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Desired Features of a State Funding System

BY debraabritt
Edunomics Lab Logo

March, 2021

One of a state’s primary responsibilities is to divvy up the public funds for K-12 schooling. A set of finance policies determines how state and local funds are apportioned—and what is expected in return—so that districts and other providers can then apply them to schools and classrooms.

As important as state allocation formulas are, they don’t change much over time, even as what we know about education evolves. While states might tweak their models from year to year, states tend to make major changes only once every two decades. As such, when the opportunity arises for a formula change, leaders will want to think carefully about the long-term implications, keeping students at the center of decision making.

This decision tree describes the desired features of a state education funding formula and walks policymakers through key decisions as well as considerations around balancing efficiency, equity and trade-offs in particular contexts. A list of relevant resources provide additional evidence and perspective on designing a funding formula.


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