School Finance Reforms Fail to Close Racial Funding Gaps, New Study Finds

State school finance reforms designed to address funding inequities between rich and poor districts have not reduced racial and ethnic disparities in school funding, and in some cases have made them worse, according to new research published in Educational Evaluation and Policy Analysis, a peer-reviewed journal of the American Educational Research Association.

Dr. Emily RauscherThe study by Drs. Emily Rauscher of Brown University and Jeremy E. Fiel of Rice University examined the effects of school finance reforms across the United States from 1990 to 2022, finding that while these reforms reduced funding gaps by income by over $1,300 per pupil on average, they increased the spending advantage of districts with low percentages of Black and Hispanic students by $900 and $1,000 per pupil, respectively.

"The growth in racial and ethnic funding inequity, in light of decades of school finance reforms, is surprising and needs to be addressed," said Rauscher, professor of sociology at Brown University. "Persistent gaps in educational opportunity and outcomes for students of color, combined with the failure of state reforms, point to the need for new investments at the federal level."

The research comes as debates over race-conscious policies in education intensify following recent Supreme Court decisions limiting affirmative action in college admissions. As desegregation efforts have declined over recent decades, school finance reforms have become increasingly important tools for addressing educational inequities.

The study found that reforms were more effective at reducing racial disparities in states where those disparities were already relatively modest and where there was lower racial and economic segregation between school districts. In highly segregated states, reforms not only failed to narrow racial gaps but sometimes widened them.

"If school funding remains unequal even as states distribute funds more equally, how can we ensure equal educational funding and opportunity for all children?" Rauscher said during an interview with Diverse. She pointed to federal intervention as a potential solution, suggesting the federal government could incentivize states to spend adequately on education and invest in states struggling to achieve adequate funding levels.

The researchers used advanced statistical methods to analyze data from the U.S. Census Bureau and the National Center for Education Statistics, examining both traditional school finance reforms and an expanded set of economically progressive reforms through 2017.