The Lingering Legacy of Redlining on School Funding, Diversity, and Performance

Abstract

Historically, the Home Owners’ Loan Corporation (HOLC) “redlined” neighborhoods, systematically disadvantaging low-income and minority communities in the United States. This study examines the enduring legacy of these discriminatory practices on modern public education, analyzing school funding, diversity, and achievement across 144 U.S. statistical areas. We find that the consequences of redlining persist today. Districts with a high concentration of formerly D-graded neighborhoods raise less local revenue and rely disproportionately on state and federal aid. Schools in these areas predominantly educate Black, non-White, and low-income students and post significantly lower average test scores. Because public education draws on neighborhood-based revenue and enrollment, the historic policies that shaped neighborhoods continue to shape educational outcomes today.