Is School Funding Fair? A National Report Card Executive Summary The National Report Card is a critique of state school funding systems and the extent to which these systems ensure equality of educational opportunity for all children, regardless of background, family income, place of residence or school. The report makes the assumption that “fair” school funding is defined as “a state finance system that ensures equal educational opportunity by providing a sufficient level of funding distributed to districts within the state to account for additional needs generated by student poverty.” The Fairness Principles The National Report Card evaluation is based on a number of assumptions: • A fair funding system provides varied levels of funding according to student need. • Context matters: a valid comparison of state funding systems must take into account a number of factors that influence educational costs, such as geography, regional labor markets, district size, population density, and various student characteristics. • A fair funding system is “progressive” with respect to concentrated student poverty. In other words, funding should increase relative to the level of concentrated student poverty. • Student poverty is the most critical variable affecting funding levels and can serve as a proxy for other measures of disadvantage, including achievement gaps, racial composition, English Language Learners, and student mobility. • A sufficient overall level of funding is crucial. Without sufficient resources as the starting point, the distribution of funding relative to poverty is rendered somewhat inconsequential. The Fairness Measures All 50 states are evaluated on the basis of four separate, but interrelated, fairness measures: • Funding Level: Using figures adjusted to account for a variety of interstate differences, this measure allows for a comparison of the average state and local revenue per pupil across states. States are ranked from the highest to lowest per pupil funding. • Funding Distribution: This measure shows whether a state provides more or less funding to schools based on their poverty concentration. States are

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evaluated as “regressive”, “progressive”, or “flat” and are given letter grades that correspond to their relative position compared to other states. Effort: This measures differences in state spending relative to the state’s fiscal capacity. States are ranked according to the ratio of state spending on education to per-capita gross domestic product. Coverage: This measures the proportion of school-age children attending the state’s public schools and also addresses the income disparity between families using private, rather than public, schools. States are ranked according to both the proportion of children in public schools and the income ratio of private and public school families.

Summary of Findings The table below provides state results for all four measures. Consideration should be given to each of the four measures, which, when taken together, provide a complex picture of state finance systems. While how states rank on particular indicators can be important, it is critical to understand how the indicators interact and create unique conditions of funding fairness or unfairness. Depending on a state’s performance on the combination of indicators, the relative success of one or two indicators may be misleading. For example, a state with an insufficient funding level is not fairly serving its students, even if the funding is distributed with some progressivity. Likewise, a high state effort grade is of little consolation if it still fails to generate a sufficient funding level. It is the combination of results on all of the indicators that give the most accurate picture of school funding fairness in any given state. Highlights General • Six states are positioned relatively well on all four measures: Connecticut, Iowa, Massachusetts, New Jersey, Vermont, and Wyoming. • Most states have at least one area in which to improve, and many do poorly on the most important indicators from a state policy perspective: State Effort and Funding Distribution. • Four states receive below-average ratings on each of the four indicators: Illinois, Louisiana, Missouri, and North Carolina. Funding Level • The national average funding level, adjusted to account for student poverty, regional wage variation, economies of scale, and population density, is $10,132 per pupil. • Higher funded states predominate in the Northeast (New Jersey, Vermont, New York, Connecticut and Massachusetts), though Wyoming, District of Columbia, Alaska and Hawaii also have funding levels that exceed the national average by at least 40%.

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The lowest funded states predominate in the South and West – Tennessee, Oklahoma, Idaho, Utah, Mississippi, Arizona and Arkansas have the lowest adjusted state and local revenues per pupil. The disparity between the highest and lowest funded states is vast – using our nationally adjusted figures, a student in Tennessee receives about 40% of the funding of a comparable student in Wyoming.

Funding Distribution • A number of states rank as progressive, including Utah, New Jersey, Minnesota, and Ohio. For example, in Utah a district with 30% students in poverty can be expected to receive over 50% more funding per pupil than a district with no student poverty. • Some states have a regressive funding system, meaning districts with higher poverty rates actually receive less funding than more well-off districts. These include New Hampshire, Illinois, New York, and Pennsylvania. In New Hampshire, a district with a 30% poverty rate receives about two-thirds the amount of funding per pupil than a district with no student poverty. Effort • Delaware, South Dakota, Louisiana and Tennessee allocate the lowest percentage of their economic activity to education (.024 to .028). • Maine, New Jersey and Vermont allocate the greatest share to education (.048 to .063). • The resources available to schools are a function of both state effort and state wealth. A state may exert above average effort, but if it has low wealth, it may still have low funding levels (e.g., Mississippi). A state with high wealth may need to exert little effort to generate relatively high funding levels (e.g., Delaware). Coverage • On average, about 87% of students attend public school, and the household income of private school students is two-thirds higher than the household income of public school students. • In Louisiana, Delaware, and the District of Columbia about 1 in 5 students does not attend public schools, and those students come from significantly higher income households. Private school families have incomes that are three and a half times those of public school families in Washington, D.C. Improving Funding Fairness The goal of the National Report Card is to provide a deeper understanding of the condition of state finance systems across the county. The results of this evaluation can be used by stakeholders, community leaders, elected officials, and concerned citizens working to reform state finance systems. A more equitable funding system throughout the 50 states will ensure high quality educational opportunities for all of the nation’s students.

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The National Report Card Funding Distribution Grade

Effort Grade

Alabama

D

C

33

38

Alaska

--

D

6

5

Arizona

C

F

46

6

Arkansas

C

B

45

30

California

C

D

31

32

Colorado

D

F

35

12

Connecticut

C

C

8

25

Delaware

D

F

10

50

District of Columbia

--

--

3

51

Florida

D

C

22

46

Georgia

C

B

24

39

Hawaii

--

A

7

48

Idaho

D

D

49

4

Illinois

F

D

29

33

Indiana

C

C

27

29

Iowa

C

C

19

11

Kansas

D

B

20

19

Kentucky

C

C

36

41

Louisiana

D

F

30

49

Maine

D

A

14

3

Maryland

D

B

13

47

Massachusetts

B

C

9

22

Michigan

D

A

23

16

Minnesota

A

D

15

20

Mississippi

C

B

47

40

Missouri

D

D

43

44

Montana

B

C

38

7

Nebraska

C

D

25

24

Nevada

F

F

39

15

New Hampshire

F

A

18

10

New Jersey

A

A

2

21

New Mexico

C

C

34

18

New York

D

A

5

42

North Carolina

D

F

44

31

North Dakota

D

F

40

14

Ohio

A

B

17

36

State

Funding Level Rank

Coverage Rank

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Oklahoma

C

F

50

23

Oregon

C

F

37

17

Pennsylvania

D

B

12

43

Rhode Island

C

B

11

37

South Carolina

C

A

28

34

South Dakota

B

F

41

13

Tennessee

C

F

51

45

Texas

C

D

42

26

Utah

A

F

48

2

Vermont

C

A

4

9

Virginia

D

D

21

28

Washington

C

F

32

27

West Virginia

C

A

26

8

Wisconsin

C

B

16

35

Wyoming

C

A

1

1

Note: The National Report Card is based on three years of the most recent available data, from 2005 to 2007. While this report was in production, the 2008 school financial data was released. An updated analysis of the fairness profiles is available at www.schoolfundingfairness.org. The updated fairness profiles are largely consistent with the published findings.