School Finance 101: Reformy Distractions, Diversions & Smokescreens from What’s Really Needed (second of two)

This post is a follow up to the previous, and is based on work in progress.


We conclude with a discussion of three themes in the current political rhetoric regarding school finance that we see as creating significant barriers to substantive reforms. Three arguments in particular, are pervasive in the broader education reform debate, with implications for school funding equity and adequacy:

  1. First, that through years of court challenges states have largely resolved funding inequities between local public school districts, and the major persistent problems that remain are inequities in local district budget allocations to schools.
  2. Second, that adopting broad-based, school choice programs necessarily provides equitable opportunities for children via the liberty to choose among high quality alternatives, thus negating concerns over equitable or adequate funding.
  3. Third, that local public school districts are so inefficient in their basic design and they invariably have more than enough money to do the job well, but lack of appropriate incentives, not lack of money causes their failure.

The Intradistrict Distraction

An increasing volume of rhetoric around school finance rests on claims that states have largely met their obligations to resolve disparities between local public school districts. This premise is then extended to the contention that the bulk of remaining disparities are those that persist within school districts, due to irrational and unfair school district resource allocation practices between individual schools (see, for example, McClure, Wiener, Roza, and Hill, 2008; Public Impact, et al., 2008). In short, since states have done their job to promote equity and adequacy of school funding, school district officials must now meet their corresponding obligations. This argument is also often attached to the remedy of weighted student funding (see Roza, 2006, pointing readers to the Fordham Institute’s “Fund the Child” campaign).

Notably, no leading researchers in economics and school finance have joined this overwhelming shift in emphasis away from state-level concerns. Many have opted instead for a broad description of the funding problem that encompasses both within-district and between-district resource disparities (see, e.g., Bifulco, 2005; Burke, 1999; Duncombe and Johnston, 2004; Downes, 2004; Imazeki and Reschovsky, 2004; Stiefel, Rubenstein & Berne, 1998; Rubenstein et al., 2007). Nonetheless, arguments favoring a devolution in focus from states to school districts have gained significant traction in policy debates, and they have the rhetorical advantage of providing state policymakers with an enticing, revenue-neutral policy solution (see Public Impact, et al., 2008). If states have done their job, no more money is needed, nor must these policymakers consider painful movement of limited funding away from wealthier districts. Rather, districts must simply reshuffle what they have, in order to achieve optimal distribution.

But, as dissected in great detail by Baker and Welner (2010), the increase in popularity of these political arguments is backed by little or no empirical evidence for the premise that states have already met their end of the bargain. Baker and Welner explain that studies of within-district disparities are largely confined to a few states or individual districts where school-site expenditure data have been available. Yet, notwithstanding the fact that state school finance policies are idiosyncratic, studies having oft-suspect validity from select locations have been extrapolated by prominent researchers and advocates to have broader implications for within- and between-district disparities in other states.

Baker and Welner summarize that the intradistrict distraction consists of five interconnected issues:

  1. The existence of within-district funding disparities.
  2. The extent of any such within-district disparities.
  3. The continuing existence of between-district disparities.
  4. The extent of any such between-district disparities.
  5. The relative causal importance of within- and between-district disparities.

Our best reading of the extant literature tells us that numbers (1) and (3) should be non-controversial: disparities do exist, but they vary tremendously by jurisdiction. As discussed above, the evidence regarding number (2) is very limited, which also means we can provide no answers regarding number (5). But it is number (4) that is most interestingly implicated by the recent policy push—the contention that we as a nation have made such progress on addressing between-district disparities that we can now turn our attention elsewhere. As such, a fifty state analysis of the current status of between-district funding inequities is warranted.

The Choice Diversion:  Liberty as Substitute for Equality

A second issue complicating the debate over school funding equity and adequacy is the role of choice programs including public financing of charter school alternatives and in some cases, publicly subsidized vouchers or tuition tax credits for private schools. Implicit in policy preferences for choice program expansion is the notion that more children should have the choice to attend higher quality schooling options and that such options will emerge, as a function of the competitive marketplace for quality schooling with little attention to the level of funding provided. In other words, the liberty achieved by choice programs serves as substitute for the provision of broad based, equitable and adequate financing. Studies purporting significant advantages achieved by students attending charter schools have invariably neglected to evaluate their access to financial resources, frequently downplaying the importance of money or relevance of equity traditionally conceived (Baker, Libby & Wiley, 2012).

But these arguments are merely a diversion, sidestepping whether, when applied in practice, adequate alternatives are equitably distributed. One problem with this assertion is that variation in resources across private providers, as well as across charter schools tends to be even greater than variation across traditional public schools (Baker, 2009, Baker, Libby & Wiley, 2012). Further, higher and lower quality private and charter schools are not equitable distributed geographically and broadly available to all. At the extreme, in New Orleans following Hurricane Katrina where traditional district schools were largely wiped out, and where choice based solutions were imposed during the recovery, entire sections of the city were left without secondary level options and provided a sparse few elementary and middle level options (Buras, 2011).

Baker, Libby and Wiley show that in New York City, charter expansion has yielded vastly inequitable choices. Table 1 shows the demographics, spending and class sizes of New York City charter schools, by their network affiliation, compared to district schools. Most New York City charter school networks serve far fewer children qualifying for free lunch (<130% poverty level), far fewer English language learners and far fewer children with disabilities than same grade level schools in the same borough of the city. These patterns of student sorting induce inequities across schools. But, these schools also have widely varied access to financial resources despite being equitably funded by the city. Some charter networks are able to outspend demographically similar district schools by over $5,000 per pupil, and to provide class sizes that are 4 to 6 (or more) students smaller.

Table 1

Inequitable Choices

Further, these charter alternatives are not evenly distributed across city neighborhoods, nor do they all have equal unfilled enrollment slots. They need not, nor can they, accept all comers. Thus, the premise that liberty via choice programs provides a viable substitute for equitable and adequate funding for traditional public systems is, in reality, a hollow promise.

The New Normal & the Efficiency Smokescreen

 Finally, an argument that reoccurs with some consistency in debates over the adequacy of education funding is that there exists little or no proof that adding more money would likely have any measurable positive effects. This argument hinges on the oft repeated (and as frequently refuted[1]) phrase that there exists “no systematic relationship between funding and outcomes.” This argument fails to excuse the facial inequity of permitting some children attending some schools to have twice or more, the resources of others, especially where, as in New York State, higher need children are the ones with systematically fewer resources.

The more recent extension of the “no systematic relationship” or “money doesn’t matter” argument that has eased its way into political rhetoric and litigation regarding school spending is that all local public school districts already have more than enough money, even those with the least, and that if they simply used that money in the most efficient way, we could see that current spending is more than adequate. This assertion is echoed in the quotes at the outset of this chapter. The extension of this argument is that therefore, even cutting funding to these schools would not cause harm and does not compromise the adequacy of their funding, if they take advantage of these cuts to improve efficiency.

A version of this argument goes that if schools and districts paid teachers based on test scores they produce, and if schools and districts systematically dismissed ineffective teachers, productivity would increase dramatically and spending could decline. Further, that because improving teacher quality is argued to be more effective and less costly than smaller class sizes toward improving student outcomes, one could increase class sizes dramatically (double them[2]), recapture the salary and benefits funding of those laid-off in the process and use that money to pay excellent teachers more. Thus, educational adequacy can be achieved at much lower cost – a much lower cost that what is currently even being spent.

The most significant problem with this argument is that there exists no empirical evidence to support it.[3] It is speculative, frequently based on the assertions that teacher workforce quality can be improved with no increase to average wages, simply by firing the 5% of teachers least effective at tweaking test scores each year and paying the rest based on the student test scores they produce, or that the funding wage increases required to substantively improve the teacher workforce is necessarily dramatically less costly than maintaining equally productive smaller class sizes.

As Baker and Welner (2012) point out in a recent article in Educational Researcher, the logical way to test these very assertions would be to permit or encourage some schools and districts to experiment with alternative compensation strategies, and other “reforms,” and to evaluate the cost effectiveness, or relative efficiency of these schools and districts.  That is, do schools/districts that adopt these strategies land in a different location along the curve? Do they get the same outcomes with the same kids at much lower spending? In fact, some schools and districts do experiment with different strategies and those schools carry their relevant share of weight in any statewide cost model.

Too often, such experimentation falls disproportionately on the state’s neediest children, because the state lacks the political will to provide sufficient funding to districts serving those children. Pure speculation that some alternative educational delivery system would produce better outcomes at much lower expense is certainly no basis for making a judicial determination regarding constitutionality of existing funding.  Experimentation is no substitute for adequacy.

Regarding this theory, a three judge panel charged with hearing arguments over school funding adequacy in Kansas eloquently opined:

Here, it is clearly apparent, and, actually, not arguably subject to dispute, that the state’s assertion of a benign consequence of cutting school funding without a factual basis, either quantitatively or qualitatively, to justify the cuts is, but, at best, only based on an inference derived from defendant’s experts that such costs may possibly not produce the best value that can be achieved from the level of spending provided.

Further, that:

This is simply not only a weak and factually tenuous premise, but one that seems likely to produce, if accepted, what could not be otherwise than characterized as sanctioning an unconscionable result within the context of the education system.


Simply, school opportunities do not repeat themselves and when the opportunity for a formal education passes, then for most, it is most likely gone.

The judges went on to tackle the logical extension of the state’s argument, noting that the state was effectively endorsing experimentation on children who have “no recourse from a failure of the experiment.”

If the position advanced here is the State’s full position, it is experimenting with our children which have no recourse from a failure of the experiment.  Here, the legislative experiment with cutting funding has impacted Kansas children’s K-12 opportunity to learn for almost one-third of their k-12 educational experience (2009-10 through 2012-13).[4]



Baker, B. D. (2012). Revisiting the Age-Old Question: Does Money Matter in Education?. Albert Shanker Institute.

Baker, B. D. (2009). Private schooling in the US: Expenditures, supply, and policy implications.Boulder and Tempe: Education and the Public Interest Center & Education Policy Research Unit.

Baker, B. D., & Corcoran, S. P. (2012). The Stealth Inequities of School Funding: How State and Local School Finance Systems Perpetuate Inequitable Student Spending. Center for American Progress.

Baker, B., & Green, P. (2008). Conceptions of equity and adequacy in school finance. Handbook of research in education finance and policy, 203-221.

Baker, B. D., Libby, K., & Wiley, K. (2012). Spending by the Major Charter Management Organizations: Comparing Charter School and Local Public District Financial Resources in New York, Ohio, and Texas. NationalEducation Policy Center.

Baker, B. D., Sciarra, D. G., & Farrie, D. (2012). Is School Funding Fair?: A National Report Card.Education Law Center.

Baker, B. D., Sciarra, D. G., & Farrie, D. (2010). Is School Funding Fair?: A National Report Card.Education Law Center.

Baker, B. D., Taylor, L., & Vedlitz, A. (2005). Measuring educational adequacy in public schools (Report prepared for the Texas Legislature Joint Committee on Public School Finance, The Texas School Finance Project).

Baker, B., & Welner, K. G. (2012). Evidence and Rigor Scrutinizing the Rhetorical Embrace of Evidence-Based Decision Making. Educational Researcher41(3), 98-101.

Baker, B.D. & Welner, K.G. (2011a). Productivity Research, the U.S. Department of Education, and High-Quality Evidence. Boulder, CO: National Education Policy Center. Retrieved [date] from

Baker, B. D., & Welner, K. G. (2011b). School Finance and Courts: Does Reform Matter, and How Can We Tell?. Teachers College Record113(11), 2374-2414.

Baker, B., & Welner, K. G. (2010). Premature celebrations: The persistence of inter-district funding disparities. education policy analysis archives18, 9.

Bifulco, R. (2005) District-Level Black-White Funding Disparities in the United States 1987 to 2002. Journal of Education Finance 31 (2) 172-194.

Buras, K. L. (2011). Race, charter schools, and conscious capitalism: On the spatial politics of whiteness as property (and the unconscionable assault on black New Orleans). Harvard Educational Review81(2), 296-331.

Clune, W. H. (1994). The shift from equity to adequacy in school finance. Educational Policy8(4), 376-394.

Cuomo, A (2011) State of the State. Albany, NY.

Deslatte, A. (2011) Scott: Anthropology and journalism don’t pay, and neither do capes. Orlando, FL: Orlando Sentinal. October 11, 2011

Downes, T. A. (2004). School Finance Reform and School Quality: Lessons from Vermont. In

Yinger, J. (ed), Helping Children Left Behind: State Aid and the Pursuit of Educational Equity.  Cambridge, MA: MIT Press.

Duncan, A. (November 17, 2010) The New Normal: Doing More with Less — Secretary Arne Duncan’s Remarks at the American Enterprise Institute. Washington, DC:

Duncombe, W.D., and Johnston, J. (2004). Helping Children Left Behind: State Aid and the Pursuit ofEducational Equity. Cambridge, MA: MIT Press.

Freeman, J. (2011) New Jersey’s ‘Failed Experiment’ The new governor is on a mission to make his state competitive again in attracting people and capital. New York, Wall Street Journal.

Gates, W. (2011) Flip the Curve: Student Achievement vs. School Budgets. Huffington Post.

Gist, D. (2010) National Journal. R.I. Formula Funds Children, Not Systems.

Imazeki, J., and Reschovsky, A. (2004). Helping Children Left Behind: State Aid and the Pursuit of Educational Equity. Cambridge, MA: MIT Press.

McClure, P., Wiener, R., Roza, M., and Hill, M. (2008). Ensuring equal opportunity in public education: How local school district funding policies hurt disadvantaged students and what federal policy can do about it. Washington, DC: Center for American Progress. Retrieved December 20, 2009 from

Public Impact; The University of Dayton, School of Education and Allied Professions; and Thomas B. Fordham Institute. (2008, March). Fund the Child: Bringing Equity, Autonomy and Portability to Ohio School Finance How sound an investment? Washington, DC: Thomas B. Fordham Institute. Retrieved December 20, 2009 from

New York State Education Department (2011). Fiscal Analysis & Research Unit. Primer on State Aid 2011-2012.

New York State Education Department (2011). Fiscal Analysis & Research Unit. Successful Schools Analysis Technical Report.

Oliff, P., Mai, C., Leachman, M. (2012) New School Year Brings More Cuts in State Funding for Schools. Washington, DC: Center on Budget and Policy Priorities.  Accessed July 23, 2013

RIDE (Rhode Island Department of Education) Division of School Finance (2010)

Roza, M. (2006) “How Districts Short Change Low Income and Minority Students,” in Funding Gaps 2006. Washington, DC: The Education Trust.

Rubenstein, R., Schwartz, A. E., Stiefel, L., and Bel Hadj Amor, H. (2007). From districts to schools: The distribution of resources across schools in big city school districts. Economics of Education Review, 26(5), 532-545.

Stiefel, L, Rubenstein, R., and Berne, R. (1998). Intra-District Equity in Four Large Cities: Data, Methods and Results.” Journal of Education Finance, 23(4), 447-467.

U.S.Department of Education, For Each and Every Child—A Strategy for Education Equity and Excellence, Washington, D.C., 2013.

Wong, K. K. (2013). The Design of the Rhode Island School Funding Formula: Developing New Strategies on Equity and Accountability. PeabodyJournal of Education88(1), 37-47.



[1]See Baker, 2012 for a thorough critique of these arguments and their origins.


[3] For a critique of oft-cited reports making these assertions, see: Baker, B., & Welner, K. G. (2012).


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Bruce D. Baker

Bruce D. Baker is a Professor in the Graduate School of Education at Rutgers, The State University of New Jersey, where he teaches courses in school finance policy and district business management. His recent research focuses on state aid allocation policies and practices, with particular attention to the equity and adequacy of...