Using recently available school-level finance data, we compare exposure to low-income classmates and average per pupil spending for black, Hispanic, and white students. Using within metropolitan area comparisons, we find that the typical black and Hispanic students attend schools with much higher proportions of low-income students than the typical white student, and that per pupil spending in the typical black and Hispanic students’ schools is higher than in the typical white student’s school. Drawing on estimates of the additional spending required to provide low-income students equal educational opportunity, we find that it is unlikely that the additional spending in schools where black and Hispanic students tend to enroll is sufficient to address the high level of student need in these schools. Middle range estimates indicate that cost-adjusted spending the typical black and Hispanic students’ schools is only 88 percent of that in the average white student’s school. Approximately 40 percent of the racial disparities in cost-adjusted spending are due to differences across schools within districts, although within district disparities play a much greater role in the South and West than in the Northeast and Midwest. Racial disparities are largest in the Northeast, and racial disparities across districts did not change significantly between 2006 and 2008.

Document Type

Working Paper


Spring 1-6-2023


Racial Inequality, Education Finance




Working Papers Series


Economic Policy | Economics | Education | Public Affairs, Public Policy and Public Administration | Public Policy



Additional Information

Working paper no. 255

Creative Commons License

Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.



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