Blog: The Educated Reporter

Who’s Funding Your District? Uncle Sam, More Than You Think

Chart created by EWA; Data from U.S. Census and Jennifer Cohen Kabaker/Federal Education Budget Project for 2009-2010

School districts might receive less federal funding next year, due to some cuts that already are scheduled and some others that are under consideration. How much is at stake is difficult to gauge, but new research shows that hundreds of districts – including several major ones — rely heavily on federal funds, contrary to conventional wisdom.

More than 1,500 school systems depend on federal funding for more than 20 percent of their annual revenue based on 2010 data, according to calculations from Jennifer Cohen Kabaker, a senior policy analyst at the centrist New America Foundation think tank. In fact, two of the four largest districts in terms of revenues rely heavily on the federal government: 23.9 percent of Chicago Public Schools’ and 18.2 percent of the Miami-Dade County Public School District’s annual revenues come from federal sources.

These figures push back against the perceived wisdom that federal support for school districts is relatively small. While the federal government’s average share of the costs that go toward educating children nationally was 12.3 percent for the 2011-2012 school year, the shares that it contributes to individual districts can vary considerably, especially during an economic downturn when state fiscal outlooks can differ widely.

“States have cut their education spending, and we only know what their share of school spending was up to 2010,” begins Cohen Kabaker, but it’s possible that with states like California, Illinois, and Florida “the impact might be greater, because as the share of state spending goes down, relative federal funding goes up.”

Many of the districts that rely on federal dollars for more than 50 percent of their revenues are small, with total budgets that only occasionally exceed $20 million a year. Still, some of the largest districts in the country rely on federal funds for a significant share of their spending. Detroit, whose school budget ranks among the top 25 nationally in annual revenue, gets one federal dollar for every four that come from state and local sources. Twenty-five percent of Milwaukee’s revenue is comprised of federal dollars. The Los Angeles, Philadelphia, Houston, and Dallas school systems—also among the 20 largest—each have revenues made up of at least 15 percent of federal funds.

Districts can receive federal dollars through several channels. Schools with a disproportionate number of low-income and disabled students receive various streams of revenue through portions of Title I and IDEA grants, the two largest chunks of the federal government’s support for schools. But nearly half of Title I dollars in the 2012 fiscal year are funneled through the Basic Grant Formula, which distributes dollars to any school with at least 10 poor children and a low-income population of at least 2 percent. Schools in even the most affluent neighborhoods can receive some portion of federal funding from the Basic Grant Formula.

In some ways, the math regarding districts’ dependence on federal funds can be unpredictable. While some districts rely on a relatively low amount of federal revenue but have higher than average per-student expenses, the opposite is true for other school systems. New York City has per-pupil expenditures of nearly $20,000 with annual revenue that’s less than 10 percent federal money. Miami, on the other hand, is slightly below the national per-pupil average with $9,017 and takes in much more federal revenue as a share of its budget than the Big Apple.

On the other end of the scale, major districts like Fairfax County in Virginia and Montgomery County in Maryland—that rank seven and ten, respectively, on systems with the largest annual revenues—use less than 6.5 percent of federal funds to support their schools. Overall, in 2010, about 60 percent of the school districts in the country—8,071 out of 13,516 —had a lower than average reliance on federal funding, based on 2011-12 Department of Education data. That 60 percent includes 2,200 districts in which federal dollars comprise just 5 percent of their annual budget.

Such figures help contextualize two financial scenarios that could spell trouble for schools. Unless Congress comes to a compromise before January 3, 2013, a 2011 agreement to reduce discretionary spending will cut 7.8 percent from the federal education budget. A recent projection suggests that this cut could mean districts could expect to lose less than 1 percent of their total federal funding. More uncertain is the effect a Romney-Ryan budget plan might have on schools. Some education experts point out the 20 percent cuts to discretionary spending the Republican vice presidential nominee has proposed would add up to 2 percent of total school funding, because only a tenth of school funding is derived from federal dollars.

(The data Cohen Kabaker collected also include the amount of money school districts would have to do without if 20 percent of education spending were cut from the federal budget. Download the full chart here.) 

Michael Petrilli, executive vice president of the right-leaning Thomas B. Fordham Institute in Washington, D.C., says the cuts Ryan is supporting should be welcomed. “Most school districts have seen a meteoric rise in spending in the last 20 years,” he said. “We’re talking about returning to spending to the mid to late 90s … this is an era that was pretty good in terms of education.” Since 1987, per-pupil spending has increased from around $7,000 in today’s dollars to roughly $10,500, according to the National Center for Education Statistics.

For the 2013 fiscal year, the Obama administration is requesting $69.8 billion in discretionary funding. That would be an increase of $1.7 billion–or 2.5 percent–from 2012.