Funding falls short on effort, fairness

Indiana’s highest-poverty school districts spend only 65 percent of what’s needed for their students to achieve modest academic success, according to a new education finance report from the Rutgers Graduate School of Education and the Albert Shanker Institute.

Is it because we can’t afford to do better? Not at all. Indiana is near the bottom of the states when it comes to funding “effort,” the percentage of gross state product spent on schools.

It’s more compelling evidence that state legislators should be thinking a lot bigger as they decide how much of the two-year state budget to spend on K-12 education.

The report, “The Adequacy and Fairness of State School Finance Systems,” was released this week. It evaluates state school funding systems on three core indicators:

• Effort – how much states spend on education compared to their economic activity.
• Adequacy – whether they spend enough to meet educational goals.
• Progressivity – whether high-need districts get proportionately more resources.

Indiana ranks well below average on effort and in the middle of the pack on adequacy and progressivity. But the middle of the pack isn’t good. Only a handful of states are spending what they should, according to the researchers. And a few are regressive in their spending: They spend more in wealthy school districts than in poor districts.

The report says Indiana spends only 2.9 percent of its gross state product on K-12 education. That’s one of the lowest figures in the nation and well below the U.S. average of 3.5 percent.

It may be, as state legislators love to point out, that education is the biggest line item in the state budget. But that’s because most of Indiana school spending comes from the state, not local taxes. And because we keep taxes low and underfund many government services, not just education.

The report takes as an established fact that states should spend more in districts with more disadvantaged students, who are more expensive to educate. Indiana does so, but barely. The figures used in the report are from 2015-16, and it’s likely that Indiana’s funding system has grown less progressive since then. Recent state budgets have given bigger funding increases to affluent suburban school districts than to high-poverty urban and rural districts.

On adequacy, the report finds wide variation among and within the states. Funding is generally adequate in low-poverty districts; but in most states, it’s not adequate in high-poverty districts. Indiana spends 65 percent of what it ought to in the 20 percent of districts with the most poverty – what it ought to, that is, if it wants to boost test scores to national averages.

The authors write that there’s a research-based consensus that money matters in education. “Yes, money must be spent wisely, but districts can’t do that when there isn’t enough money to spend,” Baker says in a news release accompanying the report.

Indiana lawmakers are putting the finishing touches on a budget that increases K-12 funding by a little over 2 percent each of the next two years, barely enough to keep pace with inflation. The Rutgers-Shanker Institute report, like a recent study commissioned by the Indiana State Teachers Association, suggests they need to do better.