Education Funding: State and Local Sources
Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016
State Education Funding
The states provide most of the funding that keeps public elementary through high school schools running in the U.S. They raise this money through a variety of means including various taxes. Some states raise money for education through state-sponsored lottery games. Doing so is somewhat controversial because, while the schools may benefit from the added revenue, some see the lottery as nothing more than state-sponsored gambling, a potentially addictive activity that particularly affects poorer individuals.
Each state has an Education Department that oversees state programs (such as state university systems) as well as individual school districts. In some states a governing body, such as the Board of Regents in New York, plays a significant role. The New York Board of Regents provides a series of examinations for students to establish proficiency in various subjects based on established state standards. Many students in New York receive a Regents diploma as well as their regular school diploma when they graduate high school.
State education funding can cause huge disagreements among communities with the state. The question state governments face constantly is how to distribute the revenues evenly to ensure that each school district gets its fair share. New York and Pennsylvania offer two examples of how state funds can be fought over. New York City holds nearly half the population of the state, yet it receives proportionally less per student from the state government than other districts in New York. Residents of upstate New York have little desire to see their state tax dollars sent to New York City schools, which they see as too bureaucratic and wasteful. Residents of central Pennsylvania feel the same about education expenditures in Philadelphia and Pittsburgh.
Urban and rural areas have separate needs and challenges. A large city may have an established infrastructure that allows its school officials to approach private companies for assistance. A local computer company may donate computer equipment to the city schools, for example. Yet city schools are often decrepit (many school buildings in New York City are heated by coal furnaces), classes are crowded, and teacher turnover is high. In rural areas, classes are unlikely to be overcrowded, and teachers may stay longer in one place. But having fewer students can also mean having access to fewer resources, and there may not be enough students in a given district to justify the expense of, for example, a special education program for developmentally disabled children.
Local Education Funding
Local sources of education funding make up nearly as much revenue as state sources. Local sources includes intermediate revenues from county or township governments, but the bulk of local funding comes from individual community school districts. Some of the local revenues come from sources such as revenues from student activities and food services. Most of the money comes from property taxes, which are raised to coverall community services as well as education. All homeowners pay taxes based on a local assessment of their houses. Local school budgets are mapped out by elected officials, including mayors and council members, as well as the local board of education. Residents are able to vote on local school budgets in regularly scheduled elections.
Funding schools with local dollars has benefits and drawbacks. The primary benefit of local funding is accountability. Taxpayers can see exactly how their money is being spent. They can see the new cafeteria at the high school, the new science lab equipment, the new textbooks. The local elected officials who submit school budgets to the voters know that if they fail to keep the promises they make, those same voters will remove them from office in the next election.
Members of the community also have more say in how local dollars are spent. Those who have children in the school system will be particularly interested in how tax dollars are spent. Some of them may become quite active in school affairs by participating in the Parents Teachers Association (PTA) or on the local board of education.
This arrangement can be a drawback to local funding as well as a benefit. Because members of the community know they have a say in the school budgetary process, they may be more likely to examine each expenditure carefully. This scrutiny is not the problem. What creates difficulties is when local residents perceive expenses as unnecessary. Those who no longer have children in the school system may be reluctant to see their property taxes increase for programs that will bring them little if any benefit. Senior citizens likewise may be reluctant to support tax increases (even though in many communities they get a property tax break). People who feel that teacher salaries are already too high or that the old gym is perfectly fine for the students or that new instruments for the marching band are an extravagance, may vote down any school budget increases.
Local elected officials need to be able to show community residents the positive side of education funding. Better-equipped schools attract better teachers. Better teachers prepare students better, and more students achieve success. This improvement in turn means more young families, since for young families the quality of the schools is the most important factor when they choose a place to live. As the community becomes more attractive to outsiders, property values will go up; often the rise in value far more than offsets the extra cost incurred by taxes.
Of course, higher property values may also mean higher tax assessments, so for the homeowner who has no children and who has no plans to move, the process of increased values may feel like a personal financial burden rather than tax dollars at work. For these and other reasons local education funding is more complex than it would appear to be.
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