Schools have the potential to serve as a corrective, a way to bring students of different socioeconomic backgrounds together and to bring resources and opportunity into the lives of needy kids. The school funding system we have, though, only draws brighter lines between the haves and have-nots.

School district borders define both which students will be served by a district and where those schools get their dollars. When states rely on local taxes to support schools, borders can be drawn to provide a deep well of resources for all of the community's children—or they can segregate those children along lines of opportunity and wealth.

When shifting conditions leave a school district without enough local resources to get by, it may seek to improve its financial health by consolidating with a better-off neighbor district. But in most states, that's all but impossible. In thirty-nine states, consolidation is purely voluntary, and struggling districts are likely to be turned away by their wealthier neighbor districts. In twenty-five states, there are financial incentives meant to encourage mergers, but they are rarely successful at bringing about consolidations for the districts that truly need them. In fact, only nine states have mechanisms that allow the state to mandate a merger, even in the direst of circumstances.

When school funding is raised from property taxes, property-rich districts have an advantage: They can afford to pay lower tax rates without sacrificing school funding. But do they? In this report, EdBuild examines the relationship between local property tax rates and district affluence in 18 states. The report also explores the state policies that can promote equity in local tax effort for education.

Every policy that increases funding equity, though it improves the overall picture, leaves some voters worse off. This report explores the stories of three states that beat the odds.

When property tax revenues are kept for the districts in which they are raised, wealthier neighborhoods can amply fund their schools at lower tax rates. When the state moves to equalize funding for districts of different wealth levels, it must either raise more state money or order the sharing of local revenues. Either course inevitably increases tax bills in those more affluent areas.

The increases create a challenge for policymakers and place political and economic constraints on the process of increasing the equity of the school finance system. In each instance, the state took on a larger role in school funding and decreased the amount of interdistrict variation permitted in the system.

Schools have the potential to serve as a corrective, a way to bring students of different socioeconomic backgrounds together and to bring resources and opportunity into the lives of needy kids. The school funding system we have, though, only draws brighter lines between the haves and have-nots.

The state of California, like many others across the country, runs a lottery whose stated purpose is to increase funding for education. In practice, this government-run program results in a transfer of wealth of $449 million from lower-income to higher-income school districts. In California, poor neighborhoods pay much more into the lottery than their schools get out of it, while affluent areas contribute far less than their schools receive.