EDBUILD
Executive Summary
Over 21 million school-age children live within the bounds of a high-poverty school district, and many are still separated from educational resources by school district borders that segregate by socioeconomic status. In some areas, walking across a district boundary can mean a jump in the student poverty rate by as much as forty percentage points—the difference between Aspen, Colorado and Flint, Michigan.
In 1973, the U.S. Supreme Court heard San Antonio v. Rodriguez, a challenge to Texas’s school funding policy. That policy drew heavily upon local property wealth for education dollars, disadvantaging students in poor communities. The Supreme Court ruled in Rodriguez that the system did indeed harm those students, but the federal government had no right to intervene and remedy inequitable state funding formulas. Since then, states have mostly continued to use wealth-based systems like the Texas policy that prompted the challenge. Today, 46% of school funding nationwide is drawn from local sources, where what matters most is the value of the property inside a given district boundary. As a consequence, communities with greater property wealth can generally provide better-resourced schools for their students, even if they tax themselves at lower rates. Meanwhile, school districts in persistently impoverished areas, or in places experiencing economic decline, are left without the resources they need to support their students. As long as states ground their school funding systems in local property taxes, they are almost sure to fall short of finding resources to level the playing field.
Struggling school systems must go hat in hand to wealthier neighbors, who can decide whether to take or leave the merger
Within this flawed framework, one means of addressing the inequity is to help struggling districts merge with their financially healthier neighbors, widening their tax bases so that they have access to more local dollars. But many states make it nearly impossible for lower-wealth districts to consolidate with better-off neighbor districts. The vast majority of states–thirty-nine in all–have given themselves no power to trigger school district mergers. Instead, consolidation is purely voluntary, and struggling school systems must go hat in hand to wealthier neighbors, who can decide whether to take or leave the merger. Twenty-five states do offer financial incentives for mergers, but most are modest, and even the most generous often fail to spur consolidations for the districts that need it most. Only nine states have the power to force consolidations in limited circumstances, but these actions are vanishingly rare. In the vast majority of cases, the state does nothing.
Because locally rooted funding systems do so much to advantage small and wealthy school districts, the incentives of our education funding system dictate that financially distressed districts seeking consolidation will almost always be turned away by their neighbors. Unless states intervene to directly bring about consolidations, merger efforts will generally fail and students in districts underfunded by the school finance system will be left stranded, with no escape route.
Introduction
In 1968, over 22,000 students, mostly Mexican-American, were enrolled in Edgewood Independent School District in Texas. Their schools were deeply underfunded—the high school, for example, had broken windows and no hot water. The school system certainly could not muster the materials and personnel necessary to off er the same sort of opportunity to Edgewood students that their affluent neighbors received in the heavily segregated San Antonio area. That spring, 400 students walked out of Edgewood High School, carrying signs reading “We Want Equal Education.”
Years of state policies had worked to structurally disadvantage the minority students who were clustered in Edgewood due to residential segregation. In the 1940s, the Texas State Legislature sought to consolidate its more than 4,500 districts by encouraging local school systems to merge and form “independent school districts,” with the authority to levy their own property taxes and retain the proceeds within their new borders. Edgewood’s better-off neighbors banded together, oft en combining their tax bases in order to pool and keep their property tax revenue under this new funding system that advantaged the wealthy. These new independent districts included San Antonio, which in 1954 had a property tax base of $10,000 per student, and Alamo Heights, which had $18,000 per student in property value. Low-wealth Edgewood, though, was unable to find a partner for consolidation. Left with no other option, the city became an independent school district on its own in 1950, attempting to make ends meet on its meager tax base. By 1954, Edgewood’s entire tax base was worth just $2,000 per student.
After eighteen years of being stranded in impoverished schools, the parents and students of Edgewood had had enough. Driven to desperation, the Edgewood Concerned Parent Association turned to the courts on behalf of their children. The lawsuit, which was initially filed against the neighboring districts that refused to partner with the city, alleged that the state’s system of partially financing public education through local property taxes deprived the children in property-poor Edgewood of their right to an equal education.
The case would become San Antonio Independent School District v. Rodriguez, and The United States Supreme Court would ultimately rule on the case less than five years later. The Court agreed that students in low-wealth districts were disadvantaged by the system—but decided that this type of systemic disadvantage was not worthy of special consideration under federal law, because education is not a fundamental right under the U.S. Constitution. In essence, the nation’s highest court bestowed its blessing on funding structures that, then and now, rely heavily on local property taxes to finance public education. The ruling acknowledged the undeniable funding disparities between the schools serving communities at the top and bottom of the economic distribution but offered no federal remedy. The problem was left to be solved by the states.
Today, school district borders serve to create gulfs between the haves and have-nots. In some areas, walking across a district boundary can mean a jump in the student poverty rate by as much as forty percentage points— the difference between Aspen, Colorado and Flint, Michigan. This segregation is motivated and exacerbated by school funding policies that rely on local property tax revenue. Nationwide, revenue that is locally raised and locally governed accounts for 46% of all school funding. Because our children’s education hinges in large part on local property values, affluent communities have an interest in maintaining school district borders that fence in their wealth so that revenues can be kept for their hyper-local schools. In the meantime, worse-off areas are walled out—keeping low-value properties from diluting the tax base and excluding poor students with resource-intensive needs. Affluent families who find themselves on the low-wealth side of the line may then seek better-resourced schools for their children by doing what their neighbors cannot: moving across the district border and gaining access to well-funded school districts for the price of a more expensive home. (This serves to further concentrate poverty in the districts they leave behind.) In some cases, the wealthier corners of larger school districts even redraw boundaries to cordon off new districts, ensuring that their children attend well-resourced schools and that they will not bear the tax burden of funding schools in the wider community. The majority of communities that have formed their own school districts in this way are wealthier than the school district they have left behind, and often include fewer minority students.
Economic isolation and misfortune can also come to school districts more gradually, when local financial troubles set off a downward spiral. A major employer closing or a regional recession can cause a drop in employment. The loss of opportunity spurs people to leave the area, and as a consequence, home values decrease. This leads to a diminished tax base and poorer levels of school funding, even as the district must serve a needier student body. The school system’s struggles can in turn prompt further departures, leading to the worsening of the town’s economic problems. Since the school district’s borders define not just the community it serves but also its taxing jurisdiction, the downward slide leaves the district trapped, unable to access the additional resources needed to arrest the cycle of decline. Budgets dwindle, and the students remaining in the district lose out.
It is only to be expected that districts in such circumstances will seek to alter their borders in order to change their fortunes. But when a struggling district seeks to broaden its property tax base by merging with another district, it is usually spurned by its better-off neighbors. School district mergers are difficult propositions in any context, but within funding systems that rely on local wealth, financially healthy school districts have a clear interest in maintaining the boundaries that separate them from their property-poor neighbors. The same funding framework that places worse-off districts on the path to financial distress also makes it more likely that they will be left stranded—and their students stranded within them—when neighbor districts refuse to merge.
Download full version (PDF): How States Maroon School Districts in Financial Distress
About EdBuild
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EdBuild works directly with stakeholders in states across the country to modernize school funding systems. EdBuild conducts data and policy analysis, creates interactive modeling tools, and makes recommendations related to implementation.
Tags: EdBuild, Equity, San Antonio vs. Rodriguez, School Funding, School infrastructure, schools
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