Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016
Free education is actually not free after all. While America offers students a free public school system, revenue must still be raised to pay for public education in elementary through high schools. Taxes (from local municipalities, state and federal taxing entities) are often cited as a funding source for school districts. And that is often the case. This section addresses all manner of school funding issues, such as how schools are funded, criteria for funding, and ways funds are allocated. This section also provides information on options for student loan repayment, what to do when you can't pay back your loans, and more.
Federal Education Funding
Each state receives a different amount of federal funding for schools, which may be allocated differently from other states. State contributions may also vary significantly. Federal contributions can constitute a significant portion of the funds devoted to education within a state and changes in either state or federal funding can contribute to financial strains for schools. The federal government itself sees its role as a kind of emergency response system.
Federal contribution may be either direct or indirect. Part of the funding comes from the U.S. Department of Education, but other agencies such as the U.S. Department of Health and Human Services also provide funding through programs such as the Head Start program. The U.S. Department of Agriculture funds school lunches for students who cannot afford to pay for their own meals. Even with the participation of multiple agencies federal funding still accounts for less than 10 percent of school revenues.
Education Funding: State and Local Sources
State and local governments provide most of the funding that keeps public elementary through high schools running in the United States. States finance schools through a variety of means including various taxes and state-sponsored lottery games. Each state has a Department of Education to oversee state programs as well as individual school districts.
State education funding is a common source of disagreement among communities. Urban and rural areas tend to have separate needs and challenges, resulting in arguments about how funds should be distributed or used. Rural communities tend to view urban educational spending as overly bureaucratic and wasteful, while urban communities feel that their overcrowded schools require and deserve more funding than their more provincial equivalents.
Local sources of educational funding often account for nearly as much revenue as state contributions. These funds are typically drawn from property taxes, which are raised to cover a variety of community services in addition to financing education. Local funding helps accountability, though it can also result in tight fists when schools seek to improve their services, especially since school improvements may result in higher property values and higher tax assessments.
How is Money Spent on Education Actually Used?
Public education is one of the most expensive programs funded by state coffers. U.S. elementary and secondary schools spend hundreds of billions of dollars annually. These funds are spent on facilities, textbooks, supplies, and the salaries of teachers and staff. Although expenses vary greatly depending of the particular school, some standard expenses that nearly all schools must cover with their funding include the cost of:
- Operation and Maintenance
- Pupil Service Staff such as nurses and librarians
- Interest on Debt
- Instructional Equipment
Learn About School Funding
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