Education Funding

7 Ways the Federal Government Shortchanges K-12 Schools

By Mark Lieberman — July 12, 2022 9 min read
Conceptual Illustration of Government taking a big chunk of the money
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The federal government contributes roughly 8 percent of the $795 billion that annually goes toward educating the nation’s 50 million children. In many cases, however, the federal share falls short of its self-imposed targets, shortchanging schools on everything from high-need students and special education to facilities and school meals.

This shortfall will persist without more vigorous and reliable federal intervention, argue the authors of a new report on funding sources for K-12 schools.

Instead of asking school districts to rely on volatile state and local revenue, they say, the federal government needs to dramatically step up its investment in K-12 education and proactively establish funding programs that help schools during economic downturns.

The report, published by the Economic Policy Institute, was written by Sylvia Allegretto, a labor economist and research associate for the Economic Policy Institute; Emma García, senior researcher for the Learning Policy Institute; and Elaine Weiss, research associate for the Economy Policy Institute.

The trio dove into federal data on school finance from the last decade, and arrived at a few key findings:

  • High-poverty districts frequently get fewer dollars per student than low-poverty districts.
  • Economic downturns like the Great Recession in the late 2000s magnify those gaps.
  • Many states fail to cover districts whose local funding falls well short of adequacy.

The authors stop short of prescribing one specific solution, but suggest the possibility that federal relief aid automatically flow to schools when the U.S. economy passes a recession threshold.

“We are recommending that Congress establish a program that kicks in when needed, rather than waiting until a crisis and coming together to pass a large, responsive bill, which requires political negotiation and can thus take a lot of time,” the report reads. Models could include existing permanent federal programs for unemployment insurance and food benefits, rather than one-time stimulus packages like the CARES Act and the American Rescue Plan.

The report also makes the case that funding schools more consistently would help the broader economy, not just schools themselves. In 2021, the nation’s eight million public K-12 school employees made up roughly 5 percent of the nation’s workforce, and more than two-fifths of the nation’s workforce of state and local public sector employees. Keeping those people employed puts them in a better position to contribute to the overall growth and stability of the economy.

And yet, despite the extraordinary economic pressures that followed the Great Recession, state and local funds have made up an increasing percentage of overall K-12 revenue in the last decade.

Drawing from the new report and other sources, here are a few ways federal funding leaves schools in the lurch, regardless of who is president and which party is in power.

Students with disabilities

The Individuals With Disabilities in Education Act mandates schools to provide an educational experience for students with disabilities that’s equivalent to the one all other students receive. That often means schools have to invest substantial sums of money to hire specialized workers, construct suitable learning spaces, or even fully or partially pay for students’ tuition for off-site programs.

Congress in 1975 set a goal for the federal government to take care of those obligations to the tune of 40 percent of a district’s overall per-pupil spending. But the federal government has never come close to that target. Worse still, recent analyses show that IDEA funding puts students from large states and students from low-income families at even greater disadvantage.

Efforts to fix: IDEA hasn’t been reauthorized since 2004. Biden’s fiscal year 2023 budget proposal includes a suggested annual appropriation of $16.3 billion for the program—$3 million above current levels.

High-need students

Title I is the main federal grant program for public education, funded at $17 billion this year, that aims to offer funds to school districts with large proportions of students from poor families, as defined by the federal poverty level. But researchers have argued that many of the dense formulas that make up the program end up funneling inadequate amounts of money to the schools and students that need it the most.

A 2019 report commissioned by Congress found that two of the four component formulas of Title I allocate more money to children in wealthier districts than to children in poor districts—the exact opposite of the program’s intended purpose. Other research shows Title I funding recipients aren’t always the students and districts experiencing the most severe poverty.

Efforts to fix: President Joe Biden pledged on the campaign trail to triple Title I funding, but so far his administration has fallen well short of that goal. His proposed fiscal year 2023 budget would raise annual Title I funding to $36 billion. The administration last year proposed a new grant program within Title I fund to expand resources for high-poverty districts, but the executive branch has since tabled that proposal.

School facilities and infrastructure

There are no laws requiring the federal government to provide funds for school facilities. But the nation’s school buildings and surrounding infrastructure, including broadband connections, are woefully out of date, and many are unsafe for students and staff. The nation’s schools collectively require nearly $195 billion dollars each year for maintenance and upgrades, according to a 2021 report by several facilities research and advocacy groups, but spending annually falls $85 billion short of that goal.

The federal government could help close that gap, but advocates have struggled to get even a fraction of the needed investment. To fill the vacuum, many districts rely on issuing bonds that force them to pay substantial interest.

Eight states help districts pay for more than half the cost of upgrading school facilities. But around a dozen states offer districts nothing for construction and maintenance, and 10 more offer less than 10 percent of overall spending on K-12 facilities in their state, according to the 2021 report.

Efforts to fix: Biden in early 2021 proposed $50 billion in grants and $50 billion in bonds for school building improvements. But Congress abandoned that proposal during negotiations over its broader infrastructure investments.

School meals

During the pandemic, the federal government for the first time extended the option for all schools to offer free meals to all students, rather than charging some families based on their income. Nine in 10 schools took the government up on that offer—but late last month, it expired.

A handful of state legislatures recently passed legislation affirming universal school meals, but many have not.

The federal role in meal funding is particularly detrimental to Hawaii, where food costs far more than on the nation’s mainland. As a result, the federal government’s reimbursement rate falls well short of schools’ needs, according to a report from the Hawaii Appleseed Center for Law & Economic Justice. The state spends $20 million to $30 million a year making up the difference, instead of investing those funds in other priorities, the report says.

Efforts to fix: A bipartisan bill that passed Congress last month renewed the higher-than-usual federal reimbursement for school meals that came about during the pandemic, but failed to extend universal school meals past this summer.

English-language learners

The number of students who need help becoming fluent in English alongside their regular instruction has grown steadily during the 21st century, from 3.7 million in 2000 to nearly 5 million in the late 2010s, according to federal data.

Federal funding to support those students hasn’t caught up. In fact, the federal government appropriated more money for the Title III funding program for English-language learners in fiscal year 2010 than in 2019—despite the growth of the student population and significant inflation of costs in the intervening years. Meanwhile, a 2019 report from the Century Foundation argued that even the federal government’s authorized amount of funding for English-language learners wouldn’t be enough to fill the growing need for services and support.

Efforts to fix: The Century Foundation last year published a wide range of policy proposals that would target more resources to students learning English as a second language. Most have yet to gain traction at the federal level.

Schools on federally owned land

Districts on military bases and Native American reservations don’t have the capacity to generate revenue through property taxes like the vast majority of the nation’s local school districts. Some districts sit entirely on federal land, while others encompass both federal and private land.

The federal Impact Aid program emerged in 1950 under President Harry Truman to make up the difference in funding for districts that lack access to a tax base of any sort. Roughly 1,100 districts receive impact aid, with large concentrations of recipients in Alaska, Arizona, California, Montana, North Dakota, South Dakota, Virginia, and Wyoming.

But since the Vietnam War, the Impact Aid program has only received up to 60 percent of what would be necessary to adequately fund all the districts who receive it, said John Forkenbrock, executive director of the National Association of Federally Impacted Schools. Many federally impacted districts have needs that are distinct from typical districts, like having plenty of food and water on hand in case a nearby military base needs to lock down, or additional services for students who move frequently to different parts of the country.

Efforts to fix: Advocates perennially push presidential administrations to prioritize impact aid. A handful of Capitol Hill lawmakers with a significant proportion of constituents who attend federally impacted schools tend to advocate strongly for the program.

Students experiencing homelessness

All schools are required to comply with the federal McKinney-Vento Act, which mandates districts to transport students experiencing homelessness to and from their school of origin, waive paperwork requirements for families who might not have all the required documentation, and to partner with outside organizations to support students who lack a stable place to live.

With the number of students experiencing homelessness at an all-time high, those services aren’t cheap. The federal government supplies only roughly $75 per student of those costs, and it relies on flawed Title I formulas to distribute aid to schools.

Efforts to fix: The federal government supplied $800 million in emergency assistance to support students experiencing homelessness as part of the American Rescue Plan. But once those funds dry up, schools will have to turn to other sources to extend or deepen those services.


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