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September 8, 2021

High Capacity, Low Effort: Virginia’s School Funding is Low Compared to Most Rich States

All students, regardless of their background, should have access to a high-quality education that will help them reach their potential. Yet adequate school funding has remained a perennial challenge in Virginia according to recent Census data released earlier this summer that will be used to update the official annual state report comparing Virginia to other states. Research conclusively shows funding has a major impact on student success. With a median household income at $76,456, Virginia is a top 10 state for household income, and has the capacity to adequately fund our schools. Unfortunately, the state’s pre-k through 12 spending level doesn’t reflect that. Virginia is currently ranked 41st for state per-pupil funding, hovering between states with far fewer resources like Mississippi and Missouri. State lawmakers have tools available to adequately fund our schools and can do so in a way that every student in every zip code has the resources they need to be successful.

Among Top 10 States for Income, Virginia Lags in School Spending
Median Household IncomeState P-12 Per-Pupil SpendingState Rank of Per-Pupil Spending
New Jersey$85,751$10,0719
New Hampshire$77,933$5,92935
Source: Census Annual Survey of School System Finances and American Community Survey, 2019; tab 11

Currently in Virginia, where a student lives has an outsized impact on available resources and their educational outcomes. State per-pupil spending is distributed based on a formula known as the Local Composite Index, which determines what share of the costs will be paid by the state and what share must be covered by the local government. Virginia places a relatively high burden out of all states on localities to pay for a majority of K-12 costs, and the local share is primarily funded through property taxes. The historical and contemporary racial inequities in housing leads to disparities in funding among school districts across the commonwealth. Typically, localities with higher income levels will have more funding available for education than localities with lower income levels. School divisions that are either located in rural areas, have a majority of students of color, or are in communities with a high share of poverty often have less resources to invest in schools, leading to less resources for students. One study by Education Trust showed that Virginia divisions serving the highest share of students of color in 2015 had 8% less total state and local funding per pupil than divisions serving the lowest share of students of color. 

These differences in funding are evident in the lack of educational opportunities that are available to students. Research shows that schools in high-poverty areas offer less foundational and higher-level math courses than low-poverty schools. High-poverty schools also trail behind in their availability of advanced courses. The gaps in funding highlight the reality that students residing in communities that face more barriers to funding education are not afforded the same resources and opportunities as students in well-resourced areas.  

Increasing state per-pupil spending and re-evaluating the funding formula are practical steps that can aid in providing a more equitable education system in Virginia. Raising Virginia’s state per-pupil investment in pre-K through 12 to equal the average investment of the top 10 for median household income would mean investing an additional $3,423 per student, or nearly $4.3 billion annually. This increase to our state support for students would substantially increase what Virginia currently spends and speaks to just how far behind the state is compared to other high-income peer states. 

Research shows us that increasing the adequacy and equity in per-pupil funding positively impacts student achievements. According to one recent study, an additional $1,000 for at least four years leads to positive test-score impacts over 91% of the time, and positive educational attainment impacts more than 92% of the time. This recently updated and highly cited compendium of research on how school funding impacts student outcomes clearly demonstrates that increasing net funding for schools has a measurable positive impact on an array of student outcomes from graduation rates to academic improvements. 

Lack of adequate funding disproportionately harms students of color and students in high-poverty areas. Concentrating increased funding to divisions that serve these demographics through improvements to the state funding formulas will help make sure every student in every zip code has access to a high-quality education. Perhaps one of the most promising and efficient ways for the state to equitably scale their direct support for schools comes from an existing supplement, the At-Risk Add-On (a state program that provides additional funding to divisions based on their share of students living in poverty). Efforts have been made to both increase the funding level of the At-Risk Add-On and incorporate it into the main school funding formula so that funding amounts are regularly updated based on need. One such effort is the Equity Fund. The Virginia Board of Education has recommended creating this fund as a revision to the state’s Standards of Quality since 2019. Legislation for the Equity Fund would increase and codify funding for high-poverty schools to provide additional ongoing state aid to divisions with the highest share of students living in poverty. 

The pandemic not only highlighted barriers that many students face to a high-quality education in Virginia, but it also further entrenched them, especially for students of color. Reading levels for early elementary students dropped significantly over the past school year. Students across the commonwealth deserve funding that unlocks their potential. Drastically scaling our state support for public schools would take us out of the bottom tier for spending and closer to our peer high-income states. And doing so in an equitable way, by creating and fully funding the Equity Fund, could provide the resources necessary to not only help students recover from the challenges of the pandemic, but also begin to reverse decades of underfunding and set schools on track to provide adequate education opportunities for all students, regardless of their zip code.

Budget & Revenue, Education

Briana Jones

Chad Stewart

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