Advancing Equity With Policy

The expansion of charter schools and other school choice models has undermined states’ efforts to increase equity through funding. Weighted student funding formulas have become more common across states as they attempt to account for differences in student need. Through these formulas, additional funding is provided to students who are low-income, English Language Learners, or have disabilities. The goal has been to promote vertical equity, or rather, to ensure that students with greater needs receive greater resources. However, as charter schools and other forms of school choice have expanded, funding is now tied to student enrollment, and dollars follow students as they move across schools. The shifting landscape of education has caused me to wonder whether weighted student funding formulas still deliver equitable and, more importantly, adequate resources in a system defined by enrollment-driven funding?

At first, there appears to be no contradiction between weighted funding and school choice. In fact, proponents of school choice argue that the two are complementary. If funding follows the student and is weighted by need, then high-need students should carry additional resources with them, regardless of whether they attend a district or charter school. From this perspective, school choice maintains a fair distribution of public funds. Yet this argument depends on a set of assumptions about how education finance systems function in practice, which do not consistently hold true. 

One of the most significant of these assumptions is that school systems can adjust their costs as quickly as they lose students and funding. However, in reality, school districts operate with substantial fixed costs. Buildings must be maintained, transportation systems must continue to run, and staffing structures must obey contracts. When a student leaves a district school for a charter school, the associated funding leaves immediately, but many of the costs associated with educating students do not decline at the same rate. This phenomenon is supported by research from Bifulco and Reback (2014), who found that charter school expansion can impose measurable financial strain on local education agencies. Therefore, as enrollment declines, districts begin to face difficult decisions about program offerings, staffing levels, school closures, and services provided to high-need students. Loss of funding within a school thus decreases the effectiveness of weighted student funding formulas. These formulas are designed to allocate resources based on student characteristics, but they do not operate in a vacuum. This is because their effectiveness depends on the overall level of resources available within the system. As charter expansion reduces the total funding available to district schools while leaving fixed costs unchanged, schools are less able to translate weighted funding allocations into meaningful services for students. For example, a district may still allocate more dollars per high-need student, but if the total pool of resources is shrinking, those additional dollars may not be sufficient to actually meet students’ needs. 

The concentration of high-need students in district schools is compounding this issue. While charter schools serve many disadvantaged students, there are tangible differences in enrollment patterns as students with more intensive or costly needs are either not provided adequate services in charter schools or leave of their own volition. This pattern results in a higher concentration of high-need/high-cost students in district schools. For example, students requiring specialized services, such as those with severe disabilities or those needing extensive language support, may be more likely to remain in district settings due to differences in program availability or service capacity. When these students are concentrated in district schools, those schools face increased demand for services while their financial capacity may be declining. 

While weighted student funding formulas are designed to account for differences in student need, they actually rely on cost estimates that do not always reflect the realities of concentrated disadvantage. The additional weights that are attached to high-need students are typically based on average costs and decided by policymakers when they approve the state budget. This means that the marginal costs that arise when schools serve large concentrations of students requiring intensive support are overlooked. As a result, even when funding is technically weighted, it may still fall short of what is required in the schools serving the highest-need populations.

Proponents of school choice do interpret these dynamics differently, as from their perspective, the fiscal pressures experienced by districts are a necessary consequence of a more efficient allocation of resources. If families choose to leave certain schools, those schools must respond by improving performance or restructuring operations. Over time, districts should consolidate under-enrolled schools, reallocate staff, and better align their cost structures with actual enrollment levels. Research by Martin Lueken (2021) supports this view, suggesting that because the funding associated with departing students is often lower than the variable cost of educating them, districts may experience neutral or even positive fiscal effects in the long run. However, the assumption that districts can adjust their cost structures quickly and without consequence is flawed. Even if districts eventually reach a new equilibrium of managing their funds and enrollment, the transition period can be financially destabilizing, and an equilibrium is not guaranteed. The last decade of education policy has been ever-shifting, and results cannot be predicted. While schools and districts wait to recalibrate to shifting enrollment and funding, they are often forced to reduce programs, increase class sizes, or limit supports, which, unfortunately, undermines the very purpose of weighted funding. 

While weighted funding formulas are designed to distribute resources equitably, they do not account for how funding systems fragment across sectors. Their effectiveness is therefore brought into question in this new education landscape. I believe that school choice and weighted funding are not inherently incompatible; policymakers must be deliberate in how these two policies interact. Ultimately, the question is whether the system as a whole can still deliver equitable and adequate resources under these conditions. Weighted student funding remains a promising tool, but its effectiveness cannot be assumed in a system that is increasingly decentralized. If policymakers fail to address this tension, they risk maintaining a system that appears equitable on paper while falling short in practice.