Federal Government Finance

The Federal government plays an important role in both governance and finance. The President of the United States appoints a secretary of education to administer the department and distribute funding to states for educational purposes. In 2018 the federal government appropriated $59 Billion dollars to education, a 13 percent decrease from 2017. Despite the decrease, this funding is an important source of revenue for public schools. In addition, each house of Congress has their own committee on education. Members of these committees provide guidance and expertise as educational policies and budgets are developed. States and local school districts, rather than the Federal Government, make most of the major decisions about the content, assessment, teaching force, structure, and funding of elementary and secondary education. The Federal Government influences educational policy by attaching educational policies to receipt of federal funds (Kober & Usher, 2012).

Title I Funding

The purpose of Title I, Part A of the Elementary and Secondary Education Act (ESEA) is to ensure that all children have a fair, equal, and significant opportunity to obtain a high-quality education and reach, at a minimum, proficiency in state academic achievement standards and State academic assessments.  It provides financial assistance through state education agencies to local educational agencies to meet the educational needs of children who are failing or are most at risk of failing the State’s challenging academic achievement standards and state academic assessments in schools with high concentrations of children from low-income families.

State and Local Finance

Public schools are funded approximately 90% by state and local revenue sources. Most local funds come from property taxes (Kober & Usher, 2012).  Since most of the school funding comes from property taxes schools use a variety of methods to maintain positive community relationships. Remember, taxpayers need to apprSove the school budget each year; however, depending on your community composition, many taxpayers do not have children in school.  Schools may host senior citizen luncheons or appreciation days, community health fairs and offer up the school for community use. It is wise for teachers to develop relationships with all members of the school community. Strong school-community relations help increase the likelihood that a school’s budget is passed.  Schools and teachers need to demonstrate that they are using public funds in a responsible manner. Teachers must find high quality, cost effective programming and materials to help students learn.

In 2015-16, New York State had the largest per pupil average expenditure in the United States at $24,657 versus Idaho, the lowest state at $7,921 (Digest of Education Statistics, 2018).  This demonstrates the variability in funding and resources by state. However, within states variability also exists between communities, largely due to revenues from property taxes. School districts that are wealthier tend to have more money and resources to dedicate to education.

Local School Budget Development Process

As stated above, one of the major roles of the members of the Board of Education is to develop a budget in collaboration with administrators. A budget is a plan of financial operation expressing the estimates of proposed expenditures for a fiscal year and the proposed means of financing them.  Multiple laws and procedures must be followed during budget development. A detailed outline of the process can be found at http://www.p12.nysed.gov/mgtserv/budgeting/handbook/legalaspects.html on the New York State Education website. Educational law emphasizes that the budget should be written in plain language in a manner that taxpayers can understand (NYSED.gov, 2019).  When developing a budget, the BOE and administration need to keep several factors in mind and have accurate information about educational objectives, enrollment projection; the community’s receptiveness to tax increases,   capacity and limitations of facilities (Budgeting Handbook, www.NYSED.gov, 2019 http://www.p12.nysed.gov/mgtserv/budgeting/handbook/process.html ).

An important term that BOE members, administrators, taxpayers and teachers alike need to understand is the tax levy. The tax levy is the term use for the sum of revenue in property taxes a district must collect, after removing other sources of funding including state aid, to meet the proposed budget. The tax levy is significant because this is the basis for determining the tax rate for each of the cities, towns or villages that make up a school district (https://www.questar.org/wp-content/uploads/2018/04/Budget-Development-Guidebook.pdf )

To determine the tax levy, school districts use a state formula that begins with an increase of 2 percent or the level of inflation (whichever is less). The Tax levy limit is the amount a district’s tax levy may increase without requiring a supermajority to approve a proposed budget (60 percent of votes plus one). The result is often a number higher than 2 percent.  In 2011 New York State established a tax levy limit (generally referred to as the tax cap) that affects all local governments (including counties, cities, towns, villages and fire districts) and school districts in New York State except New York City and the “Big Five” dependent city school districts (New York City, Yonkers, Buffalo, Rochester, and Syracuse). Under this law, the property taxes levied by affected local governments and school districts generally cannot increase by more than 2 percent, or the rate of inflation, whichever is lower (legislation summary, www.osc.state.ny.us).

What is included in the School Budget?

The school budget presentation and materials must include categories of revenues, expenditures and fund balance information, as well as comparison data from the prior year’s budget (NYSED.gov, 2019).  Sources of a school’s financial resources (revenues) include property taxes, state education aid and federal education aid. In addition, schools often have a fund balance to offset budget costs. There are several types of fund balances that a school may have. Typically, they represent funds that were not used in a prior fiscal year or when additional unanticipated revenues are accepted. It is important to remember that schools must estimate their state aid revenues when developing a budget. While New York State aims to have an adopted budget by April 1st that does not always happen. School districts are required by law to present their budget the third Tuesday of May and often are working with estimated state aid revenues.

The school budget, by law, must be presented to the public in three different components ( http://www.p12.nysed.gov/mgtserv/budgeting/). The first component is the program component (salaries and benefits of teachers, instructional costs such as supplies, co-curricular activities and interscholastic athletics equipment, and textbooks; and transportation operating costs. The program component is where most of a school district’s expenses are incurred. See figure 1.2 for an example.  The second component is the capital component which includes transportation capital, debt service, and lease expenditures; legal judgments; and settled claims; custodial costs and all facility costs, including service contracts, utilities, maintenance, repairs, construction, and renovation. The third budget component is the administrative component which includes office and administrative costs, salaries and benefits for certified school administrators, data processing, supplies, legal fees; property insurance; and school board expenses.

Figure 10.3: Sample Image of the three-component state budget

Once the budget is complete, the BOE must present the budget at a public hearing. The budget hearing must be held no more than fourteen days nor less than seven days before the date of the annual meeting and election. Notice of the date, time and place of the public hearing must be included in the notice of the annual meeting. (Education Law §§1608, 1716, 2003, 2004 &2601-a) The annual school meeting and election must be held the third Tuesday in May (http://www.p12.nysed.gov/mgtserv/budgeting/handbook/legalaspects.html).

Budget Voting Process

Under state law a school can present a budget to voters two times for adoption. If the budget is not approved the school must adopt a contingency budget. According to the New York State Education Department budgeting handbook, a contingency budget includes “items for which the statutes themselves either provide mandates or give discretion to the board of education, these may be considered expenditures deemed to be absolutely necessary to operate and maintain schools. The emphasis should be on those expenditures considered essential to maintain an educational program, preserve property, and assure the health and safety of students and staff. In addition, section 2023 of the Education Law places a computed dollar cap on general fund appropriations. The administrative component of the budget is also subject to a cap.” ( http://www.p12.nysed.gov, 2019). If a contingency budget is adopted, the tax levy may be no greater than that of the prior year.  Here is a link to an article the highlights a failed budget: https://cnycentral.com/news/local/voters-reject-altmare-parish-williamstown-school-district-budget-proposal

Access and Equity in Education funding 

As we think about funding for schools, we turn our thoughts to equity and equality in education. Included below is a short video describing equity and equality in more general terms. As a teacher you will have to make decisions on how best to meet the learning needs of your students. Local budgets will determine the types of materials and resources both teachers and students will have access to. For example, access to technology, opportunities for professional development, updated textbooks and materials, access to field trips, and availability of extracurricular opportunities are a few ways that budgets impact schools and students. In a school with fewer resources how can you make your materials equitable (fair) to the resources wealthier districts have? As a teacher the question of equity of resources is one you will need to get involved in. Advocating for equitable curricular and program resources for your students is an appropriate role for teachers.

Equity Vs. Equality Explanation Video: