Last week’s blog discussed the sources of Arkansas school funding and some of the basics about how the state’s funding formula works. As a quick review, Arkansas has a student-based funding formula that provides districts with a foundation amount for every student ($7,618 in 2023-24) as well as additional funding for students who need more support. Arkansas’s school funding formula prudently focuses funding on students’ needs.
The state’s funding formula reflects many best-practice recommendations and is similar to models used by most of our neighboring states, including Texas and Tennessee. Overall, our school funding formula is well structured, and while there is always room for improvement, it does not need a complete overhaul.
However, a school funding model can be well structured but still fall short of meeting students’ needs and supporting state goals if it is underfunded. While there is no scientific, objective way to derive the “right” answer for how much the state should invest in K-12 education, we can compare our spending and outcomes to other states to get a sense of how Arkansas stacks up.
How does Arkansas’s education spending compare nationally?
Today’s post explores how Arkansas’s school spending compares to other states. The goal is not to make normative judgements about whether Arkansas is under or over investing in education. Instead, our goal is to see where Arkansas’s education spending fits in the broader national picture.
Below are several charts that compare states’ education spending over time. The data used to create these charts come from the U.S. Department of Education’s National Center for Education Statistics (NCES). The data are part of the Digest of Education Statistics, and we focus on the data provided in tables 236.70 and 236.15.
These tables provide per-pupil current expenditures which represent the amount schools spend each year on teachers, administration, books, building maintenance, etc. Current expenditures exclude capital expenditures (e.g., the cost of building a new school) and can be thought of as the ongoing operational costs of providing public education. All dollar amounts presented below are adjusted for inflation to reflect 2022-23 prices using the Consumer Price Index prepared by the U.S. Department of Labor’s Bureau of Labor Statistics. Some charts also adjust for cost-of-living differences between states (e.g., New York is more expensive than Arkansas). We use NCES’s Comparable Wage Index for Teachers to adjust for cross-state cost differences by converting other states’ spending totals into Arkansas-equivalent dollars.
Arkansas’s per-pupil expenditures tend to be below the U.S. average.
The chart below shows current education expenditures per-pupil going back to the 1969-70 school year. You can hover over the lines to explore each state’s spending data.
Nationally and in Arkansas, education expenditures increased significantly in the 40 years between 1970 and 2010. A lot of these increases were encouraged by state court cases like the Lake View case in Arkansas.
Since 2011, Arkansas’s per-pupil funding has been between 10 percent and 25 percent below the national average, with the largest gap in 2020-21.
Inflation adjusted per-pupil expenditures were relatively flat over the decade between 2011 and 2021.
In contrast to the rise in education spending between the 1970s-2010s, current education expenditures have nearly flatlined over the ten years ending in 2021, increasing by less than $2,500 per pupil nationally and declining by $46 for Arkansas. Over this period, the gap between the national average and Arkansas widened.
Current State Education Expenditures Per-Pupil 1970-2021
(inflation adjusted 2022-23 $s, blue line is U.S. average, red line is Arkansas, grey lines are other states)
Arkansas’s peer states also tend to spend less than the national average.
While Arkansas spends less than the national average, the national figure is noticeably pulled up by a few high-spending states that annually spend between $25,000 and $35,000 per pupil. Arkansas’s spending compares more favorably with peer states, defined as states participating in the Southern Regional Education Board (SREB). The chart below compares Arkansas’s spending over the past decade to other SREB states (orange lines).
Current State Education Expenditures Per-Pupil 2011-2021
(inflation adjusted 2022-23 $s, blue line is U.S. average, red line is Arkansas, orange lines are SREB states, grey lines are other states)
Arkansas compares more favorably once we adjust for cross-state cost differences.
Many of the high-spending states that appear at the top of the charts above are also high-cost states. Because they face higher costs, they must spend more than Arkansas to get the same level of education services.
In the figure below, we have adjusted for these cross-state cost differences to make every state’s education dollar equivalent to Arkansas’s. This adjustment reduces variations in spending across states and moves Arkansas much closer to the national average. In fact, Arkansas’s spending overlays the national average from 2011-2015, with a small gap appearing more recently.
Current State Education Expenditures Per-Pupil 2011-2021
(inflation adjusted 2022-23 $s, adjusted for cross-state cost differences, blue line is U.S. average, red line is Arkansas, orange lines are SREB states, grey lines are other states)
Arkansas’s education spending is in the middle of our immediate neighbors.
When we compare Arkansas’s current education spending to our immediate neighbors, we find that Arkansas spends more per student than Mississippi, Oklahoma, Tennessee, and Texas and less than Louisiana and Missouri. Arkansas is solidly in the middle of our bordering states.
Once more recent data is available, Tennessee’s spending per pupil will increase. In 2022, the state adopted a student-based funding formula like Arkansas’s, and at the same time, chose to invest $1 billion more in education annually. However, since Tennessee has around 950,000 students attending its public schools, that big annual investment will only increase per-pupil spending by a little more than $1,000, leaving them behind Arkansas on a cost-adjusted basis.
Current State Education Expenditures Per-Pupil 2011-2021
(inflation adjusted 2022-23 $s, adjusted for cross-state cost differences, blue line is U.S. average, red line is Arkansas, purple lines are neighboring states)
Arkansas’s education spending is trending up.
Federal data often lag several years behind, but we combine NCES projections and state data to get an idea of what has happened since 2021. Between 2015 and 2021, a slight gap appeared between Arkansas’s current education expenditures and the national average. However, based on the latest projections, that gap has been narrowing since 2020, and we estimate it is now only between $600 and $700 per pupil. Given Arkansas’s student enrollment of 475,207, closing the gap completely would take an additional ~$333 million in education funding.
Part of the reason for this upward trend is the state is providing the funds for the teacher salary increases required by the LEARNS Act, which resulted in nearly $183 million in new state education funding, a ~6.5% increase from 2022-23. That’s roughly $385 more per pupil. In order to maintain this funding, the legislature will need to make it a more permanent part of the state’s school funding formula.
Current State Education Expenditures Per-Pupil 2011-2024
(inflation adjusted 2022-23 $s, adjusted for cross-state cost differences, blue line is U.S. average, red line is Arkansas)
Arkansas’s current education spending is in line with peer states and close to the national average.
Arkansas’s education spending is comparable to peer states like our immediate neighbors and SREB participants. Once we adjust for cost differences across states, Arkansas’s spending tracks the national average relatively closely.
As we often emphasize, there is no definitive “right” amount to invest in education. Together we must decide how much of our limited resources to devote to educating relative to all our other competing priorities.
While there is no “right” answer, the charts above show that Arkansas’s current level of investment is not an outlier but instead is quite average.
Stay tuned for more school funding posts coming soon!