Dr. Kenneth A. Shores is an associate professor specializing in education policy in the School of Education at the University of Delaware. He is also affiliated with the university’s Center for Research in Education & Social Policy and the Joseph R. Biden Jr. School of Public Policy & Administration.
The state of Delaware was sued because many viewed its school finance system as insufficiently funded and unfairly distributed. This suit resulted in a settlement in 2021, part of which culminated in an Opportunity Fund, which was intended to provide aid to economically disadvantaged students. Nevertheless, many advocates feel that this settlement was insufficient, and there is continued effort both among reformers and legislators to change Delaware school funding policy, specifically related to how funding is raised via state and local taxes, how much funding the state and local governments contribute, and how funding is to be allocated.
As an independent education finance scholar, I study how states have improved their public education spending — and whether they see improved outcomes as a result. Delaware has work to do to continue the journey, as I have written about here.
It’s worth emphasizing that school spending does matter for student learning and matters more for students who are economically disadvantaged, but it is not a silver bullet. A recent summary of 32 studies showed that increased school spending improves student learning, as measured by test scores and high school completion. And, when school funding increased, much of the gains in student learning occurred for economically disadvantaged students, by about a factor of 2.
Results from this study indicate that a $5,000-per-pupil increase sustained for four years would increase test scores for students from about the 50th percentile (i.e., the median) to the 56th percentile. Such an increase would see Delaware test scores jump to closer to the national average. To put this result in context, in the 2022 fourth grade math assessment for the National Assessment for Educational Progress, Delaware scored 226 — nine points behind the national average, roughly equivalent to the difference between a student scoring at the 50th and 62nd percentiles. Thus, we might not expect $5,000 per year for four years to result in students reaching the national average, but it would move the needle considerably.
With that out of the way, let me introduce three core responsibilities states traditionally undertake to create the conditions for equitable funding. The first is level of spending. The second is distribution of spending. The third is regulation of district contributions. Of these three, Delaware does well only on the first core responsibility and performs poorly on the second and third.
Level of spending
Since the 1970s, states have taken on an important responsibility to fund schools via state income, sales and property taxes to supplement what can be raised locally via local district property taxes. Across the country, states on average are now responsible for 52% of spending state and local revenues for K-12 public schools, based on my calculations using 2021-22 data from the National Center for Education Statistics. Delaware contributes 67% of state and local revenues for public education, well above the national average. At the same time, Delaware does have a larger population of English learners and students with special needs than neighboring states, which increases costs.
Distribution of spending
When it comes to distributing those funds, Delaware’s system falls short. States have sought equity in funding, or wealth neutrality, by providing additional funding to districts with more economically disadvantaged students, since those districts typically have less ability to pay for schooling.
To try and equalize the tax burden across districts, states have, since the 1970s, begun to provide direct aid to districts with low property tax bases, which are often districts with more low-income students. This role of providing additional state aid to districts with more economically disadvantaged students is nearly universal. It is well known and agreed upon that Delaware’s “equalization” funding is broken and outdated, but that is only a piece of the funding picture.
After accounting for cost of living and the size of the special education population, Delaware is one of three states in the country where state revenues are not distributed to benefit low-income students, and it is by far the most unequal. In fact, in Delaware, the higher the proportion of low-income students, the less funding is received. On average, a 10-percentage-point increase in the proportion of students who are in poverty is associated with $2,694 less funding from the state. Delaware is the only state in the country where this association between state revenues per pupil and child poverty rates is so negative.
Regulation of district contributions
As mentioned earlier, the state of Delaware contributes a comparable amount of revenues to education. How then is it possible that Delaware overall spending is below states like New Jersey, Connecticut, Massachusetts and Pennsylvania, the latter of which receives about $5,300 less per pupil from the state compared to Delaware? Indeed, how is it possible that Delaware’s total state spending is below many states in the mid- and southern-Atlantic regions, despite it contributing an amount that is greater than so many states in these regions?
The three-part answer is contained above. First, on average, states that contribute a greater share of revenues directly, as opposed to splitting responsibility for funding schools between states and local districts, tend to spend less. I estimate that a 10-percentage-point increase in the state revenue share is associated with a $1,109 reduction in total revenues per pupil, on average across states. Second, Delaware contributes 67% to education, whereas most comparator states contribute a little more than half. This last piece speaks to Delaware’s reluctance to require districts to contribute spending at a fixed rate, in contrast to most states, which place some regulation on district contributions to K-12 education. Third, Delaware does have a larger population of English learners and students with special needs than neighboring states. When we combine state and local revenues together, Delaware spends less than neighboring states, given its own unique student population.
In contrast to Delaware, most states operate something like a foundation plan, which requires districts to contribute revenues based on an accurate and up-to-date understanding of their property wealth and an assigned property tax rate (referred to as a “millage rate”) that would enable the district to meet the state-designated foundation limit — that is, the amount of revenues the state believes is necessary for a student to have an education that meets the state’s constitutional standard, often as interpreted by the courts. In effect, this requirement makes it so that all districts pay an amount commensurate with their ability to pay (based on an accurate assessment of their property wealth), and the state contributes the rest to reach the foundation limit. Thus, because the state of Delaware is already contributing so much, it is reasonable to worry that, unless districts start to pay their shares, it will be difficult to increase total revenues for education.
Many states have figured out how to ensure they act as a provider of revenues to districts with more students in need, just as states have figured out how to require districts to balance out the state’s contributions. Delaware can improve in these two areas. As two examples, to improve the allocation issue, Delaware might consider a weighted student funding model, as recommended by the American Institutes for Research group, which would require specific funding amounts be provided to students with different educational needs. Second, to diversify the burden of funding education between the state and localities, Delaware might consider regulating district contributions by setting minimum property tax rates or incentivizing districts to contribute the amount needed to reach the threshold set by a foundation plan.
In sum, most states have gotten on-board with a common playbook. Provide a level of funding — here, Delaware does well. Distribute state funding to poor districts to compensate for low property wealth — here, Delaware fares poorly. Regulate district contributions to education — here, again, Delaware fares poorly. State-mandated appraisals of property might help with the second issue, but they are not guaranteed to fix the allocation issue and are unlikely to increase district contributions without further policy changes.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
