Financing of Schools

The federal, state, and local income streams help in the financing of schools. Generally with some strings attached and in a marginal way, the federal government contributes to the funding of local school systems. Local education agencies also rely on the state to shoulder part of the education finance burden, a burden that differs dramatically depending on what state you reside in and how steady the income stream is that funds the educational initiatives of that state. On the local level, funding for schools is obtained through the assessment of property taxes, and bonds are typically issued to cover additional expenses not usually covered by property tax revenues, such as the building of a new school. These funding sources for education are not permanent and are subject to fluctuation when the economy dictates.

The economy drives the amount of revenue available to state and local education systems to disburse for education. A strong economy implies that more money is available to more fully fund educational initiatives statewide. With many states lacking what amounts to a “rainy-day fund,” weak economies demand that state funding for education get cut or “prorated.” This trickle-down system of funding passes these deficits down to the local education agencies, making budgeting for education difficult and unpredictable for administrators on all levels. When funds are cut statewide, difficult financial decisions must be made, often leading to diminishing returns for student learning outcomes.

Economics plays a role at the local level as well, affecting the quality of the education that is provided for the community. Gross inequities in education still exist between school districts due to differences in property tax income at the local level. There remains a serious educational disparity between “the haves and the have-nots”: those students who live in heavily populated, wealthier school districts versus those who live in more rural, less populated, and poorer areas. Higher property taxes means that there is more money to spend per student in wealthier systems, so the education these students receive is generally superior to the one that students receive in poorer areas. Many smaller systems have been forced to close their school doors when the money wasn't there to pay the bills.

School reform and school finance reform are inextricable connected. True school reform will not be possible without an equitable funding system for all schools, but it is a complicated task that cannot be fixed by the stroke of a lawmaker's pen. In many cases, it involves the revision of the state constitution altogether.