In an October 2014 speech on the theme of inequality, Federal Reserve chair Janet Yellen drew renewed attention to the unique way that America funds public schools and its potential drawbacks. “The quality and the funding levels of public education at the primary and secondary levels vary widely, and this unevenness limits public education’s equalizing effect,” she said. “The United States is one of the few advanced economies in which public education spending is often lower for students in lower-income households than for students in higher-income households.”

As observers have pointed out, the fundamental issue of how we fund public schools is often left out of the overall debate over education reform, and think tanks and advocates note a variety of further “stealth inequities” that remain below public awareness. Recent research has even shown how the rise of public school-supporting nonprofits has disproportionately benefited wealthy districts, further exacerbating inequities. In 2013, the Equity and Excellence Commission issued a report to the U.S. Secretary of Education that recommended, among other things, a “restructuring of the finance systems that underlie every decision about schools.”

There are a wealth of data resources that speak to these issues and facilitate comparisons and analysis. The Education Law Center at Rutgers University issues a “National Report Card” that details issues of fairness and inequality in funding. In May 2014, the U.S. Census Bureau issued its latest “Public Education Finances” report, which focuses on differences in the amounts of federal, state and local dollars appropriated for education among states, and their spending patterns. The National Center for Education Statistics also offers a database for analyzing school districts’ per-pupil expenditures and revenues.

In the absence of legislative and public policy reform, many attempts to help students in poorer districts have come to the state courts around the United States. Have these judicial remedies been successful? A 2014 study published in the Journal of Law, Economics and Organization, “The Impact of State Supreme Court Decisions on Public School Finance,” analyzes “court-ordered equalization reforms” across a 35-year period. The researchers — Sarah A. Hill of California State University, Fullerton, and D. Roderick Kiewiet of the California Institute of Technology — note that, beginning with Serrano v. Priest in 1971, nearly every state supreme court in the country has handed down rulings on school public financing equity issues. Prior research studies examining the outcomes “agree that the resultant funding reforms reduce cross-district inequality, but differ in their assessments of the magnitude of this effect.” Hill and Kiewiet update previous research, in particular a landmark 1988 study published in the American Economic Review, by adding data through 2007.

The study’s findings include:

• Collectively, the court decisions have not altered the basic math of inequity: “Adequacy-based decisions have not produced measurable changes in the extent of cross-district inequality in per pupil expenditures, but have led to higher overall levels of funding for public education.”
• Overall education spending has increased across the board but this is not because of the courts or the legislatures that have tried to implement legal decrees: “The dramatic nationwide increase in per-pupil expenditures over the past several decades … is largely the product of growth in personal incomes and a decline in the relative size of the cohort of school-age children, and not of court-ordered finance reforms.”
• “If the ultimate goal of public school finance reform is fiscal neutrality in the provision of education, this litigation has achieved little or nothing. In California, decades after Serrano and the most far-reaching equalization reforms implemented anywhere in the country, the association between the wealth of a school district and educational quality remains strong and persistent.”
• There remain deep structural barriers to any public policy solution intended to remedy this situation: “As long as public schools are embedded in the matrix of geographically defined school districts, it seems … that the goal of fiscal neutrality in public education remains a pipe dream.” Indeed, a look at some key measures suggests that the “goal of fiscal neutrality has slipped even farther away.”

The researchers conclude by noting that online-based learning trends have the potential to help equalize education. “Fiscal neutrality in public elementary and secondary education might best be achieved, then, when school district boundaries no longer matter,” they write. “If equalization of educational opportunities is to occur, it appears that it may well be through the Cloud and not through the courts.”

Keywords: youth, children, school financing