities between large, predominantly minority city districts and nearby predominantly White suburban districts are particularly significant. Illinois Board of Education data for 2003, for example, show [Page 674]per-pupil spending of $8,482 in Chicago (87 percent minority), but $17,291 in nearby suburban Highland Park (10 percent minority). Similar patterns can be found in the Philadelphia, Detroit, Milwaukee, Boston, and New York City areas.

Recent research has uncovered “hidden” disparities among schools within a single district resulting from the way teacher salaries are factored into district budgets. If one or more schools in a district have a disproportionate share of the highest paid teachers, this does not necessarily show up in districtwide budget reports. The highest paid teachers commonly are found in schools with the lowest poverty levels.

...