A map showing which states have sparsity funding formulas.
Some states provide additional funding for sparsely populated and small school districts. As more urban children and more children of color live in large districts, this often results in a per-pupil funding disparity for city kids and kids of color. EdBuild

City public school kids receive less money than rural or suburban ones. The situation is worse in districts that serve mostly children of color according to a report from EdBuild.

An opinion piece on Tuesday in the New York Daily News called for New York State to make good on its decade-old obligation to redirect money to New York City public school students to account “for differences in students’ need and localities’ tax bases.” The obligation stemmed from a successful 1992 lawsuit brought by a group of New York City parents and activists who called themselves the Campaign for Fiscal Equity.

Funding disparities for city students are a nationwide issue: Public school pupils enrolled in urban districts receive on average around $2,100 less per pupil than their suburban counterparts, and $4,000 less than students who attend rural remote schools, according to a recent study by EdBuild. And within cities, kids in predominantly nonwhite districts receive less than kids in predominantly white districts—about $1,321 less.

How does this happen?

EdBuild’s study cites a concept called “local control,” or the combination of the ability to self-fund schools with the ability to self-govern, as the main culprit. Local control is why some schools continue to teach creationism, and according to EdBuild’s findings, it’s also why there’s a funding gap between predominantly white and mostly nonwhite districts. A history of racial segregation and redlining in the United States has resulted in the concentration of low-wealth communities of color in urban areas.

Past attempts at education funding litigation have not solved the problem, they’ve only reinforced a geographically-based school funding system, says Rebecca Sibilia, CEO of EdBuild, and she says it’s a system that can never be equitable because where people live is a reflection of their wealth.“The inherent interest of keeping the control of schools close to the community creates an inequitable tax base from which schools can be funded,” EdBuild’s study reads.

In 1992, Robert Jackson, then a New York City public school parent and currently a New York State senator, instigated the lawsuit against the state for inequitable funding. Jackson’s Campaign for Fiscal Equity (CFE) won in court and the state came up with a funding formula that would direct more money to needy districts.

In an email, Jackson, who represents a district in Upper Manhattan, told CityLab about that time: “The seven-month trial we had for CFE forced New York State to actually define the number of dollars you need to provide the opportunity for sound, basic education, taking account of English Language Learners, poverty rates, and other indicators of need within a district. Up till that time, they had never done an objective analysis of how many dollars you need to provide this kind of opportunity. Education amounts every year had always been made by three men in a backroom.”

EdBuild’s study posits that state formulas that attempt to close the inequitable funding derived from place-based wealth often exacerbate the problem by focusing on the wrong variables, like sparsity, to fund for. Thirty-four states, including New York, provide increased funding for schools or districts that are rural, remote, isolated, sparsely populated, or just plain small. The reasoning is that some fixed costs are the same regardless of the number of students, so the state will send more money to help these schools and districts manage the diseconomies of scale.  

What often happens instead, according to Sibilia, is that wealthier districts that have drawn smaller borders around themselves receive the increased state funding as well as their hefty local revenues. Many state formulas, like Colorado’s, end up providing sparsity funding for districts that are just small. “All they say is that if you’re a small school district, just by the number of kids in your district, you’re gonna get more money,” said Sibilia. “When you’re not taking into consideration the sparsity of a school district, you end up with these very wealthy enclaves that end up getting lots of money that don’t necessarily have the diseconomies of scale; they’re just running small districts behind a small border.”

Sparsity isn’t nearly as much of a concern in districts that serve mostly children of color. These districts serve, on average, almost 10,500 students, which is three times the national average. Primarily white districts enroll only 1,500 students on average, and high-poverty white districts, which are predominantly rural, average an even smaller number.

Fifty-seven percent of nonwhite students are enrolled in city districts, but for poor nonwhite kids, that number climbs to 66 percent. What’s left is a majority of low-income, students of color residing in overpopulated and underfunded school districts. High-poverty districts obviously have a lot less in the way of local funding, since the majority is taken from property taxes and properties in higher-income districts generate more, both because the people in them have higher-value properties and are willing and able to pay more taxes toward school funding.

EdBuild’s research found that in Texas, the difference between funding for a remote school district and a city school district is one of the most striking. Doss Consolidated Common School District advertises itself as a “micro school” blended environment, where the benefits are “endless!” In fact, in 2009, the Texas Education Agency rated the district “exemplary.”

Sitting in the middle of Gillespie County, which has a population around 25,000, the school district teaches just 12 students, who are from middle-class or wealthy families. Based on Texas’s sparsity funding formula that inflates the student count to generate extra funding, Doss receives $16,749 per pupil from the state (the fixed state funding amount per pupil is $5,140), and $31,848 from local revenue, totaling $48,597 per pupil. Compare that to the urban South San Antonio School District, which is almost entirely nonwhite with a 28 percent poverty rate, and serves almost 10,000 students in 16 schools. Students receive $6,264 from the state, and $2,209 from local revenue, totaling $8,473 per student.

“All over the country you’ve got various small rural districts who are just sitting on a whole bunch of money,” said Sibilia. “Why are we funding only for rural costs and not for metropolitan costs? There’s probably an equal argument that there are additional costs associated with attending school in a metropolitan area. The state should be doing an aggressive job of seeing if their funding formula is actually making up for the cost differentials.”

“We focus too much on how much and not enough on how well the money is being spent,” said Ary Amerikaner, one of the authors of EdTrust’s 2018 Funding Gaps study that analyzed school funding equity across the United States.

“Poverty brings with it a whole series of additional needs that a student then brings to the school,” said Amerikaner.

If states want to put their money where their equitable mouths are, these researchers say, they need to consider the different needs of city kids, who are more likely to attend school in low-income, predominantly nonwhite districts. Suburban kids, for example, are majority white and less likely to live in poverty. Their parents are more likely to have college degrees, and they are more likely to come into school with early literacy and numeracy skills as well as school-ready behaviors.

“Some students living in poverty don’t have access to the healthcare they need, for example,” said Amerikaner. “They might come to school without glasses and can’t see the board. How are they going to learn? Some might come to school having experienced certain traumatic or adverse experiences and need a place to process that, which might come in the form of additional health counselors.”

“I feel like we sort of fall into this trap of talking about students of color who live in cities as extra-needy, and it’s important not to reinforce that,” Amerikaner said. “It’s important to also note that students living in poverty come to school with incredible strengths, and part of what we need to be investing in is making schools a place where those strengths are able to thrive.”

Amerikaner said that one of the many ways states and districts underinvest in high-needs schools is by not supporting advanced coursework opportunities, like Advanced Placement classes or gifted and talented programs. “We need to be investing in ways we’re not investing now—things that you would think of as standard in a more privileged school. We need to invest in the experiences to help all students succeed, including really engaging and rigorous coursework.”

Changing a status quo that reinforces current systems of oppression, intentionally or unintentionally, and underserves students in poverty and students of color is no easy feat. How can states ensure that they are sending money where it’s most needed, and that it’s spent in ways that are proven to promote equity?

Amerikaner said undoing this system would require either a lot of new money or moving old money around, and both of those things are extremely politically challenging.

“The change really has to be a unique state-by-state fix because every state has different tax policies, different funding formulas, and different students with different needs,” said Sibilia. “But there are certain things that you can say should be common of all funding formulas, like larger tax jurisdictions.”

Certain states have good models that allow for a more regionalized tax base. Vermont, for example, sets a flat statewide property tax, so everyone pays the same percent of their property wealth, which the state then collects and distributes based on its funding formula. If locals want to raise more money, they can, but they have to pay part of it back to the state to be redistributed to other areas that can’t raise more money locally.

“Think about the size and geography of school districts,” said Sibilia. “There are about 4,000 counties in the country and 15,000 school districts. That’s more than four districts per county. From a municipal perspective, that just doesn’t make sense.”

Only 19 states in the country have any sort of cap on the amount of money that locals can raise and keep for themselves, EdBuild found. It’s not that we should be capping the amount of money that’s in the school system, said Sibilia, but rather capping the level of inequity that exists between neighbors.

Florida, North Carolina, Georgia, and Maryland are all examples of states that have a more equitable funding according to EdBuild’s report, because their local funds can be spread across suburban and urban areas due to large county-based systems with a shared tax base. Maryland, for example, sorts 880,000 students into just 24 districts, whereas New Jersey divides 1.3 million students into 540 districts.

So what can cities do to ensure that their kids are not being left out of the equation? Get louder, said Sibilia.“Cities should actively look to put their state reps in leadership positions in places like the education committees of the House and the Senate at the state level.”

In order to ensure that states’ funding formulas don’t just fund for sparsity and instead include a measure that accounts for costs of metropolitan, low-income students’s needs, cities need better representation at the state level, Sibilia said.

According to the EdBuild study, in the U.S., there are more than six times as many predominantly white districts as those that serve primarily nonwhite populations, and most of those are in urban areas. This makes it difficult for predominantly nonwhite districts to advocate for themselves, as they are not the majority in their states. The report reads: “The power of advocacy, then, is amplified or muted by the sheer size of districts at each end of the spectrum.” But New York City’s is the largest school system in the nation and despite the successful Campaign for Funding Equity lawsuit in New York City 25 years ago, parents and legislators are still fighting for back payments to the New York City school district.

Sibilia also recommends that cities think about regionalization of resources and reaching out across their region. They could start by comparing their tax base to that of their neighbors. For example, if there’s a huge retail outlet in the suburbs just outside of a city where everyone shops, how can cities expand their tax base to capture regions where city-dwellers are actually shopping and spending their money?

According to Sibilia, “If we’re going to continue having a locally funded school system, which we believe is the problem to begin with, the fix has to be driven at the local level.

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