How K-12 school finance actually works — unpacking myths

Greg Nash

Adequate and equitable funding for the nation’s public schools is critical to protecting our democracy and ensuring all students receive a high-quality education. Recent comments by President Donald Trump and Education Secretary Betsy DeVos about school finance have been misleading or incorrect. 

More productive public debate about school finance is sorely needed as looming state budget shortfalls could lead to funding cuts and place public education at risk for years to come. As researchers of education finance and policy, we are aware of five problematic school finance myths that must be addressed to move forward.  

Myth 1: Money doesn’t follow the student

President Trump and Secretary DeVos have argued that “money should follow the student.” In other words, a school’s funding rate should be commensurate with the number of students enrolled and if a student switches schools, budgets should adjust accordingly. 

Fortunately, this is already how K-12 school finance works. Over 90 percent of all funding comes from state and local sources. And every state has a finance formula that is based primarily on student enrollment. Federal funding is also distributed on a per-student basis

The argument for funding to “follow the student” surfaces in debates about public funding for charter or private schools. In many cases, federal funds also follow students who transfer to these schools. Charter schools are eligible for Title I funding and the program already requires districts to allocate federal funds to nearby private schools based on the number of low-income students they serve.

Secretary DeVos has argued that CARES Act funds, the federal stimulus bill passed in March, should be distributed to private schools based on total enrollment, rather than enrollment of low-income students. States took legal action, and a federal judge has temporarily blocked the policy, which would funnel millions of federal education dollars to wealthy private school students. 

Myth 2: Wealthier suburban districts get less money than urban districts

Many suburban families think their neighborhood public school is not as well-funded as nearby urban districts that serve more low-income students and students of color. However, recent studies highlight persistent racial/ethnic and socioeconomic funding disparities. Relative district funding rates depend more on what state you live in than on what neighborhood you live in. High-poverty school districts are especially disadvantaged in Texas, Illinois and North Carolina, while California, Minnesota and New Jersey have more “progressive” or equitable K-12 school finance systems.    

Myth 3: Money goes to teacher unions instead of students

State legislators design a state’s funding model, but local school boards are in charge of spending. Superintendents need approval from the school board to hire more teachers or increase teacher salaries. 

After teachers receive their paychecks, they have the opportunity to pay union fees in exchange for representation in collective bargaining and due process rights. In no state are teachers required to pay dues, even when they benefit directly from union representation. The idea that public education funding directly supports teachers unions might help build support among uninformed voters but does not reflect how school finance functions in real life.

Myth 4: Virtual education is less costly 

Some federal and state policymakers have argued that virtual learning is less costly than in-person education. This argument misses the mark for two reasons. First, schools starting the school year online generally have plans to transition to in-person instruction pending lowered COVID-19 risk assessments. These schools have therefore procured the necessary resources to transition back to in-person instruction. 

Second, studies show costs would not change substantially even if schools remained virtual throughout the school year. There is no evidence that online education maintains quality and reduces education expenditures — one study calls this a “virtual illusion.” Private school tuition rates or the price of hourly instruction from private education companies are not good measures of actual costs because these companies receive public subsidies or private donations. 

Myth 5: Schools can cut spending without hurting achievement 

Perhaps the most egregious and long-lasting school finance myth is that money doesn’t matter. In addition to a long list of studies linking increased spending to improved student outcomes, recent research on the Great Recession funding cuts finds that budget reductions significantly hurt student learning over multiple years.  

By misinforming the public about federal education policy, Trump and DeVos create confusion for families trying to understand school finance amid the COVID-19 crisis. These common myths about school finance serve as distractions at a time when policymakers and voters need to take thoughtful and decisive action. 

David S. Knight is an assistant professor of education finance and policy at the University of Washington.

David DeMatthews is an associate professor in the Department of Educational Leadership and Policy at The University of Texas at Austin.

Tags 2020 school year Betsy DeVos Betsy DeVos; Education Department Donald Trump education funding low-income neighborhoods public school funding school financing school funding socioeconomic disparity Students

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