This is the third in a series of posts on Arkansas school funding. In previous posts we discussed:
- How Arkansas’s school funding formula works and a bit about it’s history; and
- How Arkansas’s education pending compares nationally.
In this post, we discuss the specifics of how Arkansas’s funding formula allocates resources to school districts based on students’ characteristics. We also investigate whether the distribution of resources results in equitable spending across districts serving students from different economic backgrounds.
Base/Foundation Funding
Arkansas has a student-based funding model that is similar to many of our neighboring states, including Texas and Tennessee. Student-based funding models provide districts with a base/foundation funding amount for each student and additional resources for students who need more support.
For the 2023-24 school year, the base/foundation amount is $7,618. This amount is divided between the state and local community based on local property wealth. Each district provides local funding equal to 25 mills (i.e., $25 per $1,000 in assessed property value). The amount generated by this required common tax rate differs by community – it generates more in wealthier communities and less in poorer communities.
After accounting for the amount generated locally in each district, the state then fills in the remainder to get every district up to the base/foundation amount. The distribution of state aid is equitable in the sense that wealthier districts generate more of their funding locally and receive less state aid, while poorer districts generate less locally and receive more state aid.
Student-Based Categorical Funding
For certain categories of students who need more support, the state provides additional “categorical” funding on top of foundation aid. Arkansas’s approach is like the student weights employed in other funding formulas (e.g., Tennessee’s TISA), but Arkansas’s law specifies dollar amounts rather than percentage weights.
Below is a list of the student groups for which districts receive categorical/weighted funding on top of foundation aid. In addition to the dollar amount, the table also provides the percentage of foundation aid the dollar amounts represent.
The Enhanced Student Achievement (ESA) is a tiered poverty weight based on the percentage of a district’s students who qualify for a Free and Reduced-Price Lunch (FRL) under the National School Lunch Program. The ESA is tiered to provide greater funding to districts with more concentrated poverty indicated by higher proportions of FRL students.
| Category | Amount |
|---|---|
| Alternative Learning Environment (ALE) | $4,890 = 64% on top of foundation |
| English Language Learners (ELL) | $366 = 5% on top of foundation |
| Enhanced Student Achievement (ESA) |
FRL >= 90%: $1,613 = 21% on top of foundation 70% <= FRL < 90%: $1,076 = 14% on top of foundation 70% > FRL: $538 = 7% on top of foundation |
These dollar amounts are provided on a per student basis and stack. For example, a student who is an ELL and qualifies for FRL in a more than 90% FRL district will generate $7,618 + $366 + $1,613 = $9,597 in funding for the district.
The state also provides a variety of other funding for things like professional development, student enrollment growth/decline, district isolation, etc. However, the funding categories above are the student-based elements, and they generate the majority of district funding.
Arkansas’s funding formula results in more spending in
districts serving more children living in poverty.
Both the local-state foundation funding split and student-based categorical funding increase state aid for higher-poverty districts, enhancing funding equity. However, it could still be the case that wealthier districts spend more if they raise additional funding locally or receive more from non-student-based funding sources.
To asses education spending equity across Arkansas school districts, the interactive graph below plots 2022-23 per pupil current expenditures (i.e., operational expenditures) and the percentage of each district’s students who qualify for FRL. You can hover over the circles/triangles to explore each district’s data.
In this graph, the circles are traditional districts, the triangles are open-enrollment charter schools, the red lines are the medians for expenditures and FRL percentage, and the dashed line is the linear relationship between expenditures and FRL percentage.
For this graph, I exclude districts and charter schools that serve a specific, high-needs population (e.g., credit recovery schools, charter schools focused on serving children who have experienced early childhood trauma, etc.). I also exclude schools with more than one-third of students identified as special needs. My goal is to focus the analysis on general education environments. You can explore the district finance data on our website here or on the Arkansas Department of Education website here.
The graph shows that there is a positive relationship (i.e., dashed line has a positive slope) between district spending and FRL percentage, meaning higher-poverty districts spend more per student. This makes sense, because Arkansas’s school funding model provides more dollars to schools in more disadvantaged communities and that serve a higher percentage of students who face economic disadvantages.
In previous posts, we’ve discussed how Arkansas has student-based school funding model that reflects many best practices and our K-12 spending is comparable to peer states and the national average. In this post, we dug a bit deeper to show that Arkansas’s funding formula generally results in more education spending in higher-poverty districts, providing additional evidence that our current funding formula works pretty well.