Arkansas Explained: How is the state’s public school funding amount set?

While Arkansas lawmakers prepare to debate the rising cost of the state’s school voucher program, the Legislature must also determine the cost of an adequate public education. 

The school adequacy study, which occurs every other year and is the result of litigation, culminates with a report that must be submitted to the leaders of the House and Senate by November. The report from the House and Senate Education committees recommends how much per-student funding the state should provide 259 districts during the next two school years.

State lawmakers will consider the recommendations during next year’s legislative session and approve legislation that outlines how much per-student funding districts will receive over the next two years. 

Here’s what to know about the state’s adequacy study:

What does the state’s constitution say about education?

Adequacy is rooted in the 1874 Arkansas Constitution, which requires the state to “maintain a general, suitable and efficient system” of free public education.

What do the courts say about an adequate education? 

The state Supreme Court first touched on educational funding in the state and how it was inequitable in 1983 with the Jim DuPree v. Alma School District No. 30 case.

The Lake View School District filed a lawsuit in 1992 arguing the funding system for public schools violated the constitutions of Arkansas and the United States because it was inequitable and inadequate.  

The litigation lasted 15 years and led to major changes in the school funding system. They include a constitutional amendment setting a minimum property tax rate to fund public schools, and consolidation of smaller school districts. 

The reforms also included the state Supreme Court in 2002 requiring the state to define adequacy and study it, know how state revenues are spent and whether true equality in education is being achieved. 

What is the funding matrix?

During the adequacy study, lawmakers calculate recommendations for per-student funding based on a funding matrix that a consulting firm recommended in 2003. The formula is based on a typical school with 500 students.

This is a funding matrix, not a spending matrix, and it can’t dictate how districts spend this money because they are unrestricted funds. 

Allocations in the matrix should be based on what’s necessary to fund an adequate and equitable education, not on how much funding is available to the state, Bureau of Legislative Research staff told lawmakers in February. 

Districts also receive categorical funds that are not included in the matrix. These are restricted funds that must be spent specifically on the allocated items, such as English learners and alternative learning environment students. 

Lawmakers have the authority to alter matrix categories. 

How much per-student funding are schools receiving?

During the 2025 legislative session, lawmakers approved legislation that allocated $8,162 for per-student funding for this school year, which includes $320 for the minimum employer contribution for participants in the state-sponsored insurance program.

The legislation also allocates $8,037 for the 2026-2027 school year. This does not include $333 for the minimum employer contribution for participants in the state-sponsored insurance program that will be paid directly to the Employee Benefits Division on behalf of public schools.

The per-student funding is multiplied by the school district’s average daily membership for the previous school year.

What concerns do lawmakers have about state education funds?

During a budget hearing this month, lawmakers voiced concerns about how districts are using state dollars and questioned if there are better ways to track how funding is being spent at the district level to ensure education-focused initiatives are being prioritized. 

Education Secretary Jacob Oliva told lawmakers the education department created a transparency dashboard where people can track where expenses are going at the school district. 

While districts are required to submit certain financial information to an education department database, Mountain View Republican Sen. Missy Irvin said it would be worth exploring requiring districts to submit reports to the Legislature. 

Critics of the state’s school voucher program have raised concerns that its growing cost — more than $309 million is included in the governor’s proposed budget — will affect the state’s ability to fund public schools. 

Under the governor’s proposed budget, the voucher program would pull money from general revenue and surplus funds, not from funds dedicated to per-student funding.