Best Practices for Providing Education Funding for Economically Disadvantaged Students

Students from impoverished backgrounds face many challenges within state public education systems. It has long been recognized that these students lag behind their more affluent peers in academic results and student achievement, and need more resources to meet the same proficiency benchmarks. This has prompted state and federal legislators to try to mitigate this achievement gap as a policy priority.

Economically disadvantaged students are more likely to attend lower-performing or lesser-resourced schools in socio-economically disadvantaged areas. Without the capacity to provide additional monetary incentives, these schools may struggle to attract and retain quality teaching staff. As well, these students are often concentrated in less property-wealthy districts that lack the capacity to raise revenue to cover their education costs relative to districts with greater property wealth—that is, unless the state government provides compensation for these differences between districts in their ability to fund education locally.

Economically disadvantaged students also generally possess less social, financial and health capital than their more affluent peers, and are more likely to face negative stressors like crime and pollution that can adversely affect their emotional and cognitive development. These problems call for the allocation of additional resources to meet the students’ unique needs while addressing the disadvantages they face and alleviating the additional stress on resources placed upon the schools or districts they attend.

As a result, research groups and government committees have generally recognized that school finance systems need to allocate additional resources or funding for students who live in poverty while accomplishing these cost adjustments in a transparent manner. And with the inevitable state education budget cuts due to the Covid-19 recession, the need to ensure the equitable allocation of limited funds to less advantaged students is especially pertinent.

This report briefly examines federal funding for student poverty, then discusses how different state education finance systems fund for poverty. By canvassing and presenting the lessons learned by some states, it explores how jurisdictions that want to fine-tune their funding formulas to better meet the needs of their economically disadvantaged students can learn from the experiences of others.

Full Policy Brief: Targeting Disadvantaged Student Funding Effectively In State Education Formulas