New study: School finance reforms increased funding inequities based on student race and ethnicity

PROVIDENCE, R.I. [Brown University] - State-led school finance reforms designed to close funding gaps between high- and low-income school districts did not reduce funding inequities based on the racial and ethnic composition of their students, and in some cases increased them.

That's according to a new study co-authored by Brown University Professor of Sociology Emily Rauscher and published in Educational Evaluation and Policy Analysis, the journal of the American Educational Research Association. Through an analysis of more than three decades of data, the researchers found that school finance reforms aimed at increasing equality of funding by income level had very little effect on the level of funding based on race and ethnicity, and in some cases made funding less equitable.

The researchers used data from the U.S. Census Bureau and the National Center for Education Statistics to examine the effects of school finance reforms from 1990 to 2022. They found that state finance reforms reduced school spending gaps between the highest- and lowest-income districts by more than $1,300 per student on average. But the reforms also increased the spending advantage of districts with low percentages of Black and Hispanic students, by $900 and $1,000 per student, respectively.

"Our study found growth in racial and ethnic funding inequity, which is surprising after decades of school finance reforms and needs to be addressed," said Rauscher, who co-authored the study with Rice University Associate Professor of Sociology Jeremy E. Fiel.

The researchers found that reforms were most effective at reducing funding disparities in states where the disparities were already relatively modest - whereas the reforms were less effective, or even regressive, in states with high levels of racial and economic segregation between school districts. In more segregated states, reforms exacerbated racial and ethnic disparities and failed to narrow economic gaps, according to the study.

Much of the inequity in school funding based on race and ethnicity exists between states, rather than within states, with wealthier states still spending significantly more per student than poorer ones, according to the study. The wealthier states tend to have higher shares of white students and lower shares of Black and Hispanic students, which contributes to national disparities.

"School resources shape student opportunities: If resources are not distributed equitably by student race and ethnicity, then we're creating unequal opportunities that will shape lives in unfair ways," said Rauscher, who is affiliated with Brown's Annenberg Institute for School Reform and the University's Population Studies and Training Center. "I hope this research will be a reminder of one of the many crucial roles of the federal Department of Education: keeping an eye on equality of school resources and educational opportunity across states."

The study was supported by the William T. Grant Foundation and Brown's Population Studies and Training Center.