Vertical Equity Funds Are Not Reaching States’ Neediest Students

Published December 1, 2007

In response to lawsuits over inequities in school funding, state legislatures nationwide have adopted spending policies whereby disadvantaged students are to receive extra resources to enhance their learning opportunities.

However, recent studies show many school districts are not giving these students the mandated resources.

Until states change from district-based budgeting to student-based funding, the question of increasing spending cannot be accurately addressed.

Funding students differently based on their presumed need is the school finance policy known as vertical equity. This policy has intuitive appeal for those interested in providing equal educational opportunities and can be an inspired alternative to affirmative action. Rather than giving preferential treatment later in life, vertical equity gives disadvantaged students a more reasonable chance for success on the front end.

Unfortunately, many poor students are not receiving the additional resources they need.

Resource Allocation

Traditional research on spending equities has commonly evaluated the degree of variation in per-pupil spending at the district level, measuring disparities between wealthy and poor districts. However, recent research has uncovered a problem with analyzing spending at this level: Even if less variation exists across districts, great variation often exists within districts.

In response to this problem of analyzing spending at a district rather than school level, researchers at the Annenberg Institute for School Reform at Brown University have presented a method for analyzing within-district resource allocation. This method creates a weighted index score for each school within a district. The index is based on a comparison of actual school expenditures to the amount an individual school should have spent given the specific characteristics of its student body.

Employing a substantially similar model, the authors of this column, in a study to be published later this year in The Journal of Educational Research & Policy Studies, analyzed intra-district spending in 72 high-poverty districts across Ohio. We found great spending disparities exist between schools even within high-poverty districts.

Despite state policies directed at providing greater resources for disadvantaged students, individual buildings are not receiving state-mandated funding, we found.

Teacher Salaries

In another study, published three years ago, Marguerite Roza and Paul T. Hill examined the intra-district revenue allocation of four major urban school districts: Baltimore City, Baltimore County, Cincinnati, and Seattle. They too found disparities in spending among the school buildings within each of the studied districts–and, as you might expect–in the wrong direction.

Roza and Hill assert many different forces are conspiring to undermine disadvantaged students’ access to resources, but they focus on the largest single expenditure in schools’ operational budgets–teacher salaries.

By tracking average teacher salaries at the building level, Roza and Hill were able to investigate relative levels of resource distribution. These researchers suggest seniority policies are largely to blame for the unraveling of vertical equity efforts. Because teachers with more experience often have discretion in their choice of teaching assignments, more expensive teachers are foregoing teaching assignments in high-poverty schools for the draw of less-challenging schools within the same district.

Ineffective Method

Roza and Hill are careful to explain that paying teachers more based on their years of service does not guarantee effectiveness. Indeed, they concede most quality research has repeatedly shown greater experience beyond the first few years makes little difference in student achievement.

However, they argue, schools in less-difficult settings have many more applicants for a given opening, and principals and boards in the more-desired schools are much more likely to choose the better teachers.

The bottom line is this: Union-advocated seniority policies that place the preferences of teachers ahead of the needs of students create intra-district funding inequities.

In addition to adopting vertical equity policies to level the playing field for disadvantaged students, states and districts should begin to modify the lockstep single-salary schedule so quality teachers have an incentive to compete for positions in high-poverty schools. Moreover, districts need to change budgeting policies so categorical funding for poor students follows them to their schools, not just their districts.

Until these changes are made, adding more money to the education budget will simply reinforce the existing inequities without closing the achievement gap.

Marc Holley ([email protected]), Matthew Carr ([email protected]), and Nathan Gray ([email protected]) are doctoral fellows at the University of Arkansas Department of Education Reform.

For more information …

“Shortchanging Disadvantaged Students: An Analysis of Intra-district Spending Patterns in Ohio,” by M.J. Carr, N.L. Gray, and M.J. Holley, The Journal of Educational Research & Policy Studies, 2007 (forthcoming).

“How Within-District Spending Inequities Help Some Schools to Fail,” by Marguerite Roza and Paul T. Hill, Brookings Papers on Education Policy, 2004: (requires registration)

“Assessing Inequities in School Funding Within Districts,” Annenberg Institute for School Reform, 2002. Available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for document #22261.