Public school funding in the United States

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Public schools in the United States of America provide basic education from kindergarten until the twelfth grade. This is provided free of charge for the students and parents, but is paid for by taxes on property owners as well as general taxes collected by the federal government. This education is mandated by the states. With the completion of this basic schooling, one obtains a high school diploma as certification of basic skills for employers. [1]

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The largest source of funding for elementary and secondary education comes from state government aid, followed by local contributions (primarily property taxes). [2] The public education system provides the classes needed to obtain a General Education Development (GED) and obtain a job or pursue higher education. [3] The education system can deem higher level courses unnecessary, therefore omitting these courses from public school curriculum. Though earning a diploma, students' education can be limiting, and most of the disadvantaged population includes those in a lower income city or neighborhood. Racial and ethnic minorities primarily comprise this population. As Kozol talks about in his book, Racial Inequality, school infrastructure and the surrounding neighborhoods play a big factor in funding allocation. Frequently, students drop out due to lack of support from parents or school faculty. [4]

According to a review of the economics literature by Kirabo Jackson, there is strong evidence of "a causal relationship between increased school spending and student outcomes. All but one of the several multi-state studies find a strong link between spending and outcomes – indicating that money matters on average... the robustness of the patterns across a variety of settings is compelling evidence of a real positive causal relationship between increased school spending and student outcomes on average." [5]

The National Center for Education Statistics reports that approximately 80% of school funding in years 2000-01, 2010–11, 2016-17 was dedicated to salaries and employee benefits. Salaries decreased by 7% and benefits spending Increased by 6% from 2000-01 to 2016-17.

Current expenditures per pupil enrolled in the fall in public elementary and secondary schools were 20 percent higher in 2016–17 than in 2000–01 ($12,794 vs. $10,675, both in constant 2018–19 dollars). Current expenditures per pupil increased from $10,675 in 2000–01 to $12,435 in 2008–09, decreased between 2008–09 and 2012–13 to $11,791, and then increased to $12,794 in 2016–17.

Capital outlay expenditures per pupil in 2016–17 ($1,266) were 10 percent lower than in 2000–01 ($1,412). Interest payments on public elementary and secondary school debt per pupil were 22 percent higher in 2016–17 than in 2000–01. During this period, interest payments per pupil increased from $312 in 2000–01 to $415 in 2010–11, before declining to $379 in 2016–17 (all in constant 2018–19 dollars). [6]

State and local role in education funding

According to the US Department of Education, the Federal Government contributes about 8% to funding US public schools. [7] To fund the remaining balance per student in the public education System, state and local governments are mandated to allocate money towards education. [8] The state allocates a percentage of its revenue, from sales and income tax, to use towards education. The funds that are set aside for education are determined by the State constitutions, Propositions, and the incoming Government officials. According to the National Conference of State Legislatures, States provide structure, equality, fiscal accountability, stability and support to the public education systems per state. Each state varies the level of support that the schools receive with the implementation of legislation. [9]

The Local government allocates education funding from the revenue generated by property tax and other fundraising efforts. Local officials have the ability to influence the rate of change of property taxes that are used to fund local expenditures, including education. [10]

Due to the varied levels of income throughout states and within local communities, education funding suffers from inequalities where some communities have excessive funding and others are lacking important resources to support students. According to the research on Equity and Adequacy in School Funding, “much of the current litigation and legislative activity in education funding seeks to assure “adequacy”, that is, a sufficient level of funding to deliver an adequate education to every student in the state.” [11] There are key factors in which states receive more funding, teacher salaries, employee benefits, cost of living, class sizes, and demographics. For example, Utah has the lowest state funding due to their demographics, and the fact that the state of Utah can not afford to let the average costs rise due to its immense young demographic, which is one in five residents attend public school. New York, on the other hand, has the highest ranking expenditures, twenty thousand per student including teacher salaries, and the cost of living, which is significantly higher than other states. [12]

There have been people protesting to change the amount of funding that schools get. One lawsuit has been going on from mid December 2021 to now (March 2022) to raise the amount of funding the Government gives to schools in Pennsylvania started by the Pennsylvania Association of Rural and Small Schools (PARSS).

Educational resource inequality

Because income and tax revenue varies so widely from district to district, the current school funding model has led to a huge disparity in the funding that schools in different parts of a single state receive. Primarily, schools in affluent areas receive more funding as compared to those located in low-income areas. Overall, this model presents a challenge to schools situated in low-income areas because performance measures can be tied to this funding approach. Low-income areas have comparatively lower property and income taxes hence affecting the funding of the schools. Poor school performance in low-income areas has a direct causal relationship with the low income and property taxes hence the need for a change in the approach to funding. A solution to the identified problem is to distribute wealth evenly to allow better funding models for public schools. Derisma (2013) claimed that “using state taxes to fund public education has the potential to create funding insecurities. To begin, state tax revenues are largely generated from income and sales taxes. Income and sales tax revenue are not stable sources and have the propensity to drop in times of recession” (p. 122). [13] The claim shows that funding insecurities in low-income areas are likely to inconvenience those living in those areas and children in school face the same issue.

On average, 8% of revenues are federal, 47% from the state, and 45% locally sourced. [14] Since 2008, states have reduced their school funding from taxes by 12%, the most pronounced drop on record. [15] The majority of targeted school funding reforms have been in response to court orders, often due to lawsuits. [16] Despite some efforts to improve school funding, 60% of schools report that their facilities need repair. [17]

School funding in the United States is unequal. Twenty-three states send more funding to their wealthiest districts; Pennsylvania sends 33% less to their high-poverty districts. [18] Only 1/5th of states spend more money on their neediest schools, half as many as did in 2008. [19] Despite receiving more money from the federal government, the majority of districts with Title 1 schools see unequal funding for staff and even less money for non-staff costs. [20] Minority students are disproportionately impacted as white students attend low-income schools 18% of the time versus 60% of the time for black and Hispanic students. [21] At the same time as funding levels have dropped and remained inequitable, the number of school fundraising organizations, such as Parent Teacher Associations, have risen by 230%, form 990 filings required for revenues above $25,000 have increased by 300%, and total revenues have increased by 347.7% to 880 million and low-poverty school districts receive a much greater level of these voluntary donations. [22]

Inadequate school funding has a disproportionate impact on low-income students and high-poverty schools. 14% of 4th graders at poor schools were at or above proficient in reading and 17% at math while in low poverty schools, more than twice as many were at proficiency or above in reading and 60% were for math. Additionally, graduation rates for high poverty schools are 68% compared to 91% for other schools, then the rate of college attendance is 28% versus 52%. [23] Low-income children are a full year behind by 14, and the total achievement gap between the richest and poorest 10% has grown by 30-40% in 25 years. [24]

Increasing school revenues by 10% would lead to an average of more years of education completed, future wage earnings increasing by 7.25%, and 3.67% less future poverty each year. For low-income students the impacts would be even greater as the amount of education completed increases almost twice as much and the future impacts include 9.5% higher adult wages and 6.8% lower poverty rates. A 25% increase in school funding would result in a complete elimination of the achievement gap between low and high income students. [25] Raising teacher pay not only results in a better overall quality and effectiveness of teachers, but also reduces the high school dropout rate. [26]

Related Research Articles

In the United States, education is provided in public and private schools and by individuals through homeschooling. State governments set overall educational standards, often mandate standardized tests for K–12 public school systems and supervise, usually through a board of regents, state colleges, and universities. The bulk of the $1.3 trillion in funding comes from state and local governments, with federal funding accounting for about $260 billion in 2021 compared to around $200 billion in past years.

<span class="mw-page-title-main">Fiscal policy</span> Use of government revenue collection and expenditure to influence a countrys economy

In economics and political science, fiscal policy is the use of government revenue collection and expenditure to influence a country's economy. The use of government revenue expenditures to influence macroeconomic variables developed in reaction to the Great Depression of the 1930s, when the previous laissez-faire approach to economic management became unworkable. Fiscal policy is based on the theories of the British economist John Maynard Keynes, whose Keynesian economics theorised that government changes in the levels of taxation and government spending influence aggregate demand and the level of economic activity. Fiscal and monetary policy are the key strategies used by a country's government and central bank to advance its economic objectives. The combination of these policies enables these authorities to target inflation and to increase employment. Additionally, it is designed to try to keep GDP growth at 2%–3% and the unemployment rate near the natural unemployment rate of 4%–5%. This implies that fiscal policy is used to stabilise the economy over the course of the business cycle.

<span class="mw-page-title-main">Government budget balance</span> Difference between revenues and spending

The government budget balance, also referred to as the general government balance, public budget balance, or public fiscal balance, is the difference between government revenues and spending. For a government that uses accrual accounting the budget balance is calculated using only spending on current operations, with expenditure on new capital assets excluded. A positive balance is called a government budget surplus, and a negative balance is a government budget deficit. A government budget presents the government's proposed revenues and spending for a financial year.

<span class="mw-page-title-main">1978 California Proposition 13</span> Ballot initiative which capped property tax at 1% and yearly increases at 2%

Proposition 13 is an amendment of the Constitution of California enacted during 1978, by means of the initiative process. The initiative was approved by California voters on June 6, 1978. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article XIII A of the Constitution of the State of California.

<span class="mw-page-title-main">Government spending</span> Government consumptions, investments, and transfer payments

Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or collective needs of the community, is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment. These two types of government spending, on final consumption and on gross capital formation, together constitute one of the major components of gross domestic product.

<span class="mw-page-title-main">Tax revenue</span> Income collected by governments via tax

Tax revenue is the income that is collected by governments through taxation. Taxation is the primary source of government revenue. Revenue may be extracted from sources such as individuals, public enterprises, trade, royalties on natural resources and/or foreign aid. An inefficient collection of taxes is greater in countries characterized by poverty, a large agricultural sector and large amounts of foreign aid.

Abbott districts are school districts in New Jersey that are provided remedies to ensure that their students receive public education in accordance with the state constitution. They were created in 1985 as a result of the first ruling of Abbott v. Burke, a case filed by the Education Law Center. The ruling asserted that public primary and secondary education in poor communities throughout the state was unconstitutionally substandard. The Abbott II ruling in 1990 had the most far-reaching effects, ordering the state to fund the (then) 28 Abbott districts at the average level of the state's wealthiest districts. The Abbott District system was replaced in 2007 by the New Jersey Schools Development Authority.

<span class="mw-page-title-main">United States federal budget</span> Budget of the U.S. federal government

The United States budget comprises the spending and revenues of the U.S. federal government. The budget is the financial representation of the priorities of the government, reflecting historical debates and competing economic philosophies. The government primarily spends on healthcare, retirement, and defense programs. The non-partisan Congressional Budget Office provides extensive analysis of the budget and its economic effects. It has reported that large budget deficits over the next 30 years are projected to drive federal debt held by the public to unprecedented levels—from 98 percent of gross domestic product (GDP) in 2020 to 195 percent by 2050.

A government budget is a projection of the government's revenues and expenditure for a particular period of time often referred to as a financial or fiscal year, which may or may not correspond with the calendar year. Government revenues mostly include taxes while expenditures consist of government spending. A government budget is prepared by the government or other political entity. In most parliamentary systems, the budget is presented to the legislature and often requires approval of the legislature. Through this budget, the government implements economic policy and realizes its program priorities. Once the budget is approved, the use of funds from individual chapters is in the hands of government ministries and other institutions. Revenues of the state budget consist mainly of taxes, customs duties, fees and other revenues. State budget expenditures cover the activities of the state, which are either given by law or the constitution. The budget in itself does not appropriate funds for government programs, hence need for additional legislative measures. The word budget comes from the Old French bougette.

<span class="mw-page-title-main">Act 60 (Vermont law)</span>

Act 60, known as "The Equal Educational Opportunity Act", was a Vermont law enacted in June 1997 by the Vermont legislature intended to achieve a fair balance of educational spending across school districts, independent of the degree of prosperity within each district. The law was in response to a Vermont Supreme Court decision in the Brigham vs. State of Vermont case, wherein the court ruled that Vermont’s then existing educational funding system was unconstitutional, because it allowed students in towns with higher total property values to receive a higher level of education funding per pupil than students in towns with lower property values. Act 60 was followed by Acts 68 and 130, which addressed some imbalances caused by Act 60.

<span class="mw-page-title-main">Poverty in China</span> Economic issues in China

In China today, poverty refers mainly to the rural poor. Decades of economic development has reduced urban extreme poverty. According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms, which still stands in 2022. The Chinese definition of extreme poverty is more stringent than that of the World Bank: earning less than $2.30 a day at purchasing power parity (PPP), Since the start of far-reaching economic reforms in the late 1970s, growth has fuelled a substantial increase in per-capita income lifting people out of extreme poverty. China's per capita income has increased fivefold between 1990 and 2000, from $200 to $1,000. Between 2000 and 2010, per capita income also rose at the same rate, from $1,000 to $5,000, moving China into the ranks of middle-income countries. Between 1990 and 2005, China's progress accounted for more than three-quarters of global poverty reduction and was largely responsible for the world reaching the UN millennium development target of dividing extreme poverty in half. This can be attributed to a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension. The World Bank Group said that the percentage of the population living below the international poverty line of $1.9 fell to 0.7 percent in 2015, and poverty line of $3.2 fell to 7% in 2015. At the end of 2018, the number of people living below China's national poverty line of ¥2,300 (CNY) per year was 16.6 million, equal to 1.7% of the population at the time.

The ability of the United States government to tax and spend in specific regions has large implications to economic activity and performance. Taxes are indexed to wages and profits and therefore areas of high taxation are correlated with areas of higher per capita income and more economic activity.

Education economics or the economics of education is the study of economic issues relating to education, including the demand for education, the financing and provision of education, and the comparative efficiency of various educational programs and policies. From early works on the relationship between schooling and labor market outcomes for individuals, the field of the economics of education has grown rapidly to cover virtually all areas with linkages to education.

<span class="mw-page-title-main">Social programs in the United States</span> Overview of social programs in the United States of America

In the United States, federal and state social programs include cash assistance, health insurance, food assistance, housing subsidies, energy and utilities subsidies, and education and childcare assistance. Similar benefits are sometimes provided by the private sector either through policy mandates or on a voluntary basis. Employer-sponsored health insurance is an example of this.

The hypothecation of a tax is the dedication of the revenue from a specific tax for a particular expenditure purpose. This approach differs from the classical method according to which all government spending is done from a consolidated fund.

In Louisiana, the Minimum Foundation Program is the formula that determines the cost to educate students at public elementary and secondary schools and defines state and local funding contributions to each district. Education officials often use the term "MFP" to refer specifically to the portion the state pays per student to each school district.

Educational inequality has existed in the Southeast Michigan area of the United States since the birth of institutional, urban schooling in the US. Inequality between lower and higher class districts have perpetuated divisions in educational opportunities and outcomes between Michigan communities, especially areas in and around Detroit, the state's largest city. According to a report by the Kerner Commission from 1967, "spending per pupil in Detroit suburbs was 27% greater than in the city and that spending since World War II had risen more in the suburbs than in the city. ." More recently, the economic decline of Detroit culminating in the 2013 Detroit bankruptcy has aggravated the educational tensions.

<span class="mw-page-title-main">Government spending in the United States</span>

Government spending in the United States is the spending of the federal government of the United States, and the spending of its state and local governments.

Poverty in Norway had been declining from World War II until the Global Financial Crisis. It is now increasing slowly, and is significantly higher among immigrants from the Middle East and Africa. Before an analysis of poverty can be undertaken, the definition of poverty must first be established, because it is a subjective term. The measurement of poverty in Norway deviates from the measurement used by the OECD. Norway traditionally has been a global model and leader in maintaining low levels on poverty and providing a basic standard of living for even its poorest citizens. Norway combines a free market economy with the welfare model to ensure both high levels of income and wealth creation and equal distribution of this wealth. It has achieved unprecedented levels of economic development, equality and prosperity.

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References

  1. ↑ "6 Reasons for Getting Your High School Diploma". WAHM.com. Retrieved 2016-02-26.
  2. ↑ https://fas.org/sgp/crs/misc/R45827.pdf [ bare URL PDF ]
  3. ↑ Walters, Pamela (2001). "Educational access and the state: Historical continuities and discontinuities in racial inequality in american education. Sociology of Education". Sociology of Education. 74: 35–49. doi:10.2307/2673252. JSTOR   2673252.
  4. ↑ Kozol, Jonathan (2005). The Shame of the Nation . New York: Crown Publishing Group. ISBN   978-1-4000-5245-5.
  5. ↑ Jackson, C. Kirabo (2018). Does School Spending Matter? The New Literature on an Old Question. Working Paper Series. doi:10.3386/w25368. S2CID   188117596.
  6. ↑ National Center for Education Statistics: The Condition of Education (Congressionally mandated annual report)
  7. ↑ "The Condition of Education". National Center for Education Statistics. April 2020. Archived from the original on August 25, 2013. Retrieved July 9, 2020.
  8. ↑ "Federal Role in Education". www2.ed.gov. 2017-05-25. Retrieved 2017-08-07.
  9. ↑ Legislatures, National Conference of State. "State Role in Education Finance". www.ncsl.org. Retrieved 2017-08-07.
  10. ↑ "Finance ~ How Do We Fund Our Schools? : Where We Stand". www.pbs.org. 2008-09-05. Retrieved 2017-08-07.
  11. ↑ Augenblick, John G.; Myers, John L.; Anderson, Amy B. (1997). "Equity and Adequacy in School Funding". The Future of Children. 7 (3): 63–78. CiteSeerX   10.1.1.838.5368 . doi:10.2307/1602446. JSTOR   1602446. PMID   10892466.
  12. ↑ Maciag, Mike (August 2016). "The States That Spend the Most (and Least) on Education". Governing.
  13. ↑ Derisma, Magda (2013). "Opposing Views: The Divide in Public Education Funding–Property Tax Revenue". Children's Legal Rights Journal. 34 (1): 122.
  14. ↑ McFarland, J., Hussar, B., Wang, X., Zhang, J., Wang, K., Rathbun, A., … Bullock Mann, F. (2018). The condition of education 2018. National Center for Education Statistics. Retrieved from https://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2018144
  15. ↑ Nelson, Ashlyn Aiko; Gazley, Beth (2014). "The Rise of School-Supporting Nonprofits". Education Finance and Policy. 9 (4): 541–566. doi:10.1162/EDFP_a_00146. hdl: 2152/61898 . S2CID   56446617.
  16. ↑ Baker, B. D. (2016). Does money matter in education? Albert Shanker Institute. Retrieved from http://www.shankerinstitute.org/sites/shanker/files/moneymatters_edition2.pdf
  17. ↑ Alexander, D., Lewis, L., & Ralph, J. (2014). Condition of America’s public school facilities: 2012–2013. National Center for Education Statistics. Retrieved from https://nces.ed.gov/pubs2014/2014022.pdf
  18. ↑ Brown, C, Sargrad, S, & Benner, M. (2017). Hidden money: The outsized role of parent contributions in school finance. Center for American Progress. Retrieved from https://www.americanprogress.org/issues/education-k-12/reports/2017/04/08/428484/hidden-money/
  19. ↑ Baker, Bruce D.; Farrie, Danielle; Sciarra, David G. (2016). "Mind the Gap: 20 Years of Progress and Retrenchment in School Funding and Achievement Gaps". Ets Research Report Series. 2016: 1–37. doi: 10.1002/ets2.12098 .
  20. ↑ Heuer, R., & Stullich, S. (2011). Comparability of state and local expenditures among schools within districts: A report from the study of school-level expenditures. U.S. Department of Education. Retrieved from https://www2.ed.gov/rschstat/eval/title-i/school-level-expenditures/school-level-expenditures.pdf
  21. ↑ Logan, John R.; Burdick-Will, Julia (2016). "School Segregation, Charter Schools, and Access to Quality Education". Journal of Urban Affairs. 38 (3): 323–343. doi:10.1111/juaf.12246. PMC   5015885 . PMID   27616813.
  22. ↑ Nelson, Ashlyn Aiko; Gazley, Beth (2014). "The Rise of School-Supporting Nonprofits". Education Finance and Policy. 9 (4): 541–566. doi:10.1162/EDFP_a_00146. hdl: 2152/61898 . S2CID   56446617.
  23. ↑ Sass, T., Hannaway, J., Xu, J., Figlio, D., & Feng, L. (2010). Value added of teachers in high-poverty and lower-poverty schools. National Center for Analysis of Longitudinal Data in Education Research. Retrieved from https://caldercenter.org/sites/default/files/1001469-calder-working-paper-52.pdf
  24. ↑ McCarty, Alyn T. (2016). "Child Poverty in the United States: A Tale of Devastation and the Promise of Hope". Sociology Compass. 10 (7): 623–639. doi:10.1111/soc4.12386. PMC   5589198 . PMID   28890733.
  25. ↑ Jackson, C. Kirabo; Johnson, Rucker; Persico, Claudia (2015). The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms. doi: 10.3386/w20847 .
  26. ↑ Baker, Bruce D.; Farrie, Danielle; Sciarra, David G. (2016). "Mind the Gap: 20 Years of Progress and Retrenchment in School Funding and Achievement Gaps". Ets Research Report Series. 2016: 1–37. doi: 10.1002/ets2.12098 .
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