State Funding for Education: A Path to Better High School Outcomes

State funding for education is an important financial resource that determines how well schools can provide quality education to students. This funding comes from state governments and is key to deciding what resources, programs, and opportunities high schools across the United States can offer.

How K-12 Education Gets Its Funding in the United States

K-12 education in the United States is funded through a combination of local, state, and federal sources. In fact, total spending for public K-12 education reached around $857 billion in the 2022 fiscal year. This shows just how much is invested in educating students from kindergarten through 12th grade. However, the majority of funding comes from state and local governments.

Local Funding

A big chunk of school funding comes from local governments, mainly through property taxes. In many cases, local funding usually makes up about 40% to 45% of a school’s budget. However, because this funding relies on local revenue, it usually means that wealthier districts can often raise more money for their schools than less affluent ones. This often leads to disparities in funding from one district to another.

State Funding

State governments contribute around 45% of the total funding for K-12 education. They use various formulas to decide how to distribute this money among school districts. These formulas often take into account factors such as:

• How many students are enrolled in the school district
• The specific needs of those students, including low-income backgrounds or special education requirements

Even with these formulas, some disparities can still exist due to variations in how states handle funding and local tax bases. Districts with smaller local tax revenue are more reliant on state and federal funding to bridge the gap.

Federal Funding

The federal government provides a relatively small portion—less than 15%—of K-12 funding. This money comes mainly from targeted programs designed to help schools with certain at-risk students. For example, Title I grants support schools that serve low-income populations or disadvantaged students. Similarly, Part B of the Individuals with Disabilities Education Act (IDEA) offers funds for special education.

State Funding Formulas for K-12 Education

State funding formulas are important for figuring out how much money each school district gets for K-12 education. These formulas are designed to distribute funds fairly, taking into account the unique needs of students in different districts. Here are some common types of funding formulas used by states:

1. Foundation Programs

Most states use what are known as foundation programs to allocate education funds. These programs set a minimum level of funding (or foundation) that each student should receive. This ensures that every school district gets enough money to meet basic educational needs. 

A base is established by the state for each student, but the foundation amount can also vary based on factors such as family income and disability status—whether students need special services. The goal is to make sure that at-risk students get adequate resources and the support they need.

2. Weighted Student Funding

In weighted student funding models, schools receive extra money for students who need more support, such as those from low-income families or English language learners. This approach recognizes that some students require additional resources to succeed and allocates funds accordingly.

3. Flat Grant Programs

Some states use flat grant programs, where each district receives a set amount of money per student, regardless of their specific needs. While this method is straightforward, it doesn’t always account for the varying challenges that different districts face.

4. Categorical Funding

Categorical funding provides additional resources for specific programs or services, such as special education or vocational training. This type of funding is often tied to specific requirements and is meant to address particular needs within a district. 

5. Local Revenue Adjustments

Many states adjust their funding based on how much local revenue a district can generate. For example, if a district raises a lot of money through property taxes, it might receive less state funding. This approach aims to balance the financial capabilities of different districts but can lead to disparities in funding.

6. Enrollment vs. Attendance Counts

States also differ in how they count students when determining funding. Here are the two main methods they use:

• Enrollment Figures: Some states count the total number of students registered in a school or district, regardless of whether they attend regularly. This method provides a broader picture of the student population.
• Attendance Data: Other states count only the number of students who are actually present on a given day. This approach focuses on the students who are engaged and participating in school. In many cases, this funding is adjusted mid-year or at the end of the year to account for the attendance rates.

This choice can impact how much funding a district receives, as the number of counted students directly affects how resources are allocated.

Why Does School Funding Vary So Much Between Districts?

Education funding can vary a lot between school districts, and a major reason is the large portion of funding that comes from local taxes. This means wealthier areas can raise more money for their schools while poorer districts struggle. When the economy takes a hit, these differences become even clearer. Wealthy districts often have stable property tax revenues, while those relying on state income taxes see more fluctuations.

Even within a district, how money is spent can vary significantly. Schools with more experienced teachers might get more funding for salaries, which can create hidden inequalities. While states try to distribute funds fairly, funding disparities still exist. These differences are influenced by local costs and how willing districts are to invest in education. Although federal funding has helped some disadvantaged students, it is still not enough to close the gaps entirely.

The Pros and Cons of Using Property Taxes to Fund Education

Funding education through property taxes has its benefits and drawbacks. Here’s a look at some of the advantages and disadvantages:

Advantages

• Stable Revenue Source: Property taxes give schools a steady source of funding. Since property values usually don’t change much year to year, this funding keeps coming in, even when the economy isn’t doing well.
• Local Control: Property taxes allow communities to have a say in how their schools are funded. Residents can participate in local elections and decisions about school budgets, promoting a sense of accountability.
• Higher Revenue Potential: Wealthier areas with higher property values can generate more tax revenue. This can lead to better-funded schools with more resources and programs.

Disadvantages

• Inequities Between Districts: When schools rely on property taxes, it can lead to disparities in funding. Wealthier districts can pull in more money, while poorer ones often find it hard to get enough. This can keep the cycle of disadvantage going.
• Regressive Nature: Property tax systems can be tough on lower-income individuals because they often end up paying a larger percentage of their income compared to wealthier people. This puts extra pressure on those who are already struggling.
• Pressure on Homeowners: If property values or tax rates go up quickly, it can really hit homeowners hard, especially those on fixed incomes. This might make people push back against tax hikes, even when those increases are needed to support schools.

Conclusion

School funding is important for making sure every child gets a good education. When schools have enough money, they can provide the resources, support, and opportunities that help students succeed. In addition to benefiting individual students, investing in education also strengthens communities and the economy. The challenge for districts is to leverage local, state, and federal funds to accomplish better student outcomes.

To boost educational success even more, schools should consider innovative solutions like TestHound. This software makes it easier to manage testing so teachers can focus on what really matters—helping students learn and grow. Adopting TestHound can help schools use their resources better and improve student performance.

If your school is interested in new ways to improve the learning experience for children, you may also be interested in automating tasks and streamlining processes so that your teachers have more time to teach. Education Advanced offers a large suite of tools that may be able to help:

• Evaluation: A solution for documenting every step of the staff evaluation process, including walk-throughs, self-evaluations, supporting evidence, reporting, and performance analytics.
• Pathways: A graduation tracking tool that enables administrators and counselors to create, track, and analyze graduation pathways, ensuring secondary students stay on track to graduate.
• TestHound: Our test accommodation software helps schools coordinate thousands of students across all state and local K-12 assessments while considering various accommodations, such as for reading disabilities, physical disabilities, and translations.