How much more does a disadvantaged student cost?

This paper provides a guide to statistically based methods for estimating the extra costs of educating disadvantaged students, shows how these methods are related, and compares state aid programs that account for these costs in different ways. We show how pupil weights, which are included in many state aid programs, can be estimated from an education cost equation, which many scholars use to obtain an education cost index. We also devise a method to estimate pupil weights directly. Using data from New York State, we show that the distribution of state aid is similar with either statistically based pupil weights or an educational cost index. Finally, we show that large, urban school districts with a high concentration of disadvantaged students would receive far more aid (and rich suburban districts would receive far less aid) if statistically based pupil weights were used instead of the ad hoc weights in existing state aid programs.