Rural School Funding News Special Series:
Financing Rural Schools: Characteristics of Strong Rural School Finance Systems

Last Updated: January 25, 2011

This article appeared in the January 2011 Rural Policy Matters.

In this series, Rural School Funding News is reviewing general principles of school finance and sharing information about school funding systems that support rural schools and their unique characteristics and needs. While there are no easy answers to questions about how to fund schools, especially in this economic climate, we hope that these articles will provide you promising practices, ideas for advocacy, and guidelines that are easily transferable in your analysis and work on your own school finance systems.

If you are new to the series, you can review a brief introduction to the subject and discussion of Characteristic 1: A Strong Foundation Formula, here; Characteristic 2: Effective Use of the Judicial System, here; Characteristic 3: Fair Accounting for Cost of Living and Geographic Differences, here; Characteristic 4: Recognition of the Benefits of Small Schools, here; Characteristic 5: A Balance of Revenue Sources for Schools, here; and Characteristic 6: Efficiency in the State Revenue System, here.

Characteristic Seven: Equity and Adequacy in School Funding

Equity and adequacy are school finance terms used so frequently in discussion that they seem almost interchangeable. But they are actually two different, but interdependent and equally important, measures of a state’s school funding system and how well it provides educational resources and opportunity to all students and all schools.

A good state school finance system must provide an equitable share of funding resources to every student, that is, it makes sure some students don’t have a lot fewer resources and opportunities to be successful than other students do. Equity is about fairness. Adequacy, on the other hand, ensures that enough funding is available so that students and schools can meet high achievement goals. A finance system that is both adequate and equitable provides all schools with enough money to achieve what is expected and it distributes money in a manner that gives all students, no matter what their circumstances or where they live, the opportunity to be successful.

Equity in School Finance

Equity in school finance systems provides all students with the funding necessary to give them an equal educational opportunity — no matter what the student’s personal circumstance and no matter how much local wealth the school district has. It is important to note that ‘equitable’ is not the same as ‘equal.’ Equity recognizes that the amount of funding needed to provide a high quality education varies from student to student. Some students come to the educational process with greater needs, and therefore require additional funding to have an equal educational opportunity. Equity in school funding systems levels the playing field among diverse groups of students.

Equity is a horizontal comparison among students; it addresses the issue of whether all students been brought up to the same level of educational opportunity.

School finance systems that rely heavily on local property taxes to fund schools lead states into severely inequitable education systems. Property-poor and low-wealth districts are simply unable to provide education opportunities to their students at the same level as districts with many more local resources. Equity is missing.

Early school finance lawsuits were brought because of the lack of equity among school districts. The decision in California’s Serrano v. Priest case, one of the first such suits, described the goal of equity this way: “Although an equal expenditure level per pupil in every district is not educationally sound or desirable because of differing educational needs, equality of educational opportunity requires that all school districts possess an equal ability in terms of revenue to provide students with substantially equal opportunities for learning.”

Adequacy in School Finance

Adequacy is the amount of funding needed so that all students are able to achieve a high-quality education. There is no universal definition of an adequate education. Standards and requirements vary from state to state. Nevertheless, some measure is needed to determine adequacy. This measure may come in the form of standards laid out in state accountability laws or regulations that establish scores students must meet. Or, it could be provided through a “costing-out” study that determines a dollar amount needed to provide an adequate education based on characteristics of the state’s education system and the educational needs of various groups of students.

If equity is primarily a horizontal comparison, then adequacy can be thought of as a vertical comparison; it provides sufficient funding to raise all students’ achievement to high levels.

The standards and testing movement has provided a new legal theory for testing adequacy in school finance. That theory asserts that when states set standards and hold schools and students accountable, the state is responsible for providing the funding necessary to enable students to meet those standards. Using an adequacy analysis, courts have been able to consider how well states are doing in educating all students.

Analyzing Your State’s Finance System

Adequacy and equity are necessary companions. If a funding system is relatively equitable, but provides too few resources for students to achieve it is inadequate. Equity without adequacy destroys opportunity. If a funding system provides some students a minimal level of adequacy and other students many more resources, it distributes opportunity to learn very unevenly and is inequitable. Adequacy without equity also destroys opportunity.

A few basic questions and concepts can serve as a good starting place to determine whether equity and/or adequacy is lacking from your state’s finance system.

Equity questions:

  • Is the share of resources each school receives commensurate with the need of its students? Are resources fairly distributed?
  • Do all schools have access to sufficient funding?
  • Are tax burdens fair for all taxpayers, based on their ability to pay?
  • What role does local property wealth play in the school finance system? Do property-poor districts have fewer resources for education than property-rich districts?
  • Do per-pupil revenues and expenditures vary significantly for district to district?
  • How much variation is there among schools and districts?
  • Are these variations based on real differences in cost or some other consideration like the wealth or political power of local residents?
  • How much do variations in funding affect students?

Adequacy questions:

  • Do all schools have access to sufficient funding?
  • Does the state constitution set some standard of education, such as “thorough and efficient” or “free and appropriate?”
  • Are there high numbers of schools and students not meeting high stakes assessments? Are they being subject to negative consequences for this?
  • Is your state’s spending level very low compared to other states?
  • Is the state’s share of school funding less than 50%?
  • Are there large disparities in spending between rural and suburban groups?
  • Are rural districts’ teacher salaries and support services well below state averages?
  • Do a large percentage of rural districts have unsafe or outdated facilities?

All students should benefit from a funding system that treats them fairly and provides real opportunity to learn. The Rural Trust can help you as you work to improve your own state’s system. Call us for help.

Read more from the January 2011 Rural Policy Matters.