The Need to Address School Financing

Children fall in love with learning when they can touch the relevance.

Education is one of the strongest predictors of lifetime earnings. College graduates earn more than high school graduates, and high school graduates earn more than high school dropouts. Parents are as keenly aware of the importance of education now as they were a century ago. The campaign for free secondary education was led by parents who saw that children with a high school education were getting the best jobs.¹ In the late 20th century, the charter school movement was another parent-led effort to improve children’s chances of getting ahead.

Government’s responsibility should be to help reduce inequalities—to level the playing field for children starting their lives in poverty. State and local financing makes up 90 percent of spending on K-12 education. Because federal funding accounts for just 10 percent, it’s unrealistic to expect it to erase inequalities that start at the district level, but federal policies can still have profound effects on what happens in classrooms across the country. No Child Left Behind (NCLB), for example, the signature education policy initiative of the Bush administration, directed all schools to set high standards and establish accountability for student outcomes. High standards and accountability are absolutely necessary to improving educational outcomes, but NCLB didn’t address the financing equation that would have allowed disadvantaged students a real shot at catching up to their peers in better-off neighborhoods.

Richard Nixon was the last president to consider reforming K-12 education financing. In 1972, a presidential commission recommended increasing the federal share of the financing to between 25 and 30 percent, paid for by a national tax.² At the time, there was little reason yet to be concerned about U.S. school performance versus that of other countries, so the suggestions of the commission were ignored.

In some ways, K-12 financing is also a housing issue. Where families live has a great impact on their quality of life, including the quality of the schools. It’s why competition is so fierce to own homes in neighborhoods with good schools. The rapidly rising home prices during the housing bubble only exacerbated educational inequalities. Housing values aren’t the sole determinant of a quality education, but they weigh all too heavily in the school-financing equation.

The federal law meant to address school financing inequalities, called Title 1, does a poor job of correcting them because of the way it is structured. Federal funding is tied directly to state and local funding levels. “At every level of government,” say Kevin Carey and Marguerite Roza of the Center on Reinventing Public Education, “policymakers give more resources to students who have more resources, and less to those who have less.”³

States and localities that spend more money generally can do so because they are wealthy to start with. Mississippi has a child poverty rate of 30 percent compared to 11 percent in Connecticut; despite having 50,000 fewer students than Connecticut, Mississippi has nearly 100,000 more students receiving free and reduced-price meals through the National School Lunch Program.⁴ Connecticut, a very wealthy state, spends 88 percent more per student on education than Mississippi, one of the very poorest states.⁵ Living costs are higher in Connecticut, so it also costs more to educate a child there, but not in the ballpark of 88 percent more—according to the Department of Education, the correct figure for 2005-2006 was 32 percent more.⁶ Perhaps children in Connecticut would have scored higher on standardized tests in any case, but the additional state and federal resources spent on their education gave them an extra advantage.

Spending more money on underperforming schools without a plan to change the dynamics inside classrooms hasn’t worked, so we know that other changes must be made as well. Research shows that good teachers make an enormous difference in student outcomes.⁷ Poor school districts cannot pay the best teachers a competitive salary, creating little incentive for them to work in disadvantaged schools. This is an area where the federal government can improve the situation by rewarding excellent teachers who are willing to work in disadvantaged school districts—providing them with salaries that compensate them for the challenges they face and offering generous performance bonuses to those who achieve excellent results.

The National School Lunch Program provides school meals that are either free or reduced-price to students whose household income falls below a certain level. Schools are reimbursed for the cost of providing the meals. School lunch may not be delicious, but it does have to meet minimum nutrition requirements for a healthy meal. Providing children with adequate nutrition is not the same as providing them with adequate education, but the National School Lunch Program provides a window into where resources are needed the most. The schools that are the most disadvantaged—meaning those with the highest incidence of violence, most poorly-maintained facilities, least- experienced teachers, and fewest number of advanced placement classes—are also where the most students receive free or reduced- price lunch.⁸ Knowing which schools need to be fixed isn’t difficult. All you have to do is follow the food.

Increase in Wealth if All Heads of Households were High School Graduates

Issues