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Federal Education Funding

Federal Education Funding Sources

Before reading about federal, state, and local funding, it is important to remember that each state has a different breakdown of funds, based on such factors as how much federal funding it gets. State contributions can vary significantly.

Much of these rates are based on the types of programs that exist within each state or the internal tax structure. A state that has more federal education programs for children may end up with a higher percentage of federal funds overall. In general, the breakdowns tend to work. That said, whenever one source cuts back, it has an effect on the other sources. If, for example, the federal government were to decrease its educational contribution across the board by two percent, that would mean states and local communities would have to make up the shortfall. If either of those sources made cutbacks, the remaining source would feel more pressure to contribute more. If the necessary funding was simply not there, the result would either be higher taxes or reduced services.

Federal Revenues

The federal government contributes money to schools directly and indirectly. Part of this funding comes from the U. S. Department of Education, but other agencies contribute as well. The U. S. Department of Health and Human Services, for example, contributes to education through its Head Start program, while the U. S. Department of Agriculture funds the School Lunch program for students who cannot afford to pay for their own lunches. Even with these added contributions, the federal government accounts for less than 10 percent of school revenues. Using its own words, the Department of Education has long seen its role as "a kind of emergency response system" that fills gaps when state and local sources are inadequate to meet key needs. (For example, the 1944 GI Bill, a post-secondary program rather than elementary through high school program, helps fund college educations for nearly eight million World War II veterans.)

The Education Department's measures are not always merely stop-gap. During and after World War II Congress passed the Lanham Act (1941) and the Impact Aid laws (1950) to compensate school districts that housed military and other nontaxable federal installations. Today, the federal government continues to compensate communities that house such institutions. Moreover, Title I of the Elementary and Secondary Education Act of 1965 guaranteed aid to disadvantaged children in poor urban and rural communities. The Higher Education Act, passed the same year, provided financial aid programs to help qualifying students meet college expenses.

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