The Education Law Center's "Making the Grade 2025" report, released this week, found that average per-pupil funding varies by more than $17,000 between the highest-funded state (New York) and the lowest (Idaho), even after adjusting for regional cost differences. The report also documented a troubling reversal in progress toward equitable funding distribution, with 11 fewer states showing progressive funding patterns compared to the previous year.
"The current uncertainty surrounding federal funding underscores just how important it is for states to establish fair and equitable state funding systems," said Dr. Danielle Farrie, ELC Research Director and report co-author. "States are responsible for creating a strong foundation for school funding. Federal investment is most impactful if it is supplementing an underlying system of state and local funds that is fair and well resourced."
The report evaluates all 50 states and the District of Columbia on three critical measures: funding level, funding distribution relative to student poverty, and funding effort as a percentage of state economic productivity.
Only 17 states demonstrated at least modestly progressive funding distribution in 2023, meaning high-poverty districts received more funding than wealthier districts. This represents the first reversal of a five-year trend toward greater progressivity. Florida, Idaho, and Tennessee received failing grades across all three indicators.
The analysis comes as the Trump administration proposes a $12 billion (15.3%) reduction to the Department of Education's budget and has already terminated over $30 million in special education grants affecting 14 states. Mass layoffs at the Department, including reductions that left the National Center for Education Statistics operating with just three employees, threaten the data collection that makes such comparative analyses possible.
"Federal revenue clearly plays an important role in improving equity in school funding. Congress must act to strengthen federal programs and incentivize states to maintain and improve their investments in school funding," said ELC Executive Director Robert Kim, report co-author. "But state and local policymakers must ensure students have the resources they need, regardless of what actions are taken by the federal government."
The report found that while federal dollars represent a small proportion of overall education revenue—averaging 9% nationally in 2019—they contribute to more equitable distribution in nearly every state. Federal funding improved within-state equity by 6 to 26 percentage points across 47 of the 48 states analyzed.
California emerged as a bright spot, dramatically improving on all three fairness measures following implementation of its Local Control Funding Formula. The state now has the second most progressive funding distribution in the nation.
However, several well-funded states—including Connecticut, Illinois, Maine, Michigan, New Hampshire, New York, New Jersey, and Pennsylvania—showed flat or regressive distribution patterns, allocating similar or fewer resources to high-poverty districts despite overall high funding levels.
The report also documented that state funding effort, measured as education revenue relative to state GDP, remains at depressed levels compared to pre-pandemic standards. Economic growth outpaced education investment in most states, resulting in declining effort in approximately half the states analyzed.
Of the 19 states earning D or F grades on funding level, 13 also received D or F grades on effort, indicating they are not leveraging their economic capacity to adequately fund schools.
"Ultimately it is the states' responsibility to provide adequate and equitable funding and resources for public schools and their students," Kim said.
