Equal Funding for All Low-Income Students

The stimulus proposal recently released by the House of Representatives includes a lot of money for education. That's a good thing, unless you subscribe to the Petrilli school bankruptcy theory of education reform. But while Mike and his colleagues are wrong to think that financial stress will induce more reform-mindedness, they're right to point out that there are better and worse ways to pump out billions of new federal education dollars. In that vein, I have a proposal for how Congress should spend the extra $13 billion in Title I funds:

Equal funding for all low-income students.

One might assume this is the way Title I funds are currently disbursed. But they're not. Instead, Congress adjusts the amount of money each district gets per low-income student based on the states' average level of state and local funding per student. Rich states, being rich, tend to spend more. Poor states, being poor, tend to spend less. As a result, poor children living in rich states like Connecticut get 50% more Title I money than poor children living in poor states like Alabama. The Title I program starts with existing wealth-based inter-state disparities in education funding and makes them worse. 

Under normal circumstances, fixing this would be difficult because it would involve redistributing lots of money from rich states to poor states. But these aren't normal circumstances. It's all new money, so everyone's going to benefit. In a perfect world we'd distribute funding inversely to wealth, as Medicaid does, but I'm a reasonable guy and understand that politics is the art of compromise. So let's just go with a simple formula that everyone can understand:

Equal funding for all low-income students.

An even bigger problem potentially lurks in the $39 billion that Congress is considering giving states to support their general education aid programs.  The problem here is that some of the formulas that drive those programs are deeply inequitable and so throwing money on top of them will also make existing disparities deeper still. The tricky thing is that there are really three kinds of general education aid programs to consider:

1) Good general aid programs in states with equitable funding systems (funding systems being defined as the totality of state aid and local property taxes) that would be become more equitable with more general aid funding. These we should feel good about funding.

2) Bad general aid programs in states with inequitable funding systems that would be become more inequitable with more general aid funding. These we should feel bad about funding.

3) Good general aid programs in states with inequitable funding systems that would be become more equitable with more general aid funding. In other words, it's possible to have a bad overall funding system but a well-designed general aid program that just doesn't get enough money to overcome local property-tax based inequities. Indeed, the under-funding is probably the main source of the inequity, and as such pumping more money into the general aid program would be a good thing.

The problem is that it can be hard to figure out from the outside which states with inequitable systems are a #2 state and which are a #3 state, because most analyses measure (as they should) the overall inequitableness of a given state's funding system as a whole. Congress should keep an eye on this issue as it crafts stimulus policy.