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Money matters: basic facts

Nothing riles the U.S citizenry more than taxes—and how those taxes are spent. So are you ready to explain your district’s budget? With Americans culturally wired to question authorities’ fiscal decision-making, you should use this guide to educate yourself on where your schools get their funding, and why it gets divided as it does. Here are some key points.

  •  The federal government is not the biggest contributor to school budgets. On average, federal funds currently make up approximately 9 percent of a school district’s budget.
  • Each state determines how much it will contribute to its schools’ budgets, with percentages ranging from the low 30s to close to 90 percent of total K–12 funding. Most states then assign the rest of the responsibility to local school districts, which raise revenue primarily through property taxes.
  • School districts are seeking more private funding. School fundraising and independent teacher spending are two common occurrences. School education foundations, which are privately operated nonprofits, are growing in popularity. Increasingly, financial support is coming from grants (Gajda and Tulikangas 2005). But grants always have criteria that must be met, and grant money goes away.
  • Each state has its own way of divvying up money among districts. Most states have formulas that determine an amount of support for each student, which can vary by district or by type of student. These formulas often come under debate. Equity, which means distributing a given amount of money evenly among students, is an issue because many argue that relying on local property taxes leads to disparities from community to community. Adequacy issues, open-ended debates of what funding students need in order to succeed, have recently used student performance on state standards to argue whether state funding is adequate.
  • Every dollar a district receives is spent on a variety of instructional items, such as salaries for classroom teachers and for supplies and professional development. That education dollar also pays for essential non-instructional items, such as support and community services and transportation. See an example of how one state allocates its education dollar.
  • The American public is ambivalent about how and when to give money to schools. “In the end, Americans resist making hard choices to either limit education spending or raise additional revenue,” says a report from the Educational Testing Service. The poll reveals that the public is willing to devote more dollars to education, but citizens want to know that more money spent will result in a better education for all, and that more money spent won’t be more money wasted.

The references for the research behind the guide are on a separate web page .

This fact sheet is based on a guide written by Kathy Checkley, a freelance writer who lives in Austin, Texas. Kathy has over 13 years of experience writing about education issues.

Posted: July 10, 2008

©2008 Center for Public Education

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