Beyond the General Fund: Understanding How Capital Project Levies Contribute to School Finance Disparities

• In Event: Aligning Resources with Student Need: How State Funding Designs Shape Resource Allocation

Abstract

School finance inequities are a key driver of disparities in educational outcomes. Higher per-pupil funding levels allow schools to provide more qualified educators, smaller class sizes, and high-quality physical resources such as modern instructional technology and building improvements. School districts receive funding for physical resources through federal, state, and local funding. We study how school districts in Washington state generate and allocate funding for capital improvements, and how that changed during the COVID-19 pandemic.  
We draw on a unique state administrative district-level longitudinal dataset that links revenues across all major fund accounts—the general fund, capital projects fund, debt service fund, and transportation fund—to expenditures for each of these funds. In many cases, district spend general funds on capital improvements or pull funding from capital projects funds to support current expenditures. By focusing on revenues and expenditures beyond the general fund, our study provides a deeper analysis of school finance equity compared to past studies that examine only and general fund revenues and current expenditures We find districts use state funding to pay for technology and capital improvements but rely most heavily on local levies. Like most states, Washington provides significant equalization funding for general fund enrichment levies, but not for capital project levies or bonds. Washington allows districts to levy both capital project and technology levies, in addition to longer term bonds.
We find that property-wealthy school districts generate substantial local revenue through capital project and technology levies, and a lack of state equalization funding creates economic and racial disparities in physical resources and facility improvements. Districts relied more heavily on these two sources of funding during the COVID-19 pandemic, as technology and infrastructure needs increased. Federal stimulus funds allowed districts to further increase expenditures on technology during the pandemic, but the expiration of these funds poses challenges for districts that made investments in one-to-one devices and computers, which run on replacement cycles and require ongoing fiscal support. Our study shows that states may need to take steps to ensure those investments are supported now that stimulus funding has expired, especially for property-poor districts that do not have equal access to capital project and technology levies.

Authors

• David S. Knight, University of Washington
  Presenting Author

• Pooya Almasi, Morgan State University
  Non-Presenting Co-Author