Dividing Lines: How Property Taxes Perpetuate Inequality in American Public Schools

The United States’ dependence on local property taxes to fund public education entrenches systemic socioeconomic and racial disparities across school districts, undermining the democratic ideal of equal educational opportunity for all students.

BRYNN LEE

Group of five students with backpacks walking at university campus together, Signed model release on file with Shutterstock, Inc., 2023

In the United States, the institution of public education has become central to the American ideal of equal opportunity and success. But the mechanisms utilized to fund public schools often work against this ideal, creating large disparities in the quality of education between regions. By using local property taxes to fund public schools, communities have a sense of control and ownership of community education but also allows for gross disparities between rich districts and poor districts which perpetuates cycles of privilege and poverty, disrupting education's purported democratic purpose of equalizing opportunity for all students. It is clear that the property tax-based funding for public schools enhances socioeconomic and racial disparities, promotes inequities in education, and urgently needs systemic change.

A History of Funding

While states and the federal government continue to contribute varying amounts of supplemental funding (often conditional and subject to change following federal regulation and distribution by the Department of Education), about 45% of total education funding in the United States still comes from property taxes. In wealthier communities where property values are high, the system generates significant revenues that fund enrichment programs, higher quality facilities, and better paid teachers. Those in poorer communities are unable to raise sufficient funds - even when the local property tax level is higher - because the property base is much less wealthy than in more affluent communities. This results in a public education system that largely determines a child's educational opportunity based on community wealth.

Inequalities in Funding and Resources

The disparities produced by property tax-based funding are stark and well-documented. In 2020, the EdBuild organization found that predominantly white school districts received $23 billion more in funding than districts serving predominantly students of color, despite serving a similar number of students Moreover, according to the National Center for Education Statistics (2021), per-pupil expenditures can vary by more than $10,000 between districts in the same state. For example, in Pennsylvania, Lower Merion School District spends nearly $30,000 per student, while neighboring Philadelphia public schools spend under $15,000.

These funding disparities translate into unequal resources where wealthier districts can offer smaller class sizes, robust extracurriculars, cutting-edge technology, and comprehensive college counseling. Meanwhile, students in poorer districts often face overcrowded classrooms, outdated materials, deferred maintenance, and teacher shortages. 

These inequalities have a direct impact on the achievement gap. Children in poorly funded schools generally perform at lower levels on standardized tests, have lower high school graduation rates and worse attendance in college (Reardon, 2011). These are not class-defined outcomes but rather class injustices performed on the part of the funding system.

Intersections with Racial Inequity

The inequities of property tax-funded systems have always been deeply intertwined with racial policies. The legacy of redlining, discriminatory policies, and white flight have led to racially segregated neighborhoods with extreme variations in property value.

As a result, students of color (predominantly Black and Latino students) are overrepresented in low wealth with poorly funded schools. This spatial and racialized distribution of inequality further perpetuates historical injustices. As Gloria Ladson-Billings (2006) articulates in her concept of the “education debt,” structural injustices keep the educational prospects for marginalized communities at an intergenerational disadvantage.

Unfortunately, court cases such as San Antonio Independent School District v. Rodriguez (1973) have only affirmed the constitutionality of local property tax funding and the disparate impacts on students living in poverty and students of color. To this day, this former precedent is used to sanction and justify measures that further educational divides between regions and racial groups.

Implications for Democracy and Social Mobility

Beyond the direct educational implications, the educational inequalities perpetuated result in societal consequences. Educational inequity is not only detrimental to different peoples' outcomes; it is a threat to democracy. Schools cultivate civic knowledge, social trust, and shared civic values. When children receive vastly unequal education, it fractures the social fabric and creates distrust in the legitimacy of democratic institutions.

In addition to the consequences for democracy, inequitable education continues to cement economic inequities. When Sean Reardon (2011) argued that educational attainment is increasingly determined by family income, he also undermined the idea of social mobility based on merit. With an increasingly wide gap between educational attainment, particularly in declining cities, cynicism about the American Dream is growing among communities that have been marginalized or ignored in policy processes and deliberations; especially among marginalized communities who see the deck stacked against them from the start.

Efforts at Reform and Their Limits

Recognizing the clear inequities of the past, many states have been working toward school finance reform. Court cases in states like New Jersey and Kentucky have compelled states to create more equitable school funding initiatives and states like Massachusetts have begun to use a weighted way of funding to direct funding to high-needs students and schools to reduce dependency on property taxes. 

However, these reforms are limited. Wealthier districts are able to make up for any loss in state or federal funding with local revenues that keep their advantages intact. Political resistance to tax increases or redistribution further hinders progress.

International comparisons reveal that the U.S. approach is both unusual and inequitable. For example, other countries like  Finland or Canada distributes school fundingIn these countries, school funding is uniform and hence all districts are funded equitably. As such, educational outcomes are much less correlated to income of a given family and corresponding achievement gaps are narrower.

These examples suggest that the U.S. could move toward a more just and equitable model of educational funding. Greater state and federal involvement in funding, combined with targeted investments in high-need schools, could reduce disparities. Moving away from local property taxes as the primary funding source would be a crucial first step.

Conclusion

The reliance on property taxes to fund public education is a historic relic of American history that only perpetuates deep injustices in the present. It produces vast disparities in resources and opportunities, disproportionately harms students of color and low-income students, and undermines social cohesion and mobility.

Addressing this injustice will require extensive policy changes, political bipartisanship, and a renewed commitment to the principle that every child deserves an equal chance to learn and thrive. The American Dream depends on an equitable education.