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February 27, 2023

7 min

Stefanie Bryant

Your Tax Dollars: How K-12 Public Education Uses Them, And The Impact On Student Achievement

Where do my state and local taxes go?

Let’s start with some background on public education finances. With the exception of a few states, residents pay state income taxes each year, and are likely to receive a property tax bill as well. In most states, a large portion of state income tax is used for public education. Property taxes generally have a line item for public education as well; often a large portion of your property taxes depending on where you live. So how does all your state and local tax money get used for students?

While each state has specific statutory code for public education funding (often with convoluted formulas) and the sources, nationally K-12 education is funded with state and local revenues to the tune of about 92%, with the remaining 8% coming from federal programs.

I’ll use the state of California as an example. Education funding for K-12 in California comes primarily from state income tax and local property taxes, about 91%. In a typical year, state funds represent about 58% of the total K-12 education budget, while local property taxes represent about 21%. Other local revenues, including interest income, rental revenues, parcel tax proceeds and donations, hover around 12%. The California state lottery provides a small proportionate share of K-12 funds. Only about 1% of K-12 funding comes from the lottery despite the fact that about 25% of the lottery revenues are provided to K-12.

Federal revenues provide a smaller piece of the pie and are usually restricted for specific needs such as Special Education, Title programs and grants that help with at-risk and low-income students, and other special populations.

As you can see, your state and local tax dollars matter when it comes to public education. But how much is really necessary to educate students?

What do schools spend the funds on?

If I had a dollar for every time I’ve heard this, it would cover my own tax bills! The reason it’s asked varies. From those who want to know what’s being spent on their student’s education, to those that want to know why they must pay so much for students that aren’t their kids. For me, the latter is easy – because we need an educated workforce and society to thrive as a nation. Imagine how many children would not get an education if it was up to parents to pay for it . As to the former, there is not a one size fits all answer – every school’s student population has different needs and the methods for categorizing costs can vary for several reasons. Charter schools (also publicly funded) can often use funds a little more freely for different student needs, online models will have different costs to cover than brick and mortar school. The variables are too many to list.

Regardless of the mode of education, the majority of education funding is spent on teacher compensation. Schools may choose to direct more funds to teacher salaries to attract and retain teachers, which is a good thing. However, the more money that is directed at teacher salaries, the less there is for support like classroom aides, school nurses or counselors and other programs the community may value as part of their student’s education.

Class size is another key factor in determining how funds can be allocated for various needs. A lower-class size means more teachers need to be hired, and thus more funding is directed to teacher salaries. Increasing class sizes by just a few students can free up funds for other uses. However, it’s a delicate balancing act to not overwhelm teachers and ensure students get the necessary attention.

Other instructional expenditures may be related to specific programs offered by schools. For example, a school might need to provide more special needs education, or English language learners may be a large student demographic. Some schools might provide more arts or music options, sports or CTE. Student support costs such as counselors, school nurses or classroom aides are often a fairly large portion of a school’s budget. Other instructional costs include curriculum, tech devices, textbooks and supplies.

While often frowned upon, other support and administrative needs are a necessary cost. Administrative needs include student and teacher support, human resources and business services, among other things considered as “overhead”. While the cost of administration is often questioned, in most cases, those costs are less than 10% of a school or district budget. For non-classroom-based models overhead costs are reduced greatly. Brick-and-mortar schools incur significant costs associated with transportation, food services, custodial needs and building maintenance.

Does more funding equate to higher achievement?

Not necessarily. Like any business, some public-school systems are great at using their resources for maximum output (in this case student achievement) while others, despite adequate resources, fail to. Public education needs are also VERY different from state to state, city to city and even from school to school in the same district.

I spent a large portion of my finance career at a public school district. Despite the fact that the school district was in a state with the lowest per pupil funding in the nation, we were able to do some great things for our students’ education. That was in Utah, a state that regularly lands at the very bottom of per pupil funding. Utah’s per pupil funding in 2021 was reported at $7951, lowest in the nation. Yet ranks Utah 10th in their Quality Counts 2021 grading. On the flip side, New York state boasts the highest per pupil funding at $24,881 (three times Utah), but is ranked 16th in the same study. Alaska has fairly high per student funding at $18,392, but is ranked last in the achievement report.

It’s clear there are more factors at play than just funding. Alaska’s school system is obviously very rural with demographics and needs much different than New York’s urban needs. Class size, at risk population, special education, teacher shortages, cost of living and a whole plethora of other factors impact each state’s student achievement. There is no apples-to-apples comparison when attempting to determine if more money equates to better education. To muddy the water more, there is a lot of interpretation in student achievement data, one could search 10 different data sources and get 10 different state ranking results.

Innovation might play the biggest role in how to stretch the funding dollars and how to best educate our children. Let’s face it, public education is downtrodden with bureaucracy and red tape. Often, legislators that have no experience in education are telling schools how they can spend their money, without taking any of the impacting factors into consideration. While I believe more flexibility is beginning to be provided, doing innovative things with your hands tied behind your back is a challenge.

Like most bureaucracies, public education needs big changes. However, there are simple means to reduce spending that do not require an overhaul of the system. While offering employees the ability to work from home isn’t exactly “innovative” these days, it is a way to reduce some overhead costs. Telecommuting likely won’t work well for teachers in the classroom, but there are a lot of necessary positions that don’t need to be physically present every day. Take educational support positions at a district office for example. As demands for services increase, district positions tend to increase with it.

Office sharing, where one employee is in an office one day, while the employee sharing the space works from home, is another easy way to reduce capital needs. Quit leasing more space or building more to make room! If the pandemic had one good outcome, it would be that it showed us we don’t have to commute to work every day just to show our faces. However, for public education this easy option does bring criticism from the public because they don’t trust the system, they want to see those people at work to trust they are actually, well, working.

What if those people aren’t really working? It happens. Some positions (and honestly, some people) just don’t lend themselves to high productivity. Outsourcing certain functions may provide more productivity at an equal or lower cost. Let’s face it, most educators are great at educating, but other areas simply aren’t what they should be focusing on. Accounting, risk management, and curriculum writing are great examples of areas that might be better served by outsourcing.

Charter schools often have the flexibility not afforded to standard public schools to better manage the challenges of the student demographics and provide choices in their education. While publicly funded, charter schools can operate a bit more like a private school since there is typically less oversight in exchange for greater accountability. Charter schools typically have the freedom to create more innovative models for education, and need to if they want to attract students and stay open. They don’t have to provide many of the programs a traditional public school does, rather they can focus on the specific needs and desires of their students. Less waste, more choice.

Online education models can be innovative, often making the cost of education less than that of brick-and-mortar schools while offering a different modality for students. In a fully on line model there are no transportation costs, little to no building maintenance, few if any buildings, and often times the models allow for larger student/teacher ratios, decreasing the number of teachers needed. Even a hybrid model where students are in class part of the week, and at home the remainder, offers overhead savings. Online education is not for every student, but it does have its place and is an effective use of public funds when done well.

The effectiveness of how tax dollars are utilized is primarily up to the individual states, school districts and charter schools. Are you getting your money’s worth? Plainly that’s muddy water, and up to much interpretation. But what is clear is students need the services provided by the education system, and we need to continue to teach and produce productive members of society to succeed as a nation.


This article was originally posted at by the same author.

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