How Property Wealth Drives Disparities in School Facility Funding

Public schools across the US rely mostly on state and local funding sources, with some contributions by the federal government, to pay for their facility costs. These state and local funding sources primarily use general obligation bonds (GO bonds) that are repaid with local property taxes to raise revenue, leading to concerns over how disparities in local property wealth affect the distribution of school funding for facilities.

Previous research and school financing reform court cases have focused on addressing disparities in schools’ operational funding, which includes staff salaries and other day-to-day expenses. However, less attention has been paid to disparities in school facility funding, which generally includes funds for renovations, new school buildings, and other infrastructure costs. The authors of this report used administrative data in California from fiscal years 1967–87 through 2015–16 to better understand how school facility funding varies based off property wealth and household income.

The authors used a combination of data on school facility spending, voting on local GO bonds, financial data for GO bonds, assessed property values, median household incomes, school district enrollment and demographics, and the share of disadvantaged students—who they defined as students who qualify for free or reduced-price lunch, English language learners, and foster students—in each district to perform their analysis. They also performed separate analyses for the three types of public school districts in California: elementary, high school, and unified (which contains both elementary and high schools).

The authors found that school facility funding varies significantly across districts and that these differences are driven primarily by interdistrict differences in property wealth.

Key findings

• Per pupil school facility funding varies widely across all three types of school districts in California, with school districts in the 75th percentile receiving more than 3.5 times the amount of local GO bond revenue per pupil than districts in the 25th percentile.
• There is a strong positive relationship between assessed property value per pupil and per pupil school facility funding, with unified districts in the top 20 percent of assessed property wealth per pupil having revenue almost twice as high as districts in the bottom 20 percent.
• Districts with higher household incomes and higher percentages of households with a college degree also see higher per pupil school facility funding.
• Per pupil school facility revenue tends to be the lowest among school districts with the highest percentages of Black and Latine students and districts with the highest percentages of disadvantaged students.

Policy implications

• As evidence grows that school facility investments result in increases in the surrounding areas’ housing values, school facility funding may act as a mechanism for school districts to attract households in a manner that falls outside many states’ current school financing regulations.
• School districts unable to raise larger amounts of school facility revenue may have to use operational funding to supplement spending on building maintenance or small-scale capital projects.
• To address disparities in school facility funding, state governments could play a larger role in ensuring the distribution of school facility funding is equitable. However, more research is needed to understand which state funding structures for school facility funding lead to more equitable school facility outcomes.