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  • Writer's pictureBell Wilkins

K12 Finance Fundamentals: Regressive Funding

This post draws from the research of Ivy Morgan and Ary Amerikaner.

Let’s begin with a question.

  • Assuming all states have both wealthy and high-poverty school districts, should states:

  1. Give more funding to wealthy districts that already have abundant resources

  2. Give more funding to the high-poverty districts lacking critical resources

  3. Roll some dice and see who gets what

  4. Give all districts equal funding

While (3) may be tempting, (2) is the option that seems most reasonable: districts with high-levels of poverty will likely need more resources for critical student services. Debt-free lunches, counselors, academic supports—all of these are research-backed ways to increase student outcomes that more school funding could make accessible for communities across the country. 

But things are rarely that simple. 

While some state and local governments practice choice (2), some practice choice (1)-- allocating more total funds to higher-income districts that already have ample resources.

This highlights the equity problem prevalent in school funding. Yes, it may seem fair at first to give all schools the exact same amount of money-per-student, but this fails to account for the higher costs of educating students living in poverty relative to their higher-income peers. 

Sidenote: This image is a (very) simplified representation of equity. Have a better image? Leave a link in the comments below!

Housing insecurity, food insecurity, and a lack of accessible, high-quality pre-school options are just a few common elements of poverty. Research shows these realities set children behind their more affluent peers—both academically and socio-emotionally-- well before they step foot into a kindergarten classroom. As a result, more resources for high-poverty districts are crucial if policy-makers are serious about closing this persistent, income-based opportunity gap. 

As discussed in a previous post local funding for schools comes largely from property taxes. This means that, for the most part, the higher the taxes (i.e., the more expensive the neighborhood), the better funded the schools. We also learned that higher-income schools often use district foundations and parent-teacher associations to substantially boost their total funding .

To counteract the disparities that arise through local funding systems, states provide additional funding to districts on top of the local funding they raise through property taxes. All states allocate more funds to high-poverty districts than wealthy ones, but they vary in the degree to which they do this; some just try to bring all districts to the same "equal" baseline, while others provide substantially more funding to their poorest districts to promote more "equitable" outcomes. (Check out the nifty visual on page nine of this study to see each the unique approach of each state!)

These gaps—those between amounts of state and local money given to high-poverty districts relative to low-poverty districts—tell researchers how progressive or regressive that state is in regards to school funding. So, states where high-poverty districts receive more state and local money than wealthy districts (because wealthy districts need less) are called progressive. Likewise, states where wealthy districts receive more state and local money than high-poverty districts (often due to quirks of their funding formulas) are regressive.

With that background, let’s try one last multiple choice question. (There’s no penalty for guessing, we promise!)

  • In 2015 which state was regressive in its per-student spending? (i.e., which state gave its wealthier districts more state and local funding than it gave its high-poverty districts?)

  1. Georgia

  2. Arkansas

  3. South Carolina

  4. Illinois

And the answer is (*drumroll please*)…Illinois! (And it’s not close.) While the three Southern states ensure their highest-poverty districts receive more state and local funding than their wealthy districts, wealthy districts in Illinois received 22% more than high-poverty districts in state and local funding. While these statistics eventually led to changes in Illinois’ state funding formulas, serious disparities persist not only there, but also in over half of the United States—many of which are facing budget crises due to the COVID-19 pandemic a looming recession. If you have questions, comments, or concerns about the way your state funds K12 education, don’t forget that your local and state government representatives are only a phone call or email away: as a constituent, they report to you!

We’ll explore these fundamentals of school funding further in future posts, so make sure to subscribe and follow Edstruments to stay informed!


Edstruments exists to equip education leaders with the knowledge and tools to most effectively and equitably serve their students. To learn more about how we can help your school administrators make better financial decisions, email us at or fill out the contact form on our main website.



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