In my role as a Special Education Director, I spend a lot of time in the “in-between” space: translating state policy into real services for students, responding to parent concerns with clarity and compassion, and working with building leaders who are trying to staff critical roles amid persistent shortages. When we talk about school funding, it can feel distant—like something that happens at the capitol, far from classrooms, therapy sessions, and IEP meetings.
But the truth is simple: state funding formulas directly shape what students experience every day. They influence whether a district can recruit and retain specialized staff, whether related services can be delivered consistently, whether class sizes remain manageable, and whether schools can respond quickly when student needs change.
The Education Commission of the States recently published the “K-12 Funding Toolkit: A Strategic Guide for States” (March 2025) by Chris Duncombe and Lauren Peisach. The toolkit highlights five principles of well-designed K-12 funding systems: transparent, student centered, adequate, fair, and sustainable. While the toolkit is written for state leaders, it offers practical insights for district administrators and school partners—including organizations like TinyEYE that support schools through online therapy services.
Below are key takeaways from the toolkit, along with what they mean on the ground for districts working hard to meet student needs—especially students with disabilities and other learners who require additional supports.
Why state K-12 funding matters more than most people realize
States are the largest funding source for K-12 schools, investing about $380 billion in 2022. Research summarized in the toolkit reinforces what many of us have seen locally: when funding increases compared with prior levels, student outcomes improve—test scores, graduation rates, and even long-term indicators like degree attainment and future earnings. Importantly, the impact can be especially strong when additional dollars are directed toward students from low-income households.
That’s not just a budget conversation. That’s an opportunity conversation.
1) Transparent: Make funding understandable and visible
School funding formulas are often notoriously complex. Some complexity is inevitable—districts must cover everything from salaries and transportation to nutrition services, technology, and special education. But complexity becomes a problem when it blocks public understanding and makes it harder for communities to engage in decisions that affect students.
What transparency looks like in practice
- Community voice in design: Students, families, educators, and school leaders have meaningful pathways to influence how aid is distributed.
- Clear rules and terminology: Funding components are defined in plain language, with predictable allocation rules.
- Public access to spending data: Communities can see how dollars are spent and how spending connects to outcomes.
Examples highlighted in the toolkit
- Oregon’s Student Success Act (2019): Requires local engagement and provides tools to ensure outreach includes families of students with disabilities, emerging bilingual students, students navigating poverty, homelessness, and foster care, and students of color.
- Tennessee’s TISA (2022): Included extensive public engagement and publishes an annual guide explaining the formula.
- Nevada’s Pupil-Centered Funding Plan (2019): Consolidated more than 30 categorical grants into a more centralized approach.
- Illinois (2017): Requires annual district spending plans addressing goals, intended use of state dollars, and targeted funding for special education, English learners, and students from low-income backgrounds.
From a district lens, transparency reduces surprises. It helps us forecast staffing, plan service delivery models, and communicate clearly with parents when we’re asked, “Why is this service limited?” or “Why are we contracting?”
2) Student centered: Fund based on learning needs, not just systems
Student-based funding models are growing nationwide. The toolkit notes that at least 35 states and Washington, D.C. use a student-based approach. These models typically include:
- A base amount per student (sometimes adjusted by grade level or district characteristics)
- Weights that add funding for students with additional needs (special education services, English learners, poverty, etc.)
- Direct funding for state priorities (like literacy initiatives or teacher pay strategies)
As a special education leader, I appreciate the clarity of a well-designed student-centered formula: it makes it easier to explain why some students require more intensive services and why those services cost more. It also helps districts align resources to need rather than to legacy staffing patterns.
Example highlighted in the toolkit
- Mississippi (2024): Adopted a new formula with a base of $6,695 per student and updated weights, including significantly increased support for students from low-income backgrounds and new weights for English learners, career and technical education, sparsity, and a revised approach to special education weights.
Student-centered funding also pairs naturally with service innovation. When districts have flexibility and clear accountability, they can expand access to supports—sometimes by leveraging teletherapy to address staffing shortages without sacrificing service quality or compliance.
3) Adequate: Ensure districts can realistically meet expectations
Adequacy is where policy meets reality. The toolkit distinguishes between:
- Legal adequacy: Meeting constitutional obligations to provide education
- Educational adequacy: Funding sufficient to meet state standards and goals
States vary dramatically in per-student funding. In 2022, the toolkit notes a range from about $27,500 per student in Vermont to $10,300 per student in Utah (cost-adjusted). That spread has real consequences for staffing, programming, and the ability to provide consistent special education and related services.
Key adequacy strategies
- Set a research-informed base amount: Using cost function studies, professional judgment panels, evidence-based reviews, or successful district models.
- Support a strong teacher workforce: Competitive pay, incentives for hard-to-staff roles, and strategies to reduce turnover.
- Develop student pathways: Funding for dual enrollment, work-based learning, and career pathways—especially where transportation, equipment, or staffing create barriers.
Staffing shortages are an adequacy issue
When we cannot hire enough speech-language pathologists, occupational therapists, school psychologists, or special educators, we are not just facing an HR problem—we are facing an adequacy problem. The toolkit’s examples of targeted compensation strategies (such as Hawaiʻi’s pay differentials for special education teachers) underscore that states can influence workforce stability.
From a district operations standpoint, this is where partners like TinyEYE can help districts bridge gaps responsibly—especially when recruitment timelines and caseload demands don’t align. Adequate funding makes it possible to plan those supports proactively rather than reactively.
4) Fair: Direct resources where needs and constraints are greatest
Fairness is about prioritizing resources for students with complex learning needs and for districts with limited local revenue capacity. Because local property taxes generate more than one-third of school revenue nationally, differences in property wealth can create opportunity gaps across district lines.
What fair funding tools can include
- Weighted funding: Additional dollars for special education, English learners, low-income students, and rural/small districts.
- High-cost special education supports: Additional aid for exceptionally expensive services (including out-of-district placements).
- Local wealth adjustments (equalization): State policies that reduce inequities driven by property wealth differences.
The toolkit notes that high-cost special education services can reach $70,000 per student, and that 7.5 million students ages three to 21 have IEPs—about 15% of public school students. Those numbers matter when districts are building budgets and explaining service delivery decisions to families.
Fair funding also supports compliance. When resources are aligned to need, districts are better positioned to deliver IEP services consistently, reduce compensatory service risk, and maintain trust with families.
5) Sustainable: Build stability so districts can plan with confidence
Sustainability is the principle I find most urgent right now. Districts are navigating the “fiscal cliff” after the end of ESSER spending windows, alongside enrollment declines in many regions. The toolkit reminds us that during the Great Recession, K-12 funding per student dropped significantly, and many states took years to recover.
Tools for sustainability
- Inflation adjustments: Indexing base funding or key program amounts to inflation to protect purchasing power.
- Stabilization funds and reserves: Rainy-day funds or education trust funds to buffer downturns.
- Diverse revenue sources: Avoiding overreliance on a single volatile revenue stream.
For special education and related services, sustainability is not optional. When funding is unstable, districts freeze hiring, delay contracts, and reduce service capacity—often right when student needs are rising. Stable funding allows multi-year planning, including predictable partnerships for online therapy services that can be scaled thoughtfully and ethically.
Bringing it back to students: What district leaders can do now
Even when states control the formula, districts can use these principles to guide local advocacy and planning. Here are practical steps I recommend to district teams:
- Translate funding into services: Build clear narratives that connect dollars to staffing, schedules, and student outcomes.
- Strengthen community engagement: Create accessible ways for families—including families of students with IEPs—to participate in budget priorities.
- Use data to drive decisions: Track service minutes delivered, vacancy rates, contractor usage, and outcomes to inform staffing models.
- Plan for sustainability: Avoid one-time fixes for ongoing needs; build multi-year staffing and contracting plans.
- Advocate for fairness: Use evidence to show where high-cost needs are concentrated and where local capacity is limited.
Final reflection
The most effective funding systems are not just technically sound—they are understandable, responsive to student needs, sufficient to meet expectations, equitable across communities, and stable over time. When those elements come together, districts can focus less on crisis management and more on what we all want: strong instruction, consistent supports, and better outcomes for every student.
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