The impact of school finance litigation on resource distribution: a comparison of court‐mandated equity and adequacy reforms

Abstract

While there is a wealth of research on school finance equity and adequacy, and school finance theory clearly documents differences between the two concepts, no study has examined whether the reforms engendered by each approach actually differ in terms of resource distribution. The present study examines the issues using district-level data on expenditure by function from two, large national data-sets: the US Census of Governments School System Finance File F-33 (1972-2002) and the National Center for Education Statistics' Longitudinal School District Fiscal-Nonfiscal File (1990-2000). A difference-in-differences estimator with state and year fixed effects indicates that both court-mandated equity and adequacy reforms decrease resource inequities. However, estimates based on data from the F-33 file show negligible differences between equity and adequacy reforms, while estimates based on data from the Fiscal-Nonfiscal File indicate adequacy reform does not decrease horizontal inequities as much as court-mandated equity reform. To explore these contradictory findings, we implement a two-stage regression approach that examines whether court-mandated adequacy reform is associated with a state funding mechanism accounting for certain educational needs of students. Court-mandated adequacy reform does not result in the allocation of additional resources to low-income districts when compared with states under court-mandated equity reform. We conclude that, contrary to school finance theory, resource distribution patterns following court-mandated equity and adequacy reforms are not statistically different.