EdTech, School Administration

How Cash Hinders School Finances


by Pay Theory Team

 4 min read

 June 6, 2022

Joey is a 6th-grade student. During the 2008 Market Crash, his father lost his job, forcing the family to move school homes and by extension, school districts.

When he arrived at his new school, Joey couldn’t help but notice the differences from his old district. When asking how school is going the parents would hear: “Good, but I’ve been here a week and the teacher still doesn’t even know my name. There are so many more kids in my class and they’re always talking so I can never get my questions in.” 

After a while, Joey got used to the changes. He also got used to moving through reading levels at a slower pace than before. With his teacher becoming ever more spread thin, he began feeling increasingly lost during math lessons.


Student writing on a desk


Why the Disparity?

Like many other districts still experiencing long-term effects from the recession, Joey’s new school lost almost 20% of their state budget for public education. Joey’s school’s funding was hit harder than most, because his school relied on state funding instead of local taxes. Schools that relied more on their local communities stayed afloat, as property taxes fluctuated less than sales taxes and government funding. 

The amount districts spend per student thus varies across the United States, depending on where families live. In some parts of Illinois, this number can vary all the way from $9,000 to $28,000 for schools that are just minutes away from each other. 


Students from more affluent areas benefit from:


These funds come from local businesses, property taxes, and donations. Increasing wealth disparities have helped increase the funding gap between poor and wealthy school districts: a study from 2017 showed that on average, poorer districts lost $1,000 more in funding per student than other schools.


Cash and the Underbanked

Today, almost one-third of American families are either unbanked or under-banked, meaning that they lack access to traditional credit/debit cards or checking accounts.  

Underbanked families are more likely to “live in low-income areas, have less education, or be in a racial or ethnic minority group. About 14 percent of black families and 11 percent of Hispanic households are unbanked, compared to only 4 percent of white families. 

This affects the entire school district, not just a select few. For example, while a family like Joey’s may not be underbanked, if their school is not able to collect fees from a third of their community, the entire district is impacted. More teachers are laid off, facilities suffer, and fewer students can participate in extracurriculars. In Los Angeles, twice as many teachers were laid off in underbanked districts during the last recession. 

Overall, reliance on cash hinders underbanked families' ability to complete online school payments. As more districts go “cashless” or move towards “online transactions”, schools with underbanked families bear the consequences. These schools might not have the funding to distribute technology, teachers, or even lunches for students the same way without cash acceptance. 


PayTheory is Here to Help

At Pay Theory, we believe everyone should be able to participate in education. Our goal is to help students and their families thrive by providing an inclusive payments platform that offers e-cash as well as traditional payments, and easily integrates with your district’s finance department. 


Pay Theory is built for schools, the families they serve, and the treasures they employ.

You can learn more here.


Sources Referenced

NPR | Why America's Schools Have A Money Problem

ChalkBeat | 12 ways the last recession changed America’s schools — and what that means for the years ahead

Journal of Education | Finance Are High-Poverty School Districts Disproportionately Impacted by State Funding Cuts?

FDIC | National Survey of Unbanked and Underbanked Households

Federal Reserve | Report on the Economic Well-Being of U.S. Households in 2018

The Atlantic | Good School, Rich School; Bad School, Poor School