State Budgets & Education Funding

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State Budgets & Education Funding

The U.S. public education system is gigantic: 50 million students in kindergarten through high school. On average, the U.S. spends about $10,000 per student per year, or about $500 billion total. So lately I’ve become very interested in understanding where the $500 billion comes from, where it goes and whether it might be spent more effectively.

In turn, this has led me to try to understand state budgets, which is where the majority of school money comes from. States spend a lot of society’s public resources, but they’re facing tremendous budgetary pressures from the economic recession. Many have cut education funding. And although the economy and tax revenues may improve over the next few years, states face continuing fiscal pressures from rising pension and healthcare costs, which could squeeze out money for both K-12 and higher education. At best, funding for education is likely to be flat.

This will reverse the trend of the past 30 years, when education spending went up consistently, although student achievement for the most part did not. Now, the challenge is much tougher: to raise student achievement when the money available is not going up much and in some states even going down. We’ll need to be much smarter about how we spend education dollars.

That’s challenging for many reasons, including just the huge size of the education system and how decentralized it is. The challenge is even bigger because of the surprising difficulty involved in figuring out exactly what schools are spending their money on. Most schools don’t track their spending by academic subject or even on a per-school basis. As a result, their spending may not really be in line with their educational objectives, but they may not know it.

It’s extremely important that more people understand and get involved in the spending decisions of their states and their schools. The future of education depends on our making wise decisions about limited resources. A good, succinct book on the subject of education funding is Marguerite Roza’s Educational Economics: Where Do School Funds Go? Another good book that collects several experts’ perspectives on how to spend more effectively is Stretching the School Dollar.


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