New York sends statewide tax dollars to wealthy communities with low property
tax rates. Texas drains resources from school districts educating high-need
children and supports districts with lower student need. North Carolina commits
both of these follies, failing to provide "either taxpayer or student equity" in
In their report, "Stealth
Inequities in School Funding," Bruce Baker and Sean Corcoran explain
how state funding laws can undermine opportunity and fairness. After an introduction
the issues, the report provides real-world examples that typify stealth inequities
in many states.
The report begins with a "primer" on state school funding systems and reminds
us of two crucial goals of modern school funding systems:
- to target funding to address differences in student need, because students
with higher needs cost more to educate;
- to target funding to school districts with lower property values because
they have less "fiscal capacity," that is, less ability to generate local
The first goal acknowledges the fact that higher poverty school districts
require more funding for programs and services that can soften the impacts
of poverty on children and provide them with the opportunity to succeed. Similarly,
students learning English and those with disabilities need programs that address
their needs. The second goal recognizes that lower wealth communities, although
they routinely tax local property at higher rates, are unable to generate sufficient
revenues for their schools.
The "Stealth Inequities" report points out that many state school funding
systems---which control both state and local funding---try to distribute funding
to address both of these needs, at least to some extent. The authors provide
brief examples of the few states that succeed in this endeavor, such as New
Jersey, where state funding overcomes low fiscal capacity and high student
needs in the state's highest poverty school districts.
But Baker and Corcoran note that most states need to change their funding
formulas to ensure that all schools have adequate educational resources. That's
necessary for students to be able to reach state academic learning standards,
graduate from high school, and become contributing members of society.
After the introduction, the report shifts to its primary focus, examining
aspects of some "regressive" state funding systems. Regressive systems provide
less funding to school districts with low property wealth and high student
need. In regressive states, the school districts and children who need the
most get the least. Unfortunately, many state systems are regressive.
Basic Guidelines for Better Funding Systems
The report concludes that "basic guidelines are in order for directing state
school finance deliberations and creating federal pressure on states to mitigate
the vast stealth inequities in school funding." For example, states need to
understand that tax relief to property-rich communities promotes inequity and
encourages inefficiency in these high spending districts.
The report also urges federal agencies to create pressure for change in those
states, such as North Carolina, that make little or no attempt to operate a
school finance formula that follows basic principles of equalization and needs-based
targeting. For those states that do have equalization formulas, they "should
run as large a share of state aid as possible" through those formulas because
outside-the-formula funding is "among the most common drivers of stealth inequity."
"Certainly," the authors advise, "when states are looking to cut budgets ...
, they should refrain from delivering those cuts through the more equitable
aid programs while protecting the inequitable ones."
Finally, the report notes that education is lauded as "a key to unlocking
the American Dream." But, it argues that "too many children ... are denied
access to high-quality education because they attend schools that are underfunded
and under-resourced. ... too often the schools serving students with the greatest
needs receive the fewest resources."