Financing for equity in primary and secondary education
1. Education resources to subnational governments
2. Education resources to schools
3. Education resources to students and families
4. Social policies and family support programmes
Introduction
In the United States, education is primarily the responsibility of state and local governments, with the federal government playing a comparatively limited role. Each state establishes its own education system through its constitution and laws, and governance is overseen by a state Board of Education alongside multiple local school district boards. The U.S. Department of Education provides leadership on national education priorities, administers targeted federal programmes, and ensures compliance with federal regulations, but it contributes only a small portion of overall funding.
School funding at the local level is largely determined by property values within the district, as property taxes serve as the main source of revenue. Funding is also influenced by the characteristics of the student population, including the number of students and any additional educational needs such as special education services or support for students learning English. State policies and funding formulas further shape allocations, sometimes adjusting resources to account for differences in local tax capacity or student needs. Because of the reliance on property taxes, significant disparities exist between wealthy and less wealthy communities, and the growth of school choice initiatives, including charter schools, vouchers, and magnet programmes, has further decentralised education, shifting resources and responsibilities from traditional district schools to a broader array of educational providers.
1. Education resources to subnational governments
Federal to State Governments
The federal government plays a relatively small role in overall education financing, though it can be critical for specific populations and targeted purposes. Federal education funds are channelled through the states, which are responsible for distributing them to public schools and charter schools in accordance with formulas established by federal law. The Every Student Succeeds Act (ESEA), which is the principal source of federal funding for elementary and secondary education, provides a framework for several grants and programmes designed to improve educational quality and equity.
Under Title I, state education agencies (SEAs) receive funds to promote equal access to education, which they then allocate to local education agencies (LEAs) and schools based on the population of children from low-income families. Entire schools may also qualify for compensatory funding under the Community Eligibility Provision. Title I further includes the Migrant Education Programme, which supports the educational needs of migratory children and ensures they are not disadvantaged by state-to-state moves. Other titles under ESEA address specific priorities: Title II supports teacher and leader quality; Title III assists English learners and immigrant students; Title IV funds student support and enrichment activities; Title V provides support to rural schools; Title VI targets the education of American Indian and Alaska Native students; and Title VII, through Impact Aid, helps districts that have lost property tax revenue due to federal land ownership or face higher costs from federally connected students. Funds under these programmes typically cover operating expenses including teacher salaries, utilities, administrative costs, and learning materials.
Federal law also supports students with disabilities through the Individuals with Disabilities Education Act, which guarantees access to free appropriate public education and covers a portion of the additional costs. However, state and local budgets continue to shoulder the majority of these expenditures. Beyond ESEA and IDEA, the federal government provides grants for homeless children, migrant education incentives, and other targeted initiatives, ensuring that vulnerable populations receive additional support even though the overall share of federal funding remains relatively limited. Other grants for specific populations are listed here, and project-specific grants are listed here as well.
The Gaining Early Awareness and Readiness for Undergraduate Programme (GEAR UP) provides six- or seven-year grants to support an entire cohort of students beginning no later than the seventh grade and continuing through high school. This programme focuses on high-poverty middle and high schools to improve college readiness and educational outcomes.
State to Local Governments
Each state operates its own system for allocating education funds to local school districts, with public education representing a substantial portion of state budgets. Most states (38 out of 50), as well as Washington, D.C., and Puerto Rico, rely on funding formulas that take into account student enrolment and specific learning needs, while many also maintain separate streams or grants for particular purposes such as school transportation or facility development.
For instance, in California, two-thirds of the state education funds are distributed to Local Education Agencies (LEAs) through the Local Control Funding Formula (LCFF), which serves as the primary funding formula for K–12 school districts and county offices of education. The LCFF provides a base grant per K–12 student, adjusted to reflect grade level, and supplemental grants provide an additional 20% of the adjusted base grant for English learners, students from low-income families, and foster youth. The funds go to more than 1,000 school districts, county offices of education, and charter schools. Local educational agencies may also receive yearly funds through California’s Mandate Block Grant.
In New York state, public education funding is allocated primarily through Foundation Aid, which uses a statewide formula to ensure resources are targeted to the neediest districts. The formula starts with a minimum allocation per pupil of $7,242 (2024), then adjusts for regional cost differences, a pupil need index to account for poverty and English learners, and inflation. Enrollment counts are weighted to consider students with disabilities and those formerly in special education programmes. After these adjustments, an expected local contribution is subtracted based on district wealth and income, with wealthier communities expected to fund a larger share locally and receive less state aid.
In Texas, public schools are funded through a combination of local property taxes, state funding, and federal contributions via the Foundation School Programme (FSP). The Texas Legislature sets a "basic allotment" per student of $6,161 (2025), and districts receive additional funding based on student needs and district characteristics. Districts collect local property taxes first, and the state pays the remaining balance to meet entitlement levels. Surplus revenue from wealthier districts, known as “recapture,” is redistributed to less wealthy districts to equalise funding statewide.
Funding
25 million students at around 60% of public elementary schools receive extra academic support under Title I. In 2020, this amounted to USD 16 billion.
In fiscal year 2022, Title I appropriations under the Every Student Succeeds Act of 2015 for the 50 states and D.C. totalled $17,278,668,000, an increase from the FY 2021 total of $16,348,369,000. Of the 2022 total, $16,866,206,000 was allocated to grants for local education agencies, $46,836,000 to state agency programs for neglected and delinquent children, and $365,626,000 for migrant education programmes. State assessment funding amounted to $360,736,000, while Supporting Effective Instruction State Grants received $2,091,335,000. When including other activities and jurisdictions, the FY 2022 total rises to $17,960,667,000, with $17,536,802,000 directed to grants to local education agencies, $48,239,000 for neglected and delinquent programs, $375,626,000 for migrant programs, $390,000,000 for state assessments, and $2,170,080,000 for Supporting Effective Instruction State Grants. Note that funding for School Improvement State Grants is excluded, as the Every Student Succeeds Act did not authorise these grants.
9 million students benefit from Impact Aid, or 200 Local Education Agencies (LEA) per year. In 2024, about USD 85 million was budgeted for this grant.
In 2023, the GEAR UP programme awarded 12 new grants for a total of USD 388 million. In 2022-23, GEAR UP served 568,775 total students in 2,954 secondary schools.
2. Education resources to schools
Public schools in the US receive funds directly from local school districts. District funding is usually sourced through a combination of local taxes, state and federal funding. New York City (NYC) is the country’s largest school district by both enrolment and funding. Since 2007, the city has used uses a weighted per-student funding formula called Fair Student Funding, which provides approximately 2/3 of each school’s budget. The remaining 1/3 is funded through categorical grants (such as Title 1) and programmatic priority funding provided through School Allocation Memorandums (SAMs).
NYC’s Fair Student Funding has three components 1) a fixed “foundation” amount given to each school, 2) a collective bargaining amount negotiated with teachers unions to increase staff salaries, and 3) a per-pupil formula. The city’s formula targets equity by giving additional weight to students with disabilities, English-language learners, and students below the academic standard. Weights also vary by grade level, and specialty and TVET schools are also allocated additional weight per student. In the 2023-2024 school year, additional weights were added to the formula for students in temporary housing, and schools with the highest levels of “concentrated need.”
3. Education resources to students and families
Federal Level Grants
At the federal level, there are several grants aimed at supporting economically disadvantaged students. However, none of these grants provide direct financial support to students and their families at the K-12 level.
State Level Programmes
At the state level, the national trend towards “school choice” has led 31 states to implement variations of Education Savings Accounts (ESAs). These programmes allow families to access public per-pupil funds, which would normally go to public schools, and use them for private school tuition, homeschooling supplies, curriculum materials, and educational therapy services. Nineteen states—including Utah, Montana, Wyoming, Arizona, Iowa, Missouri, Arkansas, Louisiana, Tennessee, Mississippi, Indiana, Alabama, Georgia, Florida, South Carolina, North Carolina, West Virginia, New Hampshire, and Texas—have ESAs. Five states—Oklahoma, Minnesota, Wisconsin, Ohio, and Idaho—offer education choice tax credits, while seven states—Nevada, South Dakota, Nebraska, Kansas, Virginia, Pennsylvania, and Rhode Island—offer education tax scholarships. ESAs were first enacted in Arizona in 2011 to offer vouchers for specific students, particularly those with disabilities.
Some ESA programmes are restricted to specific groups of students, such as those from low-income families or with disabilities, while others, in states like Arizona, Arkansas, Florida, Iowa, Utah, and West Virginia, are open to all families. A list of states with universal or near-universal ESA programmes with their per-pupil allocations can be found here. The per-pupil allocations vary by state and programme. Mississippi caps ESA awards at USD 6,779 with annual adjustments linked to the state’s base per-pupil spending, whereas Arizona caps awards at 90% of the state’s per-pupil spending, amounting to USD 6,400 in 2023. Families of students with disabilities can receive higher allocations, ranging from USD 25,000 to USD 29,999. What qualifies as an eligible expense also differs by state.
ESAs reduce the funding available to public schools, as state and local per-pupil funding follows the student. In Arkansas, for instance, 90% of combined state and local per-pupil funding is redirected into educational freedom accounts for ESA participants. Because funding formulas in most states are based on student enrolment, local education agencies receive less funding when enrolment declines. The ESA programmes have been criticised for limited regulation, as participating schools are not required to follow state curriculum standards, hire certified teachers, conduct academic assessments, or comply with civil rights and anti-discrimination laws.
In the 2020-2021 school year, Florida paid nearly USD 191 million for 18,585 students when the programme was still limited to students from low-income families and students with disabilities. Arizona’s programme enrolls more than 50,000 students. A follow-up study found that three-quarters of the students enrolled in the programme had already been attending private school rather than using the funds to leave a public school or charter school.
Funding
Between 2013 and 2025, spending on vouchers in the five states with the largest programs has grown substantially. In Arizona, spending increased from $77 million in 2013 to $249 million in 2019, and is projected to reach $1.018 billion in 2025. Florida’s spending rose from $376 million in 2013 to $989 million in 2019, with a projected $3.722 billion in 2025. Indiana saw growth from $41 million in 2013 to $181 million in 2019, reaching $505 million in 2025. Ohio’s spending increased from $150 million to $358 million between 2013 and 2019, and is expected to hit $1.032 billion in 2025. Wisconsin’s spending rose from $158 million in 2013 to $309 million in 2019, with a projection of $631 million in 2025. Only Arizona and Florida offer universal ESA programs, Indiana has a near-universal voucher programme, and Ohio a universal voucher programme. Wisconsin, home to the nation’s first voucher programme established in 1990, has experienced substantial growth despite having neither universal ESA nor voucher coverage. These figures are in nominal dollars and are not adjusted for inflation, which may exaggerate the apparent growth.
States also outsource the administration of the grant programmes to private companies, creating additional yearly costs.
4. Social policies and family support programmes
Federal Level Programmes
The Temporary Assistance for Needy Families (TANF) programme supports families with children experiencing low income to achieve economic security and stability. States receive block grants to design and operate programmes that meet TANF’s objectives. Each state, territory, and tribe administers its own monthly cash assistance programme funded through TANF, with details available on the Administration for Children and Families website. Examples of state-level programmes are outlined below.
State to Local Government Programmes
In California, families may apply for the California Work Opportunity and Responsibility to Kids (CalWORKs) programme, which provides cash aid and services to eligible low-income families. The programme is administered locally by county welfare departments. The amount of support a family receives depends on its income, the number of eligible household members, and any special needs. California also provides support to refugee families through the Refugee Cash Assistance (RCA) programme.
New York State operates two main TANF-funded cash assistance programmes, administered by the New York State Office of Temporary and Disability Assistance (OTDA). Family Assistance (FA) provides cash aid to low-income families with minor children living with a parent or caretaker. Safety Net Assistance (SNA) offers support to individuals and families not eligible for Family Assistance, including single adults, childless couples, and families facing specific barriers. Additionally, Emergency Assistance to Families (EAF) provides short-term cash grants to help families with children address urgent needs such as housing, utilities, or other immediate crises.
Florida’s TANF programme, known as Temporary Cash Assistance (TCA), is administered by the Florida Department of Children and Families. It provides cash support to low-income families with children under 18, or under 19 if enrolled in full-time secondary education. Eligibility is determined based on income, residency, and citizenship, and adults must generally meet work requirements unless exempt. Assistance is typically limited to 48 months, with possible exemptions for families facing exceptional hardship.
5. School meal programmes
Federal to States
The National School Lunch Programme (NSLP) is a federally assisted meal programme operating in public and non-profit private schools, providing free or reduced-cost lunches to children each school day. It was established under the 1946 National School Lunch Act and is administered at the federal level by the U.S. Department of Agriculture’s (USDA) Food and Nutrition Service (FNS). At the state level, the programme is implemented by state agencies through agreements with school food authorities.
Children can qualify for free meals through “categorical eligibility” if they participate in certain federal assistance programmes, such as the Supplemental Nutrition Assistance Programme (SNAP), or based on their status as homeless, migrant, runaway, or foster children. Eligibility may also be determined by household income and family size. Children from families with incomes at or below 130% of the federal poverty level qualify for free meals, while those between 130 and 185% qualify for reduced-price meals. Schools may not charge more than 40 cents for a reduced-price lunch.
Participating schools receive cash subsidies and USDA Foods—nutritious, 100% domestically produced food items—for each reimbursable meal served. Reimbursement rates are higher in areas such as Alaska, Guam, Hawaii, Puerto Rico, and the Virgin Islands to account for higher living costs.
In 2010, the Healthy Hunger-Free Kids Act introduced the Community Eligibility Provision (CEP) under Title I of the Every Student Succeeds Act (ESEA). The CEP allows all students in a district to receive free lunches if at least 40% of students are directly identified as eligible for free meals.
State to Local Governments
Several states and local governments offer additional school lunch programmes, some of which are universal. As of 2025, eight states offer universal free school meals: California, Colorado, Maine, Massachusetts, Michigan, Minnesota, New Mexico, and Vermont.
California became the first state to introduce a Universal Meals Programme (UMP) in the 2022–23 school year. Under this programme, all local education agencies (LEAs) must ensure that every school provides a nutritionally adequate breakfast and lunch to all students each school day. The California Department of Education provides additional per-meal reimbursements to LEAs approved to participate in the federal School Breakfast and National School Lunch Programmes. The UMP is designed to supplement, rather than replace, the NSLP.
As of 2022-2023, there are around 56.6 million students enrolled in free and reduced meals and about 30 million who are actually receiving meals. The federal budget funds (without accounting for state or local allocations) USD 29.4 billion for school feedings.
