Funding Pre-K through the School Funding Formula

4/24/2015

Young girl and boy looking at a book togetherSixteen states and the District of Columbia use the school funding or finance formula to fund pre-K.

Some states have found benefits to funding pre-K through a state’s school funding formula, such as being able to sustain funding based on program costs and demand. Using the formula helps support pre-K programs, because it forces budget makers to ask how much to fund or increase funding for pre-K, rather than whether to fund at all. In addition, funding formulas are premised on enrollment counts so pre-K funding can increase with enrollment growth.

Some states, however, have experienced challenges in phasing in formula funding for pre-K.

Background

Forty-one states and the District of Columbia invest in state-funded pre-K programs. States use a variety of ways to fund pre-K: general funds; formula-generated funds; dedicated (or earmarked) funds, such as tobacco and lottery taxes; and federal funds, such as Title I or Temporary Assistance for Needy Families (TANF).

An analysis conducted by the Education Commission of the States of 2013-14 appropriations showed state funding for pre-K totaled $5.6 billion. NCSL’s analysis of previous funding years shows state investments at similar levels. According to the National Institute for Early Education Research (NIEER), state pre-K programs serve more than 1 million children a year in a variety of settings, including schools and community provider programs.  

School Funding Formulas

School funding is comprised of federal, state and local funds. States’ funding formulas vary from state to state and are complex. School funding formulas establish the basic amount of public funds to be allocated to each district and designate the state and local share of total revenue. Federal funds can only be used to supplement, not supplant, state and local funds.

Forty-two states have funding formulas that provide aid to school districts on a per-pupil basis, known as foundation funding; other states fund staffing positions. States vary foundation funding based on a district’s ability to raise revenue, and through weights premised on grade level (e.g., pre-K students may be weighted differently than third-grade students) or on unique student characteristics or attributes (e.g., English language learners, cognitive disability or at-risk).[i]

Funding generated through these weights is considered inside the funding formula. Funding generated outside the formula includes categorical program funds, block grants, or funds for other specific purposes (transportation, food services, etc.), all of which districts must spend on the intended purpose of program. School districts have discretion, however, on how to use foundation funds generated by the funding formula. For more information, please visit NCSL’s school finance page.

States that Fund Pre-K through the School Funding Formula

Map with states that use the school funding formula for pre-K

Pre-K in School Funding Formulas

States structure their school funding formulas for pre-K in a few different ways. Iowa, Nebraska and Rhode Island, for instance, recently transitioned to using their existing funding formulas to fund pre-K by including 3- and 4-year olds in a district’s total student population count. Some states provide unrestricted eligibility, while others restrict eligibility. Colorado changed its school finance law in 2013 to allow districts and charter schools to enroll all of the 3-, 4- and 5-year-old children who apply for the program and meet the eligibility requirements.[ii]

Some states cap funding for pre-K, while others provide weighting for pre-K in their formulas. A few states fund pre-K at the same per-pupil rate as K-12, while others allot a portion for pre-K funding. Several states provide a basic per-child rate for pre-K and supplement with categorical aid for pre-K children who are English language learners or other at-risk students.

State Example: Rhode Island

Rhode Island started investing in pre-K in 2009, when a new demonstration project began in four school districts, funded by a $700,000 state appropriation and Title I funds. One year later, Rhode Island adopted a new school funding formula that integrated pre-K funding statewide and into the state public education system, raising to the visibility of pre-K. The Rhode Island Education Aid Foundation Formula approved in 2010 provided a phased-in approach to expand access to high-quality pre-K for communities with a high portion of children eligible for free and reduced lunch. The phased-in approach allowed the state’s expansion to create high-quality programs, prioritize access to children who needed it most, and support transition between the early childhood system and K-12.

Selected State Statutes

State

Statute Citation

Colorado

Colo. Rev. Stat. §§ 22-28-104 and 22-54-103(9.5) [Note: statutes enacted in 2006 by H.B. 06-1375, sec. 28.]

Connecticut

Conn. Gen. Stat. § 10 Chap. 164 Sec. 10-16q.

D.C.

D.C. Code § 38-2904

Iowa

Iowa Code Ann. § 256C.5

Kansas

Kan. Stat. Ann. § 72-6407

Maine

20-A Me. Rev. Stat. § 15674 & 15675

Maryland

Md. Code, Educ. § 5-207;

Md. Code, Educ. § 7-101.1

Michigan

Mich. Comp. Laws § Section 388.1632d

Nebraska

Neb. Rev. Stat. § 79-1007.01;

Neb. Rev. Stat. § 79-1007.01(1)(c)

New Jersey

N.J. Stat. Ann. § 18A:7F-54

New York

N.Y. Educ. Law § 3602-e(10)

Oklahoma

70 Okla. Stat. § 18-201.1;

70 Okla. St. Ann. § 18-201.1(B)(2)(l) and (n)

Rhode Island

R.I. § 16–7.2–6

Vermont

Vt. Stat. Ann. tit. § 16 4010

West Virginia

W. Va. Code, § 18-9A-2

Wisconsin

Wis. Stat. § 121.004(7)


Additional Information

Sources: Westlaw and state legislature websites.

The information on this page was prepared by Julie Poppe, children and families program, and Daniel Thatcher, education program.


[i] “Although there are numerous accepted ways of defining and identifying an “at-risk” student, most educators seem in agreement that an “at-risk” student is generally described as one who holds or demonstrates one or more of the following characteristics: (1) member of low-income family; (2) participate in free or reduced-cost lunch programs; (3) have parents with a low-level education; (4) show limited proficiency in English; (5) are a member of a racial or ethnic minority group; (6) live in a home headed by a single parent or guardian.”

Hoke Cnty. Bd. of Educ. v. State, 358 N.C. 605, 637, 599 S.E.2d 365, 390 (2004)


[ii] Pursuant to Senate Bill 13-213, the language in Art. 54.5 would only become effective upon passage of voter-approved tax increase meant to fund the new formula. The tax increase failed a statewide vote so Art. 54 remains in effect. However, pre-K receives funding vis-à-vis the formula through the statutes listed in the statute chart.