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7 Different Types of School Funding

What are the Different Types of School Funding?

Public schools cost hundreds of thousands of dollars to operate effectively. Each student enrolled in school often has a “price tag” associated with their attendance. Different educational facilities receive various funding types based on the population they serve. Ultimately, many different factors determine when, how, and why a school receives funding. However, that leaves the question, what are the different types of school funding?

Funding for schools comes from many different sources at the local, state, and governmental levels. Once a state determines the funding source for school funding, they often classify the available funds into various categories.

Some of the types of funding schools can receive include but are not limited to:

  • State and federal grants.
  • Categorical funding.
  • Base funding.
  • Special education funding.
  • At-risk funding.
  • English language learner funding.
  • Small size funding.

Understanding the Funding Sources

The primary bulk of public school funding comes from state resources, including sales tax. Local funding sources, such as property tax, are the second-highest contributors. Together, these fund sources make up approximately 95% of all public school funding. Additional funding from government agencies accounts for around 4% of the remaining public school funding, while private donors and alternative funding sources account for the final percent of school funding.

In most cases, each state is responsible for allocating funds to individual school districts for utilization. The amount of funding each state receives for public schools varies based on many different factors. One significant contributor to school funding on a state level is sales tax. States with higher sales tax on items often have more funding available for school districts when compared to states with lower sales tax.

Finally, areas with more at-risk children often receive more governmental funding per school district. These districts often do not gain significant benefit from the state and typically have fewer resources available to them through property taxes.

Ultimately, school districts receive funding based on many different factors. The student population, overall economic climate, and overall performance can significantly impact a school’s ability to receive funds.

Base Funding for Schools

Before each school year begins, the state’s governor or education board determines how much financial assistance is available for school districts each year. They then set a base amount that each school district is guaranteed to receive per student. Typically speaking, schools can apply for additional grants to supplement the base amount of funding they receive each year.

Many states determine the base amount provided per student using state-generated financial models. These models calculate the minimum amount of funding a school needs to provide standard education to one child for the school year. Base funding does not typically factor in additional expenses, such as school trips, materials, replacing outdated technology and furniture, and any additional assistance the student may need.

Special Needs and Disability Funding

Many states offer additional financial assistance to schools that serve students with special needs and those requiring disability assistance. The Individuals with Disabilities Education Act also provides federal resources to special needs students. Additional aid is available to low-income and at-risk populations with special needs students.

In most cases, schools must provide their students with an IEP to receive additional funds. States mandate that schools use the funds for special needs students to provide them with the same level of education as other students. Some states even offer a list of resources and recommended services for schools to invest in for special needs students.

English Language Learners Funding

School districts with a large population of English as a Second Language (ESL) students may receive additional funding. These funds help schools cover the costs associated with teaching students to speak, read, and write English. A school district can apply for these funds as needed based on their student population.

One of the primary goals associated with this type of school funding source is to help improve students’ proficiency in English and allow them to score higher on state-wide tests. Typically, schools have the flexibility to use this funding as they see fit to help facilitate language learning on-campus.


Title I and At-Risk Funding

Title I and At-Risk Funding - Types of School Funding

Low-income school districts may receive a special type of federal funding called Title I. Title I funding focuses on providing additional resources to school districts with a large population of low-income families. In many cases, these school districts are underserved and may not receive the same amount of funding due to a lack of property and income tax available.

Therefore, school districts can request additional federal, state, and local fund allocation. Schools can use this type of funding to provide supplementary support services to their students. Some of these services include:

  • Free and reduced lunch prices.
  • After-school programs for students.
  • Fee waivers for college prep exams.
  • Tutoring and literacy services.
  • Crisis support.

These are only a few ways that schools can receive additional funding to help support their low-income students.

School Equalization Funding

This type of funding is available to schools that may experience higher-than-average per-student spending. There are many reasons that schools may have to spend more per student. For instance, schools in low-income areas may need additional support services to assist at-risk children. Alternatively, some schools may have a higher population of special needs children attending.

Each of these scenarios can cause schools to need more funding in order to provide each of their students with equal opportunities compared to other districts. There are a variety of grants available for equalization services. Additionally, the Department of Education advises school districts to have District Power Equalizing programs to accommodate school districts that raise less through local taxes.

Teacher Quality Grants

Teachers must receive at least a Bachelor’s degree in order to teach in a public school district. However, they should also attend training sessions regularly to learn about new curriculum changes, discuss potential district and state-wide issues, and develop new skills. Unfortunately, many school districts do not have the funding available to train teachers effectively.

Thankfully, there are many grants available specifically for developing and executing teaching training programs. In most cases, state and federal governments distribute these funds to individual school districts and even certain local schools. The purpose of each training program may vary, and schools must demonstrate a need for additional training and quality control.

Gifted and Talented Grants

Gifted and Talented School Grants - Types of School Funding

An additional grant that schools can apply for directly involves students in the Gifted and Talented program. Schools design these programs for students who consistently out-perform their peers. These students often require additional support to remain engaged and involved in the learning process.

Schools often apply for gifted and talented grants on a per-student basis. These grants typically provide supplemental per-student spending for each student enrolled in an institution’s gifted and talented program. The funds received may vary but allow schools to create curriculum and have room for additional spending for students ahead of their peers academically.

How Do Schools Spend Their Funding?

Understanding where the funds come from and the types of additional funds schools can receive is essential. However, analyzing how schools choose to spend their funding is crucial as well. Typically speaking, school districts provide each school with a detailed report describing the type of funding available to the institution.

School board members, in many cases, decide how the school will spend its budget. In turn, parents can help make these decisions through voting for school board members. Therefore, educators must often use their personal income to supply items for their classrooms.

Some states go as far as to require detailed spending reports for each district. Typically, these reports allow state education boards to determine if schools spend their budget appropriately and allow them to make changes to school funding sources to help meet the needs of the schools.

The Obstacles of School Funding

Many schools face issues when attempting to secure appropriate funding. Often, it’s difficult for individuals at all levels to adequately estimate an annual price-per-student. Each school within a district has unique needs and a specific population to serve. Many schools also encompass multiple demographics. Additionally, schools may not have access to the necessary resources to accommodate all of their students effectively.

Ultimately, states only have so much funding they can allocate for students and schools. Therefore, school districts often have to make budget cuts to meet the needs of the student population. In some cases, this leaves educators struggling to adapt their curriculum to the materials they already have on hand.

Despite these obstacles, schools still have many different ways to secure additional funding outside of state and government allocated finances. Many schools choose to hold periodic fundraisers or partner with local businesses to secure additional funding for specific projects. Alternatively, schools may opt to seek out private local donors. Businesses and other well-established community members often provide local schools with small monetary contributions throughout the year.

Seeking School Funding

Ultimately, a school’s budget is determined through the state and by local taxes. However, educators can take advantage of grants and seek outside assistance to help secure additional funding for their facilities.

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Written by Kasey McElroy

Kasey is a passionate professional freelance writer and currently studying to receive her Bachelor's in Communications with a focus on Professional Writing from SNHU. In her free time, she serves as the ML for NaNoWriMo in the San Antonio region. She also spends a ridiculous amount of time with her three cats and two dogs. You can find out more about Kasey's current projects here.

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