Some parents will stop at nothing to provide the best opportunities for their children. The recent college admissions scandal is shining a bright light on this, and given that many of the parents being charged and pleading guilty are (very, very) wealthy individuals, the differences in educational opportunities between wealthy and low-income families couldn’t be starker.
What do parents who don’t have that kind of cash do when the education system isn’t doing enough for their children? In K–12, they often commit something called residency fraud.
Within the public K–12 education system, parents must move to access what they deem to be quality public schools. In this case, wealthy families have an advantage, and low-income families who want the same access but may not have relocation resources sometimes resort to lying about their address to access better options.
As if we needed another sign that there’s something inherently flawed about our public education system, achievement gaps between students from high-income and low-income families have only continued to widen over time.
So why is this all happening? What about how our education system is structured is leading to this inequity?
There are lots of possible answers to that question, not the least of which is how the policymakers who set up our education systems have chosen to fund schools.
A Quick School Funding Lesson
Funding inequity was a big issue especially leading up to the 1970s, when local property taxes were a source of large funding disparities between property-wealthy and property-poor school districts. As a result, a spate of litigation spurred states to address this issue.
Since then, funding gaps in many states between property-wealthy and property-poor districts have closed considerably. Many have accomplished this by implementing equalization aid formulas, where the state sends more money to property-poor districts and less money to property-wealthy districts.
Despite state efforts to equalize school funding between property-rich and property-poor districts, it doesn’t appear those efforts have been enough.
Local school funding—generated by levying local property taxes for local schools—is still a significant source of revenue for school districts. Local revenue comprises more than 40 percent of total revenue in more than half the states in the U.S. And when where you live determines how many more resources your child will receive, inequitable access to schools that parents wish to access to meet their children’s needs still exists.
We aren’t the only ones to point this out.
Aaron Smith from the Reason Foundation has said that despite these equalization methods in place, “similar students are often provided with different levels of resources, and funding portability is diminished.” And an analysis by Matthew Chingos and Kristin Blagg at the Urban Institute demonstrates that, in most states, low-income students attend public school districts that are about as well-funded as districts where non-low-income students attend. This is after federal funds, which largely target high-need student populations, are accounted for.
If you think that students with more disadvantaged backgrounds should have access to greater funding, then this arrangement in the public education system is a worrying one.
How Can We Do Better?
The current funding system can be improved so that parents without means don’t need to face a choice between waiting for the system to improve or taking extreme measures to obtain better opportunities for their children.
One option states can consider relates to property taxes. Although local property taxes are often blamed for funding inequities across school districts, Dr. James Shuls of the University of Missouri – St. Louis explains that it is the “local” in local property taxes that is the problem.
Think about what the more affluent neighborhoods generate in local property taxes versus what the impoverished neighborhoods bring in. Without policy interventions, the rich districts end up richer, and the poor districts stay poor.
Some states, like Indiana and Michigan, have enacted funding reforms that swapped local property taxes for an increase in statewide sales tax. Other states, like Illinois and Pennsylvania, rely heavily on local dollars and have large funding disparities across school districts as a result. Pennsylvania is trying to remedy its funding system in an attempt to balance the scales across districts.
Though equalizing funding is one step in the right direction for equitably funding education, states can do so much more.
People often think about school funding as just an accounting issue. School funding is also about values, as Shuls and I discuss in this paper.
States could instead collect property taxes, or any other tax, at the state level instead of locally, and distribute funds for education to families rather than directly to schools. Families and students then become the decision-makers in an education system that, for too long, has made them passengers while putting distant, impersonal administrative workers in the driver’s seat.
If you value equal opportunity in terms of access to schooling, we can improve our system even more by implementing a unified funding system of education savings accounts (ESAs), where children and their families receive public funds that they can use on a multitude of approved educational expenses, including tuition to their public or private school of choice as well as educational services outside of schools, such as tutoring, therapies and more.
When it comes to school finance issues like funding equity, it is important to understand that revenue is only part of the equation. To achieve funding equity across districts, they should ensure that the allocation component is correct as well. It is possible for a state to have local funding comprise a relatively small piece of the pie and still create funding disparities across districts. Smith argues:
One way to achieve [funding equity] is to move away from local operating revenue and adopt a weighted-student formula that delivers dollars to schools based on student need. Short of this, states can pursue policies that maximize the shares of state and local revenue that are allocated based on students rather than property wealth and local tax policies, as most formulas do.
A unified funding system of ESAs could improve funding equity by providing the same funding to students based on need rather than residence. Allowing the ESA amount to vary based on student need will also strengthen incentives for schools to serve high-need students. And the threat of losing students would incentivize schools to improve how they serve their students and families.
This arrangement is prevalent in most, if not all, other aspects of our society, including higher education and healthcare.
Such a proposal can be a shock to some people’s system. It may even seem radical if you’ve become accustomed to the ZIP Code-based public school system most of us grew up in. Knowing that, we acknowledge the legitimate concerns about what would happen to students who remain in public schools.
Fortunately, there is a significant body of research that shows public schools generally respond positively in ways that benefit their students when they face greater competitive pressure from programs like ESAs and school vouchers. Students who remain in public schools that face those increased competitive pressures, on average, experience positive modest gains on test scores.
What’s most important to understand is that an education system with ESAs as the funding mechanism would increase educational opportunities for all families, but especially for socioeconomically disadvantaged families who face fewer quality options—the ones who can’t move or pay and don’t want to break the law by lying to get into a better school.
Until states start to think about how the fundamental organization of our school system contributes both to spending and educational inequities, Shuls noted, “We will simply continue to wrestle with the same issues that we have grappled with for decades. We will continually struggle to reconcile two incompatible ideals—local control and equity.” And a system that incentivizes families that have unequal access to educational opportunity to make hard choices for their children’s welfare will persist.