FACTS ON POLICY: School Funding Shift

October 10, 2006

U.S. public school funding was once primarily financed locally but over time it has shifted toward state and federal funding.

• During the 1920s, less than 1 percent of public school funding came from the federal government. Local governments provided the majority of funding—more than 80 percent—with state government providing the rest.
   
• In the 1930s, states began to play a much more active role in school funding, nearly doubling their relative contribution, from 17 percent in the 1920s to 30 percent.
   
• By the late 1970s, states had surpassed local governments as the largest contributors of public school funding, providing more than 45 percent.
   
• The federal role in financing remains small; after peaking in the 1970s, it has hovered around 7 percent for the past twenty years.
   
• In 2004-5, the funding distribution among federal, state, and local sources was 9 percent, 48 percent, and 43 percent, respectively. However, the distribution fluctuates greatly among states; in 2004-5, local funding of public schools ranged from 85 percent in the District of Columbia to 6 percent in Vermont (and even lower in Hawaii, where there is only one school district*). Likewise, state funding ranged from 86 percent in Vermont to 30 percent in Illinois; federal funding also ranged from slightly more than 16 percent in South Dakota to less than 3 percent in New Jersey.

(*In Hawaii, local and state funding are virtually indistinguishable.)

With the movement toward state and national public school funding, control of public schools has followed the money, transferring from the local community to state capitals and the U.S. Department of Education. Federal and state agencies have also become more involved with administrative and legislative decision making.

Figure 1
Distribution of Public School Funding Sources, 1920-2000 (in percent)

Sources:

• National Center for Education Statistics, Digest of Education Statistics, 2004, Table 153: Revenues for public elementary and secondary schools, by source of funds: Selected years, 1919–20 to 2001-02.

• National Education Association, Rankings and Estimates: Rankings of the States 2004 and Estimates of School Statistics 2005. Note: all figures given for 2004–5 (both the text and in the quiz) are estimates.

Related Links and Material:

• Hanna Skandera and Richard Sousa, School Figures: The Data behind the Debate, (Hoover Press, 2003).

Quiz Source Information:

• same as fact.