How to Design a State Education Aid Formula That Is Equitable, Adequate, and Politically Feasible: The Case of Connecticut How to Design a State Education Aid Formula That Is Equitable, Adequate, and Politically Feasible: The Case of Connecticut

By Bo Zhao

Using Connecticut as a case study, the author shows how to design a public K–12 school-funding system that is equitable, adequate, and politically feasible. Connecticut, which relies heavily on local property taxes as a funding source for its schools, exemplifies states that have highly inequitable public education funding systems. While Connecticut has revised its state education aid formula several times since the late 1980s, the current version has been criticized because it is not derived from data analysis and it is not based on a student performance level that would determine its adequacy.

For his formula, the author first develops a measure of the gap between a school district’s education cost to achieve a common student performance target and its revenue capacity, both of which are estimated using school district characteristics that are outside the direct control of local officials at any given point in time. Although districts with larger cost-capacity gaps, on average, receive greater amounts of state aid per pupil under Connecticut’s existing school-aid distributions, significant inequity and inadequacy remain. The author then proposes a gap-based formula that allocates state aid in a way that closes districts’ cost-capacity gaps. The formula can include provisions such as minimum and maximum levels of aid to increase its political feasibility.

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