You are here

News Update

New Study Finds Inequities in State Education Funding Formulas

New state-by-state school finance formula database may offer solutions to fractured systems.

In 2004, Deborah Verstegen, professor of education finance, policy and leadership at the College of Education at the University of Reno, wanted to create a vast library of data that, until now, didn’t exist: state-by-state school finance formula figures. “The search for the best model to use in funding education is a perennial concern and interest,” she says.

After years of research and communication with each state’s chief education officer, Verstegen’s findings were released on Nov. 3. The study showed inequalities across states due to the way they pay for schools, with urban districts often being the least cover

Getting Their Fair Share

Forty-five states use, in at least some form, the foundation program, a structure developed in the 1920s. The foundation program essentially ensures that districts within a state receive equal access to revenue per student or teacher.

“Because of these tough economic times, what’s striking to me is that states are trying to base the amount of money they provide to schools on some rational target,” says Verstegen. “Before it was ‘How much is available?’ Now it’s ‘How much is enough?’”

Other models include full state funding, which Hawaii follows, a flat grant, seen in North Carolina, and district power equalizing (DPE) systems, in which states match the ability of local districts to raise revenue rather than setting a minimum threshold of state support.

Connecticut is one of three states following the DPE model. In August, Gov. Dannel Malloy created the Education Cost Sharing Task Force to evaluate its effectiveness.

“The education cost share formula is 30 years old in various forms,” says Philip Streifer, superintendent of Bristol (Conn.) Public Schools and president of the Connecticut Coalition for Justice in Education Funding, a nonprofit organization seeking equitable funding for K12 schools in Connecticut. “Although the formula has been modified here and there, the fundamental problem is schools have never been properly funded by the state,” Streifer says. “This is due to financial neglect that stems from a state school funding that is broken and based on an arbitrarily derived formula.”

Database for Legislators

Verstegen is hoping her study will serve as a database for legislators looking to reform their state’s education funding models. In addition to funding disparities, Verstegen was “surprised” to see that states still aren’t doing much to pay for school buildings and infrastructure.

“That money is almost totally borne by the school district,” says Verstegen. “It should be a state responsibility, but the major cost is paid for by localities.” Verstegen’s findings can be found in Financing Education in a Climate of Change, written with Vern Brimley Jr. and Rulon R. Garfield and available online through the Education Policy Analysis Archives (