The Future of K–12 Funding - EdChoice
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Research

  • Jan 29 2019

The Future of K–12 Funding

By Martin Lueken, Ph.D., James Shuls

In The Future of K–12 Funding, experts in education finance Marty Lueken and James Shuls envision a new, practical way for policymakers to improve how states fund K–12 public education. Not only did they identify the three core values that should drive policymakers’ decisions—equity, efficiency and opportunity—but also they delved deeper into three states’ K–12 funding formulas for added context.

To listen to a podcast with the report’s authors, click here.

What Will I Learn? Download Report

In this report, you will learn:

  • 1

    Policymakers should not conflate funding public education and funding public schools.

    It is important to begin thinking about how states can foster a robust public education system where school choice is a feature, not an afterthought. States can better organize their funding systems to create a coherent system of public education that allows students to choose among conventional district public schools, public charter schools, private schools and educational services outside of school walls. To do this, policymakers need to give thought to designing funding systems that fund students directly and not schools themselves—especially when courts mandate a new funding system.
  • 2

    Policymakers should align public education funding formulas with their constituents’ values.

    Equity, efficiency and educational opportunity are three guiding principles that state lawmakers should consider as they develop or change state funding systems in order to pursue ideal education finance systems. There is not a single state school funding system, yet, that has achieved all these goals at once. Ironically, in past attempts to promote educational opportunity for students from disadvantaged backgrounds, states have passed school choice programs that are funded with taxpayer money at a fraction of the level of funding that participating students’ school districts receive to educate them.
  • 3

    Policymakers can correct inequitable funding across districts and expand educational opportunities for families.

    Though property taxes are typically blamed for producing funding inequities among school districts, it is really the “local” in local property taxes that generates the different levels of income for districts. States could circumvent this issue by collecting property taxes at the state level and distributing them on a student-by-student basis via education savings accounts (ESAs) through their funding formula. A universal ESA system such as this would allow for equity and expanded educational opportunity because: A) students receive need-based rather than residence-based funding, and B) their families may use those funds at any approved educational setting, not just a ZIP Code-assigned public district school. ESAs are more efficient than the current funding system because instead of incentivizing families to choose only their zoned district schools (because it’s the only “free” option), they allow families the freedom to match their children to the customized learning environments that fit them best.
  • 4

    Policymakers should consider the constitutionality of such changes as well as how they would affect school operations.

    It is critical for policymakers to be careful to make sure any proposed program conforms to constitutional directives on funding, if any. Nevada’s ESA program provides a cautionary tale. Also, the authors of this report interviewed 13 public and private school officials directly in charge of finance to get a better understanding of what changes schools might face with such funding reforms. Generally, we found school officials recognize that most operating costs in education are neither completely fixed nor completely variable, and they agree that students have different educational needs. As such, a thoughtfully drafted student-based funding system should support public schools in times of declining enrollment but also provide funds commensurate with the varying needs of students.

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