All states have a formula that determines how state funding is distributed to school districts. Most state formulas anticipate or require that school districts raise some funds locally and adjust state allocations based on that anticipated local share of school funding. In theory, state funding formulas attempt to provide school districts with the resources needed for a high-quality education while also accounting for differences in student populations and economic conditions from district to district, among other factors. In practice, few state formulas achieve these goals, resulting in inequitable, inadequate, and inefficient spending. To better understand these disparities, it is important to understand how state school funding formulas typically work.