Current Events Updated October 2, 2012

10-Year Spending Trends in U.S. Education

By The Room 241 Team October 2, 2012

As most teachers and administrators know, spending on education in the United States varies widely from state to state and even among individual school districts. Local and state taxes, federal allocations and special grants are just a few of the factors which affect the distribution of money among schools. Most public schools rely heavily on property taxes for financial support. But as housing values fell over the past decade, local governments needed to reassess property values, which led to significant budget shortfalls for education.

In 2009 Congress agreed to provide nearly $100 billion in addition funding for public education in the upcoming year as part of the American Recovery and Reinvestment Act (ARRA) of 2009. However, following the 2009-2010 year, federal allocations fell dramatically.

This period of decline ended in 2014 when federal spending for education rose nearly 70 percent. Despite this massive surge, however, the federal government’s share of spending for education nationwide in 2014 ($67.3 billion) was almost identical to 2004 when total spending was $67.2 billion.

How is this money spent, and how does spending on education compare to other areas of the nation’s economy?

Let’s take a look.

How much is spent on U.S. education?

Education spending accounted for less than 3 percent of the $3.8 trillion in federal spending for 2015. Although this may not sound like much when compared to the 33 percent that went toward Social Security, Unemployment and Labor or the 27 percent for Medicare and Health, it still represents billions of dollars.

Federal money is allocated to individual states and covers elementary, secondary, vocational, higher education, research and training.

Education spending: 2005-2015 (in billions)

Here’s a breakdown of U.S. Department of Education K-12 and postsecondary spending from 2004 to 2013 and total appropriations for 2005 to 2015 (dollar figures are in billions):

K-12 Spending  Postsecondary
Spending
Total
Appropriation
2005 $37.5 $28.2 $71.4
2006 $39.7 $55.9 $100
2007 $36.8 $23.8 $67.1
2008 $37.9 $24.4 $68.5
2009 $38.8 $4.5 $39.8
2009 ARRA* $79.8 $17.4 $98.2
2010 $38.9 $8.3 $63
2011 $37.9 $685 $43.9
2012 $37.3 $4.1 $40.5
2013 $35.3 $2.6 $39.8
2014 $37.2 $11.3 $55.2
2015 $37.1 $43.5 $87.4

* American Recovery and Reinvestment Act of 2009
Source: U.S. Department of Education

Returning to normal in 2014

The federal government allocated an estimated $154 billion for education in 2015, according to the New America Foundation. This amount includes federal contributions toward K-12 and postsecondary public education, federal spending on Head Start and nutrition programs, student loan subsidies, U.S. service members’ and veterans’ education benefits and various other education programs supported by federal contributions.

The Department of Education’s budget increased significantly in 2006, when spending for postsecondary education nearly doubled to $55.9 billion from $28.2 billion in 2005.

Although the federal government contributed more money to states for education spending under ARRA in 2009, federal spending for education dropped by about 40 percent from 2011 to 2013.

Impact of American Recovery and Reinvestment Act

The federal government made an extraordinary, one-time contribution to assist states severely impacted by the mortgage lending crisis of 2008. To alleviate state budget shortfalls for schools, Congress passed ARRA, which resulted in an additional $98.2 billion allocated specifically for education.

In its report, “Educational Impact of the American Recovery and Reinvestment Act of 2009,” the White House noted that due to the dramatic decline in state revenues resulting from the 2008 economic crisis many states faced drastic budget shortfalls that would have severely affected education spending and probably would have resulted in layoffs for tens of thousands of teachers, principals and support staff at K-12 and postsecondary public schools.

Spending by local, state and federal government

State and local government provide the majority of funding for elementary and secondary education. According to the National Center for Education Statistics, in 2014 roughly 45 percent of funding was provided by state government, 47 percent was provided by local sources and 8 percent came from the federal government.

Federal funding: This money is distributed to the states through the U.S. Department of Education and annually amounts to more than $40 billion for elementary and postsecondary education. From 2009 to 2015 federal funds allocated for Improving Teacher Quality State Grants has remained relatively steady, from $2.3 billion to $2.35 billion annually. Money allocated for postsecondary Pell Grants more than doubled, from $19.3 billion in 2009 to $41.6 billion in 2011. Since then, the amount of federal spending for Pell Grants has declined from $41.4 billion in 2012 to $35.6 billion in 2013, to about $30 billion in 2014 and finally around $28.8 billion in 2015.

State funding: This funding for elementary and secondary schools is generated primarily through income and sales taxes. However, some states rely heavily on property taxes to fund K-12 schools. Every state legislature determines the raising and eventual distribution of money. The amount each school receives is based on different formulas like number of students and demonstrated need. Schools in poor neighborhoods often receive more attention to make up for limited local sources of funding.

Local funding: This money comes largely through tax assessments on residential and commercial property within individual school districts. In the wealthier parts of town, schools receive sufficient funds to ensure that their schools are properly equipped for students. In less-affluent neighborhoods, schools are often underfunded and may not get the resources they need.

Spending on each student

Across the country, spending on each student varies widely depending upon the state, school district and particular school. Spending at all elementary and secondary schools in 2014 averaged $11,621 for every pupil, according to the most recent U.S. Census data.

Higher education

As anyone with a college-age child knows, the cost of sending a son or daughter to a college or university has risen far more than the rate of inflation over the past 10 years. Tuition, fees, room and board and other costs to attend a public or private four-year college have more than doubled.

In 2003, it cost an average of $9,119 per year to attend a four-year public college and $15,932 to attend a four-year private college. As of 2015, it costs, on average, $23.893 per year to attend a four-year public college out-of-state, $32,405 to attend a four-year private college and $9,410 to attend a four-year public college in-state

Staying competitive

As Americans examine the benefits of a well-educated 21st-century workforce, the 2.6 percent of annual federal spending that is allocated for education by the federal government continues to be scrutinized.

With today’s focus on Science, Technology, Engineering and Mathematics (STEM) courses, diversity programs to expand differentiated instruction and inclusive classrooms that embrace special education learners, it is crucial to maximize educational resources for the benefit of current and future generations.

The resulting return on investment in education is vital for the United States to remain competitive in a global economy.

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