State governments as a whole spend more than $500 billion a year on K-12 schools in the United States, according to a recent report from the National Working Group on Funding Student Learning, making education the largest expenditure in most state budgets.

Yet, the report notes, it’s difficult to figure out where all this money goes and how the amount spent contributes to student achievement. The report recommends overhauling school finance systems so that the resources can be better spent supporting the ambitious learning goals that the general public demands.

With the current downturn in the economy, school districts across the country are getting hit hard. Most school districts depend on state and local tax revenue, so when state and local budgets take a hit, so do schools. In addition, some school districts have been affected by problems in the financial sector. From Wisconsin to California, school districts have lost money because of the bankruptcy of Lehman Brothers and investment deals gone sour. These financial losses will mean larger class sizes, and cutbacks in programs, supplies and school maintenance projects.

School district spending data on GreatSchools school profiles, which comes from the National Center for Education Statistics (NCES), gives you information on the average amount of money spent per student in your district. You’ll find this information under the School Environment tab on the school profile.

What the data means

School finance data gives you an indication of how much money is spent per student in your district, and how this amount compares to the state average.

In most school and district budgets throughout the country, the lion’s share of the funding goes to instruction and instructional-related services, i.e., teacher and staff salaries.

What the categories mean

  • Instructional expenditures include costs related to teachers instructing students. This percentage includes teacher salaries, supplies such as textbooks, and purchased instructional services, libraries, curriculum development and training for staff and teachers.
  • Student and staff support includes the percentage of funds spent on the cost of health, psychological, guidance and therapy departments at a school. Staff support includes the cost of school libraries, media centers and training.
  • Administration costs includes expenditures for the administration of both schools and school districts. This would include expenditures on the board of education, the office of the principal, graduation expenses, as well as central office expenses such as budgeting, payroll, purchasing, planning and research.
  • The “other” category includes all other types of expenditures. Examples of costs in this category include operations (utilities, maintenance and security), food service, and the salaries of support staff such as bus drivers and cafeteria workers.

What to look for

  • Compare what your school or district spends to the state average. If your school or district spends less than the state average, you’ll want to dig deeper to find out why. When comparing averages for school-level expenditures, note that certain factors may affect comparisons, such as the experience level of teachers and administrators, the types of instructional programs offered and student characteristics. If you have questions or concerns, ask your school principal or school superintendent.
  • Consider the breakdown of expenses (instructional, student and staff expenditures, administrative and other) and compare these to the state average. If the school is spending less on instruction, for example, than the state average, that’s a red flag. You’ll want to ask your principal or superintendent why.
  • Find out how much your state spends on average to educate students, and compare that with the national average. The United States Census Bureau reported in 2006 (based on state-based data from 2004) that the national average was $8,287 per student per year. New Jersey was the highest with $12,981, while the state that spent the least was Utah at $5,008. If you are concerned about the level of spending on education in your state as compared to others, contact your state legislator and/or join with other parents to lobby for increased funding.

Questions parents should ask

Want to know more about where the money goes at your school and in your school district? Ask questions like these of your school administrators, school site council and local school board:

  • How does my school and my school district’s funding level compare to other schools and districts? To the state average?
  • How does my state compare to other states in school funding?
  • How much money does my school get from local property taxes and how does this compare to other schools in my state?
  • How much money does my school get from local sources (fundraising and grants)?
  • What effect will the downturn in the economy have on my school district’s budget?
  • If the state cuts school district budgets, what effect will it have on my school?
  • What kind of investment vehicles does the school district use to invest funds? Are the funds secure?
  • Does your state have a lottery that provides some funding for schools? Currently 24 states have lotteries where a portion of the money goes to schools and an additional 18 states have lotteries where the money goes into the general fund, where a portion may be used for schools. If your state has a lottery, how much revenue does the lottery generate and what is this money used for? How much does the revenue differ from year to year?
  • Are parents and community members active in raising funds for the school and the school district?
  • Does my school or school district have a nonprofit foundation dedicated to fundraising? How can I get involved?

Other factors to consider

  • While many states have made efforts to equalize funding among school districts, a 2006 EdTrust report notes that there are severe inequities among federal and state funding allocations, and within districts. Low-income and minority students suffer the most as less money is generally spent in schools serving the most disadvantaged students. “Fairer finance systems are not a silver bullet,” the report says, “but they are a first step toward the harder work of substantive education improvement.”
  • To further complicate the issue, a high rate of spending does not necessarily correlate with a higher level of student achievement. The District of Columbia, which ranks high in per-pupil spending, ranks well below average on the fourth grade National Assessment of Educational Progress (NAEP) in reading, a national test measuring student achievement, while New York, which ranks high in per-pupil spending, ranks well above average on the fourth grade NAEP in reading.
  • Finance is only one of many factors affecting student achievement, along with the quality of the school leadership and teachers, staff training, class size, aligning state standards to curriculum and accountability, and parent involvement. And certainly schools in more affluent communities, where parents and community members help to raise additional funds, are able to provide enrichment programs such as music, the arts, well-stocked school libraries, that less affluent schools generally can’t afford.
  • The report, Quality Counts 2006, found that factors such as per-pupil spending and student demographics had less of an impact on student achievement than a state’s history of raising expectations and standards.
  • While the majority of school finance systems are based on student enrollment, a handful of states including California, Kentucky, Idaho, Illinois, Mississippi, Missouri and Texas base funding on average daily attendance (ADA). ADA funding is designed to provide an incentive to get students to attend school on a regular basis. It can be problematic for schools, however, which may lose funding for reasons beyond their control, such as when there is a bad flu season or weather-related problem, which may keep large numbers of students from coming to school.
  • Many people hoped that state lotteries would provide additional funds for schools, but the reality is that lottery revenues do not help finance education in the long run. Often, when states rely on lottery profits, they divert general tax revenues to other areas; when gambling decreases, so do the proceeds to the state and lawmakers must raise taxes or divert funds from other areas to make up the difference.
  • School spending can be complicated to understand and it can be difficult to track where the money goes. “Getting Down to Facts,” a 2007 extensive research project examining California’s systems, called the current way the state distributes money to schools “complex and irrational.”
  • What’s a good school finance system? According to “Funding Student Learning,” a five-year, in-depth report on K-12 school funding from the National Working Group on Funding Student Learning released in October 2008, a good system would align money and resources with clear student-learning goals and outcomes rather than determining funding levels by individual school or district. The report indicated that most states need to fix their school finance systems because they no longer align with the results we expect from schools.
  • Why don’t the state and the federal governments spend more on education? They must deal with competing demands for funds along with such other priorities as health care, social services and transportation.
  • What can you as a parent do about the complicated school funding system? Ask your local school board how they analyze the budget. When it comes time to approve the annual budget, urge them to ask lots of questions of the superintendent, and ask questions yourself during the “public comment” part of the school board meeting. Join with other parents to lobby your state legislature to make school funding equitable among schools and simpler for citizens to understand.