Racial Disparities in Education Finance: Going Beyond Equal Revenues

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Abstract

Education is a key pathway out of poverty, yet schools that primarily serve minority students often fail to provide the educational opportunities available in predominantly white schools. A series of state court cases has addressed one cause of that disparity, the dramatic funding differences that result from reliance on local property taxes to fund schools. This paper examines the success of court-mandated solutions in equalizing spending per pupil across districts serving minority and white students. However, we show that there remains much disparity in other measures of educational quality and outcomes.

Introduction

Education has largely been seen as the most direct route out of poverty and into the middle class. Beginning with the Coleman report (Coleman et al. 1966), which documented the disparities in academic achievement across different ethnic and racial groups, there has been concern about understanding these disparities and closing these gaps. An obvious source of the disparity in academic achievement has been the variation in educational opportunities arising from differences in educational spending. In the past, because public schools were funded largely by local property taxes, property-rich and -poor school districts differed greatly in expenditures per pupil. Since the early 1970s, however, state legislatures have, on their own initiative or at the behest of state courts, implemented school finance equalization programs to reduce the disparity in within-state education spending.

Nonetheless, large financial differences remain. In addition, many nonfinancial measures of school quality and student outcomes still show large differences across social and economic groups. Schools with high concentrations of poor or minority students have a higher incidence of school violence, more poorly maintained physical structures, more less-experienced teachers, and fewer AP courses and Internet connections. Further, educational outcomes for poor and minority students, while improving, are still lower than those of their white counterparts.

This paper examines the success of court-mandated solutions in equalizing spending per pupil across districts serving minority and white students. Other measures related to educational quality and educational outcomes differ substantially. The paper first describes the court rulings that affect the role of the property tax in education finance, examining both the initial equalization decisions and the more recent court decisions that call for an adequacy standard. It also reviews the literature on the impact of school finance reform on overall finances.

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