Public School Fund Investments: Where Does The Money Go?

Public schools in the United States are funded by a combination of local, state, and federal dollars, with state and local governments providing the majority of the funding. The federal government contributes around 8% of the funding, which goes towards specific grant programs for at-risk youth, including students with disabilities or from low-income households. States provide about 47-48% of the funding, which comes from income taxes, sales tax, and fees, while local communities contribute around 44-45%, primarily through property taxes. The allocation of funding varies from state to state and district to district, and there are efforts to address funding inequalities between schools in different communities. Additionally, there are nonprofit organizations, such as the Chicago Public Education Fund, that aim to improve public schools by investing in educators.

Federal grants for specific programs

In the United States, public schools for students in kindergarten through 12th grade (K-12) are financed through a combination of local, state, and federal funding. The federal government provides a small share of education funding through specific grant programs. These grants are designed to supplement funding for schools with at-risk youth, including students with disabilities or from low-income households. During economic downturns, federal spending has also helped supplement diminished school funding from state and local sources.

Federal funding programs for K-12 education include specific grant programs administered by the states to school districts. Federal dollars supplement state resources by narrowing funding gaps for at-risk students through programs such as Title I grants under the Elementary and Secondary Education Act (ESEA) and Part B grants under the Individuals with Disabilities Education Act (IDEA). Federal funds made up $119 billion or roughly 14% of total education funding during the 2022 fiscal year.

During the 2022 fiscal year, the federal government provided $12.5 billion in IDEA grants to states. These funds are awarded based on a state's total population with disabilities between the ages of 3 and 21, the percentage of those individuals living in poverty, and the state's IDEA appropriations in 1999.

In addition to these major grant programs, the federal government also provides funding for other specific programs. For example, the federal government allocated $29 billion for child nutrition, reimbursing schools that provided free or reduced-price lunches to eligible students. About $1 billion of federal funds went directly to school districts for various programs, including Impact Aid. The federal government also provided $0.7 billion for vocational programs.

The SchoolSafety.gov Grants Finder Tool is a useful resource for finding applicable funding opportunities for school safety-specific grants. The tool features a variety of Federally available grants that can be navigated based on school safety topics, award amounts, application levels of effort, and more. As Federal agencies release school safety funding opportunities and grants throughout the year, the tool is updated to reflect these opportunities.

State funding formulas

Nearly all states (46 out of 50) primarily allocate education funds through foundation program formulas. These programs establish a minimum level (or "foundation") of funding per student and ensure that each school district receives enough funding to meet that foundation. The funding provided through foundation programs may also take into account different student characteristics, such as family income and disability status, to ensure that at-risk students receive sufficient resources.

In addition to foundation program formulas, states may also allocate funding based on specific programs, sometimes using federal money for programs that are implemented at the federal level. For example, the federal government provides support for K-12 education through specific grant programs such as Title I grants and Part B grants under the Individuals with Disabilities Education Act (IDEA). These grants are designed to supplement funding for schools with at-risk youth, including students with disabilities or from low-income households.

Local property taxes

In most cases, local property taxes are levied on residential and commercial properties within the boundaries of a specific school district. The tax rate is typically determined by the local governing body, such as a school board or a city council, and is calculated based on the assessed value of the property. This assessed value is determined by a local assessor, who considers factors such as the property's size, location, and any improvements made, to establish a fair and accurate valuation.

The revenue generated from local property taxes is then allocated to the respective school districts, where it becomes a critical component of their overall funding. This funding is essential for covering a range of expenses, including teacher salaries, administrative costs, facility maintenance, and the purchase of educational resources and technology. By having a dedicated source of funding tied directly to the local community, schools can maintain a level of financial stability that is crucial for their long-term planning and success.

Moreover, local property taxes provide a measure of control and involvement for community members in the funding of their local schools. Homeowners and businesses have a direct stake in ensuring that their schools are adequately funded, as the quality of education can significantly impact the attractiveness and value of the surrounding area. This creates a sense of investment and encourages community members to actively participate in school board meetings, budget discussions, and other decision-making processes related to the allocation of tax revenue.

While local property taxes serve as a fundamental pillar of funding for public schools, they are often just one part of a broader funding structure. Additional sources of funding may include state and federal grants, income taxes, sales taxes, or other dedicated levies. By combining these diverse revenue streams, public schools can access the comprehensive financial resources necessary to provide a high-quality, well-rounded education to their students. This, in turn, fosters a well-educated populace that contributes to the social and economic advancement of their communities.

Private entities

Private donations to public schools can take the form of monetary contributions, but also include gifts of equipment, resources, or time. For example, individuals or businesses may donate computers, books, or other supplies to schools. They may also volunteer their time and expertise to support schools, such as through mentoring or tutoring programs.

Private funding can be crucial for schools, especially those in under-resourced areas, as it can help bridge the gap between the funding they receive from government sources and what they need to provide a high-quality education to their students. This additional funding can be used to support a variety of programs and services, such as extracurricular activities, field trips, or additional teaching staff.

However, there are also concerns about the influence that private donors may have on public schools. Some critics argue that private donations can create a sense of obligation or dependency on the part of the school, potentially influencing curriculum decisions or school policies. There may also be concerns about the transparency and accountability of private funding sources, particularly if they come with specific conditions or expectations.

Student characteristics

• Family income: Funding formulas often take into account the income of a student's family. Title I grants, for example, provide funds to school districts serving large shares of low-income students.
• Disabilities: Funding is also allocated to students with disabilities. The Individuals with Disabilities Education Act (IDEA) provides grants to states to support the education of students with disabilities.
• Foster care: Title I grants also provide funds to schools for children in foster care.
• Race: Students of colour are disproportionately affected by funding disparities. Districts in high-poverty areas, which serve larger shares of students of colour, receive less funding per student than districts in low-poverty areas, which predominantly serve white students.
• English language skills: Funding is provided to support the education of English language learners.

Frequently asked questions