Government Spending

Are Poor Schools Underfunded? It's More Complex Than You'd Think.

Despite headlines pointing to the contrary, high-poverty schools get more funding than low-poverty schools in almost all states.


One of the most persistent myths in K-12 education is the idea that high-poverty schools are near-universally, significantly underfunded. However, the truth is much more complicated. As it turns out, poor districts get more money in almost every state—and school spending has an incredibly weak relationship with school quality in the first place.

This week, USA Today published another example of fearmongering, giving a Thursday article the inexplicable headline, "Enrichment only for the rich? How school segregation continues to divide students by income." However, the research the article presents doesn't exactly show the apocalyptic outcomes implied by the headline. In fact, the research it cites concluded that "poverty rates do not have a clear relationship" with local and state funding.

Reporter Alia Wong's article is filled with heartwrenching stories of schools with "regular lockdowns and the sound of gunfire in the lobby," where "classrooms lacked basic supplies and teachers didn't notice how often [a student] skipped class. Desks tended to be broken and textbooks decades old."

While these situations are tragic, the reality is a bit more complex. Not only is the funding gap between wealthier and poorer schools found by the researchers smaller than you might think—it disappeared when dividing schools based on their poverty rates. Further, other research shows that school funding, and thus the chaotic, neglectful state of many failing schools, has basically no relationship with school quality. 

The study, from education think tank Bellwether, examined schools in 123 metropolitan areas and classified districts into lower, middle, and wealthy based on how much local income and property values differed from the average in their metro area. The researchers did this in order to study funding differences between schools in the same area—meaning that some districts in the lowest category (what they called Opportunity Outsiders) are not actually high-poverty schools.

In all, researchers found that wealthy districts received the most total funding in their metro area just 39 percent of the time. However, they did find a modest, but significant funding gap between wealthier and poorer schools. The median Opportunity Outsider school spent $14,287 per pupil, while the median wealthy school (called Economic Elite) spent $16,702. 

However, this gap all but vanished when the researchers reclassified schools not based on relative wealth but on their actual poverty rates. The study concluded that "poverty rates do not have a clear relationship with the amount of state and local revenue that districts receive."

So do the schools poor kids actually go to receive less funding? Not according to this study. Only the schools that are among the poorest in their metro area—which includes plenty of schools in wealthy areas, where the relatively poorest school has only average poverty—that face a funding gap. 

And that's only accounting for local and state funding. When you include federal funding, the situation becomes even better for high-poverty schools. According to research from the Urban Institute, when considering "federal, state, and local funding, almost all states allocate more per-student funding to poor kids than to nonpoor kids." Just three states, Nevada, Wyoming, and Illinois have a "weakly" regressive funding structure. 

If so many states allocate more money to poor districts, why do low-income schools have worse results? As it turns out, per-pupil spending doesn't seem to impact school quality all that much. One 2012 report by Harvard and Stanford researchers, found that, on average, an extra "$1000 in per-pupil spending is associated with an annual gain in achievement of one-tenth of 1 percent of a standard deviation," an increase the researchers say is "of no statistical or substantive significance."

This isn't to say that funding doesn't matter at all. Rather, low-income school districts tend to spend their funding less responsibly. 

"More money can help schools succeed, but not if they fritter those extra resources in unproductive ways," Jay Greene, a senior research fellow at the Heritage Foundation, told Reason last year. "There are many common ways that schools blow resources. Wasteful schools tend to hire more non-instructional staff while raising the pay and benefit costs for all staff regardless of their contribution to student outcomes."

Despite the headlines pointing to the contrary, high-poverty school districts aren't generally underfunded and funding gaps aren't responsible for lackluster academic performance. That's not to say we shouldn't be concerned when poorer schools receive lower funding, but rather that the issues in underperforming schools almost certainly won't be fixed by throwing more cash at the problem.