Inequalities in Public School District Revenues / Executive Summary
Executive Summary
Because public education is the largest public entitlement received by the nation's children, is recognized as the primary vehicle for social and economic mobility, and is widely acknowledged as essential to the political and economic well being of the country, there has long been considerable interest in the amounts of revenues allocated for public education services. Questions relating to how much is received, by whom, and for what purpose have long been at the forefront of local, state, and national public policy debates. In his 1997 State of the Union address, President Clinton identified his "number-one priority for the next four years" as ensuring that "all Americans have the best education in the world." Questions about whether public education funds are being fairly allocated (equity) and are sufficient for their specified purpose (adequacy) are being contested and debated by legislative and judicial bodies across the nation and in the states on a regular and ongoing basis.
The Purpose of This Report
This report examines variations between school districts and across states in the quantities of the various types of revenues received for educational programs and services. It builds on some of the analysis techniques introduced in an earlier NCES publication,
Disparities in Public School District Spending (1995). While that report focused primarily on public education expenditures for the 1989-90 school year, this report provides detailed information about how much money is received through alternative funding sources at the federal, state, and local levels for different types of students, districts, and communities
for the 1991-92 school year.
1 Many of these funding sources are categorical in nature, that is, generated for specific reasons or designated for such specific purpose as providing supplemental services to special populations of students. Other revenues, general or non-categorical in nature, are allocated for general education purposes.
These revenue measures are matched to important district characteristics such as the percentage of children in poverty, the percentage of minority children, and wealth. In addition, revenues are expressed in adjusted terms to allow for resource cost variations in providing education services across the state, and to allow for variations in the number of students with supplemental educational needs.
Given the shared responsibility for funding public education across federal, state, and local levels of government and the diversity of funding sources at these three levels, it is not surprising that there are differences in the amounts of revenue allocated in support of public education. However, there has been considerable debate on how vast these differences can be and when they are justified. Clearly, there are implications for the strongly held American value of equal educational opportunity. The courts, education policymakers, and the finance research community generally find that some variation in funding levels are acceptable, and may be fully justified by district cost differentials. However, they have struggled with the degree to which, and under what circumstances, these differences are acceptable. A better understanding of the relationship between the varying amounts of funding from different levels of government by type of school district and student provides an important basis for assessing the policy significance of these differences.
All states provide categorical aid for supplemental programs to school districts, as well as general funding aid. Special education programs receive supplemental funding in all states, while such programs as limited English proficiency and compensatory education receive supplemental funding in some states. All federal funding sources for public education are associated with some special purpose. However, traditional equity analyses have generally excluded categorical funds, focusing only on general education revenues. In contrast, the analyses presented in this report examines the overall funding received by different types of students, school districts, and communities.
This allows the reader to assess how much is received in total revenues and the extent to which categorical revenues really serve as a supplement to base or general revenues for different types of districts and students. In addition, the report shows the amount of categorical revenues received in relation to total student enrollment in the various types of districts, as well as in terms of the target population for whom the categorical program is intended to serve. For example, students in poverty are considered to be the target population for the federal Chapter 1 program, limited English proficient (LEP) students for bilingual programs, and special education students for special education funding programs.
The report addresses three questions fundamental to public education fiscal policy:
- How do general, categorical, and total revenues available for public education vary for different types of school districts and communities?
- How does the level of support from the most predominant of the individual state and federal public education revenue streams vary for different types of school districts and communities when expressed in terms of an overall per student basis, as well as a per target student basis?
- How great are differences in public education revenues in school districts within and across states?
Data Sources and Procedures
This report addresses the school finance policy questions above through the analysis of school district revenue data from the 1992 Survey of Local Government Finances-School Systems (F-33). All of the public school districts in the nation are represented in this data collection, although only "regular" school districts are included in the analysis (for example, special education districts are excluded). To simplify the presentation, unified, elementary, and secondary school districts are analyzed together, although this leads to some concerns about masking cost differentials across these three types of districts.
To increase policy relevance, fiscal data are matched to other databases that provide more descriptive information about the districts and the communities in which they are located. These other data sources are the nonfiscal data from the Common Core of Data (CCD) of the 1991-1992 school year and the 1990 data collected by the U.S. Bureau of the Census mapped by school district. The resulting data set enables the examination of public education revenues for public school districts across the nation, as well as the comparison of these allocations across a full set of student, district, and community characteristics.2
The revenue data presented in this report are presented in their actual, resource-cost adjusted, pupil-need adjusted, and cost- and need-adjusted forms. Actual quantities reflect the resource amounts actually reported for individual districts by the state education agency. Resource-cost-adjusted amounts reflect dollar amounts adjusted for education cost variations in different localities. Student-need-adjusted quantities are derived from a set of adjustments that account for differing compositions of student needs within school districts. Resource-cost and student-need-adjusted quantities combine both of these types of adjustments.
Research questions are addressed through the following data analyses:
- Comparisons of the amounts of revenues (individual detailed revenues, as well as
total revenues) per student in different types of students, districts, and communities;
- Comparisons of the amounts of individual categorical revenues received by different types of students, districts, and communities, as reported on a per student and a per target student basis; and
- Comparison of the variation in total education revenues per student, actual and adjusted for cost and need variations across districts, within each of the 50 states.
Data from the first approach is presented in the form of cross-tabulations of average values. For example, the relationship between actual, cost-adjusted, need-adjusted, and cost- and need-adjusted revenues per student and the percentage of minority students is shown.
The importance of these adjustments to a more complete understanding of the relationships among the variables presented in this report is illustrated in table A, extracted from the main body of the report. It shows the differing results that can be obtained through the use of resource-cost and pupil-need adjustments. The general revenue data (the top grouping) in this table show a negative relationship between the percentage of students in poverty and general revenues per student (the higher the poverty the lower the general revenues per student). In actual terms (column 3), the difference between the lowest and highest poverty categories is $1,362 ($5,555 minus $4,193). When these revenues are cost-adjusted (column 4), the difference between these two poverty categories falls to $1,046 ($5,196 minus $4,150), suggesting that the lowest poverty districts are often located in higher cost areas. With just a pupil need-adjustment (column 5), the average revenues per student are uniformly reduced because of the inflated student count produced by this adjustment. However, the difference between the lowest and highest poverty categories is once again similar to the difference in actual terms at $1,374 ($4,814 minus $3,440). Combining the cost- and need-adjustments (column 6), general revenues across all categories of poverty continue to be reduced as a result of the need adjustment, with the difference between the lowest and highest poverty categories of $1,098 ($4,505 minus $3,407) approximating that found in the cost adjusted only column.
Revenues by target student is the second analytical approach. This approach provides a comparison of the average categorical revenues per type of student that a particular federal or state education program is intended to benefit. A "target" student is defined as the student for whom the categorical funds are intend. For example, since state compensatory education programs are intended to benefit students living in poverty, the analysis of this categorical program per target student is derived by dividing the total state compensatory education revenues of the district by the estimated number of students in poverty in the district.
The third set of analytical procedures compares the variation in quantities of total revenues per student across states. Relative variation or dispersion in education revenues can be measured in a variety of ways. In this report, the variation in total revenues per student is depicted by showing the differences in the values at the 5th, 25th, 50th, 75th, and 95th percentiles for each state and through a variety of classic disparity measures.
Summary of Findings
How do general, categorical, and total revenues available for public education vary for different types of school districts and communities?
- The lowest poverty and lowest percent minority districts have substantially more actual general education revenues than their higher poverty and percent minority counterparts.
- In terms of actual categorical education revenues, the opposite of the trends noted above are observed. That is, the highest poverty and highest percent minority districts receive more categorical aid than their lower poverty and percent minority counterparts.
How does the level of support from the most predominant of the individual state and federal public education revenue streams vary for different types of school districts and communities when expressed in terms of an overall per student basis, as well as a per target student basis?
- For Chapter 1 (renamed Title I in the 1994 reauthorization of the Elementary and Secondary Education Act), the nation's largest federal public education program by far, revenues per target student are greatest in the lowest, as well as in the highest, poverty districts. This is an important finding, because students in poverty is a primary target population for this program.
- Comparable results are found for the state counterparts to the federal Chapter 1 program. Overall, in actual terms, state compensatory programs allocate nearly twice as much funding per target student in districts with the lowest percentage of students in poverty than in all other districts.
How great are differences in public education revenues in school districts within and across states as expressed in terms of actual, as well as resource-cost and student-need-adjusted dollars?
- Findings from this report illustrate the relative importance of concerns related to interstate, as well as intrastate equity from the perspective of the child. For example, although New York is one of the lowest ranking states in terms of intrastate equity, students at the lowest levels of revenue in that state (i.e., at the 5th percentile of district funding), receive more than the median student (i.e., at the 50th percentile of district funding) in 45 of the 50 states. Thus, children in low equity, but high revenue states, such as New York and Vermont, appear to be much better off in terms of the quantities of educational services received than those in highly equitable, but relatively low revenue states such as Kentucky.
- Differences observed in district revenues may or may not be based on the provision of additional funding to districts in which variations in education cost systematically occur. For example in Georgia and Michigan, the amount of revenue disparities appear less when expressed in terms of spending power than when considered in terms of nominal dollars. Conversely, when cost and pupil-need differences are taken into account, Texas, Maryland, and Oklahoma appear to be less equitable than in terms of nominal dollars.
Implications for Further Research
In addition to equity concerns, courts and state legislatures are increasingly focusing on questions pertaining to the related standard of education adequacy. Adequacy questions relate to the resources needed to provide some specified sets of results in education. Future research is needed to refine these concepts of equity and adequacy in education funding. How should they be defined in operational terms? How do they relate to one another? What measures might be used to determine if equity and/or adequacy standards have been achieved through local, state, and federal revenue allocations? It is likely that these standards will be assessed on some form of comparative basis. To allow better comparisons across districts and states, one area of future research is the further development of resource-cost- and student-need adjustments.
Creative methods for looking beyond what is currently being done in terms of education revenues and expenditures to what should be done constitutes an important step in advancing these ideas. Ultimately, to more fully define the concepts of equity and adequacy and to better understand the implications of alternative national investment strategies in public education, the relationship between varying levels of education resources and educational results are needed.
Footnotes
1 At the time of analysis, the 1991-92 data was the most recent information available for the entire population of districts in the nation.
2 The procedures used in deriving the breakpoints for these variables are described in appendix D.
