How Arkansas Funds Its Schools

Arkansas schools are funded from three sources — state, local, and federal. Here is what each piece is, the statute and formula behind the state's share, and how far this project has verified every number against the state's own records.

The whole picture: three sources, two kinds of evidence

A district's revenue comes from the state (foundation funding plus categoricals), local property taxes, and the federal government. This site shows all three — but it is careful to mark how each number is known, on a two-tier scale:

• Verified formulas — the state notice aid. Every state-aid line is re-derived from its statutory formula and reconciles to the DESE State Aid Notice to the cent, every year. This is the machinery the ledger decomposes.
• Audited actuals — the revenue totals. The state / local / federal totals come from districts' audited annual statistical reports (ASR), with federal program detail (Title I, IDEA, child nutrition) from the Census F-33 survey. These are reported figures, not formula-derived — audited, but observed rather than re-computed.

A note on what Arkansas doesn't have: in some states the state government centrally pays teacher retirement "on behalf of" districts — money that never appears on a district's own books. Arkansas is not one of them — districts pay their own retirement-system contributions, which already sit inside the audited totals — so there is no separate hidden "on-behalf" layer to add here. (The one genuinely state-paid benefit, a share of employee health insurance, is small and not separately reported.)

One change coming. Under Act 909 of 2025, starting in 2026-27 the employer health-insurance contribution moves off the foundation rate and becomes DESE-paid. When the state publishes those amounts, they will appear here as a distinct, clearly-labeled state-paid-insurance layer. It also means the 2026-27 foundation rate ($8,037) is not directly comparable to 2025-26's $8,162 — the drop is a channel shift, not a cut.

The one-year lag

Arkansas funds a district on last year's enrollment. A district's aid for a school year is computed on its prior year's three-quarter average daily membership (ADM) — a built-in one-year lag. That single fact drives most of what looks surprising about school funding here: a district can lose students this year and still see its check hold or rise, because this year's check was set by last year's larger enrollment. The District Funding Detail view draws that lag as two lines — the funding-basis line is simply the enrollment line shifted one year later.

…except for a charter that is new or adding a grade

The lag is not universal, and the exception is not a rounding detail. Under A.C.A. § 6-23-501(a)(2), an open-enrollment public charter school is funded on last year's ADM like any other district — unless it is in its first year of operation, or it is the first year the school adds a grade. In those years the state funds it on its current-year enrollment: an initial estimate from July 1 enrollment, adjusted in December to first-quarter ADM, and finally trued up once the current three-quarter ADM is known.

Two consequences follow, and both matter. A charter funded on the current year carries no one-year lag at all — its money moves with its students in the same year, so it never gets the cushion a traditional district gets when enrolment falls. And by statute it cannot draw student-growth funding that year (A.C.A. § 6-20-2305(c)(2)), because its funding has already grown with it.

This applies to a meaningful share of charter-years, not a handful: across 2019-20 to 2024-25, 54 of 138 charter-years (39%) were funded on current-year enrollment and the other 61% on the lag. Which branch applied is printed on each school's State Aid Notice, and we verified the rule against paid dollars for every one of those years — 137 of 138 reproduce to the dollar. See the charter foundation entry below, and qa/registry_charter_foundation.md in the repository for the full derivation.

Foundation funding, the local share, and the top-up

Foundation funding is the base per-student amount — rate × prior-year ADM — but the way it is paid is the key to the whole system. The entitlement is funded local-first: every district must levy a 25-mill Uniform Rate of Tax (URT), and whatever that raises counts toward its foundation amount. The state tops up the rest. So the green "required local" layer in the revenue charts isn't separate from the foundation — it is the first slice of it, raised locally; state foundation aid is only the gap the URT doesn't cover.

That makes it an equalization formula. Property-wealthy districts raise more of their own foundation and receive less state money; the wealthiest raise the whole thing and receive $0 in foundation aid, funding themselves entirely from local property taxes. The ledger shows this as a chain: entitlement, minus the local URT share, equals foundation paid.

And every district levies more than the required 25 mills — for debt service and for operating money above the foundation floor. That extra is the pink "additional local" layer: what a community chooses to tax itself beyond what the state formula requires. Statewide it runs close to the required share, and excess mills over 25 explain most of it.

The declining-enrollment cushion and student growth

Two mechanisms soften the lag at the edges, and they are mutually exclusive — a district gets the greater of the two, never both (except in a handful of transition years where the rule resolves to both line items). The declining-enrollment cushion refunds half of last year's enrollment drop, for one year only, so funding falls more slowly than students do. Student-growth funding is its mirror: for fast-growing districts it pays on the current year's enrollment, so growth isn't held back a year by the lag.

The categoricals

On top of foundation come the categoricals — targeted funding streams. The five largest get their own line in the ledger: ESA/NSLA (enhanced student achievement, for concentrations of low-income students), EETF (the teacher-salary-earmarked trust fund), ALE (alternative learning environments), ELL (English-language learners), and PD (professional development). The rest — isolated/small-district funding, teacher salary equalization, bonded-debt assistance, enhanced transportation, the LEARNS teacher minimum-salary raise, and charter facilities funding — are grouped as "other categoricals." Every one is defined in the reference below.

How we mark what's verified

Each line in the ledger carries a verification badge. The three classes are an ordinal confidence scale, not a good/bad axis — "observed actuals" is not "wrong," it means the state's published figure is reported as-is rather than re-derived from a formula.

Across the whole payment record, the sum of every line reconciles to the state's published total to the cent, every year — the guarantee that this grouping neither drops nor double-counts a dollar. The technical methodology gives the fit statistics mechanism by mechanism.

Mechanism reference

Every funding mechanism in the state-aid record, grouped as the ledger groups them. State-aid mechanisms sum to a district's total; local, federal, and "context" rows (the money that follows students out) are shown for completeness but never counted in the state-aid total.