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School Funding Formulas

Research consistently demonstrates that when funding is matched to student needs and allows for local flexibility, academic outcomes improve. By adopting a student-based formula that combines a uniform base with equitable weights, states have seen accelerated academic gains and increased long-term student outcomes. The resources below highlight how states have taken this approach and offer tools to support evidence-based policymaking.

Research

States provide funding to districts using either a weighted student formula or a resource-based formula

Curated by: Christopher Candelaria, Vanderbilt University

Listen to Christopher Candelaria explain what a school funding formula is and how it determines how education dollars are distributed.

Learn how base funding and student “weights” work, and why districts with the same number of students can still receive different amounts of funding.

Research Consensus

Research shows that investing in school buildings, facilities, and equipment—capital investments—improves student achievement, especially if it targets basic infrastructure and high-needs school districts.

Policy Notes

  • About three fourths of facilities funding for schools comes from local funds, disadvantaging lower-wealth communities that have more difficulty raising taxes.
  • Many states offer matching grants for local bonds. While these make it possible for some districts to finance larger projects, they tend to be more beneficial for higher-wealth districts that have the means to approve new taxes. Some states take special measures for low-income districts, which makes it easier for lower-wealth districts to access funding.
  • Twenty-four states that offer a credit enhancement program to help school districts issue bonds. This allows low-income and low-wealth districts to qualify for a higher credit rating, increasing the amount of funding they can borrow at no cost to the state. For more information about these programs, see this summary of the effects of state credit enhancement programs.
  • Eleven states require supermajority votes to pass school district bonds for facilities construction and repair. Lowering vote thresholds for these measures would make it easier for districts in these states to access resources.

WSF Led To More Rapid Student Achievement Gains in Districts Receiving Concentrated Funding

Main takeaway

California school districts that received funding for high concentrations of low-income and English Language Learner students saw more rapid gains in math and English language arts than those that did not receive this additional funding. In addition, the gap between students who completed college-readiness coursework between these districts and those that did not receive this funding narrowed by nine percentage points.

Lafortune, J., Herrerra, J., & Gao, N. (2023). Examining the reach of targeted school funding. Public Policy Institute of California.

Main takeaway

A comparison of district staffing models between California (a state that uses a WSF) compared to Washington (a state that uses a resource-based formula) found that there is significantly more staffing and salary variation in California districts. This implies that the staffing flexibility offered under WSFs may allow districts to vary their workforce to meet the unique needs of their students and communities.

Aldeman, C. (2022, August 2). State funding methods influence schools’ spending decisions. Brookings Institution.

Main takeaway

Test scores in math and English language arts increased substantially in a school district that moved from a resource-based budgeting approach to weighted student funding. School principals cited the flexibility provided by this funding approach as a key driver in their ability to produce achievement gains.

Candelaria, C. A., Crutchfield, A. N., & McGill, D. G. (2024). The impact of additional funding on student outcomes: Evidence from an urban district using weighted student funding and site-based budgeting., (EdWorkingPaper 24-1006). Annenberg Institute.

Learn more with audio snippets

Listen to Christopher Candelaria explain what a school funding formula is and how it determines how education dollars are distributed.

Learn how base funding and student “weights” work, and why districts with the same number of students can still receive different amounts of funding.