Roosevelt Institute | Cornell University

How Property Taxes Fund Inequality

By Kayleigh RubinPublished January 1, 2017

Public school districts in much of the United States are funded, to varying degrees, by local property taxes. This article discusses how this method of finance diminishes the equality of students' educational opportunities.

 By Kayleigh Rubin  
"It is doubtful that any child may be reasonably expected to succeed in life if he is denied the opportunity of an education. Such an opportunity, where the state has undertaken to provide it, is a right which must be made available to all on equal terms."

In the landmark Brown v. Board of Education case, Chief Justice Earl Warren championed the right to equality of educational opportunity in the 1954 majority opinion. Brown v. Board established the legacy that, in accordance with the Equal Protection Clause, each state is required to provide the same educational opportunities to all students, regardless of their demographics.  

Nearly twenty years later, Demetrio Rodriguez asked the Supreme Court to apply the same logic the justices had in Brown v. Board and rule that unequal funding undermines an equal opportunity to education. In Texas, nearly half of local public school funds were derived from local property taxes, a system that favors more affluent communities. Rodriguez and his children lived in Edgewood, Texas, the poorest school district in San Antonio. In the 1967-1968 school year, local property taxes raised $26 to the education of each child. Rodriguez' children attended a dilapidated elementary school with a shortage of books and certified teachers. The dropout rate among secondary students in Edgewood was 32 percent.

A few neighborhoods away is Alamo Heights, the wealthiest school district in San Antonio. In the 1967-1968 school year, local property taxes raised $333 per pupil. Students in Alamo Heights attended elementary schools with physical facilities, an abundance of library books, and a smaller teacher to pupil ratio. The dropout rate among secondary students in Alamo Heights was eight percent.

In San Antonio Independent School District v. Rodriguez, the Supreme Court ruled against Rodriguez in a 5-4 decision. The majority opinion concluded that, although Brown v. Board affirmed the right to equality of educational opportunity, the "Equal Protection Clause does not require absolute equality or precisely equal advantages." In his dissent, Justice Thurgood Marshall wrote that, with the issue of funding public education deferred to states, "countless children unjustifiably receive inferior educations that may affect their hearts and minds."

The tale of two schools is not unique to 1968 Texas. Forty years later, the system by which local property taxes fund local public schools persists across the United States. The results confirm Marshall's warning. Nationally, the United States government contributes approximately 8.3 percent to public education revenue. However, these revenues are intended to be supplemental rather than supportive. They are distributed directly to state and local governments for express purposes such as Head Start and reduced lunch programs. Thus, it is the constitutional responsibility of states, in conjunction with localities, to fund the remaining 91.7 percent.

In 49 states (Hawaii being the only exception), property taxes contribute, in varying degrees, to public education revenues. Between 2012-2013, 81 percent of total local revenues for public school districts were derived from local property taxes. In 14 states and the District of Columbia, local revenues comprised of at least 50 percent of total funds for public education.  In Illinois and Nevada, approximately 60 percent of education funds come from local sources. In the District of Columbia, 90 percent of education funds come from local sources.

These discrepancies in the finance of public education are responsible for inequities in per student spending, and consequently, student achievement. Differences in spending equate to inequitable differences in resources: gaps in teacher salaries, disparities in the number and condition of textbooks, distinctions in the number of guidance counselors, etc. A study published by the National Bureau of Economic Research concluded that a 20 percent increase in per-pupil spending for students in lower poverty districts results in higher test scores, an additional year of completed education, 25 percent higher earnings, and a 20 percent reduction in risk of future poverty.

"Achieving equity and excellence requires sufficient resources that are distributed based on student need, not zip code," reported the Equity and Excellence Commission, a committee organized by former Secretary of Education, Arne Duncan. It is time to revisit and reform the economics of our public education system. Proposed solutions include increasing federal government supplements for public education, collecting funds from the local income or sales tax, and seeking revenues from non-tax sources. Each of these propositions requires further study and amendment. However, until we can insure equitable and adequate funding for public education, the right to an equal educational opportunity, a right that Brown v. Board upheld and esteemed, will remain an ideal rather than an actuality.