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How Should States Weight Funding for Disadvantaged Students?

Many states are doggedly, sometimes desperately, working to get their state finance policies right. Many want to strategically and equitably channel their finite dollars to help close the performance gap across student groups, often as part of a weighted student formula. A big part of that is making sure that the schools serving the neediest students—with needs stemming from things like poverty, disability, limited English proficiency, homelessness and other challenges—get the resources they need.

But as state policymakers grapple with competing approaches for allocating scarce education resources, many are finding themselves trying to do this work in the dark.

States naturally want to know what’s the “right” amount to spend for each type of student. As an education finance research center, we regularly field phone calls asking exactly that. But researchers haven't settled on a dollar figure for the costs of any one type of student.

That's in part because the question about the “right” amount assumes that we know the best way to deliver services for each student type when we don't. Nor is it always easy to convert services into fixed-dollar figures.

Absent answers to their questions about the "right" level of spending on given services, states often ask what other states or districts are spending on different types of students. But spending ratios in one state or district don’t always translate well to those in others. Spending levels for student vary thanks to everything from the fine print in state rules and local politics, labor contracts and more.

Rather than look outside for answers, we think states should look inside, at their own data, to expose patterns and surface potential funding strategies for high-needs students. That means asking these key questions:

  • How much funding is our state currently allocating per pupil type?
  • How much on average are districts spending per pupil type?
  • What outcomes are produced from the current spending patterns?
  • What systems are needed to help drive a clearer relationship between spending and outcomes?

Getting a handle on the dollars already flowing for each student type is a smart place to start. And even if a state allocates zero dollars to districts by student type, districts, in turn, may decide to spend some portion of their state dollars to support distinct student types through staff positions and the like. Understanding what districts actually spend to educate each type of student provides policymakers with valuable new data.

[Read More: Piloting a New Way to Fund Schools]

The key is in marrying spending data with student outcomes, generating patterns that can tell states a lot. If a state priority is to boost outcomes for English learner students, and analysis shows that few if any schools are getting (or close to getting) the desired results for this group at current spending, the state may want to bump up spending for students learning English. States can also use their data to compare performance across schools and raise expectations for lower-performing schools.

Once states look at spending in relation to outcomes, their job is then to figure out how to structure spending to maximize gains for the targeted students. Some states like California are overhauling their systems in order to better tie funding to student needs.

But we know that’s not just a matter of coming up with the “right” amount of money. Myriad human factors, what we call “school effects,” matter—such as relationships between staff and students. States can’t mandate school effects, or easily scale them across school district borders. But there are strategies that enable state finance systems to harness these school effects, rather than simply ignore them.

We also acknowledge that lots of states face data challenges. But as we wrote here earlier this year, a new ESSA financial transparency requirement means states should soon have valuable additional information on education spending down to the school level. We still won’t have a tidy answer on the “right” amount to spend for different student types. But together with asking the right questions and examining their own expenditure data states can make progress toward finding their own best answers to the “right “amount to spend toward maximizing student outcomes.

FutureEd Senior Fellow Marguerite Roza is the director of the Edunomics Lab and Research Professor at Georgetown University's McCourt School of Public Policy and the author of a new Edunomics Lab resource on state education finance titled Funding Student Type: How states can mine their own data to guide finance policy on high-needs students.