Federal, state, and local policies designed to distribute education funds systematically provide more money to higher-income students and wealthier schools.

This is the startling conclusion of School Funding's Tragic Flaw, a new report from the University of Washington's Center on Reinventing Public Education (CRPE) and Education Sector.

"At every level of government—federal, state, and local—policymakers give more resources to students who have more resources, and less to those who have less," states the report. "These funding disparities accumulate as they cascade through multiple layers of government, with the end result being massive disparities between otherwise similar schools."

To illustrate how this three-layered K–12 funding benefits students and schools that are better off, authors Kevin Carey and Marguerite Roza examine two schools that from the outside appear the same but inside are quite different: Cameron Elementary School in Fairfax County, Virginia, and Ponderosa Elementary School in Cumberland County, North Carolina.

Both schools educate a large number of low-income students. Yet, because of a number of circumstances, federal, state, and local policies play out such that Cameron has more than twice the money per pupil than Ponderosa, $14,040 vs. $6,773. 

• Federal policy: The Title I program, which provides money to school districts with high concentrations of poor students, contributes to the funding disparity problem. Title I allocations are dependent upon how much states and districts spend. States and districts with more money spend more money, so they get more federal dollars. States and districts that are poorer and, therefore, have less money to spend, get fewer federal dollars, penalizing poorer states.
• State policy: Many states have adopted policies—some prompted by lawsuits—to equalize funding between richer and poorer school districts. However, laws allowing local districts to augment state funding with local property tax levies often mean those districts with higher property wealth wind up with more money. Also, when state funds are distributed according to staffing reimbursement formulas, wealthier districts that spend more typically benefit.
• Local policy: Districts make decisions that determine how funding is distributed among individual schools, especially around budgeting for teachers. When teachers are allowed to choose where they work, they tend to go to lower-poverty schools where working conditions may be better. High-poverty schools typically have less experienced teachers and higher turnover rates, so the average teacher salary is usually much lower in those schools, resulting in significant per-student funding disparities between schools within districts.

The report offers a series of policy ideas to help remedy the problem of funding disparity at the three levels of government. Fundamentally, federal and state policies should continue to target poor students and poor school districts but use inverse-funding formulas.

"By perpetuating school finance systems that treat children from different districts so differently—by shackling students to the economic circumstances into which they were born—states are undermining the egalitarian goals of public education and new performance imperatives of NCLB. At the very least, combined state and local funding per student should be equal among districts within each state."

Among the reforms recommended for the local level, the report says, districts "…should allocate a standard amount of money per student to each school."

This study was funded by the Spencer Foundation. It can also be found on the Center on Reinventing Public Education Web site.

Read the full report: School Funding's Tragic Flaw (pdf file).