In almost every state, each district levies its own school taxes and keeps the proceeds—whatever money can be raised from the properties in the district.
These revenues form the first layer of education funding in most states. When all the dollars are tallied, local funds make up almost half of districts’ funding nationwide.
Those local dollars, though, are an unequal foundation for education funding. Property values are far higher in some districts than in others, allowing school districts in wealthy areas to collect ample funding, while little is raised for students in property-poor districts.
Because ground-level inequality is an automatic consequence of funding schools in this way, states are forced to play catch-up. They generally try to make up the difference by providing extra state dollars to low-wealth districts, but most often, this aid isn't enough to do the job.
This is because high-wealth districts often move the goalposts, raising extra local funds that states simply can’t afford to match.
Moreover, the revenues that states raise to fill in the gaps—most often derived from income, sales, and, energy taxes—are much more volatile than property taxes, making them more susceptible to cuts. This puts the low-wealth districts that rely on state aid in a precarious position.
We need a new solution.
What if, instead of trying to compensate for local funding inequality, we were able to prevent it from arising in the first place?
To that end, we offer a thought experiment—a model that reduces the impact of local economic conditions on education dollars.
We can tackle inequality in education funding by separating the two functions of school district borders.
With no changes to the borders that determine where kids attend school and which school boards govern which areas, we can widen our tax borders, pooling property tax dollars, and sharing them across the students in the broader county or state.
With this one change
69% of all students
would receive equal or greater funding
The students who are the most disadvantaged by the current funding system would see even more widespread gains:
76% of low-income students
would receive equal or greater funding
73% of nonwhite students
would receive equal or greater funding
and the
$23 billion funding gap
between predominantly white and nonwhite school districts
would shrink by over $13 billion
to $9.5 billion.