The Biggest Source of Inequity Might Be the Way We Fund Schools

If you worry about inequity in wealth and income and in policing and incarceration, you should keep digging to uncover what might be the biggest source of inequity in America–school funding. 

American education is largely a local affair including a historical dependence on local property taxes to fund schools (still over a third of average school revenue) leaving America the only developed country where students from rich families get more education funding than students from low-income families. 

The idiosyncratic reliance on local education authorities makes American education unusually inefficient–half of all K-12 employees aren’t teachers. We have a bureaucratic mess with too many rules and too many school districts. Nearly half of all districts nationally have fewer than 1,000 students. All 14,000 districts (and 7,000 charter schools) administer complicated federal and state programs. (And they’re all trying to figure out pandemic education largely on their own). 

We have an allocation problem and an efficiency problem. Both stem from the inefficient governance model we inherited. That and a lack of transparency keeps the financial and opportunity costs hidden, making it a gnarly problem to solve. 

Let’s start with allocation: education funding–and, more broadly, resource allocation– should reflect the challenges learners bring to school, not the family wealth as expressed in property tax. Changing the allocation of education funding is a complicated multi-level affair. State policy is the big driver but the decisions of local education authorities (LEA)–the school districts, charter schools, and networks where resources are ultimately allocated.  

There are eight opportunities to invent new resource allocation systems: 

1. Weighted Funding. Funding weighted on risk factors and academic gaps would provide more time and support for learners that need it in a personalized and competency-based system. Some states (like my home state of Washington) have taken steps to equalize funding but even with the addition of federal funding, it doesn’t push enough to high need learners. Despite unweighted and inequitable inputs, school districts can and should weight more of their resource allocation (and avoid inequitable staffing like 30 learners in algebra and 12 in AP Calculus). 

2. Special Needs. For students with disabilities, weights have often been assigned to the specific disability categories. On its face this may appear logical, however, “there is great diversity within these categories along with decades-old preconceived notions of the challenges these students face,” said Karla Phillips-Krivickas, KnowledgeWorks. “Funding for these students should reflect the services and supports that they need to succeed.”

3. Flexibility. Lots of well-intentioned federal and state programs come with special administrative and reporting requirements. Taken together, it makes it hard to provide integrated experiences and services that individual students need.

4. Staffing. Talent is another way most low-income learners and schools are disadvantaged. A combination of agreements drives the most talented and experienced teachers to the most affluent schools and to the least challenging assignments within schools. As a result, funding inequities within districts can be even greater than those across districts. Learners that need it most should have the benefit of great teachers. 

5. Portability. Byron Sanders, CEO of Big Thought, said, “Portable funding that follows the youth into nontraditional learning spaces would not only help these organizations that offer critical skill development, but it legitimizes the space in ways that ups the currency value for all stakeholders. It also puts the power in the young person’s hands.” 

6. Facilities. School buildings are another vestige of privilege. They are primarily funded by a levy on local property and, as a result, reflect local wealth. States could equalize funding with a weighted match. Another solution is to separate facilities from operations and provide weighted funding to all public schools that includes money for rent. 

7. Connectivity. Weighted funding would help all schools provide take home mobile devices to learners and, where community solutions don’t exist, support last-mile wi-fi solutions (hot spots, community wi-fi locations). (CRPE notes ways rural districts have been creative without much help.) 

8. Incentives. State allocations could test performance incentives but there’s not much evidence they work in education. A few performance-based funding schemes have proven successful (including the way Florida Virtual is paid for course completions). The small pay for success pilots in higher education have had mixed results. 

Sanders would like to see learner incentives built into goal attainment along learning pathways where levels of achievement (credentialed learning) could unlock opportunities including internships, stipends, and scholarships. 

With leadership from Purdue coding bootcamp Lambda, income share agreements are becoming a more widely available approach to financing postsecondary learning (particularly in tech fields) because they align the incentives of the learning and the institution. 

Invention Opportunity in Provisioning Learning

Equitable resources for all learners is one of the great invention opportunities of our time. It’s more political than technical in nature but complicated nonetheless. Solutions will require a shared problem definition and well-crafted community agreements at both state and local levels. 

Compared to other OECD countries, local education authorities in the US control a large percentage of fund distribution. States that wanted to advance more equitable funding with a larger percentage spent in the classroom could push budgets to the school level (like the Blair-era reforms in the UK which reduced the influence of the LEA and the Klein-era in NYC which pushed more autonomy to schools). 

With current data capabilities, it would be possible to push budgeting to the learner level. In the same way, SNAP funds food for families, a dynamically provisioned learning wallet for each learner could support opportunities in schools, with tutors and summer programs. ReSchool Colorado is an operating example of how funding learners could work. It underscores the importance of family advisors to identify and guide learning choices. With means testing, states could use this learning wallet concept from early learning to workforce training. 

Weighted and portable funding is controversial because it means a redistribution of spending toward low-income learners and non-traditional providers of learning experiences and a redistribution of power toward families. 

Better tools and well-equipped schools mean we don’t need 50,000 administrators running the same programs in LEAs across the country.   

If over the next five years, districts consolidated and became more agile, there is more than enough money in the U.S. system to provide high-quality learning experiences and strong supports for every learner including a boost in funding for learners needing more support.  

District consolidation doesn’t imply school closings. The explosion of microschools makes clear the demand and opportunity for thousands of new schools (including reopening schools in rural communities that lost them). We could use a third more schools and a third fewer districts.

The education invention opportunity in resource allocation requires coordinated local, state, federal action. It requires new budgeting tools, secure learner profiles, portable wallets, and strategies to certify providers. It requires a long view and a sense of mutuality. But one thing is clear, there is an opportunity to be more efficient and equitable in the way we distribute educational opportunity. 

For more see: 

• Weight Portable and Performance-based Funding 
• Why and How to Open a Microschool

To help inform and deliver new agreements, new practices and new tools Getting Smart and eduInnovation are exploring the Invention Opportunity thanks to support from the Walton Family Foundation and the Bill & Melinda Gates Foundation. The findings and conclusions contained within are those of the authors and do not necessarily reflect positions or policies of the foundations.

Steven Hodas contributed to research for this blog.

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