School Funding

The disparate funding for public schools and between states and within metropolitan areas has turned some public schools into meccas for affluent students and others into decaying infrastructures with overcrowded classrooms and soaring drop-out rates.

Expenditures for public and private education, from pre-primary through graduate school, were about $508 billion for 1994-95. The expenditures of elementary and secondary schools were about $308 billion for 1994-95, while institutions of higher education spent about $201 billion.

Viewed in another context, the total expenditures for education were about 7.5 percent of the Gross Domestic Product (GDP) in 1994-95.

Expenditures on schooling are not equal from state to state. Some of the disparity can be explained by differing costs of educational input costs such as real estate and teacher salaries. However, when the numbers are adjusted to reflect regional wages and prices, there is still a large gap between state spending. Accounting for cost of living and price differences, New Jersey spent about twice as much as Utah per student. Within a state spending between districts also varies. In an “average” state about one student in eight would live in a district that pays $3,800 or less, and one student in eight lives in a district that pays $5,400 or more.

Spending per Pupil and Average Teacher Salaries in Selected States, 1993-1994
State Spending per Pupil Spending Rank Average Teacher Salary
New Jersey $9,429 1 $45,308
Alaska $8,501 2 $46,581
Connecticut $7,991 3 $49,500
New York $7,642 4 $46,800
Pennsylvania $7,583 5 $43,688
Oklahoma $3,889 46 $26,749
Alabama $3,815 47 $28,705
Arkansas $3,657 48 $27,873
Mississippi $3,297 49 $25,235
Utah $3,203 50 $28,056


School funding comes from a variety of federal, state, and city money pots. About 46 percent of public spending on elementary and secondary schools is derived from local government budgets. The size of the local tax base is one reason for the large disparity in spending.

In 1994-95, the estimated current expenditure per student in average daily attendance was $6,084. After adjustment for inflation, this represents an increase of 23 percent since 1983-84.

Compared to other countries, the United States spends the same amount per-student as France, less than Sweden and Canada, and more then Japan and West Germany. However, there is much range within the states. Alaska, Connecticut, New Jersey, and New York, for example all spend more than Sweden and Germany. Mississippi spends about as much as the countries who spend the least: Japan, Australia, Spain, and Hungary.

Another way of looking at the figures is to compute the amount of money spent on education as a percentage of the Gross Domestic Product in other G-7 countries. In the primary and secondary level, the United States and France spent about 4.6 percent of GDP in 1994-95. Canada spent 6.1 percent. Japan spent the least: 3.1 percent. The distribution of levels of expenditure across states and countries was quite similar. Montana, Canada, West Virginia, Vermont, and New Mexico had the highest levels of educational expenditure as a percentage of GDP (6.0 percent or above). The lowest levels were found in Japan, Nevada, West Germany, and Delaware (3.3 percent or less).

A third financial indicator, current public education expenditure as a percentage of total public expenditure, attempts to show what states and nations spend on education in terms of the size of their public sectors generally.

Finland, Canada, and the United States had the highest level of education expenditure as a percentage of total public spending among the countries represented here; West Germany and Italy, the lowest.

The U.S. states figures on this measure generally exceeded those of the countries represented here. Two-thirds of the countries reported levels of current public education spending as a percentage of all public spending to be lower than that of Virginia, the state with the lowest level.

While the average spending per pupil in a given state tells one story, the difference between districts within a state tells another. For example, average expenditure in New York in 1988 was $5,500 per child. In the suburbs, spending levels were $11,000 and higher in some areas. Obviously, some school districts are spending much less than $5,500 per student.

In 1990, writer Jonathan Kozol visited the Woodrow Wilson Public High School in Camden, New Jersey. In his book “Savage Inequalities,” Kozol describes a lab room with no equipment, a broken boiler, a computer room with 30 unusable computers– they were melted by the heat, and a 58 percent dropout rate. At the time, the state-wide average was $5,000 yearly on each student. The Camden school received $4,000 per kid. The same year, nearby Cherry Hill spent over $6,000 and Princeton spent over $8,000 per child. One of the most extreme case of disparate school funding was in San Antonio, Texas, where in 1989 district spending ranged from $2,112 to $19,333. The richest district drew property taxes on wealth totalling $14 million per student, and the poorest district drew property taxes on wealth totalling $20,000 per student.

Low income districts have gone to court challenging the existing system of school funding. The results have differed state-by-state. In 1989, a Texas court ruled that the differences in San Antonio went against the Texas State Constitution. The legislature has enacted an equalizing formula, but it contains many loop-holes. A task force set up by the Governor of Maryland in 1983 said 100 percent equality was too expensive. Maryland settled on a goal of 75 percent equality. California restructured its funding system so that in all but 5 percent of California, districts are within $300 of each other. However, legislators responded by placing a cap on spending. California, the eighth richest state, spends 3.8 percent of per capita income on education, making it the 46th in that category of spending ranking. Many affluent districts have formed tax-exempt foundations to make up for lost income.

There are no easy answers to the problems facing the U.S. public school system. But running away from the complicated details of school funding cannot help the debate. School vouchers and restructuring the Department of Education must be put in the context of already crumbling schools with classrooms overflowing with students and teachers lacking adequate books and basic supplies.

The table comes from Wright, John W., ed. 1994. The Universal Almanac, 1995. Kansas City, Mo.: Andrews and McMeel.

Statistics from the Department of Education’s National Center for Education Statistics.