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Education Statistics Quarterly
Vol 5, Issue 2, Topic: Elementary and Secondary Education
School District Revenues for Elementary and Secondary Education: 1997–98
By: Joel D. Sherman, Barbara Gregory, and Jeffrey M. Poirier
 
This article was originally published as the Executive Summary of the Statistical Analysis Report of the same name. The sample survey data are from the Common Core of Data (CCD) "School District Finance Survey (Form F-33)" and the 1990 School District Data Book.
 
 

The "School District Finance Survey (Form F-33)" is an annual collection of school district financial data that is part of the Common Core of Data (CCD). The F-33 collects data on revenues and expenditures for prekindergarten through grade 12 in public schools in approximately 15,500 local education agencies (LEAs) in the 50 states and the District of Columbia.

This report presents analyses of school district revenues for the 1997–98 school year. The F-33 data form the core of these analyses, but information is supplemented by data on selected school district demographic and fiscal characteristics from the 1990 School District Data Book, prepared by the U.S. Census Bureau for the National Center for Education Statistics (NCES). The demographic and fiscal data are used to examine the relationship between selected district characteristics and revenues from different sources.1

This report is designed to address a number of questions about the financing of public elementary and secondary education at the state and district levels:

  • How much money per pupil is raised for elementary and secondary education from federal, state, and local sources?
  • What is the level of variation in revenues per pupil across school districts nationally and in each state?
  • How do district demographic and economic characteristics relate to revenues per pupil nationally and in each state? How strong are these relationships?
  • What proportion of funds for elementary and secondary education comes from federal, state, and local sources nationally and in each state? How do districts with different demographic and economic characteristics differ in their proportion of funds for education from different sources?
Analyses of school district revenues are presented for the nation and the states. The national analyses focus on school revenues in districts in different geographic regions, school districts of different sizes, school districts with different fiscal capacity to support education (measured as median household income and median value of owner-occupied housing), and school districts with different proportions of minority and school-age children in poverty. The state analyses focus on interdistrict variation in revenues per pupil and the relationship between revenues per pupil and the school district fiscal and demographic characteristics cited in the national analyses.

The analyses of revenues presented in this report are based on both actual dollars and cost-adjusted dollars. Cost adjustments are designed to take into account differences in the cost of education across school districts in a state. The cost adjustment used in these analyses is the Geographic Cost of Education Index (GCEI) (Fowler and Monk 2001; Chambers 1998). The GCEI uses data from three separate categories of school inputs: certified school personnel, noncertified school personnel, and nonpersonnel school items. The index reflects how much more or less it costs in different geographic locations to recruit and employ comparable school personnel, as well as the varying cost of nonpersonnel items such as purchased services, supplies and materials, furnishings and equipment, travel, utilities, and facilities.

In the remainder of this summary, the major findings of the report are presented using cost-adjusted revenues. Findings based on actual revenues are included in the body of the report, with both actual dollars and cost-adjusted dollars reported in the text.

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The national findings focus on three areas: geographic differences in revenues, revenues in school districts of different sizes, and the relationship between revenues and selected school district fiscal and demographic characteristics.

Revenues in different geographic regions

Cost-adjusted school district revenues for elementary and secondary education totaled $319.7 billion in 1997–98, or about $7,028 per pupil. State governments provided nearly half the total (49 percent)—about $155 billion, or about $3,413 per pupil. Local governments provided the second-largest share (45 percent)—about $144 billion, or about $3,167 per pupil. The federal government provided the remaining 6 percent of revenues—more than $20 billion, or about $447 per pupil.

School districts in the Northeast started out with the highest cost-adjusted local revenues per pupil—$4,699 per pupil in 1997–98. Even though state revenues per pupil were lowest in the Northeast—$3,201 per pupil—state and local revenues per pupil of $7,899 were still higher than in all other regions. Federal revenues per pupil of $380 were also lowest in the Northeast. However, even with lower federal revenues, the Northeast still had the highest total revenues per pupil. Put differently, school districts in the Northeast had an advantage in local revenues per pupil that was not offset when other regions obtained greater revenues from state and federal sources.

At the other end of the spectrum, school districts in the West had the lowest local revenues per pupil—$2,114 per pupil in 1997–98. After the addition of state revenues of $3,515 per pupil, school districts in the West still had the lowest state and local revenues per pupil—$5,629. Federal revenues were an additional $436 per pupil in the West. However, even with the addition of state and federal revenues, total revenues of $6,066 per pupil in school districts in the West were still lower than in all other regions of the country.

Revenues in school districts of different sizes

The smallest school districts (those with fewer than 1,000 students) consistently had the highest revenues per pupil for education in cost-adjusted dollars. These school districts had local revenues of $3,819 per pupil, which was $652 per pupil above the national average. With state revenues of $4,087 per pupil, state and local revenues per pupil were more than $1,300 higher than the national average—$7,906 in the smallest school districts, compared to the national average of $6,580. Federal revenues per pupil, which averaged $499 in the smallest districts, were also about $52 above the national average of $447. As a result, total revenues per pupil in these districts were nearly $1,400 above the national average—$8,405, compared to $7,028. In other words, the revenue advantage that the smallest school districts had from local revenues more than doubled with the addition of state and federal revenues.

In contrast, the largest school districts (those with 10,000 or more students) consistently had the lowest revenues per pupil. These school districts had the lowest local revenues per pupil ($2,896) and the second-lowest state revenues per pupil ($3,328), compared with districts with fewer students. State and local revenues per pupil of $6,224 were therefore lower in the largest districts than in smaller districts. Although federal revenues of $478 per pupil were only slightly lower than in the smallest districts, the largest school districts still had the lowest total revenues per pupil ($6,702 in 1997–98) of all size categories.

Relationship between revenues and school districts' fiscal capacity

For the nation as a whole, school districts with higher median household income tended to raise more cost-adjusted revenues per pupil from local sources than lower income districts. School districts with median household income of less than $20,000 had local revenues per pupil ($1,975) that were less than half of these revenues in districts with household income of $35,000 or more ($4,113). However, revenues per pupil from state sources were negatively related to household income and tended to partially offset the revenue advantage of high-income districts. As a result, while combined state and local revenues per pupil were positively related to household income, the relationship was much weaker than the relationship between household income and local revenues per pupil. Federal revenues per pupil had an even stronger negative relationship with district household income ($881 in the lowest income districts and $210 in the highest income districts). Consequently, there was a small negative relationship between household income and total revenues per pupil. Put differently, higher state and federal revenues per pupil in school districts with lower household income tended to offset the local revenue advantage of high-income school districts.

Similar results were found when the median value of a school district's owner-occupied housing was used as the measure of fiscal capacity. A positive relationship between median value of owner-occupied housing and local revenues per pupil was counterbalanced by a stronger negative relationship between housing value and state revenues per pupil. As a result, there was only a small positive relationship between median value of owner-occupied housing and state and local revenues per pupil. A negative relationship between housing value and federal revenues per pupil changed the relationship between housing value and total revenues per pupil from slightly positive to slightly negative. Again, higher state and federal revenues per pupil in school districts with lower median housing values offset the local revenue advantage of school districts with higher housing values.

Relationship between revenues and minority and poor children

School districts with higher concentrations of minority and poor children tended to raise less money from local revenues than districts with lower concentrations of poor and minority children. However, higher state revenues per pupil in these districts partially offset the local revenue advantage in districts with smaller proportions of poor and minority children. With federal revenues per pupil having a strong positive correlation with a district's proportion of poor and minority children, total revenues per pupil had only a small negative relationship with percent minority enrollment and no significant relationship with proportion of children in poverty. In short, the local revenue disadvantage of districts with high proportions of poor and minority children was offset by higher revenues per pupil from state and federal sources.

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The state findings focus on two areas. The first is interdistrict variation in revenues per pupil. This area was selected because the amount of interdistrict variation in revenues per pupil is often used as a measure of the equity of state school finance systems. States with little variation in revenues per pupil are generally considered to have more equitable systems than those with large interdistrict variation (Berne and Stiefel 1984).

The second area is the relationship between revenues per pupil and selected school district fiscal and demographic characteristics. Fiscal characteristics such as median household income and median housing values were selected because school district wealth, as measured by these variables, has been found in many states to be associated with differences in funding for education (Parrish, Hikido, and Fowler 1998). States in which finance arrangements produce either no relationship or only a weak positive relationship between district wealth and school funds are generally considered to be more equitable than those that have a strong positive relationship between district wealth and revenues (Berne and Stiefel 1984). Demographic characteristics such as proportion of children in poverty and proportion of minority enrollment were also selected because of equity considerations. States in which revenues are positively associated with students' special educational needs (e.g., needs based on poverty) are generally regarded as more equitable than those that do not provide additional funding to address the educational needs of poor students (Goertz and Odden 1999).

Interdistrict variation in revenues per pupil

This study created a synthesized measure of variation that combined state rankings on three standardized variation measures to assess the amount of interdistrict variation in revenues per pupil across school districts.2 Based on their rankings on this synthesized measure, states were then organized into 4 groups with approximately 12 states in each group. States with the lowest rankings had the smallest overall variation in revenues per pupil; states with the highest rankings had the largest variation. This analysis includes 49 states; the District of Columbia and Hawaii are not included because each has only one school district.

The 12 states with the largest variation in unadjusted local revenues per pupil were Alaska, Arizona, California, Connecticut, Idaho, Illinois, Kansas, Massachusetts, Michigan, New Jersey, Texas, and Wyoming. Five of the 12 states (Alaska, Arizona, California, Idaho, and Wyoming) were in the West, 3 (Connecticut, Massachusetts, and New Jersey) were in the Northeast, and 3 (Illinois, Kansas, and Michigan) were in the Midwest. There was only one state in this group from the South (Texas).

When state revenues were added to local revenues, only 4 of the original 12 states (Alaska, Illinois, Kansas, and Wyoming) were in the group with the largest overall variation in state and local revenues per pupil. In other words, the addition of state revenues tempered the variation in local revenues per pupil. The states with the largest variation in state and local revenues per pupil were now distributed nearly evenly across three regions—Alaska, Montana, New Mexico, and Wyoming in the West; Illinois, Kansas, and North Dakota in the Midwest; and New Hampshire, New York, and Vermont in the Northeast.

With the addition of federal revenues, 5 of the 12 states with the largest variation in local revenues per pupil (Alaska, Arizona, Illinois, Kansas, and Texas) continued to show the largest variation in total revenues per pupil. The largest concentration of states was in the Midwest (Illinois, Kansas, Missouri, Nebraska, and North Dakota) and the West (Alaska, Arizona, Montana, and Wyoming), with only one state from the South (Texas) in this group.

Looking at cost-adjusted revenues per pupil, 6 of the 13 states with the smallest variation in cost-adjusted local revenues per pupil were in the South (Delaware, Florida, North Carolina, South Carolina, Tennessee, and West Virginia), 5 were in the Midwest (Indiana, Iowa, Missouri, North Dakota, and South Dakota), 1 was in the Northeast (New Hampshire), and 1 was in the West (Nevada).

When state revenues were added to local revenues, the balance shifted more heavily to the South. Eight of the 12 states with the smallest overall variation in state and local revenues per pupil were in this region (Arkansas, Delaware, Florida, Kentucky, North Carolina, South Carolina, Tennessee, and West Virginia); only 4 states were outside the South—3 of them in the Midwest (Indiana, Iowa, and Wisconsin). With the addition of federal revenues, 9 of the 12 states with the smallest overall variation in cost-adjusted total revenues per pupil were in the South. Alabama and Louisiana were added to the group, and South Carolina was eliminated. Put differently, disparities in local revenues per pupil, which were less pronounced in the South, were lessened even further with the addition of state and federal revenues.

Relationship between revenues and school districts' fiscal capacity

Analyses of the relationship between school districts' fiscal capacity and revenues per pupil were conducted in the 40 states in which at least 50 percent of the school districts had demographic and fiscal data. In 34 of these 40 states, there was a positive relationship between median household income and cost-adjusted local revenues per pupil. There was, however, a negative relationship between district median household income and state revenues per pupil in 39 states. As a result, there was a positive relationship between median household income and state and local revenues per pupil in just 10 states. Higher state revenues per pupil overcame the local revenue advantage of high-income districts. Federal revenues reinforced this trend. After the addition of federal revenues per pupil, which had a negative relationship to district income in 39 states, only 7 states still showed a positive relationship between household income and total revenues per pupil. In 21 states, lower income districts actually tended to have higher total revenues per pupil.

District fiscal capacity, measured as median value of owner-occupied housing, showed similar relationships to district revenues. Median value of owner-occupied housing was positively related to local revenues per pupil in 35 of the 40 states with available data and negatively related to state and federal revenues per pupil in 40 and 34 states, respectively. When state and federal revenues were added to local revenues, the local revenue advantage of districts with higher median housing values was overcome by larger amounts of state aid in most states. Only 10 states continued to show a positive relationship between median housing value and cost-adjusted state and local revenues per pupil, and only 7 states showed a positive relationship between median housing value and total revenues per pupil.

Relationship between revenues and district poverty and proportion of minority enrollment

School district poverty was negatively related to cost-adjusted local revenues per pupil in 33 of the 40 states with available data. State and federal revenues per pupil were positively related to school district poverty in 36 and 38 states, respectively. With the addition of state revenues to local revenues, there was still a negative relationship between district poverty and state and local revenues per pupil in nine states. With the addition of state and federal funds, there was a negative relationship between district poverty and revenues per pupil in only three states. Higher state and federal revenues in high-poverty districts offset their local revenue disadvantage in a substantial number of states.

Similar results were found for minority enrollment. In 17 of the 40 states with available data, there was a negative relationship between proportion of minority enrollment and cost-adjusted local revenues per pupil. However, state revenues per pupil were positively related to minority enrollment in 19 states. With the addition of state revenues, the proportion of minority enrollment was negatively related to state and local revenues per pupil in only 12 states. Federal revenues per pupil were also positively related to the proportion of minority enrollment in 36 states. As a result, with the addition of federal revenues, there was a negative relationship between proportion of minority enrollment and total revenues per pupil in only 6 states, and a positive relationship in 18 states. Higher state and federal revenues in school districts with large minority enrollments worked to overcome the local revenue advantage of school districts with relatively small minority populations.

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Footnotes

1 While more current census data on district characteristics are now available, the 1990 census data were used in these analyses because they were the most current data available at the time the report was planned and written. The national analyses include districts in all states, even when the percentage of districts with demographic and fiscal data was less than 50 percent of the total districts in the state. The state analyses, however, only include the 40 states in which at least 50 percent of the districts had demographic and fiscal data.

2 The three measures used to create the synthesized measure were the restricted range ratio, the coefficient of variation, and the Gini coefficient. The method used to create the synthesized measure is explained more fully in the introduction to the complete report.

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Berne, R., and Stiefel, L. (1984). The Measurement of Equity in School Finance. Baltimore, MD: The Johns Hopkins University Press.

Chambers, J.G. (1998). Geographic Variations in Public School Costs (NCES Working Paper 1998–04). U.S. Department of Education. National Center for Education Statistics. Washington, DC: U.S. Government Printing Office.

Fowler, W.J., and Monk, D.H. (2001). A Primer for Making Cost Adjustments in Education (NCES 2001–323). U.S. Department of Education, National Center for Education Statistics. Washington, DC: U.S. Government Printing Office.

Goertz, M.E., and Odden, A. (Eds.) (1999). School-Based Financing. Thousand Oaks, CA: Corwin Press, Inc.

Parrish, T.B., Hikido, C.S., and Fowler, W.J. (1998). Inequalities in Public School District Revenues (NCES 98–210). U.S. Department of Education, National Center for Education Statistics. Washington, DC: U.S. Government Printing Office.

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Data sources: The NCES Common Core of Data (CCD) "School District Finance Survey (Form F-33)" and the 1990 School District Data Book.

For technical information, see the complete report:

Sherman, J.D., Gregory, B., and Poirier, J.M. (2003). School District Revenues for Elementary and Secondary Education: 1997–98 (NCES 2003–341).

Author affiliations: J.D. Sherman, B. Gregory, and J.M. Poirier, American Institutes for Research.

For questions about content, contact Frank H. Johnson (frank.johnson@ed.gov).

To obtain the complete report (NCES 2003–341), call the toll-free ED Pubs number (877–433–7827) or visit the NCES Electronic Catalog (http://nces.ed.gov/pubsearch).


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