How Have School Finances Changed Since the Year 2000?
by Pay Theory Team
3 min read
September 1, 2022
A lot has changed since the turn of the century: the housing market, family dynamics, pop culture trends, and of course education. Advancements in online programs and data-supplemented learning are able to unveil the ways student learning is adapting to maintain progress and the areas where it’s not.
Post-1990s: Districts Struggle to Distribute Funds Equally Among K-12 Students
Although the fiscal amount of “education funding has generally increased since the 1990s,” proportionately with inflation, help for educating low-income students has just about flat-lined since the 1990s. This has to do with how districts distribute funds, and the new factors drawing their attention including:
Rising Housing Costs
Since 2000, the median cost of housing has increased by over 160%! School funding is distributed by the amount of taxes collected by families in the district. This allows a district like Alamo Heights in Texas, a relatively wealthy school district, to receive about $5,000 more per student than neighboring Edgewood Independent School District.
This $5,000 difference makes students of less wealthy districts miss out on the benefits of “hiring and retaining excellent teachers, reducing class sizes, and expanding the availability of high-quality early education.”
Federal, State, and Local Funding
“Historically, the federal government has focused its investment in supporting education and related services on the most at-risk children,” defined as those exposed to households with drug abuse, domestic abuse or violence, family members with health detriments, and more.
But as the cost of living and housing has increased, although the number of students with these exact threats to receiving consistent education hasn’t risen, the number of students losing access to high-quality education has. Our government, at all levels, needs to start looking into how funding distribution may need to change to accommodate the number of students who are truly at risk.
Post-2008 Recession: Budget Cuts and Job Loss Impacted Families and Educators
Unfortunately for all students, especially those of lower socioeconomic backgrounds, over half of the states in the US decreased their school funding in 2015 compared to 2008, following the recession. Families already impacted by job loss were exuberantly impacted by decreased access to quality education.
Since budgets were cut to hire and retain educators, district-related job losses impacted communities by “reducing purchasing power of workers’ families, weakening overall economic consumption and thus slowing the recovery” from the recession. As we see an oncoming recession in the wake of COVID this is important to keep in mind.
Post-2020 COVID Pandemic
We’ve already seen long-term effects of ineffective financial planning hurting schools, student learning, and communities at large. Cutting teacher jobs and budget cuts will cause longer economic recovery and a less educated workforce. Thoughtful student budget planning will be essential to a successful post-pandemic recovery as we look into the coming decade.
As fintech and edtech develop, there are opportunities to even the financial playing field for all districts and families. Programs like Pay Theory, which offer online cash payments, are mindful of creating software platforms that allow families to pay for K-12 education through systems that meet their needs. Innovation in the delicate intersection of finance and education is the answer to how we can be proactive in addressing future changes for our districts.
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