Opinion: Want More Equitable School Funding? NBA Salary Caps Can Be a Model

Summer is an exciting time for NBA fans with a flair for analytics. The free-agency period has my news feed full of trades, signings and salary dumps. One aspect of professional sports leagues that has always fascinated me is the way they build in financial safeguards to increase competition.

Education finance could learn a thing or two.

Policymakers intent on providing high-quality schools for everyone typically face a familiar problem: Variability in property taxes allows wealthier communities to send much more money to their local schools than those in poorer communities. That extra investment translates into opportunities that lower-wealth schools simply cannot afford. Education leaders across the country have tried to fix this by filling holes with state dollars. But they are faced with a common challenge: If local spending on education in high-wealth communities keeps rising, the bar for state contributions to poorer communities moves with it.

Many professional sports leagues grappling with similar issues of inequality have found a solution in salary caps that curb wealth hoarding and reward competitiveness. In the National Basketball Association, the salary cap is a set dollar amount that all teams must stay under to avoid a financial penalty. If my beloved Atlanta Hawks spent $100,000 above the threshold, for instance, they would pay an additional $100,000 as a luxury tax. These extra dollars would then be distributed to teams that have not spent as much, helping to level the playing field.

What could this policy look like in education? Vermont already has one in place. 

Like many states, Vermont calculates and guarantees a baseline amount of funding required to educate a standard student (which is adjusted by increasing funding for disadvantaged kids). But beginning in 1997, Vermont lawmakers adopted an additional process called the excess spending adjustment. If a town votes to spend more than the baseline per-pupil funding amount, it triggers the state's version of the NBA's luxury tax. Wealthy towns can still raise more money for their schools, but are then required to pay higher rates created in the funding formula. In Fiscal Year 2026, six Vermont school districts exceeded the $15,926 spending threshold.

The additional tax revenue raised by property-rich towns is distributed to property-poor, rural school districts to ensure their students get a more equitable education. Three years into implementation, one report had found that legislative provisions including the excess spending adjustment had significantly reduced the relationship among property wealth, student resources and taxpayer burden. 

What stops other states from following in Vermont's footsteps? Policies like this do not come easily, and may require a shock to the status quo. The NBA salary cap and luxury tax were the result of difficult negotiations between the league and players. Vermont's school funding mechanism was passed in response to a state Supreme Court ruling that the state's previous education finance law was unconstitutional. Many wealthier residents expressed outrage at the new law — one going so far as to buy a car previously owned by one of the bill's chief sponsors, bringing it to the state capitol and urging passers-by to destroy it with sledgehammers to vent their frustration with the new law.

Interestingly, several of the wealthy property owners financially affected by the excess spending threshold are not eligible to vote in Vermont: Many of its property-rich communities are ski resorts filled with second homes of out-of-state residents. This politically advantageous fact, paired with provisions that provided 229 of the state's school districts with additional funding and only 23 districts with less, might help explain why the pushback was not strong enough to undo the law's sweeping changes. Howard Dean, the incumbent governor, faced an opponent who tried to center the law as her chief campaign issue. Dean handily won reelection.

Vermont is not alone in structurally tackling this issue. Texas has recapture , a state policy that requires wealthy school districts to send a portion of their local property tax revenue back to the state. In the 2024-25 school year, nearly $3 billion was returned to the state under the program.

Policy advocates interested in finance equity policies should study these two states, and consider how private giving might circumvent any progress. 

In my work for Brown's Promise , housed in the Southern Education Foundation, I regularly meet with education stakeholders across the country to imagine school funding and enrollment policies that undo the harm of intense segregation, specifically between districts. Income segregation leaves students in high-poverty schools with numerous challenges and few resources to meet them. Some state leaders treat the school district lines as impenetrable, for both students and dollars, leaving kids to the education provided by local property tax wealth. But every American has an affirmative right to public education, written into the state constitutions. Like the NBA power brokers of the 1980s and the Vermont lawmakers of the late 1990s, state legislators can work across lines of difference to devise a system where wealth hoarding is challenged. The ball is in their court.