Public education funding in the U.S. needs an overhaul - Key findings and policy proposal

Oct 15, 2026

Uploaded by Connor

Public education funding in the United States relies heavily on state and local revenues, leaving the federal government with a limited share and making finance metrics—equity, adequacy, effort, and sufficiency—uneven across districts. Districts serving higher-poverty communities receive less per-student funding than low-poverty districts, worsening disparities for students of color. These gaps intensify during and after recessions, delaying recovery even after economic improvement. The report argues for overhauling school finance through a stronger, stable federal role and automatic countercyclical funding increases.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages47

Reading Time1 h 58 min

AccessFree to download

Summary

Introduction

A funding primer

Key metrics reveal major financial barriers

Reliance on local funding

Disparities in access and allocation

Economic downturns and cumulative damage

Recession-era budget tradeoffs for children

Automatic stabilizer role for education spending

Conclusions and next steps

About the authors

Appendix: Notes on the data sources and the analyses

Endnotes

References

Public education funding in the U.S. needs an overhaul How a larger federal role would boost equity and shield children from disinvestment during downturns Report • By Sylvia Allegretto, Emma García, and Elaine Weiss • July 12, 2022 Summary Education funding in the United States relies primarily on state and local resources, with just a tiny share of total revenues allotted by the federal government. Most analyses of the primary school finance metrics—equity, adequacy, effort, and sufficiency—raise serious questions about whether the existing system is living up to the ideal of providing a sound education equitably to all children at all times. Districts in high-poverty areas, which serve larger shares of students of color, get less funding per student than districts in low-poverty areas, which predominantly serve white students, highlighting the system’s inequity. School districts in general—but especially those in high-poverty areas—are not spending enough to achieve national average test scores, which is an established benchmark for assessing adequacy. Efforts states make to invest in education vary significantly. And the system is ill-prepared to adapt to unexpected emergencies. These challenges are magnified during and after recessions. Following the Great Recession that began in December 2007, per-student education revenues plummeted and did not return to pre-recession levels for about eight years. The recovery in per-student revenues was even slower in highpoverty districts. This report combines new data on funding for states and for districts by school district poverty level, and over time, with evidence documenting the positive impacts of increasing investment in education to SECTIONS 1. Summary • 1 2. Introduction • 3 3. A funding primer • 5 4. Key metrics reveal the four major financial barriers to an excellent, equitable education system • 7 5. Public education’s over-reliance on local funding is a key factor behind the troubling funding metrics • 13 6. Disparities shortchange states’(and districts’) ability to access and allocate the resources needed • Washington, DC View this report [at](at epi.org/233143)[ epi.org/233143](at epi.org/233143) make a case for overhauling the school finance system. It calls for reforms that would ensure a larger role for the federal government to establish a robust, stable, and consistent school funding plan that channels sufficient additional resources to less affluent students in good times and bad. Furthermore, spending on public education should be retooled as an economic stabilizer, with increases automatically kicking in during recessions. Such a program would greatly mitigate cuts to public education as budgets are depleted, and also spur aggregate demand to give the economy a needed boost. Following are key findings from the report: Our current system for funding public schools shortchanges students, particularly low-income students. Education funding generally is inadequate and inequitable; It relies too heavily on state and local resources (particularly property tax revenues); the federal government plays a small and an insufficient role; funding levels vary widely across states; and high-poverty districts get less funding per student than low-poverty districts. Those problems are magnified during and after recessions. Funding inadequacies and inequities tend tobe aggravated when there is an economic downturn, which typically translates into problems that persist well after recovery is underway. After the 2007 onset of the Great Recession, for example, funding fell, and it took until 2015–2016, on average, to return to their pre-recession per-student revenue and spending levels. For high-poverty school districts, it took even longer—until 2016–2017—torebound to their pre-recession revenue levels. And even after catching up with pre-recession levels, revenue levels in high-poverty districts lag behind the per-student funding in low-pov

FAQs

Why is U.S. public education funding considered inequitable across districts?

The system depends mainly on state and local resources, while the federal role is small. Districts in higher-poverty areas typically receive less funding per student than districts in lower-poverty areas.

How do recessions affect education funding and student outcomes?

Funding inadequacies and inequities worsen during and after downturns. After the Great Recession, per-student revenues and spending took years to return to pre-recession levels, especially for high-poverty districts.

What does the report propose to improve school finance?

It calls for reforms that expand the federal government’s role to create a robust, stable, and consistent school funding plan. It also recommends treating education spending as an economic stabilizer with automatic increases during recessions.

Oct 15, 2026

Uploaded by Connor