Between 1997–98 and 2004–05, differences between states accounted for a greater percentage of the variation in instruction expenditures per student among unified public school districts than did differences within states.

A number of methods can be used to measure the variation in the amount school districts spend per student on instruction. This indicator uses the Theil coefficient because it provides a national measure of differences in instruction expenditures per student that can be decomposed into separate components to measure school district-level variations both between and within states. In this indicator, a coefficient of zero indicates that there is no variation in the instruction expenditures per student in unified public school districts for kindergarten through grade 12, and the Theil coefficient, which has a maximum possible value of 1.0, increases as the amount of variation present increases.

Across U.S. districts, the total variation, after controlling for geographic cost differences,¹ in instruction expenditures per student increased between the 1997–98 and 2004–05 school years (see table 36-1). The between-state variation also increased during that time, but the within-state component remained largely unchanged. In the 1997–98 school year, 57 percent of the variation in instruction expenditures per student was due to the between-state differences and 43 percent was due to within-state differences. As the between-state component of the variation increased from 1997–98 to 2004–05 and the within-state component remained largely unchanged, the percentage of the total variation due to the between-state component increased to 66 percent in 2004–05 and that due to the within-state component decreased to 34 percent.

Changes in the variation in instruction expenditures per student over time may also reflect differences across school districts in the amount of services or goods purchased, such as the number of classroom teachers hired. These changes may, in part, reflect various state litigation, school finance reform efforts, and changes in the composition of student enrollment.

¹ Instruction expenditures in this indicator have been adjusted for geographic cost differences using the Comparable Wage Index (CWI). In indicator 35, expenditures were not presented by geographic area so no such adjustment was required. Rather, in indicator 35, the Consumer Price Index (CPI) was used to adjust for the effects of inflation. The CWI is available from 1997–98 to 2004–05. See supplemental note 11 for more information. (back to text)