Public schools in the United Sates are one of the most unequally funded of any other nation. Public schools are consistently suffering significant funding disparities as certain school counties receive more government funding than others. This being said, schools in lower income neighborhoods often receive less funding than those in wealthier areas (How money matters: Education funding and student outcomes 2025). This may directly affect teacher quality, classroom resources and student support services. These disparities may contribute to lower graduation rates amongst these students within the lower-income neighborhoods. The question within this review is: How does unequal school funding effect graduation rates amongst students in low-income neighborhoods?
To understand how unequal school funding may affect graduation rates and how changing this may have a positive effect, we must first see how the two are correlated. Owens (2017) in the American Sociological Review wrote on Income Segregation Between School Districts and Educational Inequality, analyzing how income segregation across school districts produced disparities in both school funding and student outcomes. Using national data on district demographics, finances and student performance, Owens measured income segregation and funding disparities as independent variables. The dependent variables were student outcomes such as graduation rates. In her study, the results showed that students within low-income neighborhoods or in his study “high-poverty districts” had consistently seen lower graduation rates due to reduced funding. This demonstrated the structural nature of funding inequality and its affects, especially on students in lower income neighborhoods (Owens, 2017). This research conducted by Owens highlights the effects on unequal school funding on student graduation rates as a systematic issue under the United State’s education policies.
In The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms, from 2016, Jackson, Johnson and Persico examined how changes in school funding and spending directly students’ educational outcomes. To do this, they conducted an analysis of student outcomes of being tied to per pupil funding. Their independent variable within the study was school spending per student and the dependent variables included high school graduation rates and years of completed education. Results indicated that a 10% increase in per-pupil spending for all K-12 years of schooling led to a significant increase in graduation rates, with a strong effect on students from lower-income families as well (Johnson et.al, 2016). This study directly supports the idea that unequal school funding may contribute to disparities in graduation rates and shows that increased resources can assist in closing the educational gaps in disadvantaged neighborhoods.
LaFortune, Rothstein, & Schanzenbach in School Finance Reform and the Distribution of Student Achievement in 2018, analyzed the effects of state level school finance reforms on the achievement of students in lower income districts. Using data from test scores and graduation rates between 1990 and 2011, they used a difference-in-difference model to compare the low-income districts before and after finance reform. The independent variable in this study was the changes in school funding while the dependent variables consisted of graduation rates and academic performance. Within their study and research, they found that reforms that increased funding within the low-income districts led to a measurable increase in student achievement, reducing the gap between poor and wealthier districts (Lafortune et al., 2018). This study directly supports the argument that unequal funding across neighborhoods contributes to lower graduation rates within low-income districts. Like the previous study, it supports that an increase in targeted funding can greatly narrow the disparities amongst graduation rates between high and low-income neighborhoods.
The studies that have been reviewed in this paper demonstrate that unequal school funding contributes to disparities in educational outcomes such as graduation rates, especially for students within low-income neighborhoods. Owens (2017) introduced us to the correlation between unequal school funding for low-income neighborhoods and the outcome of graduation rates by linking school funding directly to educational attainment. Jackson, Johnson and Persico (2016) provided evidence that increases in school spending raised graduation rates especially amongst disadvantaged students. Lafortune, Rothstein, and Schanzenbach (2018) added onto the previous study by further showing that targeted funding reforms help narrow the gap between educational outcomes between high and low-income neighborhoods. The findings from these studies highlights the significant role that school resources and funding plays in graduation outcomes and how the unequal funding of low-income neighborhoods decreases graduation rates.
Based on the studies, I hypothesize that increases in school funding in low-income neighborhoods is positive associate with higher graduation rates amongst students within those low-income neighborhoods. The independent variable within this hypothesis is an increase in school funding for schools in lower income districts and the dependent variable is graduation rates amongst students within lower income districts.
References
How money matters: Education funding and student outcomes. Learning Policy Institute. (2025, April 9). https://learningpolicyinstitute.org/product/how-money-matters-factsheet
Jackson, C. K., Johnson, R., & Persico, C. (2016). The Effects of School Spending on Educational and Economic Outcomes: Evidence From School Finance Reforms. The Quarterly Journal of Economics, 131(1), 157–218. https://doi.org/10.3386/w20847
Lafortune, J., Rothstein, J., & Schanzenbach, D. W. (2018). School Finance Reform and the Distribution of Student Achievement. American Economic Journal, 10, 1–26. https://doi.org/10.3386/w22011
Owens, A. (2017). Income Segregation Between School Districts and Inequality in Students’ Achievement. Sociology of Education, 91(1), 1–27. https://doi.org/10.1177/0038040717741180