School Finance 101: Preserving an Educated Future for America (Short Term Plan)
Draft excerpt from forthcoming work:
The short-term plans presented here are focused primarily on mitigating damages inflicted by the current federal administration, focusing on states likely to fight back and pursue educational equity and excellence on their own. I have less short-term hope for other states that have been green-lighted and even incentivized to engage in additional erosion of public schooling. Mississippi is presently proposing elimination of its income tax, the primary source of funding for public education and Florida is discussing elimination of property taxes, the primary source of that state’s funding for public schools, meanwhile diverting substantial funds to voucher programs (Baker et al., 2025). Neither state’s high court has previously affirmed their own constitutional requirements to be enforceable, however strong or recent the constitutional language. Other low spending, generally low performing states are taking similar steps to erode their public education systems.[1] At the same time, federal aid is at risk and those same states are the most reliant on federal aid (Baker, 2025c). The short-term prospects for children in these states are bleak.
It may be that the best we can do for the next few years, while facing a federal administration hostile to public education and seeking actively to undermine it, is to work with states that remain committed to providing quality public schooling, such that they may be beacons as we emerge from these times. Southern states resisted federal policies a) during reconstruction and b) during the civil rights era, adopting state policies to undermine the provision of more equitable and adequate education to all. The Education States (not exclusively “blue” or northern) as I will call them here, might use similar strategies this time around to advance education equity and equal opportunity, including racial equality, in the face of a federal administration which seeks to ban these very things and even the words that describe them. We might be wise to focus on those states where state courts have been willing to uphold AND enforce education quality and access standards, those states where legislators and governors have done so, whether court ordered or not and those that have already refused compliance with anti-equity demands of the current administration.
We are in an era where efforts to advance educational progress depend on states, state legislatures, governors and states’ own constitutional requirements (Corbin, 2025). Unfortunately, the current federal administration has not merely deferred to state’s own preferences but has chosen to weaponize federal aid to coerce states to oppose principles of equity and inclusiveness. As noted previously, the recent shift in federal policy has been a green-light for some states to go even further. Thus, the following short-term efforts might best focus on states: 1) that have maintained or reinstated effort to fund schools (or shown willingness to do so); 2) that have maintained or reinstated progressive funding (funding targeted to areas of greater need); and 3) where state high courts have enforced education rights in recent decades (and where legislatures have been responsive). Kansas, for example, despite being a “red” state, meets all three of these goals (Baker, 2022).
Antiregulations for the Modern Era
During the civil rights era in the 1960s, when the first significant direct federal aid to local public schools was introduced (under ESEA) and regulations adopted to enforce school integration, southern states adopted state aid adjustments, local tax policy changes and other resistance policies to support districts refusing desegregate (Bagley, 2018; Baker & Green, 2005; Milligan, 2018). These aid provisions were part of antiregulations acts, referring to opposition to federal regulations requiring desegregation. Ironically, these are the states that are now most dependent on federal aid. By the time of this writing, several states and local district officials have responded to the current administration’s threats to withhold federal aid for any school or state promoting equity with a hard “NO.” These states should consider adopting into law, provisions that protect the revenues of their local public school districts by filling any temporary or permanent losses with additional state funds. The same strategy used during the civil rights era, to oppose civil rights, should now be used to protect them.
Federally tax-exempt state education endowments
Many if not most of the Education States are higher income and high GDP states which over the years have contributed more in federal taxes than they receive from the federal government in aid, programs and services. Taxpayers in northeastern states with strong public education systems, are subsidizing underfunded, increasingly oppressive, discriminatory (removing undocumented children), increasingly Christian nationalist (via voucher programs, religious charter schools and bibles in public district schools) school systems in states like Louisiana, Alabama, Mississippi and Oklahoma. These same taxpayers took an additional hit when the Federal tax code was revised to place caps on the deduction of state and local taxes (SALT deduction). Admittedly, these are equity-oriented tax provisions. These provisions lead to more progressive taxation and redistribution from wealthier to poorer states. That should be a good thing and would be necessary under my long-term plan (a later post, but also, earlier version here). But in the present times, these provisions are a) penalizing the Education States for having higher taxes and spending on schools and other state and local services and b) subsidizing the expansion of Christian Nationalist and other religious (and racially) exclusionary schooling in other states, through what has been proposed as a national voucher program .
Under the circumstances, to preserve public education in the national interest, I propose that the Education States establish federally tax-exempt Endowments for the Future of Education in which to hoard (yes, hoard, sadly, hoard) significant war-chests of (1 to 2% of GSP for the next 5 years) to stabilize elementary and secondary education funding in future years. The goal is to convince as many individual and corporate taxpayers to contribute as much as possible to these funds (reducing their federal taxable income) in support of their state’s education and economic future. That is, I am encouraging the Education States to be Harvard in this moment. It’s a substantial uphill climb to build an endowment of such magnitude. But in these states where so much personal and corporate wealth have been accumulated over time, it is not infeasible to build endowments that can, in four to five years’ time, generate hundreds to thousands of dollars per pupil to be directed toward the highest need schools and districts, and buffer the state’s schools from future economic uncertainty.[2]
Significant public school endowment funds are not an unprecedented concept. For example: “The Texas Permanent School Fund (PSF) was created by Texas’ first Constitution in 1845 as a perpetual fund to support the state’s public schools and was seeded with $2 million in 1854. Since that time, the PSF has grown to comprise over $57 billion in assets and will distribute over $2.4 billion annually to Texas K-12 schools.”[3] Texas PSF is 57.3 billion in 2024 which is about 2.2% of GSP. It yields 2.4 billion per year to support the available school fund. Other states, including Alaska have similar funds.[4]
Expanding & Improving State Data Capacity
As continued collections of federal data erode, have gaps or are at risk of elimination, Education States should take steps to improve the quality of their own data and research capacity, including continuing and improving upon collections of statewide school level expenditure data and collections of a wider array of student outcomes, from assessments across additional content areas to more detailed measures of completion and dropout rates, chronic absence and more. Many states have already engaged with outside consultants to compile their data, construct comprehensive outcome measures, set goals and standards, and estimate statewide school level models of the costs of meeting those standards. The findings from these models have been increasingly consistent in recent years (Atchison et al., 2023; Atchison et al., 2025; Brooks et al., 2025).
Interstate consortia for the improvement of education data and evaluation could lead to improved data collections on measures including school revenue and spending and greater consistency on student outcome collections across states. These efforts may lead to improved federal data collections in the future (as those data collections typically occur through states, presently, with federal guidance and vetting of data), including improved methods for harmonizing and cross-walking revenue and spending measures across states.
Unblurring the Lines between Public and Private
I close here with a bleak foreshadowing of our Supreme Court’s next possible move in further dismantling church/state separation in public schooling in the United States. Chief Justice Roberts in Espinoza v. Montana Dept. of Revenue explained that if and only if a state does provide funding for private, non-state-actors to provide education, then that state cannot exclude religious providers. But, that’s only if the state chooses to provide funds to private providers. In his dissent in Espinoza, Justice Breyer pointed asked “what about charter schools?” noting the ambiguity of their status under widely varied state charter statutes.
The court is now considering this public/private status question in a case where an Oklahoma charter school wishes to operate openly as a religious school. If the court determines it to be private (non-state-actor), then a) it most certainly can, and b) other religious operators cannot be denied similar opportunity to apply for and run charter schools. As I’ve previously written, this opens the door to these same schools refusing (likely succeeding at the Supreme Court) to comply with any/all regulations they claim conflict with their religious views, including racial discrimination (Green, Eckes & Baker, 2024).
We are at a point where there is only one way to shut this down in states that wish to preserve strong, accessible, public education systems. Voucher programs are rare or small in what I have referred to here as the Education States. That is no coincidence. But charter schools have a significant presence in the Education States, and these states must either substantially tighten state charter school laws, allowing only government authorization and oversight, defining governing boards and board members of charter schools to be public officials (subject to all laws pertaining to public officials) and making all employees of those institutions public employees, perhaps under the contract of the local host district. While these changes may seem restrictive and unappealing to existing charter operators in those states (like New Jersey, New York, Massachusetts and Connecticut), the alternative is to eliminate charter schooling altogether, to ensure that religious and discriminatory charter schools cannot make their way into the state.
This also means that states like Vermont, Maine, New Hampshire and Connecticut which have long been home to “town academies,” many formed by private citizens and benefactors as centralized secondary schools in the early to mid-1800s to serve surrounding communities, will have to take steps to change the status of those schools. In Carson v. Makin, the court decided that these academies were enough of a crack in the door to require states to provide similar funding for religious alternatives. States that are home to these town academies will need to either eliminate funding for them or require academies to be sold to and/or absorbed by their local public school districts or the state. Unfortunately, the courts have left us with no alternative but to seal off that crack in the door as well.
[1] https://www.cbpp.org/research/state-budget-and-tax/tracking-the-fallout-from-state-tax-cuts
[2] We understand that it is likely that the current federal administration would seek to deny tax exempt status for these state created, privately governed endowment funds. That said, they are quite similar to pass through organizations used in state tuition tax credit and voucher programs. One strategy to counter this move is to declare these endowments to be religious organizations – Endowment for the Church of the Educated Public – wherein their mission is to support the provision of public schooling to all across their state. More details to be provided as needed in future writings.
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