Will Fallout from COVID’s K-Shaped Recession Finally Fix Delaware’s Jim Crow-Era School Funding Rules?

Affluent people were affected, certainly, but not nearly as much as their impoverished neighbors, who felt COVID’s disproportionate impact on multiple fronts: losing jobs and child care, missing meals and lacking even the most basic technology necessary for their kids to participate in distance learning, as nearly half of the state’s school districts kept classrooms closed. 

Coincidentally, the news on Oct. 12 also brought word of a settlement in a lawsuit addressing another longstanding disparity: a Jim Crow-era school funding system that sends dramatically fewer resources to impoverished schools than to wealthy ones. While the nexus between COVID-19 and the lawsuit might not at first be obvious, the agreement in Delawareans for Educational Opportunity v. Carney was celebrated as a first small step toward interrupting the intergenerational cycle of poverty — necessary to a full pandemic recovery.

Because the state’s system for distributing money to schools was created at a time when segregation was enshrined in its constitution, separate but equal — rather than a quality education for disadvantaged children — was the goal. Because of this, and in marked contrast to other states, Delaware schools do not receive any funding to compensate for the costs of meeting the needs of low-income students, those learning English or the youngest children with disabilities. 

Indeed, Delaware is one of a handful of states that reimburse school districts for the cost of their teacher corps, rather than the demographics of their students. Under this system, the districts with the best-paid educators receive more money than those that offer lower salaries, which, as a consequence, end up with novices and teachers whom affluent schools don’t want to hire. 

Pre-pandemic, there wasn’t much debate about the system’s unfairness, or much urgency among state lawmakers to undertake the wholesale overhaul educators have called for since the last recession.

“The equity challenges in our funding system have roots that run deep, so they’ve been challenging to uproot, so to speak,” says Paul Herdman, CEO of Rodel, a nonprofit that has worked on the issue for more than 15 years. “The cold reality is that it’s a relic from the 1940s. It wasn’t built for the group of students we have today. Equity and addressing the unique needs of students simply was not built into the system back then because that was not its charge.”

But COVID heightened the public’s understanding of both the human and the economic costs of the educational inequities. With disadvantaged students and children of color trailing their affluent, mostly white peers, the state’s future prosperity was already imperiled. The pandemic-driven shutdowns of schools and businesses only widened these gaps — and made them visible to more people.

Over the last 16 months, with schools toggling in and out of in-person classes, some students — mostly the children of affluent parents with the time and money to supplement lackluster remote schooling — were freed to learn at an accelerated pace. But many more will return to classrooms having missed foundational lessons, unable to catch up without carefully crafted interventions and support for recovering from COVID’s traumas. The historically wide achievement gap, in short, will be much harder to bridge.

When COVID forced schools to close, affluent Delawareans, like wealthy Americans elsewhere, were confronted with headline after headline about their less privileged neighbors. Parents who shop at the Apple store woke up to the number of children who have no access to the internet. White-collar workers oversaw distance learning in big houses chosen for their proximity to good schools, while children in poor and working-class neighborhoods struggled to find a place to log on. 

Never had inequity — and the relationship among wealth, education and opportunity — been so starkly on display. And never had it been harder to ignore the correlation between race and poverty. The question was whether now would be the moment for Delaware to do something about it.

A reckoning to address the historical disparities is long overdue, says Rep. Nnamdi Chukwuocha, a Wilmington-area Democratic lawmaker and social worker. Without it, recovery from the pandemic will be impossible. “We will hide the true impacts of COVID. It’ll be this blanket approach. It will never be the process of determining what our students need,” he says. “There has always been a way to hide.” 

A K, versus a V

Normally, when economists analyze shifts in employment, consumer spending and other indicators of a community’s financial well-being, they have to wait for state and federal bureaucracies to produce reams of statistics. But as COVID-19 first swept across the country, Opportunity Insights, a team at Harvard University, acquired a number of datasets, some of them from private companies that typically guard their internal financial information.

Using records of individual credit card transactions, payroll processing records, cell phone GPS movements and other information — essentially, trade secrets — they built a nationwide online pandemic tracker capable of providing a down-to-the-day snapshot of who is spending and who is struggling, by income level, city, state and county and, in some instances, by zip code. What they found was stunning.

In a typical recession, Friedman told The 74, economists generally see a V shape: Everyone’s fortunes take a fall, then everyone rebounds together. This time, the Opportunity Insights team saw a K. Money is flowing, but not the way it used to, and this shift in spending sent shock waves through low-income neighborhoods. Instead of buying high-end restaurant meals, for example, affluent people signed up for wine tastings on Zoom. There were waiting lists for home treadmill deliveries, while gyms hemorrhaged members.

WATCH: Beth Hawkins details her latest investigation into COVID’s K-shaped recession and how the fallout will challenge America’s schools

On Oct. 12, in New Castle County, where Wilmington is located, employment among residents earning $27,000 or less a year was down 17 percent — most of the decrease a result of higher-income residents not spending at the businesses that employed their lower-income neighbors. Revenue was down 54 percent statewide at eateries, brew pubs and nail salons. Yet employment was up a percent among higher-income New Castle residents. In New Castle County, small-business revenue overall was down 29 percent, but consumer spending had fallen only 1 percent.

(Friedman and Chetty update the tracker as the underlying information changes. The data in this story was downloaded June 29, 2021.)

The Opportunity Insights tracker contains one academic dataset: student participation and progress on the math app Zearn, which one-fourth of the nation’s K-5 students have access to. Immediately after schools closed, use of the app among low-income students “completely dropped off,” notes Zearn CEO Shalinee Sharma. As they started logging on again, a yawning gap became apparent. A year into the pandemic, these students’ progress was behind where it should have been, while their wealthier peers were ahead 28 percent.   

New research by McKinsey & Co. and the nonprofit assessment concern NWEA found wide disparities between white/affluent students and their low-income peers/children of color. Depending on grade and subject, low-income students ended the 2020-21 school year with up to seven months of unfinished learning.

A slew of studies by economists and education scholars have established how poverty, instability and school closures affect children’s chances of academic success, research that has allowed educators and policymakers to project what setbacks schools should be prepared to address.   

According to state data from 2017, of students in grades 3 through 5, 64 percent of low-income children, 85 percent of English learners and 86 percent of students with disabilities could not read at grade level. Broken down by race, the same data showed yawning disparities between white and Asian students and Black, Latino and Native American children.

“This current system is rooted in failure. It is rooted in racism.” —Rep. Nnamdi Chukwuocha

Disadvantaged students are likely to start the new academic year even further behind. In Delaware, they will show up at schools that since 1940 — despite Brown vs. Board of Education, despite passage of the Individuals with Disabilities in Education Act and despite a large influx of Spanish-speaking immigrants into the state — have had virtually no money to meet their needs.  

This, many economists and education policymakers agree, is where the inequitable fissures in any community’s economy — and, by extension, its rates of college graduation, employment and earnings, home ownership and even health — begin to open. Left unaddressed, these cracks become chasms, denying opportunity to successive generations.  

“What COVID has provided is an opportunity to really see how glaring the disparities are,” says Chukwuocha. “We just don’t get to the point in our state of saying, ‘We’re going to buckle down and fix this.’”

‘Rooted in failure … and racism’

It was 1950, and Sarah Bulah was fed up. Every day, a bus passed her house, transporting white children to a whites-only school nearby. But Bulah was forced to drive her daughter to the nearest school for Blacks, Hockessin Colored School #107, two miles away. She wrote to the governor of Delaware asking for a school bus to take her 6-year-old, Shirley, to class.

After Gov. Elbert Carvel rejected the request, Bulah turned to Louis Redding, the first Black lawyer admitted to the Delaware bar. 

“He said he wouldn’t help me get a Jim Crow bus to take my girl to any Jim Crow school, but if I was interested in sending her to an integrated school, why, then maybe he’d help,” Bulah would later tell historians. “Well, I thanked God right then and there.” 

Help Redding did, laying the groundwork for a case that, consolidated with four other suits that eventually became Brown vs. Board of Education, led the U.S. Supreme Court to outlaw segregation in schools. Indeed, two of the cases in Brown vs. Board of Education involved segregated schools in or near Wilmington.

There are two things particular to Delaware that are important to understand. One is that, wedged against the Mason-Dixon line, it was a slave-holding state, yet loyal to the Union. Because it did not secede, President Abraham Lincoln’s Emancipation Proclamation did not apply to slaves in Delaware, who were freed in 1865 — more than two years later, at the end of the Civil War. The state would not ratify the 13th Amendment to the U.S. Constitution, outlawing slavery, until 1901.

The other is a holdover from Delaware’s early status as a British colony. Redding pressed Bulah’s case in the state’s Court of Chancery, which, unlike a conventional court, is a place where people may challenge injustices or push for needed laws or policies. A place, its English boosters said, to address “that which ought to be done.”

The Court of Chancery sided with Bulah and Redding, giving the high court a roadmap for deciding Brown — if not for ensuring that states and localities would comply with either the spirit or the letter.

For 25 years after the landmark decision, Delawareans endured their own version of the painful back-and-forth plaguing school systems throughout the United States as courts issued desegregation orders. White families decamped to suburbs and urban districts were consolidated, sparking fresh lawsuits. Busing battles were joined. 

In 1981, the state created four school districts in New Castle County, with the intent of making sure each had a mix of students from Wilmington, where Black households were concentrated, and surrounding suburbs. In 1995, the court declared those districts — Red Clay, Brandywine, Colonial and Christina — integrated. 

But in ensuring a relatively equal racial balance in each of the new school districts, the state ended up effectively gerrymandering families of color into smaller voting jurisdictions where, divided politically, they were minorities. Their children were more likely to attend schools with white pupils, but Black and brown parents lacked the political clout to hold education officials accountable for delivering results for their kids. 

Soon after court supervision ended, schools in the new districts resegregated. By 2015, just six of the 24 schools located within Wilmington city limits had a reading proficiency rate equal to or above the state average of 52 percent. Citywide, just 46 percent of students read at grade level. In math, the city proficiency rate was 35 percent.

“This current system is rooted in failure,” says Chukwuocha. “It is rooted in racism.” 

An inequitable Catch-22

Photographs of Shirley Bulah riding a bus to her new school were said to depict a watershed moment. But the vestiges of Jim Crow remain alive and well in the state’s education funding system. 

Most states weight funding according to student need, with a base per-pupil amount supplemented by additional dollars sent to schools and districts depending on the demographics they serve. A mountain of research has shown that disadvantaged children need more resources to flourish in school.

In recent decades, many states have made efforts to direct more of their dollars to the classrooms with the greatest need. With small exceptions, Delaware does not provide resources to offset the costs of educating children in poverty, those learning English or the youngest children with disabilities. 

On top of this, it is one of nine states that fund districts not according to enrollment or student needs, but based on the number of teachers they employ and those teachers’ salaries. Under this system, a certain number of students adds up to a unit; the number of units determines how many teachers a school can have, as well as some operating costs, such as utilities and facilities. 

On a given day each fall, typically Sept. 30, schools count their students and report enrollment to the state. Officials use this information to tally how many units will be funded. For example, in grades K-3, 16.2 students add up to a unit. In higher grades, the number of students constituting a unit is larger. 

Shirley Bulah won a ride on an integrated bus to an integrated school in Hockessin, Delaware resulting from Bulah v. Gebhart (1952) and upheld in Brown v. Board of Education (1954). pic.twitter.com/ZUdX2XfH8D

— Bradley Skelcher (@bskelcher) December 10, 2020

Depending on the intensity of their needs, a small number of students in special education starting in grade 3 can constitute a unit. Younger children with disabilities are not counted separately from their classmates in general education, and so do not receive extra resources.    

Once the requisite number of units has been established, districts report their teachers’ seniority levels, degrees and other credentials to the state, which in turn pays the school system according to a salary schedule that reflects each teacher’s seniority and level of education. A district or school is free to pay its teachers more than this amount. 

This creates an inequitable Catch-22: Schools that have more money can hire more expensive teachers, which in turn results in more funding. Schools that pay educators less are typically those that can’t raise local taxes to boost salaries, and thus are locked out of higher state funding.

An additional problem with the formula is that it leaves just 8 percent of state funding for a school’s or district’s discretionary needs. Again, as a result of their small local tax bases, the poorest school systems can’t raise money to fund expenses not in the state formula.

Because of the unusual way payments to schools are calculated, the amount districts spend per pupil is all over the map. Among Wilmington-area districts in 2017, Christina had the highest poverty rate, at 41 percent, but received the least funding, at $16,574. Brandywine, where 29 percent of students are low-income, had the smallest poverty rate and the second-highest revenue, at $18,299 per pupil.

The funding system contains one more confounding element. Though the cost of operating schools has risen steadily between inflation and deepening unmet needs, Delaware law requires districts to base local tax rates on decades-old property values. School levies in Sussex County — the southernmost swath of the state, home to a mix of poultry processors and coastal vacation homes — are based on 1974 property values. Values in northernmost, urban New Castle are fixed at 1983 assessments; in Kent County, home to Dover, the state capital, at 1987 levels. 

COVID, says Chukwuocha, makes reforming the system’s structural inequities more urgent than ever. In the schools with few resources and intense needs, students often were already disengaged. Bringing them back will be an intense, multi-step process. 

“When you look at the impact of the last year, it’s devastating,” he says. “When the pandemic started, we had all these contact tracers. We need something like that — social workers and others to go out into the community and find our kids and understand their needs.”

‘This is our opportunity to fix it’

In 2007, following years of declining enrollment, school closures and poor academic results in Wilmington-area schools, lawmakers appointed a task force to consider potential solutions. Chief among its recommendations were an overhaul of the funding system and consolidation of the four districts created in 1981. 

Over the next decade, some 30 civic, education and nonprofit organizations signed on as members of the coalition Education Equity Delaware, as well as several other campaigns. Adding to the chorus of voices were members of the business community who saw a need for high school graduates with the skills to work in health care, technology and other growing sectors of the economy. 

There was bipartisan agreement that change was needed — yet it didn’t happen. Bills to change the system failed to gain support among lawmakers representing suburban Wilmington districts, who like the predictability of the unit-based system, and those representing the southern parts of the state, who felt the shift would direct a disproportionate amount of money to urban schools.   

And so, in 2018, 70 years after Bulah’s case was heard, the state’s NAACP and Delawareans for Educational Opportunity, a nonprofit made up of parents of disadvantaged students, sued the state and its three counties in the same Court of Chancery where Brown began.

“Delaware fails to provide all low-income children, children with disabilities and children whose first language is not English (collectively, ‘Disadvantaged Students’) with a meaningful opportunity to obtain an adequate education, one that will enable to them to participate as active citizens in a democracy, to be employed in a modern economy and to enjoy the benefits of our country’s social and cultural life,” the lawsuit asserted. 

DEO v. Carney Complaint by The 74 Media

The settlement announced Oct. 12 was widely celebrated as a good first step, but one that doesn’t address the structural problems. In 2019, Democratic Gov. John Carney asked lawmakers to approve a new financing mechanism called opportunity funding — extra money for disadvantaged children. Under the terms of the settlement, the size of this pot will more than double, reaching $60 million by 2025.

Totaling an extra $300 per low-income student and $500 for each English learner, the money is welcome even though it is just 4 percent of the state’s education budget. But it’s no substitute for overhauling the way schools are financed, educators and advocates say. 

A few days after members of the General Assembly approved the boost in opportunity funding, two dozen lawmakers, from both parties and both chambers, signed a resolution authored by Chukwuocha committing to taking up a comprehensive funding reform.

“WHEREAS, the COVID pandemic has exacerbated existing educational gaps and brought new attention to the need for racial justice in schools, beginning with, but not limited to, how schools are funded,” it states. 

“WHEREAS, there is a need to build upon the urgency of this moment. The confluence of the COVID pandemic and the movement toward racial justice require that we define a path forward for future generations that raises and allocates funding for schools in ways that are more flexible, transparent, equitable [and] based on the needs of students.”  

Chukwuocha is optimistic that this time, there will be a greater willingness to tackle the longstanding issues. In addition to the heightened awareness created by the pandemic, the lack of substantial funding for students learning English is a mounting problem for schools in Kent and Sussex counties, where the Latino population is growing rapidly. 

“I truly believe that the more work we put into it, the more we speak to lawmakers in other parts of the state, the more they see the need,” he says. “They had no idea what was really at play.” 

A return to the status quo, Chukwuocha concludes, would be a mistake:  “We have to have a new foundation. This is our opportunity to fix it. With that, Delaware will truly be what we say it is.”  

This article is part of a series examining COVID’s K-shaped recession and what it means for America’s schools. Read the full series here.

Disclosure: The Bill & Melinda Gates Foundation and Chan Zuckerberg Initiative provide financial support to Opportunity Insights and The 74.

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