Matthew Joseph is a Senior Policy Advisor at ExcelinEd.
Families across the nation pay into their state’s education system whether their children attend public, charter or private schools. But too often, school funding formulas leave some families with fewer resources to support their child’s education simply because they choose one schooling type over another.
Public education funding should be considered funding for individual students, regardless of the type of school a student chooses. There should be funding parity so that parents are not financially penalized if they choose one option or another, and funding should also be weighted for student need, so that all parents can find schools willing and able to serve their children, even if they have higher needs.
Yet no state at this time has a formula that funds individual students with full parity between the traditional public, public charter and private school choice systems. We believe that should change, especially as more and more states offer families robust and diverse educational opportunities.
A fair funding system would put families first by ensuring that every student can access their share of education dollars no matter where they learn. The best way to do this? Setting a base amount that reflects the funding needed to educate an individual student. This base amount can be calculated and applied across all schooling types.
The existing school funding models were designed for an industrial-era education system that no longer meets the demands of our 21st century economy. Current funding structures treat students like interchangeable parts on an assembly line rather than recognizing their unique needs. Today’s students must be prepared for success in a rapidly evolving, international workforce, requiring a fundamental upgrade to the way states allocate education funding.
When we invest in education, we should not be investing in a particular delivery model. We should be investing in students, each of whom has different needs that don’t change when they move from one type of school to another. A unified, student-centered school funding formula will level the playing field for families utilizing school choice programs and ensure all schools have resources to serve students with differing levels of need.
If we want all families to have real choices when it comes to their children’s education, we need to make sure no family is put at a financial disadvantage based upon the school option they select. The best way to do that is by setting a base amount that fairly reflects the funding traditional public schools receive.
Our approach is a simplified, universal weighted student funding formula that will provide true funding parity, ensuring that all students—regardless of the school or schooling type they attend—receive adequate resources tailored to their educational needs.
To create parity, states need to go beyond the “base” funding in the main funding formula. For example, universal choice scholarships in Florida are linked to base funding in Florida. Yet, the scholarship amount is less than half of what public schools receive. Why the big difference? Public schools in Florida receive local funding outside of the formula, for both operating and facility needs. The state also has separate funding programs outside of the formula. Finally, public schools are receiving federal funds.
To create a fair funding system, states need to consider several key funding sources:
State and Local Base Formula Funding: The state’s main school funding formula provides the bulk of resources for public schools. Any funding in this formula that’s not meant for higher-need students should be included in the base. This also includes the portion of local funding that districts are required or expected to contribute. If there are legal barriers to including local funds, the state can step in by providing an equivalent amount in state dollars.
Other State Funding: Beyond the main formula, states provide money for specific programs, services and staffing needs—sometimes through different state agencies. Since this funding makes up a big part of what districts receive, it should be included in the base as long as it’s not specifically for higher-need students.
Additional Local Operating Funds: Local property taxes often make up a huge share of school funding. If schools rely on this revenue, then it should be counted in the base on a per-student basis. Again, if legal restrictions prevent these local dollars from following students to other schools, the state can step in with equivalent funding.
Additional Local Facility Funds: Many districts raise extra money through local taxes to pay for facilities, but these funds don’t just cover buildings. Schools often use them for essential expenses like textbooks, technology, security, utilities and even custodians. If schools outside the traditional system don’t receive similar funding, they have to dip into money meant for teachers and students just to pay for rent and upkeep. If local facility dollars can’t be shared, states should step in with additional funding.
Federal Funding: Federal dollars support a wide range of school services. Ideally, these funds should be included in the base, unless they are intended for higher-need students. However, federal funding comes with rules and regulations that may not be a good fit for some schools, so states should be prepared to provide an equivalent amount to ensure fairness.
“Funding should always differentiate for students who have higher needs,” said Dr. Eric Hanushek, one of the country’s foremost scholars on school funding. While these students benefit from a diversity of services, the following are examples of particularly cost-effective investments: placing most effective teachers in classes with higher-need students; professional development for teachers in the science of reading; significantly smaller classes; high dosage, small group tutoring; strong pre-school and early intervention programs; and extended day and year programs.
States can identify these academically at-risk students who have the ability to achieve at the same level as other students but face barriers that can be overcome with effective interventions. These are the students who should receive additional funding beyond the base scholarship. They typically fall into these categories:
Students with specific learning disabilities. These students are identified because there is a significant gap between their ability and school performance. Dyslexia is a common reason. Students with specific learning disabilities are entitled to services under the federal Individuals with Disabilities Education Act. Indeed, students with specific learning disabilities are about one-third of all students receiving special education services nationally and about 5% of students overall.
English learners. These students come from non-English speaking homes and are learning English. They make up about 10% of all students.
Low-income students. These students live in households with limited financial resources. A significant portion of these students begin school behind their peers and struggle to catch up. About one-half of all students meet the most common criteria, which is eligibility for free or reduced-price school meals or 185% of the federal poverty level.
There is significant overlap among these categories. Students are academically at risk if they meet any one of the criteria. Additional funding should accompany all three categories.
ExcelinEd examined how much supplemental funding states are providing in traditional public schools for low-income students, the most common category of academically at-risk students. On average, states are providing 22% more, which equals an additional $1,300 per student.
There is compelling evidence that providing supplemental funding for academically at-risk students can narrow achievement gaps. The research shows that increasing funding by $1,000 per student improves outcomes for all students, and the impact is double for academically at-risk students. Moreover, the impact of supplemental funding can be tripled by state policies that incentivize the most effective use of resources, including universal choice where students are able to find a school that works best for them.
To achieve both funding parity and funding that is weighted for student need, states should adopt a universal weighted student funding formula that provides the same base funding per student regardless of the school system chosen and then adjusts funding based on individual student needs using a consistent and transparent methodology.
Here is how that formula can work across all schooling types:
| Steps | Traditional Public Schools | Public Charter Schools | Private School Scholarships |
|---|---|---|---|
| Step 1: Create parity in base funding per student Include all revenue sources, both operating and facility, unless meant for higher-need students. |  | For any local or federal funding not provided, substitute state funding. | For any local or federal funding not provided, substitute state funding. |
| Step 2: Divide financial responsibility for base funding Require more local funding in higher-wealth jurisdictions. |  | For any local funding not provided, substitute state funding. | For any local funding not provided, substitute state funding. |
| Step 3: Add funding for academically at-risk students Create a funding weight for students with specific learning disabilities, English learners, and low-income students, adjusted for neighborhood characteristics. |  | Same | Same |
| Step 4: Provide bonuses for post-graduation enrollment, employment and enlistment. Extra bonus for success with higher-need students. |  | Same | Voluntary participation |
| Step 5: Require that all funding follow students, including funding for higher-need students. | Districts send supplemental funds to the schools serving higher-need students. | Each school gets funds based on students served. | Each school gets funds based on students served. |
By implementing a unified formula, states can create a truly student-centered education funding system that provides equal opportunity for all children, empowers families to make the best educational choices for their students and ensures that schools have the resources needed to serve students effectively.
This solution also makes the issue of education funding less political because advocates for various school choice options do not have to battle with each other during the state’s budget process every year or two, and the state budget itself will have less fluctuation as students move from one schooling type to another because they receive the same funding regardless of choice.
The state’s role in education should be to empower students with equitable funding, not to financially penalize them for choosing an educational pathway that better fits their needs. By modernizing funding models, states can ensure that all students receive the support necessary to succeed in school and beyond.
