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September 5th, 2008
How Do We Fund Our Schools?

Poverty must not be a bar to learning, and learning must offer an escape from poverty,”
– President Lyndon Johnson, 1965

It’s a little known fact that when it comes to the funding of our schools, the U.S. Government contributes about 10 cents to every dollar spent on K-12 education – less than the majority of countries in the world. And it wasn’t until 1965, when President Lyndon Johnson passed the Elementary and Secondary Education Act as part of his War on Poverty, that the federal government created a lasting program to fund K-12 education.

So where does the bulk of the money for our 14,000 public elementary and secondary school districts schools come from? State and local governments. According to the National Center for Education Statistics, state and local funding accounts for approximately 93 percent of education expenditures.

What’s the source of these funds? In most states, it’s sales and income taxes (both corporate and personal). But on a local level, these funds usually come from property taxes, which are set by the school board, local officials or citizens. It’s this system that causes the most dramatic differences between states, and even within districts.

Depending on the property wealth of a community, its schools might boast gleaming buildings and equipment, or they might be dilapidated – struggling with the burden of outdated equipment and unpaid bills.

According to the most recent Funding Gap report by the non-profit group The Education Trust, many states still provide the least amount of funding to school districts serving students with the greatest needs.

In 1999, for example, Illinois’ funding gap was the second-largest in the nation. By 2005, the Illinois gap was still the second-largest, and had gotten worse. Illinois is joined by Florida, Idaho, Kansas, Maine, Missouri, Nebraska, Nevada, New Hampshire, North Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia and Wisconsin at the top of the list of states in which the funding gap between high- and low-poverty districts grew between 1999 and 2005.

Jonathan Kozol, the education activist, teacher and author, famously described these “gaps” in his 1992 book Savage Inequalities: Children in America’s Schools. That same year, he told an interviewer: “We need to have urban schools that are so good that they will not be abandoned by white people, and this is impossible without equitable funding. Until we have equitable funding for our urban schools, there’s no chance in the world that white people in large numbers are going to return.”

These inequities have led to court challenges in almost every state. And in the majority of them, the court has ordered the states to overhaul their system to fund public schools more equally. These challenges began in the 1970’s, with a landmark case in California – Serrano v Priest (1971). In that case, the state’s high court ruled that a child’s access to public education cannot be based on the wealth of his or her parents.

In the past decade, the debate over school finance has grown as states have adopted performance standards, enforced by No Child Left Behind. Some argue that to meet higher standards, schools need more money. Others say that spending increases don’t always translate into higher performance, and that if more money in funneled into our schools – it must be well accounted for.

“Locally, if we just work on getting more money and use it the same old way without raising expectations or professional development, then there will be only modest improvement in the schools,” says Allan Odden, Professor in the Department of Educational Leadership and Policy Analysis at the University of Wisconsin-Madison.


Inside This Report

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