Arkansas’ School Funding System Is in Need of Reform
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Arkansas’ School Funding System Is in Need of Reform

Simply pouring more money into a broken school finance system will not help the students most in need of educational assistance.

Last month, Arkansas legislators introduced a bill that aims to help public schools struggling with the effects of the COVID-19 pandemic, as well as expand school choice opportunities for students across the state.

While the legislation, the Arkansas Child Academic Opportunity Scholarship and Grant Act, is being applauded by school choice supporters, state leaders also need to address longstanding problems with the state’s public school funding system that create funding disparities and hurt low-income families and students. Simply pouring more money into a broken school finance system will not help the Arkansas students most in need of assistance.

The problems in the Arkansas school finance system that are most detrimental to students and staff include the school finance system’s way of funding special education and low-income students, its inequalities—stemming from varying degrees of property wealth across the state, and the lack of discretion given to principals and local school leaders when it comes to deciding how to spend their school budgets.

A report commissioned by the state House last year found that Arkansas’ special education funding system does not provide dollars based on individual student needs. While Arkansas’ education department assumes a uniform distribution of special education students across the state, data on student populations and student disability classifications show that there is significant variation in school districts’ special education needs.

Consequently, the school districts that aren’t receiving the necessary funds to serve these students are forced to either neglect providing special education students the services they need or to dip into various other budget areas to cover the special education costs—thus shortchanging other students.

Similarly, low-income students are not treated equitably under the state’s funding system. While Arkansas does provide additional education dollars for low-income students, school districts with nearly identical percentages of economically-disadvantaged students can receive very different amounts of resources.

Even more problematically, Arkansas continues to use federal free and reduced-price lunch enrollments as a measure of student poverty, even though these figures are becoming an increasingly inaccurate measure of student poverty.

As a broader problem, state and local funding per student is often higher in Arkansas school districts with greater property wealth. Because local voters in wealthy school districts are more easily able to leverage property taxes for bonds to pay for school facilities and operations, Arkansas schools with the highest levels of property wealth per-pupil receive significantly more money—23.9 percent more funding—than the most property-poor school districts in the state.

Extra local funds often translate to higher teacher salaries and better school facilities, but only for the families that are lucky enough to live in the right zip codes. These problems are made worse by the fact that more than half-a-billion dollars from the state’s education budget are allocated for “restricted” grants that are subject to a myriad of rules which prevent local leaders from using these funds in ways they believe would best serve their students.

Principals, superintendents and teachers are best equipped to know what spending strategies will best benefit students at any given school. Nonetheless, Arkansas’ leaders have set restrictions for these grants, which comprise 10.4 percent of all state and local education funds. Furthermore, these grants come with extensive reporting requirements that don’t appear to make much of a difference in academic outcomes.

A straightforward way to make progress on all these issues is to streamline Arkansas education funding into a weighted student formula system. Under this type of funding system, most education dollars are disbursed on a transparent, per-student basis. Greater resources flow to students with greater needs and education dollars can be used flexibly by local school leaders.

Make no mistake—overhauling Arkansas’s school funding formula will require substantial political effort. But doing so would go a long way toward giving Arkansas students better educational opportunities.