On this week’s Education Gadfly Show podcast, Alex Spurrier, an associate partner at Bellwether, joins Mike and David to discuss whether schools in low-income neighborhoods receive less funding than their affluent counterparts. Then, on the Research Minute, Amber examines a new study investigating state finance reforms that secure lasting budget increases for districts.
Recommended content:
Alex Spurrier, Bonnie O’Keefe, and Biko McMillan, “Leveling the landscape: An analysis of K–12 funding inequities within metro areas,” Bellwether (May 2024).
“Low- and high-income schools now receive equal funding” —Adam Tyner, Fordham Institute
“Doing educational equity right: School finance” —Michael Petrilli, Fordham Institute
Shelby M. McNeill and Christopher A. Candelaria, “Paying for school finance reforms: How states raise revenues to fund increases in elementary-secondary education expenditures,” Annenberg Institute at Brown University (May 2024).
Feedback Welcome: Have ideas for improving our podcast? Send them to Daniel Buck at dbuck@fordhaminstitute.org.
This transcript was created using AI software.
Michael Petrilli (00:01):
Welcome to the Education Gadfly Show. I'm your host Mike Petrilli of the Thomas B. Fordham Institute. Today, Alex Spurrier, an associate partner with Bellwether, joins us to discuss whether schools in low-income neighborhoods receive less funding than their affluent counterparts. Then on the research minute, Amber reports on a new study investigating the state funding reforms and revenue policies that secure lasting budget increases for districts. All this on the Education Gadfly Show,
(00:42):
Hello. This is your host, Mike Petrilli of the Thomas B. Fordham Institute here at the Education Gadfly Show and online at fordhaminstitute.org. And now please welcome our special guest for this week, Alex Spurrier. Alex, welcome to the show.
Alex Spurrier (00:56):
Thank you for having me, Mike.
Michael Petrilli (00:57):
Yeah, Alex is an associate partner with Bellwether, and we're going to talk about school finance, which is super exciting. But first, let me introduce my colleague, my co-host, David Griffith.
David Griffith (01:09):
Hey, Mike. It's always a pleasure.
Michael Petrilli (01:11):
Yeah. Well, Alex, excited to have you on. I understand you're a longtime listener. I can't believe we haven't had you on before, but glad to have you on today. What caught our attention was, of course, a new analysis that you put out that you and bellwether put out. It's called Leveling the Landscape and Analysis of K 12 funding and equities within Metro areas. This is kind of like a research minute doubleheader. Then today we're going to go into the research, but especially talk about the implications here. So let's do that on ed reform update.
(01:47):
Alright, Alex, well first of all, let me say very nice job on this analysis and I'm so excited to see you dig in at the metro area. I have long thought that that is really where these funding analyses make sense, partly where most of the kids live. But also I'm a firm believer that when it comes to school finance, the reason we've got to worry about inequities or even a situation where maybe we've done a good job leveling up so that high poverty schools have the same amount of money as other schools. In some places that's still not enough if you're trying to attract great teachers to those high poverty schools. Because we know from lots of research, including lots of research, Amber has covered on the research minute that you got to pay teachers a lot more in general to go teach in high poverty schools. You teach 'em, you got to pay 'em more every year, not just one time bonus. And so it's that metro if you want to really see how inequity plays out, looking at it within the metro area makes a ton of sense. But that said, we do have our quibbles with some of the things in the study, or at least how it's been reported in the press. So let's start here. Tell us what you did very briefly and some of the major findings.
Alex Spurrier (02:56):
Well, thanks for that intro. Mike and I, at their best public K 12 school systems should be engines of social and economic mobility, giving students the chance to apply their skills and knowledge and shape their own futures regardless of their socioeconomic background. But in practice, school funding the United States undermines this vision deepening the very inequities public education aspires to overcome. And so as you mentioned, there's been a lot of work done to look at school finance equity at the state level, but we know that states are much more complex than just singular entities. You've got lots of different communities and metro areas within states, and we found a kind of a gap in the literature on school finance equity where there wasn't a whole lot of analysis done to take a look at school finance equity issues at the metro level. So that's really where our recent report level, the landscape comes in.
(03:43):
We look at 123 of the nation's largest metro areas across 38 states analyzing how per pupil revenues differ between affluent and less affluent districts within metro areas. And what we found is that in many metro areas, school systems that are in the wealthiest communities are often funded at higher levels than school systems in nearby districts that have relatively less wealth. And so there are three really important takeaways from our research. First is that this isn't an isolated issue, that it's a systemic challenge found in many parts of the country. We found that in more of the districts that we looked at in the metro areas, we looked at more than half of the students that are enrolled in those metro areas live in a place where the affluent districts are funded at the highest levels. Second, we found that despite generally progressive state revenues that are flowing to school systems, disparities in local revenue are driving gaps between affluent districts and less affluent districts within metro areas. And then finally, there's a huge role for state policy makers to determine how state revenue is flowing to districts. But they also play a role in determining how local funding flows through districts. And we offer a couple different ways states can address that, but those are really the biggest takeaways from our paper.
Michael Petrilli (05:01):
Alright, that's great. Nicely done, Alex. So first of all, I think it's important to point out that you are not saying that we're finding that rich districts always get more money than poor districts, right? In fact, tell me if this is right. I think it was a majority of the metro areas you looked at, it was the high poverty districts that received the most money. Is that fair to say?
Alex Spurrier (05:24):
So this is where it gets a little wonky in terms of the methodology. So I want to make sure that we're clear on what we'd use to define affluence versus less affluent within metro areas. So we used median household income and median property values to sort districts into either what we call economic elites, those districts that were more than half a standard deviation above their metro areas, income and property wealth valuations or those that we qualified as opportunity outsiders. So those that were a half standard deviation below on both income and property valuation, poverty rates can differ across those different metrics. So we stuck looking at income and property wealth to determine whether or not there were funding equities.
Michael Petrilli (06:05):
So I got to be careful with the language. No, fair enough. But the big point is one that our colleague, Adam Tyner made in one of our think again papers last year. I was actually just last week in Las Vegas speaking to the Education Writers Association about school finance. And it's just simply this, that if people think that the American education system is still terribly inequitable from sea to shining sea, it's savage inequalities everywhere you look just like the ones that Jonathan Koal wrote about 30 years ago. The point is that that is not the world we're living in. Thankfully, we've made huge progress, or I should say most states have made huge progress in funding schools more equitably. Now look, those of us on the right, we can't take any credit for this. I mean, this is about school finance lawsuits that happened in the nineties and two thousands.
(06:52):
It's mostly because of Democrats pushing for more school funding for those areas. I guess some Republicans can take some credit in some places, and there's still some states where we've got a long way to go. I mean, there's outliers, I think Pennsylvania, Oregon, but there's been real progress. And so I just think it's important to say that you can talk about this in different ways. You can say, well, we are still not where we need to be. And that's true. You found these 43 metro areas where it's still the richest, well richest, how do we say the districts with the most property wealth and highest incomes that get higher funding, but that leaves what something like 70 something metro areas where you did not find that to be the case. And so it depends how you look at that. Glasses, half full glasses, half to empty, more work to be done, right?
Alex Spurrier (07:45):
Sure. I think it's fair to say that there's been progress, but I'll also note that within those 49 metro areas, that it makes up over half of the students who are enrolled in these large metro school systems.
Michael Petrilli (07:57):
These are some big places. Gotcha.
Alex Spurrier (07:58):
Yeah. So there's definitely some parts of the country where this is a much more acute problem and it creates much more inequities that play out within metro areas. We highlight a few of them in our report that have some pretty clear examples of where you've got state school finance policies that affect both state revenue and local revenue generation that lead to huge disparities within metro areas where affluent school systems are generating thousands of dollars of more people than less affluent school districts. And there are some states that have done better to minimize those inequities. And we highlight a few of those in the report. Texas I think is a notable example of this, where they have a policy of power equalization and revenue recapture. It's a mouthful, but what it basically means is that when two districts want to set a certain tax rate, the state ensures they can generate similar amounts of revenue per pupil based on that tax rate.
(08:55):
In states where you don't have a policy like that, Connecticut is one example that we highlight in the report. You can have two districts very nearby each other, Greenwich and Bridgeport, Greenwich being extremely affluent and has relatively low tax rates. Bridgeport being very much not affluent and has relatively high tax rates. Bridgeport generates less per pupil than Grech is able to, even though they're taxing their citizens at a higher rate to do so. And so there's a lot of opportunity for state policy makers to address some of the issues that we found in the report that could help minimize some of these school finance and equities. And
Michael Petrilli (09:30):
Look, and I know my friends on the right will say, well, look, there's no way that you can tell a given affluent district, say Greenwich, Connecticut, that you're not allowed to raise your own taxes if you want to spend even more on your schools. But I guess what you're saying is, well, maybe you can or you can't, or you should or you shouldn't. But you could certainly say to Greenwich, well, if you want to raise your taxes to spend more on your schools, some of that's going to go back to the state and we're going to redistribute it. And that's what's happening in Texas.
Alex Spurrier (10:03):
Yeah, exactly. And I think this is a policy conversation that needs to be had because local revenue opportunities for school districts aren't just made up out of thin air. They come from state policy and policies that determine where and how many district lines are drawn to carve up a metro area and how much authority is granted to either a local school board or a town to raise revenue. One of those solutions that we talk about for policymakers to consider in the paper is saying, we can leave school boundaries the way they are, but maybe we take revenue generation authority and move it up to a higher level of government, be it a county or a more regional authority so that you can minimize some of those inequities across school districts. Florida's a great example of where nearly all of their school districts are countywide. And so you just don't have these huge inequities within metro areas because their metro areas aren't carved up into dozens or even hundreds of districts like what we see the Chicago metro area or in the New York, New Jersey area, or in California or Ohio or St. Louis, where you've got these metro areas that are incredibly fractured by district lines. And what that ends up doing is creating a much bigger challenge for policy makers to ensure an equitable funding environment across district lines. And that's something we really want to push policy makers to consider.
Michael Petrilli (11:21):
David, what's on your mind?
David Griffith (11:23):
Well, I mean, as usual when we talk about this, it's the fact that words like equality and equity are a lot more complicated than they sound when you actually dig into it. So I want to make sure, I don't know, I mostly have questions. Honestly. I think one question is, I've never actually done a study on this subject, so I'm curious to know what you think. Is this the right way to look at it? Right? Is metros the right way to look at it? Do you think you would've found less or more inequality if you were looking at it at a state level or a federal level? I mean, can you just help us wrap around our heads around the implications of looking at it at different levels as you see it?
Alex Spurrier (12:02):
That's a great question, and I think the metro level is a really appropriate geography size to consider when you're thinking about questions of whether or not school funding systems are providing similar opportunities to students regardless of what kind of context they're growing up in. So I grew up in the Minneapolis metro area when my parents were considering moving from one house to another, they weren't thinking about whether or not we were going to move to Duluth or Bemidji way up in northern Minnesota. They were thinking about where in the Twin Cities would make sense for our family to live. And I think a lot of families think about the decisions they make in that context within their metro area. And the same goes for teachers. They're considering where they want to get jobs teaching at different schools. So I think the metro area is a really important context for us to think about when it comes to questions of school finance policy, because I think when you just look at it at the state level, it can be useful to get a broad sense of whether or not state policies are having their intended impact on the state school finance system.
(13:04):
But states can often contain so many different geographic and metropolitan regions. Not every state is Rhode Island where it's a tiny state with one context or Hawaii where it's one single school district spread across in Archipelago. But we've got lots of states that have lots of different metro areas with very different cost pressures on school districts and on families. And so I think that's an appropriate level of geography to consider for these questions.
Michael Petrilli (13:31):
Well, I'm glad you brought up the word federal though, David, because that's my last question here, Alex, is that if you look into the report, you say very clearly that you do not look at federal funding as part of this. Now this is something we've seen in other studies as well. I think about the ones that Rebecca Sabilia group's Ed build and now ed fund, that she also leaves out federal funding. I worry that that creates a misleading impression. I mean, the money is money, it's green, and in fact, if you do look at federal money, it changes the picture pretty dramatically. Why didn't you include that?
Alex Spurrier (14:08):
We didn't include it for the simple reason that the vast majority of school funding dollars come from state and local sources. North of 90% in most states is coming from state and local sources and state policy makers have a direct influence over both of those sets of funding streams. And I think additionally, federal dollars are often intended for either targeted programs or intended to supplement, not supplant what's happening at the state and local levels for funding generation. And so I think it makes sense when we're taking a look at state policy and what state policy can do to either level the landscape or raise the level of equity and fairness within metro areas or across their state to focus on state and local revenue because those are what state policy makers have direct control over.
Michael Petrilli (14:55):
Yeah. Alright. Fair enough. But I am correct, right, that if you do include the federal money, then some of those 43 districts for example, the findings would shift. You would see more places where you'd say that the places with less wealth are getting at least closer to their fair share of money. Maybe it's still not progressive enough, it supplementing, maybe it is supplanting instead of supplementing, but in terms of the money that's being spent, it changes the equation.
Alex Spurrier (15:24):
It might at the margin for some of the metro areas, but I think in enough of the metro areas that we looked at where it's multiple thousands of dollars per pupil of a difference between some of these affluent districts and less affluent districts, that there is still a systemic challenge for state policymakers to consider and how they're structuring their state school funding systems to ensure that wherever kids are growing up, that the school, public school they go to down the street isn't providing a significantly different opportunity than what's being offered to kids that might be growing up in a neighborhood that has much more expensive housing than what they do.
Michael Petrilli (15:57):
Gotcha. Alright, well we will have to leave it there. Alex. Spurrier, thank you so much for joining us today. Again, Alex is an associate partner with Bellwether. You can check out his study, which we'll put in the show notes, leveling the landscape and analysis of K 12 funding and equities within metro areas. Thanks for coming on the show, Alex.
Alex Spurrier (16:16):
Thank you so much for having me, Mike.
Michael Petrilli (16:18):
All right, now it's time for everyone's favorite Amber's research minute. Amber, welcome back to the show.
Amber Northern (16:30):
Thank you, Mike.
Michael Petrilli (16:32):
Well, that was a good conversation we just had with Alex at Bellwether. I don't know, David, I think this thing about federal funding, I mean, I understand the policy point that federal funding is supposed to supplement, not supplant, but I'm sorry. If you're doing these reports on school finance and inequity, you got to be at least make the reporters crystal clear that they know that this does not represent all of the money we're talking about. That makes a pretty big difference. I mean, certainly in recent years with Esser, but even in normal years, it's real money.
David Griffith (17:07):
I agree that it's real money. That's the most diplomatic thing I can say there, Mike, but
Michael Petrilli (17:13):
Okay. Alright. I know this is where you good liberal bonafides come out on school funding, but
David Griffith (17:20):
Well, it's true. It's true. I think that the reality is that it is hard to make the case for more progressive funding, right? When funding's already a little bit progressive in some places. And it's hard to say how progressive it needs to be.
Michael Petrilli (17:36):
No, no, no. But I made this case the other day in front of the education reporters, which is we know from studies that Amber has covered on the research minute, you got to pay teachers something like $10,000 a year more every year to get them to teach in high poverty schools. That's a lot of money. And so yeah, that's the argument right there from my perspective. But look, and I understand Alex, and there's lots of other people talking about this right now, it would be great if we could get rid of district boundaries or every place had countywide school systems. Okay, that's never going to happen. I dunno. I mean, I would put real money talking about money again on the idea that a hundred years from now our school districts are going to be mostly the same as they are now because I mean, it's just politically impossible to make those changes. I will take that bet because not us will be here. Okay, let's do it. Alright, well, Amber, this is all a good segue for you because I understand that we are going to keep talking about school finance today.
Amber Northern (18:33):
We are Chris Candelaria, one of our EEPs and some other folks have done a new study on school finance reforms. Man, I got to call it SFR, which is kind of annoying, but that's the acronym here. These are state level education reforms. They usually result from a court ruling or a legislative statute. I think most of our listeners know. They're meant to induce states to either revise their school funding formulas to provide more equitable funding to districts. So perhaps they're going to reduce expenditures on non-education programs, or they'll increase state funding some other way or some combination. We know, like we were just talking about, prior research in many cases shows that spending increases induced by these SFRs improved test scores in graduation rates. But Chris and his colleagues make the point that we don't have studies that look at differences at the state level.
(19:28):
We mostly have national studies that sort of average this across states. And so anyhow, we really want to do a deep dive at the state level, which is what they do. They ask which states increased and sustained higher levels of elementary and secondary education funding after an SFR and how was it paid for? So a bunch of data sources are using census state level finance data from 1987 to 2007. They've got a list of SFRs that occurred between 1989 and 2005, which is called the adequacy era. They examined the text of the statutes that were passed around the same time and often because of these court rulings. And then they look at changes to state finances to fund these proposed increases. They look at data on local property tax revenues. They merge in state population data and student level enrollments. And then they purposely don't include the great recession because they said that just kind of put a wrench into everything.
(20:34):
But they do note that several states have had their finance systems declared unconstitutional since then. So they say, Hey, this is still relevant information. So they've got 24 states, and I had at least one SFR during this period, I just told you about 87 to 2007. And then they look at the average effects up through 10 years post reform. They say, we're going to give them sufficient time for all of this to play out. And then they use what I think basically amounts to a differences in differences approach, although it had a different name because they're looking at, they're trying to figure out how can we address these unobservables, like the motivation to engage in finance reform. So they go into a lot of explanation about the diff and D 26 states did not have reform during this period, and these never treated states serve as the comparison group.
(21:28):
All right, we're ready for the results. Six out of 24 states that had SFRs significantly increased their per capita state education expenditures at the oh five levels. So significance levels in the years following the reform, the sixth of 24, I had a whole paragraph on what's going on, but I deleted that. We'll talk about it. They zone in on six states that did increase and sustain spending after the SFR, Vermont, New Hampshire, Kansas, Arkansas, Maryland, and New Jersey. So now we're going to dig into those six. The average state across 'EM, state spending increased ranged as a result of the SFR ranged range from a high of about $5,500 per pupil in Vermont to a low of less than 500 bucks in Maryland. And there's lots of detail on how each state funded these increases, but it boiled down in my mind after many beauty pages to two things.
(22:29):
One states took control of the property taxes either by imposing them, collecting them, or distributing them. And Vermont, for example, that meant that total property tax revenues remain largely unchanged, but got redistributed using a foundation grant program, which guaranteed a base level of funding per pupil. And then the state presumed the primarily responsibility for funding that foundation grant program. So the total amount increase, but the local property tax revenues tended to decrease. And then state property tax revenues, however, did increase in Vermont, Michigan, Arkansas, and New Hampshire. So then you say, okay, what about, did they have any flexibility here? So Vermont, the districts could actually choose to tax their local property, but the state guaranteed that if you did that, the districts approved the same tax rate, those districts would receive the same amount of funding per pupil if you taxed yourself at the same rate.
(23:33):
And then other states like Michigan, let the districts keep their local monies if they chose to tax themselves more. And then the second way they funded this is not brain science, is to increasing a variety of taxes. Oh man, I never knew there were so many taxes rooms, meals, sales tax, gas tax, cigarette tax, sales tax, corporate income tax bank, franchise tax. I mean, it went on for pages. And then finally, minimal evidence that non-education state expenditures were reduced. So they didn't apparently rob this other bucket over here. Minimal data that state debt increased, but they can't be sure because there are limitations in their data. But they do say that New Hampshire local funding decreased, and that's notable because the total local and state revenues decreased in the years after that, SFR as taxpayers appear to engage in a tax revolt. So there are always trade-offs to these decisions.
Michael Petrilli (24:35):
Wow. Well, Amber, this really goes nicely with the conversation we just had with Alex because we talked about the exact same thing, which is what do you do about local districts wanting to tax themselves at higher rates in one way to push towards equity is say, well, you're allowed to do that, but we're going to take some of that money and redistribute it and give it to somebody else. Which it sounds like, if I'm hearing him right, David was, is what Texas' Reform did. That's a very recent reform. So that's probably why it's not in here. But that New Hampshire example is interesting. I mean, these things, there's politics. I mean, suddenly, if you know that you're going to raise your own taxes and a lot of that money is not coming to your own schools, that certainly does change the equation. Interesting.
David Griffith (25:21):
Yeah, I have so many clarifying questions. I guess I'm just surprised, first of all that half of states didn't engage in any state level reform over this 20 year period. I guess it feels to me like states are constantly tweaking their funding formulas, but maybe that's just the impression I get from a hundred thousand feet,
Michael Petrilli (25:41):
Or maybe tweaks didn't count. I dunno. I mean, that is a good question.
Amber Northern (25:45):
Right? Well, and they also said, which is kind of crazy, that these six of 24 that supposedly had these reforms occur that it sometimes can take longer than 10 years. I'm like, really? Can the legislator really kick the can down the road that long before they start making changes?
David Griffith (26:04):
I think they probably can. Yeah.
Michael Petrilli (26:05):
Yeah, that sounds right.
Amber Northern (26:08):
I'm like, geez. But obviously, yeah, this redistributing funds from low to high poverty districts without increasing the total pie. That's obviously what we see going on too.
David Griffith (26:21):
Okay, so I want to make sure I understand the six states then. So why didn't it happen in the other 18 states then?
Amber Northern (26:29):
Well, that's what I'm saying, that they basically say, okay, it could be longer than 10 years that we could still see it in the remainder of those other states.
David Griffith (26:41):
I see. Okay. Alright. But they couldn't detect it in three quarters of the states.
Amber Northern (26:45):
That's right. Not yet.
David Griffith (26:49):
Okay. But it definitely matters, right? These changes matter,
Michael Petrilli (26:53):
Right, Mike? No, look, they do, of course. No. And based on a lot of what we talk about in this show, I've been convinced over the years that yes, these discreet funding increases can boost student achievement if done well and done, and especially when targeted towards high need schools. So yeah, no, this stuff matters, but the politics are messy. And so I guess I'm not surprised that a study comes out saying, well, it's complicated
Amber Northern (27:25):
And we honestly, we know when LaFortune, I know we're familiar with Hay Study and Kenneth Shores and all those studies. So yeah, I think we know that again, we've seen some improved test scores, improved graduation rates from these things writ large. And then when other folks have dug down and they've seen these approximately, I think it was $500 increases in high income districts and 1200 and low income districts after these reforms. So I do feel like this study took another angle at it in terms of really digging down into the decisions they're making. And this is hard stuff, right? I mean, they were making the point where in Maryland, for instance, they found that they were financing the increase with the cigarette tax, but five years later, they still couldn't trace how they were financing it in those out years. I mean, literally after looking at all of these documents and statute and finance everything. So God bless them for trying to find the money.
Michael Petrilli (28:24):
Well, as a Maryland resident, let me say it is not because we're not paying enough in taxes. That's my impression.
Amber Northern (28:30):
Yeah. We
Michael Petrilli (28:31):
Need to stop wasting so much money on all sorts of things. That's just one guy's opinion. Alright, well that is a lot of school finance for people to enjoy on this summer day. I hope that they did, in fact enjoy it. But that is all the time that we've got. So thank you, Amber. But until next week, I'm David Griffith. And I'm Mike Petrilli of the Thomas B. Fordham Institute. Signing off.
#923: Debating school funding inequities, with Alex Spurrier