Is There a Racial Gap in School District Spending?

Efforts have been made to address the race gap in educational achievement by targeting public school funding. A recent Economic Synopses essay explored the relationship between school districts’ budget and the racial composition of their student bodies.

St. Louis Fed Economist Hannah Rubinton and Research Associate Maggie Isaacson analyzed the revenue and spending per student for school districts in the 2017-18 academic year, comparing the data for Black students and for white students. The authors excluded districts in the top 1% and bottom 1% of spending per student; they also omitted the 1% of districts with the smallest numbers of students.

Spending Levels Were Similar, But Funding Sources Weren’t

The authors found that the numbers were very similar: The average Black student went to a district that spent $14,385 per student, while the average white student went to one that spent $14,263 per student. When the expenditures were narrowed to spending on instruction, the figures were $7,169 per student and $7,329 per student, respectively.

However, Rubinton and Isaacson noted that the funding sources were different. While states contributed 46% of funding for these school districts, regardless of the average student’s race, the average white student attended a district that received 47% of revenue from local sources and 7% from the federal government. For the average Black student, the district obtained 44% of revenue from local sources and 10% from the federal government.

“Because federal funding often comes as grants or for specific programs, school districts that serve predominantly Black student bodies may have less control over how these funds are spent,” they pointed out.

Instructional Spending Was Unequal

The authors then conducted a different analysis. Rather than looking at spending on an average student, they examined the relationship between per-student spending on instruction and the share of Black students in a district. The results are shown in the figure below.

“There is a small but statistically significant negative relationship; on average, schools with a 10-percentage-point higher share of Black students spend $140 less per student on instruction,” the authors wrote. “The data on total expenditures are similar; schools with a 10% higher share of Black students spend $160 less per student.”

What explains this negative correlation when average spending is very similar? The scatter plot reveals significant variation in school spending and that districts spending the most tend to have a mostly white student body, the authors pointed out. Thus, this negative correlation is driven by small, predominantly white school districts with large spending that don’t educate a big share of the student body nationally, Rubinton and Isaacson concluded.

Notes and References

1. The authors excluded districts in the top 1% and bottom 1% of spending per student; they also omitted the 1% of districts with the smallest numbers of students.