Report Card is a critique of state school funding systems and the
extent to which these systems ensure equality of educational opportunity
for all children, regardless of background, family income, place
of residence or school. The report is based on the assumption that "fair" school
funding is defined as "a state finance system that ensures
equal educational opportunity by providing a sufficient level of
funding distributed to districts within the state to account for
additional needs generated by student poverty."
The Second Edition of the National Report
Card evaluates the states on four funding fairness measures,
now based on data updated through 2009. The Report is designed
to shine a spotlight on the states’ critical role in funding
public education and the importance of fair funding as an essential
element of ongoing efforts to boost academic performance in our
The Fairness Principles
National Report Card evaluation is based on a number of assumptions:
- A fair funding system provides varying levels of funding
according to student need.
- Context matters: a valid comparison of state funding
systems must take into account a number of factors that influence
educational costs, such as geography, regional labor markets,
district size, population density, and various student characteristics.
- A fair funding system is "progressive;" in
other words, funding should increase relative to the level
of concentrated student poverty.
- Student poverty is the most critical variable affecting
funding levels and can serve as a proxy for other measures
of disadvantage, including achievement gaps, racial composition,
English Language Learners, and student mobility.
- A sufficient overall level of funding is crucial.
Without sufficient resources as the starting point, the distribution
of funding relative to poverty becomes much less consequential.
The Fairness Measures
50 states are evaluated on the basis of four separate, but interrelated,
- Funding Level: Using figures adjusted to account for
a variety of interstate differences, this measure allows for
a comparison of the average state and local revenue per pupil
across states. States are ranked from highest to lowest per
- Funding Distribution: This measure shows whether a
state provides more or less funding to schools based on their
poverty concentration. States are evaluated as "regressive," "progressive" or "flat" and
are given letter grades that correspond to their relative position
compared to other states.
- Effort: This measures differences in state spending
relative to the state’s fiscal capacity. States are graded
according to the ratio of state spending on education to per-capita
gross domestic product.
- Coverage: This measures the proportion of school-age
children attending the state’s public schools and also addresses
the income disparity between families using private schools
and those sending their children to public schools. States
are ranked according to both the proportion of children in
public schools and the income ratio of private and public school
Summary of Findings
The table below provides state results for
all four measures. The letter grades (from A to F) show how a
state ranks. The arrows indicate whether a state’s ranking improved,
stayed the same or worsened between the first and second editions
of this report. Consideration should be given to each of the
four measures, which, when taken together, provide a complex
picture of state finance systems. While how states rank on particular
indicators can be important, it is critical to understand how
the indicators interact and create unique conditions of funding
fairness or unfairness. Depending on a state’s performance on
the combination of indicators, the relative success of one or
two indicators may be misleading. For example, a state with an
insufficient funding level is not fairly serving its students,
even if the funding is distributed with some progressivity. Likewise,
a high state effort grade is of little consolation if it still
fails to generate a sufficient funding level. It is the combination
of results on all of the indicators that give the most accurate
picture of school funding fairness in any given state.
- Six states are positioned relatively well on all four measures.
Four states remain in the top in the 2012 report: Iowa, Massachusetts,
New Jersey, and Vermont. Kansas – which began implementing
remedies to address the inequity exposed in a successful school
finance case – and New Mexico have joined the top states.
- Most states have at least one area in which to improve, and
many do poorly on the most important indicators from a state
policy perspective: state effort and funding distribution.
- Three states receive below-average ratings in each of the
four indicators: Florida, Missouri, and North Carolina. Florida
is new to this group after seeing a substantial decline in
state effort and funding level.
- The national average funding level, adjusted to account for
student poverty, regional wage variation, economies of scale,
and population density, is $10,774 per pupil, a $642 increase
over the estimate in the 2010 report.
- The highest funded states are those in the northeastern region
of the country, with the exception of Wyoming and Alaska. The
lowest funded states predominate in the South and West.
- The disparity between the highest and lowest funded states
is vast – using our nationally adjusted figures, a student
in Tennessee receives less than 40% of the funding of a comparable
student in Wyoming.
- The effects of the economic recession are beginning to show
with about half the states experiencing declines in per pupil
spending between the two most recent estimates. The District
of Columbia, Florida, and Vermont saw declines in excess of
$1,000 per pupil during that time period.
- Only 17 states have progressive funding systems, providing
greater funding to high-poverty districts. Utah, New Jersey,
Ohio, and Minnesota remain the four most progressive states.
- Six states have regressive funding systems, meaning districts
with higher poverty rates actually receive less funding than
more well-off districts. The most regressive state is Illinois,
followed by North Carolina, Alabama, Michigan, Texas, and Colorado.
- Some states have improved funding distribution by at least
one letter grade (Delaware, Kansas, Louisiana, and Maryland),
while other states have regressed one letter grade (Minnesota,
Montana, North Carolina, North Dakota, and Texas).
- Delaware, South Dakota, North Dakota, and Tennessee rank
lowest on effort.
- Vermont, New Jersey, New York, and New Hampshire rank highest.
- While states’ relative rankings shifted, the overall trend
saw states increasing funding effort. Thirty-four states had
higher effort indices than in the 2010 report, though the magnitude
of the changes was small.
- Two states – Hawaii and Maine – each had a particularly large
disinvestment in public education, reducing their funding effort
by over 20%.
- The resources available to schools are a function of both
state effort and state wealth. A state may exert above average
effort, but if it has low wealth it may still have low funding
levels (e.g., Kentucky). A state with high wealth may need
to exert little effort to generate relatively high funding
levels (e.g., Delaware).
- The top ranked states – Wyoming, Utah, Alaska, and Idaho
- have few students enrolled in private schools, and private
school students are from households with incomes that are only
about one-third higher than their public school counterparts.
- In the lowest ranked states – the District of Columbia, Louisiana,
and Delaware –about one-fifth of the student population is
enrolled in private schools, and those students come from households
with significantly higher incomes, as much as two and three
times those of public school students.
Improving Funding Fairness
The goal of the National Report Card is to
provide a deeper understanding of the condition of state finance
systems across the county. The results of this evaluation can
be used by stakeholders, community leaders, elected officials,
and concerned citizens working to reform state school funding.
As education reform initiatives capture the
public’s attention, the National Report Card presents the critical
element for successful public schools. The ability to improve
states’ educational outcomes, whether closing achievement gaps,
increasing college and career readiness, or supporting teacher
quality, depends on the foundation of a fair school funding system.
The National Report Card contributes valuable information that
can help determine the direction of public education policy at
the federal, state, and local level.