How much would it really cost to fund our schools?

September 8, 2021

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Photo credit: Tima Miroshnichenko

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It's not all bad news for the American education system. According to the Nation's Report Card, over the last 30 years student test scores have been going up. In 1992, 12 states were below a "basic" level of proficiency in 4th grade reading or mathematics; by 2019, this number had been reduced to just three (Alaska, New Mexico, and Puerto Rico).

Although the achievement gap has narrowed since the 1970s, progress has been uneven. Significant differences remain between the standardized test scores of white, Hispanic, and black students.

A major source of this persistent socioeconomic gap is unequal funding. About 45% of funding for schools is from local taxes (primarily on real estate), meaning that poorer school districts have lower funding levels. By one estimate, the richest school districts spend around 15% more per student than do the poorest.

"How much would each school district need to spend to reach national average test scores?"

The Biden administration is proposing to reduce these inequalities with an infusion of $20 billion in funding to high-poverty Title I schools. This funding aims to address inequalities in school district funding, promote increased teacher pay, and increase the offerings of higher level mathematics and science courses.

But how much would it really cost to fully fund the U.S. educational system? Is $20 billion enough?

Where are the biggest gaps in school spending?

A fully-funded educational system is one where students are achieving national standards. But not all schools have the same funding needs: some states may pay their teachers more, some school districts may have more students living in poverty, and some schools may have lower average test scores than others.

So how much do American schools need to fill the gap? The Albert Shanker Institute and Rutgers University offer some clues. Using a variety of data sources (including test scores, funding levels, teacher salary, and neighborhood poverty levels), this group provides one answer to a key question: how much would each school district need to spend to reach national average test scores?

States spend vastly different amounts on education. District-level data from this group show that New York spends $24,503 per student in the state. Utah spends $7,590 — less than one-third of what New York spends per student.

Per-student spending and funding gap, 2018

Source: School Finance Indicators Database: District Cost Database. The Albert Shank Institute and Rutgers Graduate School of Education. 2018. Red bars are total spending, per student, and grey bars indicate the total amount needed to fill the gap, per student. States without data are excluded.

Almost every state needs more school funding to achieve educational benchmarks. But some states have further to go: where districts spend less per-student, they tend to have larger funding gaps. Notably, Utah and Idaho, which spend the least per student, have relatively small funding gaps.

In Texas, New Mexico, and Arizona, the states with the largest per-student funding gaps, school districts would need to increase their budgets by more than 50%.

But state-level funding can only tell part of the story. Since so much of school funding is local, even well-funded states can have districts that fall behind.

Spending needed to achieve average test scores, 2018

Source: School Finance Indicators Database: District Cost Database. The Albert Shank Institute and Rutgers Graduate School of Education. 2018. Values are the per-student amount needed for students in the school district to achieve the national average test scores. Negative values indicate a funding gap, while positive values mean a school district is spending more than the model finds would be needed to reach average test scores.

Geographically, school districts with the biggest spending shortfalls are overwhelmingly in the south of the country. Out of the 100 districts with the largest per-capita funding gaps, 71 are in either California or Texas.

Some states are uniformly underfunded. In Mississippi, 94% of school districts having a funding gap. More than 82% of districts in Florida, Texas, Arkansas, North Carolina, Arizona, New Mexico, and Alabama have spending gaps.

Yet every state in this analysis except for Wyoming has at least one district with a funding gap.

How can states fill the gap?

Do states have the money to spend? The cost per taxpayer in would be high in some states: in Texas, for example, filling the gap would be $1,792 per taxpayer every year. Although taxes are leveraged progressively (so the actual cost per person would vary by income), these costs may be very high for states with smaller tax bases.

Or maybe states are collecting enough taxes to easily pay for schools, but they are prioritizing other programs. But the reverse seems to be true: states with the biggest gaps are also spending the highest proportion of their budgets on education. Texas, for instance, spent 36% of total state revenue on education — one of the highest in the country.

Spending gap per taxpayer vs. state budget spent on education

Source: School Finance Indicators Database: District Cost Database. The Albert Shank Institute and Rutgers Graduate School of Education. 2018. Gap per taxpayer is calculated by dividing the total gap by the number of federal tax returns per state (U.S. Internal Revenue Service SOI Tax Stats - State Data FY 2020). Spending for education as proportion of state budget is taken from the U.S. Census Annual Survey of State Government Finances Tables (2019).

Not every district is feeling the gap. In New York, for example, one school district in the Hamptons spends more than $70,000 per student: 5.5 times more than one school district in upstate New York. In Texas, the state with the largest per-student gap, districts are spending between $6,209 and $43,085 per student.

Per-student spending, by district and state, 2018

Source: School Finance Indicators Database: District Cost Database. The Albert Shank Institute and Rutgers Graduate School of Education. 2018. Values are the per-student spending in each school district.

Improving how the United States educates its children is a multi-faceted challenge. Funding is just one piece: the importance of smart government educational policies, appropriate school curricula, high-quality teachers, and reducing racial and socioeconomic discrimination and inequality should not be understated. And even if schools were successfully funded at the levels proposed by this model, schools and students would not change overnight.

However, what is clear is that if schools continue to be funded by local property taxes, financial inequality will persist. Children in some neighborhoods will continue going to schools with less funding than the schools in richer communities. All things equal, students in better-funded schools will have more teachers, more building space, more equipment and books, more classes, and — ultimately — better educational outcomes.

What's also clear is that in some places, the costs to fully fund schools may be too much for states to fund themselves. Across the country, the cost to fill the total funding gap (according to this analysis) is $104 billion per year. States with large gaps but smaller economies, like Mississippi and New Mexico, may struggle to raise the funds to fill these gaps. In these cases, action by the federal government could provide much-needed financial support.



Want to see for yourself? All our data are on GitHub.

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