America has a proud tradition of providing a free education to its citizens, but the amount of money spent on public education varies widely from state to state, as it does from school district to school district. These differences affect quality, making it hard to provide equivalent educational opportunities for all students.

How are public schools funded?

Historically, public schools in America have been funded largely by local property taxes. Local revenues, however, have not kept up with the needs of the schools and have actually decreased in many states. This has been especially true in those states that have had 鈥渢axpayer revolts,鈥� such as California, where voters passed Proposition 13 in the late 70s, which led to a dramatic change in the funding structure for public education. To compensate for this change, the states have entered into the picture and backfilled these losses.

Despite all the media attention to federal programs like No Child Left Behind, the federal government does not contribute a large amount to running America鈥檚 schools. And the federal money that is given to schools often comes with strings attached.

How it all breaks down

On average, schools receive:

  • About eight percent of their funding from the federal government
  • Almost 50 percent from the state budget
  • The rest, about 42 percent, comes from local taxes.
  • However, keep in mind that no two states have the same funding systems.

Addressing funding disparities

In the past few decades, school financing systems have been scrutinized, revised and adjusted as the nation tries to address the problem of underfunded schools. Paying for schools with local property taxes has been one of the main causes.

Affluent communities can raise much more money through property taxes than less affluent communities, and consequently can attract better qualified teachers, build and maintain more attractive buildings, and pay for more programs and better instructional materials.

There are also differences in funding from state to state. Donna Kaufman, a mother of two children, and a transplant from California to New York, has had the opportunity to experience first hand the differences in per-pupil funding. The state of New York spends $13,703 a year per student, whereas California spends only $7,127 a year per student (according to 2004 data from the National Center for Education Statistics).

鈥淭here is a big difference between schools in California and schools in Long Island,鈥� she says. 鈥淚 volunteered twice a week in the children鈥檚 classrooms in California and when I was in there I was teaching children-pulling out the higher students and enriching them and pulling out the slower students and helping them. So I really was involved in teaching and that was the way the volunteering went. I participated in the classroom curriculum. In Long Island, there aren鈥檛 parent volunteers in the classroom. There are teachers鈥� aides and reading teachers coming in. So they supplement the classroom with professionals. I didn鈥檛 see that in California.鈥�

Class size is generally lower in Long Island as well. 鈥淚n elementary school it鈥檚 17 to 1,鈥� she says. 鈥淭hat鈥檚 not what we experienced in fourth grade in California where it went up to 30-something kids in a class. So the class size is smaller here and the lunch programs are more varied.鈥�

Spending on education

The ways states and districts choose to spend funds depends upon decisions made by state legislatures, school boards, and increasingly, the federal government. Educational expenditure is even more varied across the nation than funding is.

The best way for parents to understand how their school and district spends money is to participate in the decision making process by attending:

These are the main places where public education spending decisions are made.

Return on investment

A recent trend in school finance is the effort to link spending to test results. This is called return on investment, or ROI. For example, the Florida Department of Education Web site has a section that allows visitors to examine taxpayers鈥� return on investment in Florida schools.

School finance terms to know

The world of school finance is a complex, ever-shifting landscape. Knowing a few basic terms can be a big advantage to parents choosing a school and making their way through the public school system.

  • Categorical funds: restricted school district funds given to schools that can only be spent on specified programs.
  • Charter schools: public schools that have flexibility in structuring academic programs, hiring teachers and carrying out other functions. The degree of freedom that charter schools have differs by state. These are generally funded by a combination of public and private funds.
  • Free/reduced-price lunch program: A federally assisted meal program that provides nutritionally balanced lunches at low or no cost to eligible students. The number of students at a school that qualify for this program is frequently used as a measure of the school鈥檚 socioeconomic demographic makeup.
  • General fund: unrestricted money in school district budgets given to schools for general educational purposes.
  • Parcel taxes: voter-approved assessments on parcels of property that are used for general education purposes (as opposed to school facilities, which is what bonds pay for).
  • Parent association fundraising: parent groups often fill in the gaps in school budgets with fundraising. Generally this means that affluent communities raise more funds for their schools than poor communities.
  • Property taxes: taxes on local properties- this makes up a large part of a school district鈥檚 budget.
  • School bonds: voter-approved loans that are used to pay for school facilities.
  • School district foundations: private nonprofit groups that administer grants to school districts to help pay for 鈥渆xtras,鈥� and, in some cases, more substantial programs, such as music and libraries, that school districts would otherwise have to cut.
  • State lotteries: many states use these revenues to supplement public education funding; often this source of funding represents only a small percentage of lottery profits and is not a stable source of funding for schools.