With declines in enrollment and attendance, increases in student poverty, and potential reductions in state revenue, policymakers are facing a perfect storm of uncertainty in apportioning K–12 education funding.

State policymakers typically use prior-year enrollment numbers or average daily attendance to allocate funding proportional to the number of students a school serves. In most states, these funding formulas are designed to more equitably distribute money to schools serving low-income students. This year, however, substantial pandemic-induced changes in enrollment, as well as uncertainty in the measurement of student poverty, will complicate the assessment of which school districts need funding the most.

To understand how states can most equitably allocate available funding, we modeled five policy approaches, each with benefits and drawbacks. From our analysis, it is clear that policymakers cannot rely on the status quo to efficiently distribute resources to the districts most in need.