Equalization Aid

Equalization aid, a term often used synonymously with state aid, refers to general use financial assistance that is available to public school districts in the United States. The use of such funding is considered non-restrictive and can be used for a broad range of purposes to be determined by the district (Wisconsin Department of Public Instruction, 2006). How much equalization aid is awarded to each school district is determined by complicated formulas that vary in each state. At its simplest level, the calculation of equalization aid considers factors such as student enrollment, school assessed value, and levels of poverty when measured or compared against target spending levels and target property tax rates. Though each state may use a different formula to precisely calculate aid, this measuring tool provides a general understanding of how such aid is determined.

Keywords Adequacy; Average Daily Attendance (ADA); Brown v. Board of Education; Elementary and Secondary Education Act (ESEA); Equalization Aid; Per-Pupil Spending; Revenues; Segregation; Serrano v. Priest; Unification Clause; Vouchers

Politics, Government, & Education > Equalization Aid

Overview

Equalization aid, a term often used synonymously with state aid, refers to general use financial assistance that is available to public school districts in the United States. The use of such funding is considered non-restrictive and can be used for a broad range of purposes to be determined by the district (Wisconsin Department of Public Instruction, 2006). How much equalization aid is awarded to each school district is determined by complicated formulas that vary in each state. At its simplest level, the calculation of equalization aid considers factors such as student enrollment, school assessed value, and levels of poverty when measured or compared against target spending levels and target property tax rates. Basically, equalization aid is determined according to the following formula: "the aid per pupil equals target spending per pupil minus what the school district can raise on its own" ("State Aid to Local Schools," n.d.). Though each state may use a different formula to precisely calculate aid, this measuring tool provides a general understanding of how such aid is determined.

Historical Perspectives

As a nation that prides itself on democratic values, justice, and prosperity, the U.S. has always seen education as a way for the poor or oppressed to better their prospects and raise their positions in life. Equalization aid is based on this philosophy. By financing low-income schools and increasing their per-pupil expenditures, those students have equal chances of succeeding or prospering as those in wealthier communities. One government policy that supports such thinking is the 1994 reauthorization of the Elementary and Secondary Education Act (ESEA), originally known as Title 1 funding. To better support and assist schools that serve primarily low-income students, the ESEA enables school districts to use revised, more flexible calculations in determining federal, state, and local funding. Research has shown that low-income students can succeed and do well in school but may need more resources in order to achieve such academic goals. This shift in policy enables teachers, administrators, and other school officials to have greater flexibility in deciding what works for their particular school population. This method of school management has been shown to be more effective than the federal government's dictating local policies (United States Department of Education. Policy Studies Association, 1998, p. 15). In receiving such government funding, each school district must show how it is using the money in a responsible, deliberate, and purposeful manner. In other words, schools must show a plan for how they will distribute such state aid funding and then show how these funds were actually distributed (p. 32).

Equalizing Wealth Disparities

In the United States, all young people between the ages of 5 and 18 have the inalienable right to a quality education provided by the government. It is largely each state's responsibility to finance and support the educational endeavors of the population of those who reside within its borders. Local financing of school districts has proven to be problematic as wealthy communities who pay higher property taxes can pay for good, quality elementary and secondary schools while more impoverished neighborhoods struggle to adequately finance their schools. To make financing more equal, the states have come up with various polices and formulas to better ensure that students in low-income communities can receive a quality education (Payne, 2005, p. 843). Some states have voluntarily developed programs to provide aid to these low-income schools while others have had their hands forced to action through legislation. For most states, however, determining which schools get aid and how much they should receive remains a contentious issue influenced by politics, wealth, community mores, and population makeup (p. 844). Some states, such as Kentucky, have had success with finance reform programs. Recognizing a need for real change, Kentucky reformed its local governance, curriculum, school finance, and more. By pairing these changes with providing additional resources to its low-income students, the state saw a significant increase of the academic performance of its low income, traditionally underserved minority population (p. 846).

Applications

Examples of How Equalization Aid Works in Different States

States are largely responsible for funding their own public schools, which includes being responsible for ensuring that funds are distributed in an even-handed fashion. Title 1 and other legislative acts state that per-pupil spending must be similar regardless of a school district's wealth. Equalization aid helps to ensure that low-income students in impoverished communities receive comparable funding so that they may receive a quality education.

State of California

In the state of California, the 1971 Serrano v. Priest state court case ruled that school district funding could not be solely based on income from property taxes as this was inherently unequal and unconstitutional. In other words, all students, regardless of their family income, had the right to receive quality education provided by the state. In order to determine equal distribution of funds, Lee (1998) states that "wealth-related differences in school funding must be reduced within a 'band' of equality extending $100 per pupil above and below the state average in per pupil spending" (p. 3). In other words, no more than a plus or minus $100 disparity when compared to the standard should exist between per pupil expenditure regardless of familial income.

Since Serrano v. Priest, various legislations have been passed to ensure general purpose funds are distributed accordingly and fairly. In 1983, the revenue limit, cost of living adjustment and equalization aid policies were revised to provide districts of the same category the same dollar amounts per average daily attendance (ADA). This approach was modified to allow low-performing school districts to receive more equalization aid. The amount received largely depended on how much funding was needed in order to bring its revenue limit to the average amount in its slated category. Moreover, aid was significantly affected by student attendance; something that previously was not a consideration. Equalizing the funding for all the school districts within the state itself has proven a difficult endeavor due to the cost of applying such equalization policies and determining what specifically constitutes "adequate equalization." Lee (1998) argues that using a sliding scale for calculating cost of living adjustment (COLA) may be the most efficient and effective way for determining equalization aid allotment, so that low-revenue school districts receive sufficient levels of funding (Lee, 1998, p. 6).

Washington & Oregon

In efforts to ensure that every student within its state received a quality education, Oregon established its Quality Education Model (QEM). The QEM is the standard for which Oregon's elementary, middle school, and high school students receive funding. It also determines how much funding low income schools should receive. One issue the state faces is a significant rural population that comprises about one third of the state's geography. Due to transportation costs, smaller pupil-teacher ratios, telecommunications costs, spotty infrastructure, and related expenditures, it is an accepted fact that such per pupil spending is higher than for students of larger populated urban areas. As such, these factors must be considered when allocating state aid to low income rural communities to ensure such students receive similar resources as available to those in urban areas (Hill, 2001, p. 14).

In Washington, a 1987 levy equalization aid measure was passed to limit the contribution of revenue generated from property taxes. In general, schools with lower than average valuation per pupil are slated to receive equalization aid (Plecki, 1998, p. 8). In 1997, about 66 percent of school districts were eligible for this equalization aid. Since such measures were put in place, analysis shows that overall school districts have improved their equitability or aid distribution (p. 10). Due to modifications of the levy equalization aid bill, districts are allowed to collect more and more funding from local revenue sources, typically property taxes. Such a trend threatens to negatively affect the equalization of school district funding as a whole.

Illinois

In Chicago, Illinois, wealth disparities among communities largely reflect wealth disparities among school districts despite efforts in state aid that have tried to correct this gap. For instance Rondout School District, the wealthiest school district in the state, generated $26,356 per pupil from property tax revenue. The Ford Heights School District, one of the state's poorest, generated $5,548 per pupil from its property tax revenue even though its property tax rate is over five times more than the Rondout district's (Lowenstein, 2005, p. 17). Wealthy neighborhoods with high real estate value can have lower tax rates because they attract prospering businesses, creating jobs for members of the community. Such neighborhoods can support affluent school districts, thereby providing a quality education to those in their community. Conversely, areas such as Ford Heights must make up for lack of business revenue by increasing property taxes, thereby discouraging new businesses from setting up in the area. Funds in a mostly empty pot must go to support already fledging schools that struggle to meet minimum standards of performance. To put it another way, Lowenstein (2005) says, "Since the districts with the lowest tax rates were home to properties six times more valuable than the districts with the highest tax rates, they generated more local revenue. In all, local sources in districts with the lowest tax rates generated nearly $11,752 per pupil, while local sources in districts with the highest tax rates generated nearly $5,783 per pupil" (Lowenstein, 2005, p. 19). Though such school districts do receive equitable aid, it does not compare to the tax revenue received by schools in wealthy neighborhoods.

Viewpoints

Equalization Aid & School Vouchers

The birth of school vouchers came about as a way for states to financially enable some students in low-income communities with poor performing school districts to attend school in a higher performing school district. Vouchers serve as a guarantee of compensation from the state for a student's educational expenses for attending a "school of their choice" outside their own residential school district. Voucher programs have shown to be somewhat controversial as it is an issue of concern whether public funds or aid should be used to finance private (sometimes religious) education programs. It has also been argued that such voucher programs violate the "uniformity clauses" in constitutions that state school learning from one public school to the next should be relatively the same. In the state of Florida for instance, the Bush v. Holmes case argued that state voucher programs were unconstitutional in that they violated this uniformity clause. In other words, since it cannot be verified that private schools have a similar curriculum to public schools, the state cannot ask the public to finance this non-uniform educational experience (Dycus, 2006, p. 421). Moreover, the case ruled that states could not fail in their educational responsibilities and then pass them on to private schools. Finally, it was decided that such voucher programs would hurt public schools by taking away their slated funding and funneling it to private schools. In other words, aid marked to go toward a low-income school may actually indirectly end up going toward a private school as a result of the voucher program (p. 424).

Equal Opportunity in Education

Generally speaking, school administrators, legislators, state officials, and the voting public support equalization aid or state aid and see it as a way to enable low-income communities to better educate their youth. Conventional thinking states that better educated students are more likely to get higher paying jobs, strengthen their communities, and better provide for their own children. The notion of equal opportunity for all is a widely supported American value referenced in the U.S. Constitution. The notorious Brown v. Board of Education case in 1954 stipulated clearly that segregating schools by race was unconstitutional because such a system failed the litmus test of "equal opportunity." Fifty years after the historic Supreme Court case, some scholars believe that Southern states have maintained de facto segregation policies as a way to work around Brown (Baker & Green, 2005, p. 373).

Determining Need

While legislation in the 1950s focused on equalization regardless of race or income, legislation in the 1980s until present day has focused on the notion of adequacy. In theory, adequacy is more concerned with students from all school districts in a state achieving the same established performance goals than it is with ensuring that each school district receives the same amount of funding in order to meet those same performance goals. Under this new shift in policy, schools that need more financing to meet adequacy standards should get it (Baker & Green, 2005, p.374). Undoubtedly, some low-income school districts have benefited from this new way of determining need; however, other scholars claim it has benefited school districts with a predominantly white, middle-class population. For instance, in an economically disadvantaged school district with a large immigrant population, the school may receive more state funding so that it can serve its sizable population of limited-English-proficiency students. In wealthier communities, a school may receive aid so that it can fund its advanced placement or gifted programs or continue to pay expected higher salaries for teachers. What constitutes as a need varies greatly from one community to the next (p. 375).

De Facto Segregation in Funding

Moreover, loopholes in the law have enabled Southern states and others to follow pre-Brown segregationists funding policies that separate by wealth or family income thereby indirectly separating students by race. Since most legislation focused on desegregation by law rather than de facto segregation, many pre-Brown funding policies remained in place. In addition, because state aid was largely viewed as a positive development for low-income and minority populations, its limits were not often scrutinized by legislators, civil rights advocates, and policy makers. According to Baker and Green (2005), "School finance litigation is often depicted both as a means of moving beyond race as the salient issue in education reform and as an effective way to achieve educational equity" (p. 377). This assumption often meant that actual disparities in state aid and policies that supported pre-Brown segregation were unnoticed (p. 377).

When looking at historically segregated Alabama for instance, state aid is allocated according to teacher units required per grade level and class size. Costs are assigned in relation to the education and experience of instructors in a given district (Baker & Green, 2005, p. 383). Baker and Green's case study revealed that experienced teachers who held master's degrees were more likely to teach in school districts that were predominantly white while teachers with less experience and without master's degrees were more likely to teach in predominantly black schools. Following the state's aid allocation policy, those schools with the better teachers continued to receive more funds to support their teachers while those with the less experienced teachers continued to receive less funding. This teacher-unit aid allocation method illustrates how some states have used aid to maintain segregationist values and better assist white schools rather than low-income black schools (Baker & Green, 2005, p. 384).

Terms & Concepts

Adequacy: In the realm of education, the term adequacy refers to an approach to school funding that considers the amount of funding schools should receive based on a cost estimate of achieving the state's educational goals (http://www.edsource.org).

Average Daily Attendance (ADA): Average daily attendance refers to the total number of days of student attendance divided by the total number of days in the regular school year. The state of California, for instance, uses ADA calculations to determine the school district’s funding, whether it be general-purpose or state aid (http://www.edsource.org).

Brown v. Board of Education: This landmark case, one of the most significant in U.S. history in improving race relations, stated that segregating schools by race, or separate but equal, was unconstitutional. The 1954 case broke down the legalities of racial segregation in School systems and public establishments.

Elementary and Secondary Education Act (ESEA): The Elementary and Secondary Education Act, enacted in 1965 as part of the War on Poverty, is a federal law pertaining to K-12 education. The No Child Left Behind Act (NCLB) is ESEA’s most recent reauthorization, which supports the education of the country's poorest children.

Equalization Aid: Often used interchangeably with state aid, equalization aid refers to funds allocated by the state in order to bring attention to inequalities and increase the funding level of school districts by lowering the revenue limits toward the state average. Such aid is typically calculated on size and type of school district.

Per-Pupil Spending: The amount of money that is spent on each student via public funding; it is also the amount of money used to compare spending from one state to the next or one district to the next.

Revenues: Revenue is the income of a government from taxation, excise duties, customs, or other sources, appropriated to the payment of the public expenses (http://www.reference.com/browse/all/revenue).

Segregation: In the United States, segregation is the practice of separating people of different races or ethnicities away from the dominant race. Segregation can be by law, (de jure segregation), or in fact (De facto segregation). De jure segregation has been prohibited in the United States since the mid-1960s. Segregation in fact occurs when social practice, political acts, economic circumstances, or public policy result in segregation even though no laws are in place to sanction the separation. De facto segregation continues despite state and federal civil rights laws to discourage it.

Serrano v. Priest: A 1960s-1970s California court case that challenged the inequities created by using property taxes as the principal source of revenue for public schools. The case ruled that wide wealth discrepancies in school funding because of local wealth differences represented a denial of equal opportunity (http://www.edsource.org).

Unification Clause: The unification clause states that public school districts within a state must offer a similar curriculum covering largely the same or similar lesson plans. The term is often used to talk about the differences between public and private schools, which are often given the freedom to offer differing curriculums.

Vouchers: A payment from the state that guarantees all or part of a student's education expenses for any school or college of the recipient’s choice. Vouchers are sought when a student resides in a low-income, poor-performing school district.

Bibliography

Adequacy. (2004). A Glossary of School Finance Terms. Retrieved September 2, 2007, from http://www.edsource.org.

Average daily attendance. (2004). A Glossary of School Finance Terms. Retrieved September 2, 2007, from http://www.edsource.org.

Baker, B. D. & Green, C. P. (2005). Tricks of the trade: State legislative actions in school finance policy that perpetuate racial disparities in the post-Brown era. The American Journal of Education, 111 , 372-413. Retrieved August 28, 2007, from ProQuest Database.

Brown v. Board of Education. (2004, April). Brown vs. the Board of Education - About the Case. Retrieved September 9, 2007, from http://brownvboard.org/summary/http://brownvboard.org/summary/.

Fahy, C. A. (2012). Fiscal capacity measurement and equity in local contributions to schools: The effects of education finance reform in Massachusetts. Journal of Education Finance, 37, 317-346. Retrieved December 15, 2013, from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=75121361&site=ehost-live

Dycus, J. (2006). Lost opportunity: Bush v. Holmes and the application of state constitutional uniformity clauses to school vouch schemes. Journal of Law and Education, 35 , 415-459. Retrieved August 28, 2007 from EBSCO Online Database Education Research Complete http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=22713762&site=ehost-live

Hill, J. (2001). The Oregon quality education model applied to schools characterized by low student enrollment, sparse distribution of students, and remote settings with findings relating to equity of services. Washington, DC: U.S. Government Printing Office. Retrieved August 28, 2007, from (ERIC Document Reproduction Service No. ED456009). Retrieved October 18, 2007 from EBSCO Online Education Research Database. http://eric.ed.gov/ERICWebPortal/contentdelivery/servlet/ERICServlet?accno=ED456009

Lee, J. (1999). Equalizing school district funding: Option for a sliding scale COLA . A Legislative Analyst's Office Report. Washington, DC: U.S. Government Printing Office. (ERIC Document Reproduction Service No. ED438592). Retrieved August 28, 2007, from EBSCO Online Education Research Database. http://eric.ed.gov/ERICWebPortal/contentdelivery/servlet/ERICServlet?accno=ED438592

Lowenstein, J. K. (2006). Never-ending cycle: Illinois' reliance on property taxes as the major source of school funding has major consequences for communities throughout the state. The Chicago Reporter, 35 , 16-20.

New study finds inequities in state education funding formulas. (2012). District Administration, 48, 14. Retrieved December 15, 2013, from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=70548547&site=ehost-live

Payne, A. A. (2005). Helping children left behind: State aid and the pursuit of educational equity. National Tax Journal, 58 , 843- 846. Retrieved August 28, 2007 from EBSCO Online Database Education Research Complete. http://search.ebscohost.com/login.aspx?direct=true&db=ehh&AN=19402940&site=ehost-live

Plecki, M. L. (1998). School finance in Washington state 1997-98: Emerging equity concerns. Washington, DC: U.S. Government Printing Office. (ERIC Document Reproduction Service No. ED426447). Retrieved August 28, 2007 from EBSCO Online Education Research Database. http://eric.ed.gov/ERICWebPortal/contentdelivery/servlet/ERICServlet?accno=ED426447

Revenue. (n.d.). The American Heritage Dictionary of the English Language, Fourth Edition. Retrieved August 21, 2007, from http://www.reference.com/browse/all/revenue

Segregation. (n.d.). Encarta Online Encyclopedia,. Retrieved August 21, 2007, from (http://encarta.msn.com/encnet/refpages/RefArticle.aspx?refid=761580651&para=20)

Serrano v. Priest. (2004, August). A Glossary of School Finance Terms. Retrieved September 2, 2007, from http://www.edsource.org.

State Aid to Local Schools. (n.d.). A simple version of the school aid formula. Retrieved August 27, 2007, from http://www.agecon.purdue.edu/crd/Localgov/Second%20Level%20pages/topic_school_aid.htm

United States Department of Education. Policy Studies Association. (1998). Implementing school-wide programs. Volume I. An idea book on planning . Washington, DC: U.S. Government Printing Office. (ERIC Document Reproduction Service No. ED423615). Retrieved August 28, 2007, from EBSCO Online Education Research Database. http://eric.ed.gov/ERICWebPortal/contentdelivery/servlet/ERICServlet?accno=ED423615

Wisconsin Department of Public Instruction. (2006). Equalization aid - Section F of basic facts. Retrieved August 27, 2007, from http://dpi.state.wi.us/sfs/equalaid.html .

Suggested Reading

Sracic, P. A. (2006). San Antonio V. Rodriguez and the pursuit of equal education: The debate over discrimination and school funding (landmark law cases and American society). Lawrence, KS: University Press of Kansas.

West, M. R. & Peterson, P. E. (Eds.). (2007). School money trials: The legal pursuit of educational adequacy. Washington, DC: Brookings Institution Press.

Yinger, J. (2004). Helping children left behind: state aid and the pursuit of educational equity. Cambridge, MA: The MIT Press.