Education Funding

What New School Spending Data Show About a Coming Fiscal Cliff

By Mark Lieberman — May 07, 2024 4 min read
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Schools stand to lose a significant chunk of revenue when federal COVID-relief aid expires.

That’s one of the takeaways from a new batch of federal data illustrating the money schools received (revenues) and the money they invested (expenditures) during the 2021-22 school year—the second full one after the start of the COVID-19 pandemic.

The data come from the results of the Common Core of Data National Public Education Financial Survey, which annually collects data from school districts nationwide.

The numbers, published on May 7 by the National Center for Education Statistics, a research arm of the U.S. Department of Education, lag present-day conditions by two school years.

Still, they offer a snapshot of America’s investments in public school during an especially tumultuous period, when students nationwide had generally returned to school buildings full time, and academic recovery and related challenges such as chronic absenteeism were proving especially daunting.

On average, America’s K-12 schools spent $15,591 per student, up nearly $800 compared with two school years earlier when adjusted for inflation.

Those figure perennially vary from state to state. In Utah, schools spent roughly $9,500 per child on average, while the comparable figure in New York was more than $29,000.

Schools in states including California, Louisiana, and North Carolina spent between 6 and 7.5 percent more per student in 2021-22 than they did the previous year. By contrast, spending per pupil dropped slightly more than 4 percent in states including Maine, Montana, and Wyoming.

The new data also preview challenges school districts are already bracing for in the coming months and years.

The emergency aid that drove the federal government’s biggest-ever single-year contribution to education funding is set to expire in just four months.

Some states are already tightening investments in anticipation of less revenue coming in. Districts in many states are pondering teacher layoffs and building closures.

Here are a few key takeaways from the latest batch of data.

Federal funding rose during the pandemic—but state and local funding went down.

It’s no surprise to learn that the share of education funding that came from the federal government increased significantly during the pandemic. Between 2020 and 2021, Congress approved close to $200 billion in emergency aid for public schools.

That translated to the federal government contributing 13.7 percent of all the funding K-12 schools received in the 2021-22 school year. In previous non-COVID years, the federal share typically hovered around 8 to 10 percent.

As ever, the overwhelming majority of funding for K-12 schools comes from state budget allocations and local property taxes, among other state and local sources.

However, state revenues for K-12 schools declined 2.6 percent from the 2020-21 school year to the 2021-22 school year when adjusted for inflation, while local revenues declined 2 percent over the same period, according to the new data.

Schools spent billions of COVID-relief dollars soon after they got them.

ESSER dollars—more than $38 billion—represented slightly less than 5 percent of all the money K-12 schools spent in the 2021-22 school year.

During that time, schools were working through allocations from the set of ESSER II funds Congress appropriated in December 2020 and beginning to spend the largeest set of COVID-relief funds, ESSER III, approved in March 2021.

These data show that districts collectively spent roughly 20 percent of the federal government’s overall ESSER investment during the 2021-22 school year. They spent another $24 billion in ESSER funds the previous school year. The majority of ESSER spending took place after fall 2022.

Some districts are still finishing up their ESSER spending, even as the Sept. 30 deadline looms to commit funds to particular expenses. Districts have until Jan. 31, 2025, to actually spend the money, and the U.S. Department of Education may grant deadline extensions for school districts to spend funds they’ve already committed to contract expenses.

Costs of food and bus services are rising precipitously.

Virtually everything got more expensive during the pandemic, thanks to inflation. But even adjusting for inflation, some costs grew more rapidly than others. Between 2020-21 and 2021-22, schools saw:

  • a 21.3 percent increase in the cost of food service.
  • a 14.5 percent increase in the cost of school transportation.
  • a 9.5 percent increase in the cost of “enterprise services” that operate at least partially on user fees, like school bookstores or certain after-school activities.

Supply-chain issues and pandemic-era precautions likely contributed to increased costs for food and buses.

Fuel costs during this period were at record highs, too, in part because of the start of the war between Russia and Ukraine. Transportation has also gotten more expensive for districts investing in electric buses, which some states are mandating despite their higher upfront costs than traditional diesel buses.

The majority of funding for K-12 schools pays for people.

Out of $767 billion spent on K-12 education from all sources combined during the 2021-22 school year, $595 billion went to compensation for school staff. Salaries and wages accounted for $416 billion, and benefits like health-care coverage and pensions cost another $178.3 billion.

Those costs are rising for districts in part because of the labor market. Workers have more leverage to demand higher wages or seek employment outside the public sector.

Similarly, the bulk of America’s K-12 investment in the 2021-22 school year went to instructional expenses. Those items accounted for slightly less than 60 percent of all school district spending. The next largest category was operations and maintenance, with 9 percent.

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