School districts in the United States are funded using three main sources: state contribution allocated per student,  revenue from property taxes, and federal subsidies. However, the predominant source of school district funding comes from revenue from the value of property taxes. The use of property taxes caused inequity in public education for students as property taxes dictated the amount of funding a school district would receive. This means that schools in areas with higher property taxes receive higher revenues per student than those with lower property taxes. Inequity in school funding has been understood for decades but was upheld by the United States Supreme Court decision regarding San Antonio ISD v. Rodriguez in 1973. In this decision, the Supreme Court supported the states’ policy that used property taxes to finance free public education. In this ruling, the majority opinion indicated that education was not a fundamental right guaranteed by the Constitution; thus, states had the right to continue using their public school funding model without adjustment, even though not all students received quality education. 

The majority opinion of the San Antonio ISD v. Rodriguez argued that school funding was a different circumstance than the discrimination addressed in the Brown v. Board of Education ruling in 1954. Racial discrimination in schools is still illegal, but wealth discrimination through the use of property taxes as a funding source is supported. The court argued that there was no true discrimination in use by the state government since poor is not an identity but dissenting opinions argued that the variation of property values in the state led to educational disparities and discrimination. Using property taxes to fund schools has led to an increased resource gap between high-income and low-income school districts, resulting in a growing gap in student outcomes between high-income and low-income students. 

Scope of the Problem

Despite strong evidence that increased funding leads to better educational outcomes, a significant number of marginalized students are in underfunded and under-resourced schools. A report published by the Albert Shanker Institute disclosed that 82% of majority-black and Hispanic (MBH) districts are significantly underfunded compared to 22% of majority-white (MW) districts. This study also found that 85% of underfunded MBH districts scored below the U.S. average on standardized tests in math and reading, compared to just 6% of MW districts. The unequal distribution of money caused by this financing model has been a significant cause of the achievement gap existing among white and Black/Latinx children as well as between those of rich and poor families. To address equal opportunity in American education, then the structure of school funding must be the priority, as many other issues are interconnected with underfunded education. By underfunding schools, the education system has perpetuated the cycle of poverty. It has become a barrier to social mobility because students are less likely to graduate, attend college, or get well-paid jobs. Meanwhile, families in such places may also have to send their children to those underfunded schools. This means that generations of American families are receiving a lower-quality education than their high-income peers, which furthers the divide between socioeconomic classes.  

Challenges to Addressing the Problem

The connection between inequitable school funding and unequal educational opportunities for students has been identified for decades but there have been many challenges to reform. The main challenge is the decades-long dependence on local property taxes to fund public schools. The current funding model allows wealthier districts to implement policies to increase student achievement such as better facilities, smaller class sizes, and more experienced teachers, while poorer districts struggle to provide basic educational resources. This funding system has continued to this point because of a lack of a consistent alternative funding model. Some states have reformed their school finance systems to be more equitable but many have not. Even when states have attempted to address these funding disparities through state funding formulas, the adjustments did not fully overcome the impacts of local funding disparities.  

One alternative to using property tax revenue is federal subsidies. Currently, the federal government provides small subsidies to school districts, and these subsidies to mitigate the impact of property taxes on education. However, consistent federal intervention needs to be improved to address disparities. This is because the federal government only provides a small percentage of the money used by the school districts and can only regulate this subsidized money. While there have been some federal initiatives trying to promote equity in school funding, these have been underfunded initiatives and insufficient in addressing equity. To move funding sources away from property taxes, the federal government would have to increase school subsidies. This increase in funding would require subsequent oversight of the allocation of funds, which would provide additional challenges on its own. 

Additionally, discriminatory housing practices have added challenges to improving school funding models. Practices like redlining have created districts where Black/ Hispanic students are more likely to live in under-resourced neighborhoods and thus would attend underfunded schools. To compensate for redlining and the subsequent lower property values, federal and state governments have provided additional funding to underfunded schools but these subsidies have not been large enough to overcome the gaps in per-student funding between high-income districts and low-income districts. 

Policy Recommendation 

To ensure genuine educational opportunity for every child, the United States must confront the structural roots of school funding inequity. The current system, which relies heavily on local property taxes, virtually guarantees that communities with high property wealth can fund strong academic programs, small class sizes, advanced coursework, and competitive teacher salaries, while low-wealth districts struggle to meet even basic student needs. This design flaw is embedded in how we finance public education. But it is also fixable.

I recommend that federal and state governments take a more active role in equalizing school funding by increasing the proportion of revenue they contribute and reducing districts’ dependence on local taxes. Federal dollars currently make up less than 10% of public school funding, which I believe is a a remarkably small share for a country that aspires to equitable opportunity. A more substantial and consistent federal investment, tied directly to measures of district need, would stabilize budgets in high-poverty communities and address long-standing inequities in staffing, facilities, curriculum access, and extracurricular offerings.

The framing of this change is important as expanding federal investment does not mean replacing local control. One of the hallmarks of American education is district and state autonomy in aspects of education. However, increased federal funding is a necessary intervention to strengthen the baseline level of resources students must have to thrive in the classroom.

Change doesn’t have to stop at the federal level as the states have even more ability to change their funding models. Many states, including New York, already have funding formulas that are designed to provide equitable support to districts. But this financial support still leads to chronic underfunding of high-poverty districts. Revising state financial commitments, paired with federal matching funds, would create a more coherent and sustainable funding system that aligns resources with need rather than neighborhood wealth.

Without these changes, the United States will continue to reproduce unequal educational conditions across racial and socioeconomic lines. The achievement gaps we track on assessments like NAEP are simply reflections of deeply unequal opportunities to learn. If we want different outcomes for our students across the nation, we must redesign the funding system that produces inherent inequity.