Trends in Educational Funding - Public Schools: Where Does The Money Go?

The chart shows how America's school districts spend their money: 61% goes for instruction and 33% goes for support services. The statistics are not very enlightening. It would be more valuable to know how schools actually allocate their resources. Do they spend money on smaller classes and better-educated teachers — or do they mismanage and waste it, as news headlines allege? ("Bad bookkeeping: Missing and misspent school money," says the Detroit News. "Mismanagement and wrong priorities top issues for schools," says the Seattle Post Intelligencer.⁷)

The table below shows that more than 14,000 school districts are in operation and are allocating their resources in different ways. Margaret Hadderman cited studies of resource allocation.⁸ One found that the New York State system increased spending on special education by 55% between 1983 and 1992, while spending on science and math teachers increased only modestly. A study of 1,000 California schools revealed a similar pattern. A Chicago study found that thriving schools spent more for instruction, while poorer schools spent more on noninstructional items like security.

Hadderman says that teacher salaries (more than 60% of most school budgets), increased nearly 21% from 1981 to 1990, then declined for most of the 1990s. She reports that money spent on maintenance declined from 14% of budgets in 1920 to 9.6% in 1960 and 3% in 1992. This trend cannot continue. The average age of America's public schools is 42, says the NEA. The General Accounting Office estimates that more than 14 million children are being taught in schools that need major repairs, especially schools in inner cities and those with more than 50% minority enrollment. NEA estimates $322 billion is needed to update and repair schools. Major construction projects are already underway in DC ($2 billion) and Detroit ($1.5 billion).

California, home to the nation's largest school system, must contend with an enrollment of one-quarter limited-English-proficient students (the number of these students, most of them Hispanic, doubled to 5 million in the 1990s). All school districts say new technology drives up costs. The number of special education students is growing faster than that of general students, and federal law requires that every special education student must be provided with a free, appropriate education regardless of cost to the district.

School administrators complain that after mandating special help for children with disabilities, neither federal nor state governments provided sufficient funds. The Center for Special Education Finance estimates that it costs 128% more to educate a special ed student. Expenditures rose from $19.3 billion in 1987 to $32.6 billion in 1995. In school year 1998-99, $49.2 billion was spent (Hadderman; states paid 38.8% and local districts paid 53.9%). (See Chapter 13, "Special Needs.) Spending for technology nearly doubled between 1991-92 and 1996-97, from $2.1 to $4.1 billion.

School District Expenditures per Student: 1996-97

	Expenditures
District characteristic	Total	Instruction	Support services	Capital outlay	Other	Number of districts
Total	6,555	3,473	1,876	617	589	14,493
Metropolitan status
Primarily serves a central city	6,742	3,607	1,958	567	610	709
Serves a metro area, not a central city	6,711	3,526	1,920	677	588	5,751
Does not serve a metro area	5,952	3,168	1,663	558	564	8,033
Children in district below poverty level
Less than 2%	7,080	3,753	2,074	639	614	3,535
2%-9%	6,912	3,631	1,961	701	618	3,623
10%-19%	6,075	3,184	1,729	619	544	3,618
More than 19%	6,422	3,459	1,844	529	590	3,717

The table shows how public school expenditures vary depending upon the district's poverty level and metropolitan status. School districts with the smallest percentage of students below the poverty level spend more on their students than districts with more poor students. Expenditures are highest in central cities, where living costs are higher.

Sources: U.S. Bureau of the Census. Statistical Abstract of the United States 2001. 121st ed. Table 241. Online. Available: http://www.census.gov/govs/www/school.html. Margaret Hadderman. "Trends and Issues: School Finance." Online. Available: http://eric.uoregon.edu/trends_issues/finance/. May 1, 2002. Jay G. Chambers et al., "What are we spending on special education in the U.S.? Center for Special Education Finance Brief No. 8 (February 1998). Online. Available: http://csef.air.org/papers/brief8. May 1, 2002. "School Facilities: America's Schools Report Differing Conditions (Letter report)." 14 June 1996. GAO/HEHS-96-103. Online. Available: http://frwebgate6.access.gpo.gov/. May 6, 2002.