Giving with One Hand, Taking Away with the Other

Last Updated: November 06, 2008

This article appeared in the November 2008 Rural Policy Matters.

Pennsylvania recently enacted substantial changes in its school funding formula. The new formula contains a poverty adjustment that adds state aid to districts in proportion to the percentage of students eligible for federally subsidized meals. It also provides extra funding students learning English and for school size, with a net result that all districts receive a funding increase.

In addition, the formula includes a "location cost metric." The so-called LCM adjusts the state allocation based on the costs of hiring comparably educated non-teaching professionals in the same location and the cost of living in that location, especially the cost of renting a house.

An analysis by the Rural Trust finds that the LCM tends to offset much of the poverty allocation to many high-poverty or remote districts and increase overall funding to high-wealth districts where professional salaries and housing costs are high. High-poverty districts receive more money under the new formula, but most receive much less than they would without the LCM adjustment.

The full report provides examples from Pennsylvania and includes a pithy analysis of overall challenges in calculating the costs of providing educational services in rural and high-poverty districts. The report, "Effect of Location Cost Metric on Distribution of Funding Under the Pennsylvania School Funding Formula" is available here.

Read more from the November 2008 Rural Policy Matters.