The Bottom Line

We have abundant evidence that more money for schools translates into real benefits for students. Increasing per-pupil spending leads to improved test scores and higher graduation rates, particularly in low-income districts. What is more difficult to understand is how to distribute funds in an effective and equitable way.

Building Equitable Systems

Community, school, and student needs look different in every district, so each district must develop its own procedures to diagnose needs and remedy inequities. Many districts have developed strategies that use measures of student need to help determine how to allocate money to schools (see how Allovue worked with Indianapolis Public Schools to structure and implement their new student-based allocation model to increase resource equity in their the district). 

At the state level, education grants are structured according to categories of student need. All states provide additional aid to districts for special education students, and most also distribute more funding to English language learners and students living in poverty.

Districts can similarly provide additional aid to schools based on different student needs, and use these funds to work toward leveling the educational playing field for students who face educational challenges and structural disadvantages. In fact, the federal Department of Education recently encouraged districts to adopt these allocation practices by offering a pilot program that allowed districts more flexibility in distributing federal funding to disadvantaged students.

As policies in education finance place more importance on equity, districts become an essential part of the process. Districts can bring more nuance to the budgeting process than states or the federal government because they have a deeper understanding of local student needs and which schools serve the most disadvantaged students. Equity-based budgeting practices ensure that funding goes to the students who need the most supports. When districts adopt these practices, they create the potential to initiate real and meaningful change for students.

Meeting the Moment 

We know that the educational playing field in America has always been uneven, but the COVID-19 pandemic has steepened the slope. Early data show what teachers, parents, and students across the country see firsthand—students are struggling, and underserved communities have suffered disproportionately. Education systems must provide additional support to help students recover—emotionally, socially, and academically—from the traumas they have sustained over the course of the pandemic.

All students will require these additional supports, but the need is especially great for those with educational needs and who face structural disadvantages. By allocating resources deliberately and equitably, districts can help meet these intensified student needs. The pandemic has heightened the impetus to act.

To help in this effort, the federal government has provided a cumulative $190 billion through the Elementary and Secondary School Emergency Relief (ESSER) Fund, along with guidance and regulations for how to use these funds to support students. This infusion of funds provides a chance for districts to build equitable, student-based allocations into their resource distribution policies. 

Using ESSER Dollars to Achieve New Goals

Districts face competing demands on ESSER funds as they strive to provide in-person and hybrid learning solutions, improve attendance, and ensure the safety of students and teachers. Fortunately, ESSER funding can serve multiple goals. A first priority is to support students as they continue to face challenges related to the pandemic and to repair some of the damage to academic and social development from the past two years. 

Beyond this, districts can use the opportunity created by the influx of ESSER dollars to work toward longer-term goals of achieving resource equity.  Districts should use this opportunity to allocate these funds in a way that provides the greatest support to the highest-need students and to take stock of ongoing budgeting practices—bolstering effective and equitable funding allocations and, if necessary, redirecting funds to support district strategic priorities.

To move in this direction, districts can pilot new equity-based budget models. If, for example, a district allocates supplemental funding for students who have struggled with attendance in recent years, these extra funds could help schools hire attendance specialists or parent coordinators. Similarly, districts can provide additional funding for English language learners so that schools that serve these students can hire more TESOL-certified teachers. 

Districts can gather school-level feedback to gauge how well these equity-based budgeting models meet student needs. This is yet another example of how well-positioned districts are to implement equitable budgeting models: they know their schools better than the state or the federal government. Allocating funds thoughtfully, aligning resources to equity goals, and directing them toward schools that serve structurally disadvantaged students can make meaningful differences on the ground. These funds can give students access to more instructional aides and counselors, better classroom materials and facilities, and improved supports and programs that will bolster outcomes for every student.

Key Takeaways for District Finance Practitioners

• More money can improve student outcomes—especially for students who face structural disadvantages.
• By adopting equity-based budgeting models, districts can address their students’ needs by allocating additional funding for higher-needs students.
• ESSER funds provide an ideal opportunity for districts to pivot toward equity-based budgeting. Equity-based budgeting models can help schools support student recovery from the ongoing traumas of the COVID-19 pandemic. By allocating ESSER dollars according to these models, they can also create equitable funding formulas that compensate for the structural disadvantages many students face.