Do Poor Kids Benefit from State School Funding?

Education funding is a complicated issue in Wyoming. The state constitution gives education a special status on the list of public policy priorities, and the state's education funding formula has been the subject of much debate.

It is therefore impossible to give a full picture of state education funding in a short blog or two. There is, however, one aspect that deserves attention and can be addressed in this format, namely the question whether or not tax funding of education is redistributive in nature.

This question is of fundamental importance, especially in a state like Wyoming where the constitution elevates education as a state priority above other needs people have, such as health care, food, shelter, clothes and transportation. From an economics viewpoint, this special status is logical if and only if the state redistributes funds between rich and poor counties. (For full disclosure, yours truly does not believe government should be in the redistribution business in the first place. That is, however, a general question we will have to return to later.)

In theory, by taxing everyone, typically based on their ability to pay taxes, and then producing tax-funded education, government can assure that every kid gets a good education regardless of the economic status of their parents.

If there is any validity to this argument, we should be able to find a redistributive profile in the education funding that the state of Wyoming provides. Since school funding is best done locally – thus reassuring the closest possible ties between tax funding and accountability – the state's involvement has to be redistributive to add anything to the picture (again assuming it should redistribute in the first place).

Redistribution in education funding can be measured in two ways. The first compares local funding to state funding: given that local per-student funding reflects the ability of county residents to pay school-funding taxes, state funds should be a larger part in districts with low per-student local funding.

However, as shown by the figure attached to this blog, this is not the case. If there was a true redistribution mechanism built into the state school funding formula, then the blue part of the column, which represents state funding, should be larger in districts with low total per-student funding. It should also taper off as total funding increases. Furthermore, it should eliminate the differences between districts in terms of per-student funding. None of this happens, which means that with this method for measuring school funding in Wyoming, the state does not fill a redistributive purpose.

Put bluntly: based on the data reported here, state school funding does not appear to benefit poor kids.

Another way to measure redistribution is by comparing state funding to household income. That is a bit more complicated, so we will have to leave it for another blog.

---

FOOTNOTE: Data reported is sourced from the U.S. Department of Education. Not all districts appear by name, but data from all districts are included.