How Does Education Funding Differ Across States In The United States?

In the United States, funding for public schools K-12 is a mix of local, state, and federal money. Each state decides how much they will provide from these sources. This leads to big differences in how much money each student gets for their education. In 2021, the total spent for this kind of schooling hit $795 billion. This was the ninth year in a row to see an increase.

The federal government helps out by offering grants and special programs like Title I and IDEA. These are for students who might need a bit more help. States have their ways to divide up cash for schools, all to try and make things fair.

Local areas depend a lot on property taxes to fund their schools. This can make the money gap between rich and poor neighborhoods even bigger. It’s a big reason why funding isn’t always equal.

All kinds of things affect how money is spread in education. Things like what students need, what the school district is like, and the things money has to buy determine this. Trying to make sure everyone gets a fair shake is hard work. Overcoming these challenges takes smart planning. The long-term result of good education spending is worth all the effort.

Key Takeaways

  • Education funding in the United States is a complex system involving local, state, and federal sources, with varying proportions across states and districts.
  • The federal government provides targeted grants and programs to supplement state and local resources, particularly for at-risk students.
  • States employ various funding mechanisms and formulas to distribute education dollars, often aiming to address inequities in locally-raised revenues.
  • Disparities in education funding can be attributed to factors such as student characteristics, district characteristics, and the cost of educational resources.
  • Challenges in equitably distributing funding, the impact of economic conditions, and the long-term effects of adequate education investment are key considerations in understanding education finance in the United States.

Education Funding Sources

Schools get money from the government at the federal, state, and local levels. They also collect funding through local property taxes. Once funds come in from these sources, they are distributed to each school within the district. This helps pay for teachers, administrators, and school supplies, ensuring each student gets what they need.

Local Funding

States use special methods to try and spread education money fairly. They work with what they have, considering the money raised locally and student needs. Often, districts with less local money get more state support. This is especially true for areas with many students who need extra help, like learning English, and those with lower family incomes.

State Funding

The federal government also pitches in for school funding through special grants. These funds help bridge the gap for students at risk, thanks to programs like Title I and IDEA. In 2021, the federal share of total education funds was 11 percent, reaching $85 billion. This was more than in 2020, mainly because of support during the COVID-19 pandemic.

Federal Funding

The federal government aids in education via grants handled by the states. These grants, like Title I and Part B under IDEA, support students in need. In 2021, federal funding grew to $85 billion, making up 11 percent of all funds. This increase was mainly due to help during the COVID-19 crisis.

Education Funding Models

education funding models

Recently, many school districts have changed how they budget. Instead of giving each school a set portion of resources, they’ve started using a system that looks at what each student needs. This method is called weighted student funding. It tries to match resources with the specific needs of students. The idea is to make the process clearer and fairer by showing where the money goes.

Some places, however, have rules that stop this new way from working everywhere. And, because this method is still quite new, we don’t know all of its effects yet. But, it’s gaining interest among schools for trying to ensure fairness and better use of resources.

Student-Based Funding Model

Some states decide education funding by the resources schools get, like teachers or books. This way is not about the students themselves, but about what the schools need to teach. The aim is for all schools to have what they need for quality education.

Resource-Based Funding Model

Other states, however, use a mix of the first and second ways. They give a set amount of money per student but also adjust this based on things like the student’s or district’s situation. It’s called a hybrid model. This method tries to be fair and make sure schools have enough funding for a good education.

Hybrid Funding Model

Base Funding Amount

At least 32 states and Washington D.C. promise a base amount for each student. This amount comes from the education budget and school finance models. It ensures every student gets a fair share, no matter where they live.

This money is the base funding amount for all school budgets. Its goal is to balance funds between rich and poor districts. By doing this, each student can count on certain resources and programs for their learning.

In setting this base amount, states aim for fairness. They want a clear, fair way to allot money that’s based on students’ needs. This means less reliance on local taxes that can lead to unequal opportunities for students.

Student Count for Funding

student count

When it comes to education funding formulas, states have their unique methods. They decide how many students to include in their count. This choice can really change the budget allocations and funding mechanisms supporting student aid, funding sources, and many funding initiatives across the nation.

Enrollment-Based Student Count

44 states and the District of Columbia count students through enrollment. They may tally students on a single day, multiple days, or use an average for the year. The aim is to fund districts based on the number of students they take care of, not just those who show up.

Attendance-Based Student Count

Six states count students for funding based on their daily attendance. They give money according to the actual number of kids at school, hoping to push districts to improve attendance.

Funding for Special Student Populations

Funding for special student populations

States have set up special ways to give more money for students with different needs. These extra funds are to make sure everyone gets what they need to do well in school. It’s all about making things fair for every student.

Special Education Funding

Every state gives out special education funding to help students with disabilities. This money comes from a careful plan. It looks at things like how many students need help and what kind of help they need. The federal government also helps with the money through the Individuals with Disabilities Education Act (IDEA) – they gave $11 billion in 2021.

English Learner Funding

Almost all states help with funding for students learning English. The extra money is for special classes and services. These help students to learn English well and do good in school.

Low-Income Student Funding

A lot of states help with funding for students from low-income families. They give out this money through programs like Title I. This helps schools with many poor students get what they need.

Gifted and Talented Student Funding

Over a third of states offer funding for gifted students. This money supports special programs and services for these top students.

Funding for District Characteristics

Small and Rural District Funding

In many states, special funds are given to small and rural schools. These funds help cover the higher costs they face per student. They look at the school’s size, how many people live nearby, and how far it is from other schools. This extra money is meant to make sure kids in remote areas get the same chances to learn and grow.

This extra funding is very important for fairness in school budgets and spending on education. It helps to level the playing field, making sure every student gets a fair shot at a good education. It’s all about giving every school enough money and resources, no matter where they are or how big they are.

Disparities in Education Funding

In the United States, school funding varies a lot. This happens both between different districts and within the same district. These differences mean some students may not get the education resources they need.

Wealth Disparities Among Districts

About 40 percent of public education funding comes from local taxes. Thus, schools in richer areas often get more money. If a district has more valuable homes, they usually collect more taxes. This allows them to spend more on their schools.

When the economy goes bad, these differences become even clearer. Richer districts see stable tax revenues. But poorer ones, which depend on state funding, can struggle. This results in some states spending more money on each student than others.

Racial Disparities in Funding

The history of keeping neighborhoods white through laws affects school funding today. These laws are from a long time ago. They stopped people of color from living in certain areas. Even though these laws no longer exist, their effects are still felt.

In 2019, EdBuild found that schools in nonwhite areas got $23 billion less in funding. This was compared to schools in white areas. Both served the same number of students. This shows how these old laws still influence education today.

Funding Disparities Within Districts

Within the same district, schools don’t always get the same amount of money. This is even with rules in place to distribute funds evenly. One reason for this is how resources are given out, not just money. If a school gets teachers with more experience, it might seem like they’re getting more money.

Impact of Economic Conditions

State money plays a big role in evening out funding disparities. However, this money can change a lot during recessions. This can then lower the funds given to important areas like education. During the Great Recession, from 2007 to 2009, federal aid went up to make up for states having less to spend.

When things started looking up and the economy recovered, the extra federal help went down. But, when this federal funding during downturns stopped, states hadn’t raised their education spending back up. Even by 2019, 17 states were spending less on education than in 2008, once you adjust for inflation. This is according to the Pew Charitable Trusts.

Federal Aid During Downturns

Federal support goes up to help when states have less money. But when the economy got better after the 2007-2009 recession, the extra help from the feds went down. Unfortunately, states didn’t fill this gap in funding for education. In 2019, the Pew Charitable Trusts found that 17 states were spending less on education, even when you adjust for inflation.

Education Funding Trends

education funding trends

Over the past century, we’ve seen a big change in how schools get their money. Back then, most money came from local places. But now, most is from the state and the government itself. The federal part of education money has stayed about the same in the last 40 years.

COVID-19 Impact on Funding

When COVID-19 hit, the federal government sent an extra $190 billion to help out. This money was for K-12 schools and was triple what it had been in the previous year. It was meant to help schools deal with the pandemic and keep learning on track. But, this heavy federal help is not likely to continue after things get back to normal.

Also Read: Adult Education: Unleash Your Potential, Anytime, Anywhere


Funding K-12 education is vital for our country’s future. The mix of money from local, state, and the federal level causes big differences in what each student gets. Tackling these differences and making sure everyone gets a good education is hard for those in charge and for those who care about education.

The issue of K-12 education funding goes further than just schools. It affects how students get support with student loans, grants, scholarships, and tuition fees. As the ways we pay for education change, working together to find new ways to help students financially is key. We want to make sure all students can reach their education goals.

Getting the right amount of money for K-12 education, and making sure it’s fair for everyone, is crucial. It helps kids learn and grow, and keeps our neighborhoods strong. The path forward might be tough, but a strong focus on top-notch education and fixing how we fund it can make a big difference. This way, all children will have the tools they need for success.


What are the primary sources of education funding in the United States?

Education funding in the United States is from local, state, and federal money. Local taxes, like property taxes, primarily fund schools in your area. State money comes from different methods and is shared out using certain rules. The federal government helps with extra money through grants like Title I and IDEA.

What are the different education funding models used by states?

States have a few ways to fund education. This includes how the money gets to the schools. Some states focus on needs of students and give money this way. Others look at the resources schools require. Some places use a bit of each method.

How do states ensure a minimum level of funding for all students?

States often have a basic amount of money they give per student. This is called the “base amount.” It helps make sure every student gets at least a certain amount of money. It doesn’t matter if their school district is rich or not.

How do states count students for funding purposes?

States normally use the number of students enrolled to figure out funding. This is regardless of whether they show up to school every day. But, some states track the actual times students are in school to decide funding.

How do states provide additional funding for special student populations?

Extra funding is set aside for certain students like those who are special needs or learning English. This also includes those from low-income families and kids who are gifted. This special funding looks at how many students need help and what kind of help they need.

How do states provide funding for small and rural school districts?

Small or rural schools might get extra help to handle their unique challenges. This is because it costs more to educate students in these areas. Funding usually considers things like school size, how close students live to each other, and how far schools are from each other.

What are the main disparities in education funding across the United States?

Differences in how much money is available can create big gaps in education. This often happens because some school areas are richer or poorer. Racial segregation and how money is divided within districts also play a big part. This can mean very different chances for students, even within the same state.

How do economic conditions impact education funding?

When the economy is bad, less money is available for schools. Even though the federal government helps more then, it might not be enough. So, schools can still have less money to work with as things pick up again.

What are the key trends in education funding over time?

More of the education money comes from states now than before. Over the last 40 years, how much the federal government helps has stayed about the same. The COVID-19 pandemic made the federal government give more emergency money to schools.

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