Financial Evolution

This report argues that public school finance systems uniformly fail to support the nation’s education goals regarding greater student performance. Thirty-one States are debating major changes to the ways they pay for education or distribute money to school districts. The push is on to link education spending to academic results. Nearly $500 billion in combined Federal, State, and local money is spent on pre-collegiate education in the United States each year, with nearly half the total coming from State sources. This large sum of money raises three concerns: (1) Could existing resources be better spent to produce the desired results? (2) How much money is needed to bring all children to State standards? and (3) Could State tax systems be improved to better withstand economic downturns and provide greater fairness for students and the public? Efforts to link spending to results are hampered, in part, by limited evidence about which practices and programs actually produce learning gains. To distribute money more equitably across schools, experts suggest that States and districts should move to “weighted student” funding formulas that are based on individual students and their educational needs. Based on research showing a strong link between teacher quality and student learning, experts also suggest that States and districts move away from single-salary schedules and shift toward compensation plans that reward teachers who have special knowledge or skills, or who succeed in boosting student performance.