Are Friends of Schools the Enemies of Equity? The Interplay of School Funding Policies and External Fundraising

Abstract

School districts across the US have adopted funding policies designed to distribute resources more equitably across schools. Concurrently, schools are increasing external fundraising efforts to supplement district budget allocations. We document both funding policies and fundraising efforts in Chicago Public Schools. We find that adoption of a weighted-student funding policy reallocated more dollars to schools with high shares of students eligible for free/reduced-price lunch, creating a policy-induced per-pupil expenditure gap. Further, almost all schools raised external funds over the study period, with most dollars raised concentrated in schools serving relatively affluent populations. We estimate that external fundraising offset the policy-induced per-pupil expenditure gap between schools enrolling the lowest and highest shares of FRL-eligible students by 23-35 percent.

Keywords: education finance, public school, school funding, non-profits, fundraising, equity

JEL Classification: I22, I28, H75