Budget Blog

Back to School: A Snapshot of State K-12 Spending

By Kathryn White posted 09-09-2016 10:31 AM

  

As we enter a new school year, we naturally tend to see an uptick in questions on state spending for elementary and secondary education.  Here, we take another look at the most recent editions of NASBO’s State Expenditure Report and Fiscal Survey of States to examine current K-12 funding trends at the state level.

Elementary and secondary education spending makes up the largest share of state general fund spending, estimated at 35 percent for fiscal 2015 according to NASBO’s most recent State Expenditure Report. This level has stayed remarkably consistent over the years, hovering between 34 percent and 36 percent in every year since fiscal 1996. Previously, K-12 education was also the largest category of total state spending from all funds (including general funds, other state funds, bonds and federal dollars), but has been surpassed by Medicaid in recent years. States spent about 19 percent of their total budgets on K-12 in fiscal 2015, compared to 22 percent in fiscal 1996.

Fiscal 2015 General Fund Spending and Total State Spending

Since coming out of the Great Recession, states across the country have focused on restoring funding for K-12 budgets that had to be cut due to the economic downturn. After state general fund spending declined two years in a row in fiscal 2009 and fiscal 2010, funding for elementary and secondary education has been rising steadily as state economies and fiscal conditions have improved. In fiscal 2015, state general fund spending on K-12 was 11 percent above pre-recession, fiscal 2008 levels (without adjusting for inflation). By comparison, general fund spending on all program areas increased 10 percent from fiscal 2008 to fiscal 2015.

We know from NASBO’s recent Fiscal Survey report, as well as from reviewing states’ proposed and enacted budgets, that states are continuing to prioritize and invest in K-12 education. According to the Spring 2016 Fiscal Survey of States, 36 governors recommended increased general fund spending on public schools, amounting to a net increase of $8.9 billion for fiscal 2017. Governors’ priorities, as demonstrated by their proposed budgets, include investing in and reforming school funding formulas, expanding early education, and increasing teacher compensation.

FY17 Recommended General Fund Spending Changes by Category

Looking at the full picture of public elementary and secondary finance, state governments play the largest role in funding K-12 education. According to the U.S. Census Bureau’s 2014 Annual Survey of School System Finances, revenue from states sources made up 46.7 percent of total revenue for K-12 education, followed closely by local government revenue (mostly from property taxes), which comprised 44.7 percent. The remaining 8.6 percent of public school revenue came from federal sources. This funding split varies by state, depending on differences in state constitutional requirements, school finance systems, local revenue structures, and so on. That said, regardless of these differences, all states today play a major role in funding public elementary and secondary education and have done so for many decades.