Press Releases

News from EPI Public school funding shortfalls during past economic downturns hurt students for years after: Warnings of what may come post-pandemic

Long-standing public school funding problems shortchange U.S. public education and widen disparities in educational opportunities between rich and poor school districts, according to a new Economic Policy Institute report.

This reality is even more stark for the future of public education, given that local funding for schools could get even more competitive because of a recent Supreme Court ruling allowing state public funding for education to also go to religious schools.

Inadequate and inequitable funding, aggravated by many states that undervalue and underinvest in public education, causes cumulative harm to students—especially low-income students. These harms worsen during economic downturns, which does not bode well for post-pandemic education, particularly in low-income communities with large shares of Black and Brown students. 

According to the report, after the 2007 onset of the Great Recession, it took until 2016–2017 for per-student revenues in high-poverty districts to return to pre-recession levels, on average. However, the lowest-poverty districts never experienced a recession drop.

Education funding has long-standing problems because:

  • it relies too heavily on state and local resources (particularly property tax revenues);
  • the federal government plays a small and insufficient role;
  • funding levels vary widely across states; and
  • high-poverty districts get less funding per student than low-poverty districts.

Districts in high-poverty areas, which serve larger shares of low-income and students of color, get about 14% less ($2,710 less per student) in revenue than districts in low-poverty areas.

School districts—which get more than 90% of their revenues from state and local sources—are not spending enough even in normal times to ensure that children achieve national average test scores. Chronic underfunding and funding disparities severely undermine the goal of providing a good education to every child. Creating a more robust and equitable school funding system with a larger and more strategic federal role would improve and help equalize educational opportunities, protect school budgets during recessions, and provide an economic boost during downturns.

The report is authored by EPI research associate Sylvia Allegretto, senior researcher at the Learning Policy Institute Emma García, and Policy Director at the National Academy of Social Insurance Elaine Weiss.

“For too long in this country, we have normalized the practice of underinvesting in education while expecting that schools would still function well. We have also accepted the disproportionate burden that economic recessions place on public schools and students. These norms are very costly—to individuals and to society—and they shortchange our country’s potential,” said the authors in the report. “If we are to have a chance of providing all students in the United States with an excellent education, we must build a strong funding foundation—one with sufficient, adequate, and equitable funding of public schools in practice, not just in theory.”