This brief describes how several commonly used per-pupil funding measures derived from federal data include passthrough funding in the numerator but exclude students attached to this funding from the denominator, artificially inflating per-pupil ratios. Three forms of passthrough funding for students not educated by the school district where they reside are included in district-level funding totals: payments to private schools (V91), payments to charter schools (V92), and payments to other school systems (Q11). We illustrate this error in Pennsylvania and New Jersey and use data from all 46 impacted states to show how racial and economic funding gaps are understated as a result.