Adequacy, Not Equity, May Be the Biggest Education Funding Challenge

FAYETTEVILLE, Ark. – Today, even when adjusting for inter-state differences in cost of living, Arkansas spends less on education than almost any other state, ranking 44 out of 51 states in 2000-2001.

With the state of Arkansas in a quandary over the funding of its K-12 education system, University of Arkansas researchers looked to state statistics on equity and adequacy from across the nation to show how Arkansas stacks up. They found that the state is relatively equitable but spends fewer dollars per pupil in all of its districts than the national average in the districts across the state.

"We are relatively equitable in our spending," said Gary Ritter, associate professor of education and public policy. "Our larger issue would be the adequacy of that spending."

Ritter and his colleague, graduate research assistant Joshua Barnett, looked at statistics from all 50 states over the past 13 years. They used data collected by the National Center for Education Statistics on spending per pupil in each state and outcomes on a standardized test administered to a representative sample of fourth and eighth grade students in each of the 50 states. To measure equity, the researchers also examined measures how levels of school spending vary between school districts within the same state.

On the topic of spending adequacy, they found that since 1960, Arkansas has spent less per pupil than most other states. Educational spending per pupil in Arkansas has remained about 20 percent behind the national expenditures, but Arkansas spending also has lagged behind the expenditures in neighboring states. Also, Arkansas students taking the National Assessment of Educational Progress (NAEP) tests did not perform as well as their national peers in mathematics and reading. This relatively poor performance does not speak well for the adequacy of the system overall.

However, when it comes to equitable spending by school districts within the same state, Arkansas ranks among the 20 most equitable states in the nation, based upon variations between the highest- and lowest-funded school districts and other measures.

Ritter and Barnett noted that the adequacy issue may be addressed by the recent legislative activity that earmarked additional money for education in Arkansas. The state legislature responded to the need for more resources by increasing the state sales tax rate from 5.125 percent to 6 percent, which will generate an estimated $370 million in new educational resources each year. The total state appropriation to elementary and secondary education in 2003-2004 was $1.845 billion; due to the new tax dollars and other appropriations, the proposed 2004-2005 budget is $2.292 billion.

"This kind of increase in education spending is rare but not unprecedented," said Ritter. Looking back to 1987-88 in all the states across the country, the researchers found 20 instances out of about 650 annual state budgets where state education funding increased by as much as it will in Arkansas in the upcoming year. However, the average annual increase on state education spending nationwide over that time was only seven percent, indicating the 24 percent increase in state funding that Arkansas will undertake in the upcoming year is a major commitment.

This research allows Arkansas legislators and school officials to see how the state compares with other states currently, but it also can be used as a baseline - as the state begins to implement reforms in reaction to the Lake View court ruling - to determine whether legislative reforms have a positive impact on spending adequacy and equity.

The researchers at the Office for Education Policy plan to continue providing educational data and evidence on educational reforms around the country to the state legislature to aid the policymaking body in making informed decisions about the direction of education in the state.

To view the full report, entitled "Placing Arkansas School Funding Data in the National Context," please visit the Web site for the Office for Education Policy and follow the link for Working Papers. Additionally, a condensed two-page policy brief describing the main conclusions of this paper is available on the Policy Briefs section of the Web site.