How the Recession Changed School Funding

The recent recession scrambled the traditional balance in education funding, according to a report released yesterday by the U.S. Census Bureau.

For the first time in 16 years, local governments picked up a higher share of the education bill than the states, while the federal government picked up more than 10 percent of the tab, according to the Census Bureau's annual Public Education Finances report.

The report looks at data from the 2009-10 school year. State funding decreased by 6.5 percent from the previous year, according to the Census Bureau, the biggest decrease since the Census Bureau began publishing the report in 1977. That drop was accompanied by an unprecedented increase in federal funding, largely stimulus dollars, that in many cases propped up state spending. All told, education funding across the country increased by a half percent, while per-pupil funding increased by 1.1 percent.

Local funding wasn't hurt as early by the recession says Michael Griffith, senior school finance analyst at the Economic Commission on the States, but it declined since the years included in the Census report as lagging lower property assessments translated into lower local property taxes.

That decline has come as state budgets are starting to recover, compensating for some of the losses in local revenue. Griffith anticipates that the next couple of Census reports will show a fuller picture of the impact of the recession, particularly numbers for the past school year, in which federal stimulus dollars expired.

Declining state revenues increased the distance between the haves and the have-nots, Griffith says, because wealthier districts in many parts of the country were better able to make up for fewer state dollars.

This gap and what states have done to combat it are the subject of another report released earlier this week by the Rutgers Graduate School of Education and the Education Law Center, which advocates for increased funding for poor and disabled children.

The report grades states on the basis of their level of state and local education funding in the 2008-09 school year and how funding is distributed, adjusted for poverty rates and regional wage differences, among other factors.

The report concludes that Utah, New Jersey and Ohio do the “fairest” job of funding education, as evidenced by the fact that they gave significantly more funding to schools with higher poverty rates. The report finds that high poverty school districts received less per-pupil funding than wealthier districts in 16 states, with high-poverty districts receiving less than 80 percent of the funding given to wealthier districts in Nevada, Illinois, New Hampshire and North Carolina.

Phil Oliff, a policy analyst at the nonpartisan Center on Budget and Policy Priorities co-authored a report last fall looking at state education funding levels. While education funds are starting to show signs of recovery, he says it will still be a few years until they return to pre-recessionary levels. “They're coming out of a very deep hole.”

Explore