Rural Education and The Kentucky Education Reform Act of 1990: Funding And Implementation Issues

After discussing basic principles of school funding, and comparing selected school finance indicators in southeastern states, this paper examines how schools districts are financed in Kentucky. Emphasis is given to issues of funding adequacy, efficiency and equity, which together led to the lawsuit culminating in the recent Education Reform Act. Changes in the minimum foundation and percent equalization formulae by which State school aid is distributed are discussed in detail. Estimated per pupil school revenue data for the 1989-90 and 1990-91 years are analyzed to determine how funding inequality changed. In the aggregate, per pupil revenues across county school districts (i) have been raised without exception; (ii) have become less variable as measured by a reduced standard deviation and; (iii) become less dependent on locally raised taxes. Nevertheless, there are differences among metro and non-metro areas as demonstrated by an analysis using a variety of measures of inequality including (among others) coefficients of variation, relative mean deviation, Gini coefficients and Theil indices. Most importantly, perhaps, increases in funds have been directed primarily towards eastern Kentucky, where a high proportion of pupils live under "economically deprived" conditions. The reason for this result is obvious when the new funding formula is examined.