Washington, September 10, 2025—In a striking revelation that challenges longstanding assumptions about school finance reform in the United States, new research demonstrates that efforts to close funding gaps between affluent and economically disadvantaged school districts have failed to address, and in some cases have actually exacerbated, racial and ethnic disparities in educational funding. The comprehensive study conducted by sociologists Emily Rauscher of Brown University and Jeremy E. Fiel of Rice University highlights how income-targeted reforms, while somewhat effective in reducing economic inequalities, often sidestep the deeply entrenched racial funding inequities that persist across American school districts.
Over the past several decades, numerous states adopted legislative measures and court-mandated reforms aimed at restructuring school finance systems to diminish dependency on local property taxes. The initial rationale behind such reforms was to funnel financial resources more equitably towards districts with predominantly low-income populations, thereby leveling the playing field for students disadvantaged by systemic poverty. However, by employing an extensive longitudinal dataset spanning 1990 through 2022 from the U.S. Census Bureau and the National Center for Education Statistics, Rauscher and Fiel’s analysis uncovers a critical flaw in this economic-centric approach: racial and ethnic disparities continue to widen despite these reforms.
The research underscores that, on average, state school finance reforms succeeded in narrowing the per-pupil spending gap between the wealthiest and poorest districts by over $1,300. This figure represents a meaningful stride toward economic equity in theory. Yet paradoxically, schools with lower percentages of Black and Hispanic students experienced a growing advantage in funding levels, with increases averaging $900 and $1,000 per pupil, respectively. This divergence suggests that income-based reforms, while benefitting economically disadvantaged schools overall, often do not translate into proportional gains for racially marginalized communities whose schools remain under-resourced relative to their white counterparts.
One of the most compelling aspects of the study is its in-depth examination of the structural and geographic factors that moderate the effectiveness of these reforms. In states characterized by relatively low racial and economic segregation among districts, finance reforms tended to be more progressive and successful in directing funds toward historically marginalized areas. Conversely, in states with stark segregation patterns—where racial and economic disparities align robustly between districts—such reforms faltered or even regressed, exacerbating both racial and economic educational inequalities.
A critical finding emphasizes that much of the national racial funding disparity stems from differences between states rather than within them. While many states have adopted funding methodologies that distribute resources fairly evenly among districts irrespective of racial demographics, stark contrasts exist at the state level. Wealthier states, which typically possess higher proportions of white students and fewer Black and Hispanic students, allocate significantly more per pupil in funding than poorer states, reinforcing systemic inequalities on a national scale. This interstate discrepancy serves as a root cause for persistent racial disparities that district and state reforms alone have been unable to mitigate.
The implications of these findings are profound, suggesting that current policy frameworks grounded exclusively in economic corrigenda are insufficient to achieve racial funding equity in education. Co-author Emily Rauscher points out that the slow progress despite decades of concerted reform efforts calls for a reevaluation of strategies and the consideration of federal intervention. Such intervention could offer targeted investments and incentives explicitly designed to reduce racial and ethnic funding gaps that state-level income-focused reforms have left untouched or worsened.
The study also explores the interplay between school desegregation dynamics and funding equity, noting a slowdown in desegregation efforts since the 1980s as a contributing factor to entrenched disparities. As districts become increasingly segregated by race and class, resource allocation mechanisms based solely on income fail to capture or remediate the complex socio-political realities shaping educational opportunity for students of color. This context reinforces that finance reforms must integrate considerations of racial dynamics to dismantle layered inequalities effectively.
Furthermore, the data indicate that legislative reforms intended to lessen reliance on local property taxes do not inherently ensure equitable distribution of funds to all marginalized groups. Rather, systemic patterns of residential racial segregation and fiscal limitations in certain states perpetuate a cycle where Black and Hispanic students are disproportionately confined to underfunded districts. The persistent funding gaps underscore the necessity of more nuanced policy tools capable of addressing the intersection of race and socioeconomic status in resource allocation frameworks.
Federal involvement emerges as a critical avenue for remedying these shortcomings. By establishing minimum thresholds for per-pupil spending across states and incentivizing equitable funding formulas that explicitly address racial disparities, federal policymakers could counteract interstate inequities and promote fairness on a nationwide scale. Such top-down measures could complement state reforms, creating a multi-layered approach attuned to both economic and racial justice aims in public education.
Beyond the direct impacts on funding, the study raises broader concerns about the implications of sustained inequity for educational opportunity and outcomes among students of color. Persistent underfunding correlates with diminished access to quality teachers, advanced coursework, extracurricular opportunities, and facilities—factors fundamentally shaping academic trajectories and long-term socioeconomic mobility. Without intentional investment to bridge racial funding gaps, the promise of equal education remains elusive.
The research further signals that policymakers and stakeholders must move beyond simplistic income-based metrics and incorporate comprehensive race-conscious analyses in education finance policy. The limitations of current models expose the complexity of disentangling economic disadvantage from racial marginalization and the need for innovative, evidence-based reforms that prioritize equity in its fullest sense.
As the United States continues to grapple with systemic racism and education inequality, the insights furnished by Rauscher and Fiel’s rigorous investigation punctuate a vital call to action. They urge the research community, policymakers, and education advocates to recognize the insufficiency of slow, incremental reforms and instead push for bold, multifaceted policy interventions poised to create lasting change in the funding landscape.
This landmark study, published in the peer-reviewed journal Educational Evaluation and Policy Analysis, adds a crucial dimension to the discourse on education equity and reinforces the urgency of redesigning school finance systems in ways that genuinely account for racial and ethnic disparities. Its findings entail not just technical refinement in funding formulas but also a recommitment to social justice ideals in educational policy.
As the nation reflects on the results of more than three decades of school finance reform, the overarching lesson is clear: investment equity requires federal leadership that explicitly addresses racial disparities, transcending the limits of class-based state reforms. The research powerfully illustrates that without this recalibration, persistent gaps will endure, undermining the foundational democratic promise of equal educational opportunity for all children.
Subject of Research: School finance reforms and racial disparities in funding
Article Title: Slow Progress: School Finance Reforms and Racial Disparities in Funding
News Publication Date: September 10, 2025
Web References:
- Research article DOI: http://dx.doi.org/10.3102/01623737251362855
- Related research summary: https://www.aera.net/Newsroom/Slow-Progress-School-Finance-Reforms-and-Racial-Disparities-in-Funding
References:
Rauscher, E., & Fiel, J. E. (2025). Slow progress: School finance reforms and racial disparities in funding. Educational Evaluation and Policy Analysis. Prepublished September 10, 2025.
Keywords: Education research, school finance reform, racial disparities, funding inequity, educational equity, socioeconomic segregation, public education policy, federal education funding, racial segregation, school desegregation, economic inequality, resource allocation
