Trends and volatility in school finance

Financing inequities are the result of decentralized school financing in which wealthy areas can afford good schools while poor are unable to do so in the US. There were around 49.1 million public school students in the US in 2005 in about 97,000 schools and 16,000 school districts. The numbers of schools and districts have stabilized since the 1970s. There are seven main tax bases for revenues to finance public schools, namely residential property, other real property, retail sales, personal income, corporate income, and capital gains. The long-term trend in education financing is a decline in the local share of revenues from over 80% of the total to about 43%. Ignoring absolute differences in school resources, non-metro areas appear to be in a relatively better position than metro areas to absorb the budget shortfalls that state governments will likely face through the remainder of the current downturn.