We’ve covered federal, state, and local sources of school funding, including how the long-standing flaws in federal and state sources continue to shortchange our most vulnerable students. Now, it’s time to take a closer look at how thousands of local education agencies, otherwise known as school districts, miss the mark on funding allocations nationwide.
Each city in America has school districts—organizations that manage various school sites using resources they receive from the state and local governments. These districts range in size from the 4-student (!) Panoche Elementary School District in California to the massive New York City Department of Education, which has 1.1 million students (1 out of every 30 Americans).
For logistical reasons, most K12 funding flows from governments to districts rather than to individual school sites, so it is ultimately up to the district to determine how to best spend the money on each school within its boundaries. The way districts manage their money can either lead to fair resource allocation or deep, persistent inequity.
Intra-district inequity—that is, inequity between schools within the same district—is often caused by how teacher salaries are factored into formulas that determine district allocations to each school.
Digging deeper: The largest expenses a district incurs annually are the salaries and benefits for its teachers and staff. These educators earn higher salaries as they gain experience, as almost all school districts use compensation structures based primarily on years of service and degrees earned. Over time, these longest-tenured (and most expensive) employees in districts tend to cluster in schools with the highest-income students, often because teachers consider such schools as easier to teach in. So, when district policies fail to factor such trends into funding formulas, they effectively funnel funds to more-resourced schools and divert them away from precisely the schools that need them most. The eventual result is a clear disparity in per-pupil spending favoring wealthier schools, and a growing opportunity gap within that district that will only get harder to close.
To illustrate, let’s take a trip to the fictional Berry Unified School District. Like most public-school districts, Berry Unified ties educator salaries to years of experience: the longer you’ve been teaching, the more you get paid. Berry Unified is also a fairly large district, with schools that serve affluent neighborhoods and high-poverty areas as well. We’ll be focusing on two of its middle schools, Boysen and Lingon. Each has 400 students, and as a result of Berry’s Full-Time Equivalent (FTE) driven staffing model, each has 20 teachers (1 FTE for every 20 students). However, the similarities end there.
Boysen Middle is a wealthy school within the district; most households contain high-earning professionals such as physicians, attorneys, or smoothie engineering managers. They are also mostly two-parent homes which only need a single-income, so the guardians who provide childcare have plenty of time organize both to avoid district cuts and fundraise substantially through the Parent-Teacher Association. As a result of Boysen’s ample resources, teachers in Berry Unified see it as the pinnacle of job placements; rarely do teaching positions open, and when one does (almost always due to a retirement), scores of experienced educators rush to apply. In short, when teachers make it to Boysen, they don’t leave: most have been at the school for a decade or longer, and they command the salaries to match.
Across town, Lingon Middle serves a very different population; most families have two working parents in hourly-wage positions, and 90% of them qualify as “low-income” based on the district’s income threshold. The parents are involved to the greatest extent possible, but simply don’t have the time nor the resources to organize or raise funds on the scale of wealthier schools. Though federal and state grants to support their population somewhat help, student outcomes have lagged for years. Experienced teachers have heard enough stories about Lingon to avoid it, so the school usually only has applicants fresh out of teacher-preparation programs. While they have good intentions, these rookies quickly tire of having to do more with less; most leave within a few years to either change careers or teach in schools with more resources-- schools like Boysen Middle.
Because the teachers at Boysen Middle are so experienced, all of them make more than the average teacher within Berry Unified School District. Because teachers at Lingon are usually new and quick to turnover, they all make less than the average teacher in the district. In a perfect world, Berry Unified would calculate how much money to give each school with a precise understanding of how much the particular school’s teachers cost, while heavily factoring in the needs in that school’s student body. So, instead of just allocating one teacher for every 20 students regardless of a school’s socio-economic, English learner, and special-needs composition, the district would take those metrics into account when determining staffing and funding. This way, it could ensure high-needs schools with novice teachers get the additional resources (including additional staff) they need to thrive.
But things in K12 finance are rarely that simple.
While actual teacher salaries vary based on seniority, Berry Unified calculates how much money to allocate schools under the assumption that all teachers earn the district’s average salary. So, if rookie teachers in Berry Unified make $40,000 annually and veterans make $60,000, Berry Unified uses an amount in between when calculating how much to fund each school. If all schools had the same mix of novice and experienced teachers, this would work swimmingly, as the veteran teacher pay would average with the rookie pay. But, as we just saw with our two middle schools, this is not the case.
When Berry Unified uses an average salary to calculate that both schools should get $1 million for salaries, it’s likely not enough to cover the salaries of all the expensive, experienced educators concentrated in Boysen Middle. If the 20 teacher salaries in Boysen total $1.2 million, then it’s the district that has to fork up $200,000 to cover the difference.
In order to cover the $200,000 shortfall needed for Boysen teacher salaries, Berry Unified School District will take the $200,000 Lingon has leftover rather than let them keep it.
Across town, let’s assume the 20 combined teacher salaries in Lingon Middle total $800,000. With a million in funding from the district, that extra money could be a gamechanger. The school could hire additional counselors and academic interventionists, adopt a research-proven curriculum that’s more culturally relevant, and even purchase new popsicle molds for a tasty way to learn letters! Unfortunately, Lingon Middle School won’t see that extra money -- the district will use it to cover the cost of Boysen Middle’s pricier teacher corps.
So, two schools with the same number of students get the same number of teachers, but the real dollar cost of those teachers (reflecting their real experience) varies widely. Troublingly, no one examining district finances would notice the inherent inequity, as the reality is hidden behind the teacher salary averages Berry uses to calculate funding. “On paper,” both schools receive the same amount for salaries because they have the same FTE count. In reality, Boysen receives much more.
The funding practices in Berry Unified have been present in the US education system for decades. In a 2004 study, schools in Baltimore, Cincinnati, and Seattle all had high concentrations of experienced teachers in wealthy schools, and high concentrations of novice teachers in under-resourced schools—this even though administrators confidently assumed teacher experience was equitably spread out in their district. By using teacher salary averaging, these cities effectively gifted wealthy schools 5-7% more than their original funding allotment, causing poorer schools to lose the same amount. (Don’t forget, these percentages represent hundreds of thousands of real dollars in school budgets.)
Many things have changed in education since 2004, but teacher salary averaging is not one of them. In a 2014 study, experts stated teacher salary averaging was among one of the few “real resource allocation barriers” (as opposed to easily surmountable ones) that prevent principals from best serving their students. When No Child Left Behind was replaced by Every Student Succeeds Act in 2015, a clause that uses teacher salary averaging to dictate how districts can allocate money remained constant— despite all the research highlighting its flaws. The issue remains a topic of legal discussion to this day.
As the US grapples with a pandemic that has made K12 public education even more of a hot-button issue than usual, revising K12 funding formulas to promote equity is more important than ever. It is true that moving away from teacher salary averaging and towards real costs has challenges: there are valid concerns it would effectively penalize schools with strong teacher retention, or give rise to conflict with teacher's unions. However, moving towards real costs also means districts can better manage finances to ensure a fairer distribution of funds and educator talent. Imagine how many more experienced teachers would go to a school like Lingon Middle if their district provided more resources, or even stipends for educators in high-potential areas? Such incentives could retain veteran teachers and build long-term stability that contributes to stronger student outcomes.
District salary allocation formulas are far from the only change that will fix the large (and growing) opportunity gap. Still, K12 finance represents a powerful, often overlooked lever to make real progress in education equity. Here at Edstruments, our evidence-based school budgeting software can drastically improve K12 funding management, helping districts better support and invest in the teachers, students, and staff they serve.
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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 hello@edstruments.com or fill out the contact form on our main website.