New Report Finds Most States Have Deprived Schools of Hundreds of Billions of Dollars Since 2016

According to the 2024 edition of the annual “The Adequacy and Fairness of State School Finance Systems” report from researchers at the Albert Shanker Institute, University of Miami, and Rutgers University, 39 states devote a smaller share of their economies to their K-12 public schools than they did in 2006, and this decrease in “fiscal effort” cost schools over $360 billion between 2016 and 2021.

Bruce Baker, a University of Miami professor and one of the report’s co-authors, describes this as a “permanent disinvestment” in K-12 public schooling. “In the decade and a half since the height of the so-called ‘Great Recession,’ most states have increased their expectations for the performance of schools, teachers, and students,” he explains, “but they have refused to make their districts whole after the disastrous cuts during that recession.”

The $360 billion shortfall represents nine percent of all state and local school funding between 2016 and 2021. But it also includes several states with enormous proportional “losses” in funding during those six years, such as Hawaii (-27.8 percent), Arizona (-27.5 percent), Indiana (-26.8 percent), Florida (-24.9 percent), Michigan (20.0 percent), and Idaho (19.9 percent). In other words, the report explains, had these states returned to their own 2006 effort levels by 2016, their total state and local funding would have been 20-28 percent higher.

“Right now everyone is concerned about the so-called ‘fiscal cliff’ coming when federal pandemic aid runs out,” says Mary Cathryn Ricker, the Executive Director of the Albert Shanker Institute, “but school funding in most states fell off a fiscal cliff 15 years ago and never got back up.”

“It is shocking that almost four out of five states still have not returned to the fiscal effort they were making to fund public schools in 2007,” responded Randi Weingarten, president of the Albert Shanker Institute Board of Directors and AFT president. “In the sixth year of releasing The Adequacy and Fairness of State School Finance Systems the evidence shows every state must commit to making funding our public schools our shared priority.”

Baker, Matthew Di Carlo of the Albert Shanker Institute, and Mark Weber of Rutgers University, the authors of the report, use a new approach to evaluate the K-12 finance systems of all 50 states and the District of Columbia. In addition to fiscal effort, the authors judge states based on statewide adequacy and equal opportunity.

The authors’ primary measure of statewide adequacy ranks states based on how many of their students attend schools in districts with funding below estimated adequate levels. They also identify “chronically below adequate” districts, which are the 20 percent of the nation’s districts in which actual funding is the furthest below adequate levels. About 60 percent of the nation’s students that are in these chronically underfunded districts are in just 10 states. Yet these states—Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, and Texas—serve only about 30 percent of the nation’s students.

“The reality is that it costs more to achieve higher educational outcomes,” notes Baker, “and we’re unlikely to see much return on our investments when we’re not really making those investments. And that goes double for low effort states like Florida, Nevada, and North Carolina, which have the economic capacity to boost revenue but are choosing not to do so.”

The report’s final measure of education finance is equal opportunity, which evaluates whether states fund their affluent districts more adequately than they do higher-poverty districts that serve the most vulnerable students. And they find that opportunity is unequal—higher-poverty districts are funded less adequately than their lower-poverty counterparts—in every single state, but the size of these “opportunity gaps” varies quite dramatically.

The largest gaps are found in states, such as Connecticut, New York, and Massachusetts, where statewide adequacy is relatively high, but where wealthier districts contribute copious amounts of local (property tax) revenue to their schools, creating chasmic gaps in adequacy between the “haves” and “have nots.” The authors recommend that states should narrow these adequacy gaps by targeting additional state aid to higher-poverty districts with less capacity to raise revenue locally.

The opportunity gaps are not solely determined by economics but also by race and ethnicity. The report finds African American students are twice as likely as white students to be in districts with funding below estimated adequate levels, and 3.5 times more likely to be in “chronically underfunded” districts. The discrepancies between Hispanic and white students are smaller but still large.

According to Di Carlo, “states with large opportunity gaps are essentially inequality factories, with affluent districts funded to achieve higher student outcomes than lower-income districts, year after year. We cannot expect to close achievement gaps when states’ systems are designed to reproduce them.”

The authors conclude with a set of general recommendations for improving the design of states’ systems, including the need for states to apply more rigorous methods of setting district funding targets, and increasing revenue (particularly state aid) to bring all districts up to those targets minus a “fair share” contribution by each district. They also propose that the federal government step up to help states that, due to high poverty and small economies, cannot meet their students’ needs even when their effort levels are high.

“The Adequacy and Fairness of State School Finance Systems” is an annual report by researchers from the Albert Shanker Institute, University of Miami School of Education and Human Development, and Rutgers University Graduate School of Education. The report is also accompanied by 51 one-page profiles that summarize the performance of the K-12 finance systems of each state and the District of Columbia.