Following the 2007 Education Dollars

Last week the Department of Education released a study of education revenue and expenditures using 2007 federal, state, and local National Center for Education Statistics finance data. This report provides some of the most up to date information on where education dollars come from and how they are spent.

According to the report, public education revenues totaled $555.3 billion in 2007 from federal, state, and local sources. On average, federal dollars accounted for 8.5 percent of revenues while state and local dollars accounted for 47.6 and 43.9 percent, respectively.

At the state level, the distribution of education revenues among the three sources varies widely. Louisiana receives 17.3 percent of its education revenue from the federal government, the most of the 50 states and the District of Columbia. But federal dollars account for only 4.4 percent of revenues in New Jersey.

After the District of Columbia, which makes no distinction between state and local funds, Nevada relies most heavily on local revenues for education funding at 66.1 percent. Hawaii, on the other hand, relies on local revenues the least of all 50 states and DC at 1.7 percent. Vermont comes in a close second – local revenues account for only 7.3 percent of education funding.

In turn, state revenue in Hawaii and Vermont accounts for the greatest percent of education funding at 89.7 percent and 85.9 percent, respectively. Illinois uses its state revenue the most sparingly for education – it account for only 30.5 percent of total education funding.

In terms of education expenditures not including capital outlays, instruction costs like teacher salaries and other related materials accounted for 65.8 percent of total spending, on average. Operations accounted for 18.0 percent, administration for 10.8 percent, and student support services for 5.3 percent. That’s a total of $313.9 billion spent on instruction nationally in one year.

Of the 50 states and DC, New York spends the greatest proportion of it education dollars on instruction – 71.9 percent. New Mexico, however, spends the least – 59.7 percent. Expenditures on student support services seem to vary the most across states. This disparity makes sense – New York has one of the highest average teacher salaries in the country, $58,837 in 2006, while New Mexico has one of the lowest, $42,714. Hawaii spends the highest percent of its funds on student support, 12.1, while Minnesota spends the least, 2.7 percent. But there is little connection between expenditures on student support and special education participation rate (the program on which support dollars are primarily spent) – Minnesota has a higher rate of special education participation (14.0 percent) than Hawaii (11.7 percent).

The report also breaks down expenditures for different purposes per student. Per pupil expenditures averaged $9,653 in 2007 with $6,637 going to instruction, $512 to support services, $1,050 to administration, and $1,747 to operations. New Jersey spent the most per student – $16,163 – and Idaho spent the least – $6,648. New York, however, spent the most per student on instruction at $11,173, while Utah spent the least at $3,859.

The report’s findings suggest that states choose to collect and spend money for education purposes in dramatically different ways and at very different magnitudes. But the report provides no information about how effective the expenditures were and whether they improved the academic experiences of their students. As the new Administration’s record-keeping and reporting requirements take effect, we hope that these issues will also be illuminated.