Federal Government Becoming a Greater Funding Source for Local Schools

August 1, 2007

A new Tax Foundation Fiscal Fact released Monday analyzes the growing role of the federal government in local education spending. In particular, we highlight the fact that in 1999-2000, the average federal revenue per student sent to local school districts was $578. Five years later, following passage of No Child Left Behind, that number had grown to $919, amounting to a 39 percent increase when adjusted for inflation. Kansas schools saw the biggest increase—88 percent—while Arizona saw the smallest increase—15 percent.

Overall, in the 2004-05 school year, schools relied on the federal government for approximately 9.2 percent of their funds. Five years earlier, that number was merely 7.3 percent. New Jersey relies the least on federal funds, with just 4.4 percent of its education spending coming from the federal government. This is due to the state’s decision to spend more at the state/local level, as well as its high per capita income, which means fewer means-tested federal outlays.

New Jersey also spends the most per pupil: $14,117 in 2004-05. That’s nearly three times as much as the bottom state, Utah, which spent only $5,216 per pupil.

Nationwide, over the 20-year time period from 1984-85 to 2004-05, per pupil spending has averaged an increase of around 2.5 percent each year in real terms (i.e. adjusted for inflation). The states that increased their per-pupil spending the most in that 20-year period are Maine, Vermont, South Carolina, Alabama, and Georgia. Alaska, Oregon, Washington, Arizona, and Wyoming have seen the smallest growth in per pupil spending.

Click here to read the Fiscal Fact.

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