US Education Budget: Where Does The Money Go?

The Education Department is asking for $82 billion for the next fiscal year—a $3.1 billion increase. The proposal keeps spending in line with the caps enacted last year in a bipartisan agreement to prevent the federal government from defaulting on its financial obligations. So what does it buy? Not very much, actually.

While $80 billion is a very large number, it is a small share of the public expenditure on K-12 education, which totals $800 billion this year. This equates to an average of about $19,000 per student spent by federal, state, and local governments. Federal spending is $1,730 per pupil, states contribute $7,430 per student, and local government spending totals $7,230 per student. In aggregate, states contribute $367.1 billion to K-12 public education, while local governments contribute $357.5 billion. Together, these two levels of government contribute roughly 90% of the total.?

This level of spending is the second-highest amount per pupil (after adjusting to local currency values) among the 37 other developed nations in the Organisation for Economic Co-operation and Development (OECD). However, if we look at spending as a percentage of GDP, the US ranks 14th among OECD countries.

The discretionary education budget requested by the Biden Administration has been increasing for the last two decades. In 1999, it totaled $3.5 billion, increased to $192 billion during the pandemic, and then fell to $75 billion this year. The increase masks that a large amount of the spending request is in the nature of entitlements rather than an investment that will improve the quality of the average American's education.?

Prominent among these, the 2025 budget request includes $18.6 billion for Title I and $14.4 billion for special education. Title I is the largest federal aid package for schools in America. Almost all of it goes to public schools, although students enrolled in private schools or who homeschool are also eligible. Title I funding is directed at low-income and disadvantaged students because they may not have had all the educational benefits children from higher-income families enjoy.?

In 2010, the Obama administration added an eligibility option through the Healthy Hunger-Free Kids Act called a?Community Eligibility Provision ?(CEP). Under CEP, if 40% of a district's students are "directly identified" as eligible for free lunch (a stricter way of certifying a family's poverty status), all students in that district, regardless of family's income, are eligible for free lunch. Today, more than half of all American schoolchildren—about 25 million—in about 60% of American public schools receive some Title I funding. In 2022, 7.4 million families lived below the poverty line in the United States, so the program is clearly not being managed to its original mandate of helping the most disadvantaged. It has become another entitlement program.

As they weigh the president's budget request, Republicans are not enthusiastic about increasing federal spending on education. Like most federally funded programs, there needs to be more understanding of how the money will be spent and its educational impact. During a?late January hearing , some Congress members suggested districts had?wasted the historic $190 billion ?made available during the pandemic or needed more to show for the investment.

School lunches and other Title I programs are best administered through a monthly transfer or credit, as in many European countries. When we lived in Germany, we received a monthly transfer payment, and the children were in school. Under the current structure, many recipients (theoretically up to 60%) are not low-income. A "passport" approach can then truly be needs-based, and the savings generated can be reallocated to higher-impact programs, like preschool education and prenatal care.

I have the same view of special needs spending totaling $14 billion. Our extended family has three special needs kids, so I understand the need exists. In 2021-22, about a third of students (32%) receiving services under IDEA had a specific learning disability. Some 19% had a speech or language impairment, while 15% had a chronic or acute health problem that adversely affected their educational performance. Chronic or acute health problems include ailments such as heart conditions, asthma, sickle cell anemia, epilepsy, leukemia, and diabetes. Provide the parents with direct assistance, not the state.?

In summary, well over half the budget request for education for 2025 is for entitlements. Spending on Title 1, on students with disabilities and funds for Hispanic and Black colleges are more in the nature of entitlement programs. Specifically, these programs do not have accountability, specific goals, or defined outcomes - and therein lies the real problem.