School spending equity since 1976

Introduction

Inequality of educational outcomes by race and class is large and persistent (Reber, Kalkat, and Goodman 2025; Reardon, Kalogrides, and Shores 2019), and the role that schools do or could play to reduce these gaps is complex and long debated. Schools in high-poverty or predominantly non-white communities often fail to serve their students well. Many point to American schools’ reliance on local property taxes as the culprit, arguing the school finance system ensures that “affluent areas end up with well-funded schools and low-income areas end up with poorly funded schools,” (American University 2020). However, state governments now contribute about as much to school funding as school districts raise locally, and the federal government also contributes. Moreover, state and federal funding disproportionately benefits school districts serving low-income students, and decades of school finance reforms mean that schools’ spending is less tied to its property wealth than in the past.

Do high-poverty and predominantly non-white districts spend less than their lower-poverty or predominantly white counterparts? How has that changed over time as policy preferences evolved and states reformed their school finance systems? In this report, we use newly assembled school district level data spanning 1976 to 2021 to address these questions. We present a comprehensive descriptive analysis of how school spending varies across districts depending on child poverty and racial composition and how that has changed since 1976. To make sense of these patterns, we also decompose differences in average spending into their between-state and within-state components. Average spending varies tremendously across states—some spend nearly three times what others do (Reber and Goodman 2025)—so we ask: When some districts spend more than others, is it because they are in states where all districts spend more or because they spend more than other districts in the same state?

The patterns of spending by poverty and racial composition were surprisingly similar at the beginning and end of the nearly five decades we study, though this masks some changes in the intervening years. Spending trended less equitable (or progressive)—in the sense of being less targeted to disadvantaged students—in the 1980s and early 1990s and then trended more equitable after 1995.

The analysis shows that between 1976 and the early 1990s the average level of spending increased, but the distribution of spending changed only modestly, becoming somewhat less progressive. After about 1995, spending within states was increasingly targeted to high-poverty districts, though between-state differences increasingly favored lower-poverty districts. That is, low-poverty districts were more likely to be in states where average spending was higher, but they had lower spending relative to high-poverty districts in the same state. We also find that low-poverty and predominantly white districts were more protected from spending cuts during the Great Recession, and high-poverty or predominantly non-white districts were the least protected. Finally, differences in average spending between states remain a major driver
of spending inequality overall, even though policy conversations often focus on within-state differences.

The findings are broadly consistent with recent academic work on patterns of school spending, which finds within-state progressivity (increasing since the mid-1990s) and usually modest national-level differences in spending by poverty and race (Tyner 2023; Corcoran et al. 2003; Corcoran and Evans 2015; Candelaria and Shores 2019). However, our findings are contrary to popular narratives that often assume that high-poverty or predominantly non-white districts have lower-than-average spending.¹

Several factors may contribute to the disconnect between conventional wisdom about inequality of school funding and our findings. First, the conventional narrative is bolstered by schools’ historical—and sometimes continued—reliance on local property taxes for funding. It seems intuitive that this would create a correlation between property wealth and school spending, which could in turn explain observable problems in high-poverty schools, such as staffing shortages, lack of supplies, or ill maintained buildings. School finance systems are complex, and local taxes are salient to the public. By contrast, funding from the state or federal government, which disproportionately benefits more disadvantaged districts, is less visible.

Jonathan Kozol, author of the 1991 bestseller “Savage Inequalities,” was an especially forceful promoter of the idea that high-poverty schools struggle for the simple reason that they have less to spend. He told the stories of urban schools that lack “the basic elements of learning,” concluding that “schools for rich and poor [are] blatantly unequal” and attributing these gaps to funding differences related to local property tax finance (Kozol 1991). Although Kozol’s account was based on a small number of districts and is more than 30 years old, some widely discussed reports based on systematic analysis of more recent school finance data come to similar conclusions. Like Kozol, they argue that high-poverty or predominantly minority districts are being shortchanged financially (Baker et al. 2018; EdBuild 2019; Morgan and Amerikaner 2018; Morgan 2022). These studies—which are designed to answer different questions—make methodological choices that can obscure patterns of actual spending, for example, excluding federal funding (Morgan and Amerikaner 2018; Morgan 2022; EdBuild 2019) or reporting spending relative to a complex (and controversial) estimate of what a district needs (Baker et al. 2018; Costrell, Hanushek, and Loeb 2008). That is, they are not reporting on differences in actual per-pupil spending or revenue.

We agree with the authors of those reports—and the broader consensus—that high-poverty schools need more funding than their low-poverty counterparts to fulfill their mission; equal is not equitable. Answering questions about what constitutes a fair or equitable distribution of spending and how to spend education dollars effectively is important but difficult. Our goal here is more modest but perhaps more achievable. The analysis does not speak to whether high-poverty or minority-serving schools have “enough” funding—or whether or under what conditions additional funding would improve student outcomes. Instead, we document what happened: Which districts spent more, and which spent less? How has the distribution of school spending changed? This nearly five-decade national perspective captures how spending patterns evolved as states reformed their finance systems, sometimes multiple times, during the school finance reform era.

The remainder of this report proceeds as follows. Section 2 provides historical context on school finance in the United States. Section 3 describes our data and approach. Section 4 presents findings on spending trends by the child poverty rate, and Section 5 presents findings on trends by racial composition. Section 6 addresses why our results seem to contradict some widely cited reports from advocacy organizations. Section 7 examines the contributions of differences in spending within and between states to differences in overall spending across quintiles of child poverty and racial composition. Section 8 discusses implications and relates our findings to the broader literature on school finance equity.

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