How Racial Segregation between Districts Relates to School Spending

In the United States, school district boundaries define both where students go to school and the local tax base that makes up part of districts’ funding. State legislatures can draw school boundaries in ways that either integrate or isolate students by race, ethnicity, or wealth, and today, these boundaries often reflect patterns of residential segregation. This has racial equity implications, because recent research shows that greater segregation between districts is associated with larger gaps in total school revenue between predominantly Black and predominantly white school districts because of racial disparities in local revenues. These revenue inequities may contribute to racial differences in educational opportunity, as research shows that per student spending affects student educational outcomes.

This study explores how between-district racial and ethnic segregation relates to racial and ethnic disparities in school spending. The authors analyzed measures of between-district, Black-white, and Latinx-white racial and ethnic segregation and racial and ethnic socioeconomic segregation. Socioeconomic segregation measures the how much students of one race or ethnicity tend to be in districts with higher child poverty rates than students of another race or ethnicity.

The authors explored per student spending on instruction, infrastructure, administration, and support services—categories they selected because evidence shows they influence student outcomes. They used national data on school district spending and demographics from 1999 to 2013 from the School Funding Fairness Data System, the Common Core of Data, and the Comparable Wage Index and controlled for racial and ethnic differences in the number of schools, special education enrollment, English-language-learner enrollment, and other demographic controls.

Key findings

• Average per pupil spending for Black and Latinx students exceeds spending for white students by $229.53 and $126.15, respectively, which was expected because of higher poverty rates among Black and Latinx families.
• On average, Black and Latinx per pupil spending is higher than per pupil spending for white students in the administration, instruction, and social services categories but is lower in the infrastructure categories.
• Between-district segregation is associated with racial and ethnic disparities in school district spending, while differences in racial and ethnic socioeconomic segregation generally are not.
• When Black-white segregation increases in a state over time, the average Black student’s district experiences a relative decline in total per student spending and spending on infrastructure, relative to the average white student’s district.
• When Latinx–white segregation increases in a state over time, the average Latinx student’s district experiences a relative decline in per student spending on infrastructure, relative to the average white student’s district.

Policy implications

• Differences in spending driven by demographics, but not racial or ethnic socioeconomic segregation, raises concerns about racialized spending decisions at the local level and whether state school funding formulas and local budgeting practices best meet school districts’ needs.
• States and districts should interrogate how school district budgets are being set, understand how this might vary across a state, and explore spending category disparities also related to race and ethnicity.