The Teacher’s Guide to Educational Funding in K-12 Schools

Funding for public education can be a tricky topic to comprehend fully. As the process is complex, federal funding can bring up a myriad of questions, and new educators may not know how to make sense of it all.

Historically, as presidential administrations change, so do the various laws and funding sources around education. Initiatives to increase or remove various school supports through grants and programs change over time, but here’s a quick guide to the current types of federal funding in place for today’s public schools.

Types of Federal Education Support

Broadly speaking, funding for federal education is provided to districts through grants and programs. The purpose of these programs is generally to provide support to meet achievement goals. The largest funds for elementary and secondary education include the following:

  • Title I: support for the socioeconomically disadvantaged
  • Title II: support for professional development for educators
  • Title III: support for English-language learners (EL students) and immigrant students
  • Title IV: student support for academic achievement and 21st-century learning initiatives
  • The Individuals with Disabilities Education Act (IDEA): support for special education services
  • Head Start: support for early education programs

The majority of federal funds are geared toward districts with high populations of specific groups of students, including students from low-income families, English-language learners, and students with disabilities. A shift recently occurred in federal funding to provide support for early education and intervention programs at the preschool level. The Head Start initiative has already shown promising outcomes as a result of the funding, and it looks to be where the focus of education is headed.



The Distribution Process

Using Title I, the largest of the federally allocated funds, let’s explore the complex state and district distribution process. There are four different formulas to determine what funds go where:

Basic formula:  A district qualifies for the “basic formula” funding if it has at least ten poor children and 2 percent of its students live in poverty. This means that virtually every school district gets at least some Title I funding through this formula.

Concentration formula:  This formula allocates money to school districts based on the concentration of poor students they serve. A district qualifies for the funding if it has at least 15 percent of children in poverty or 6,500 poor children, whichever is less.

Targeted formula:  This formula allocates more dollars to school districts as their poverty rates increase. A district qualifies for the funding when it has at least ten poor children and that number of poor children accounts for at least 5 percent of the district’s school-age population.

Education finance incentive formula:  This formula allocates money to states that provide a certain amount of financial support for education compared to their relative wealth. It takes into account the degree to which education spending among districts within the state is equal. Once a state’s allocation is determined, funds are distributed to school districts in which the number of poor children is at least ten and accounts for at least 5 percent of the district’s school-age population.


The process is outlined below:


Source: Selling to Schools: Education Data

How to Use Federal Funds

Each federal funding source program has different guidelines that must be met in order for districts to use those funds:

Title I, Part A:  The school must focus these funding services on children who are failing (or most at risk of failing) to meet state academic standards. Schools in which children from low-income families make up at least 40 percent of enrollment are eligible to use Title I funds. Funds must be then applied to school-wide programs that serve all children. Local education agencies (LEAs) also must distribute funds to eligible children enrolled in private schools who require academic enrichment services.

Title II, Part A:  All Title II funds must be used for professional development, which encompasses a variety of school sectors. In exchange for receiving funds, agencies are held accountable for improvements in academic achievement via teacher improvement initiatives. Title II funds are generally flexible, and education agencies can use these funds creatively to address challenges that address teacher quality and training. Initiatives for fund usage can concern teacher preparation, recruitment and hiring, induction, curriculum development, teacher retention, or the development of capable principals to serve as effective school leaders.

Title III, Part A:  Funds may be used to expand language development and instruction programs for limited-English-proficient and immigrant students. Title III funding provides opportunities for EL students to attain English proficiency and meet state academic achievement standards.

Title IV, Part B:  Funds may be used for a variety of different methods but must ultimately provide academic enrichment opportunities to help students (particularly from low-income families in low-performing schools) meet state education standards. These will depend on state and district goals, but measures could include social and emotional learning initiatives, digital curriculum, or community outreach.

IDEA, Part B:  Sections 611 and 619 funds must be used only to pay the excess costs of providing special education and related services to children with disabilities. These costs include but are not limited to:

  • special education teachers and administrators;
  • providers of related services (speech pathologists, school psychologists, etc.);
  • materials and classroom supplies for use with children with disabilities;
  • professional development for special education personnel and general education teachers who educate children with disabilities; and
  • specialized equipment or aide devices to assist children with disabilities.

Expenditures must benefit eligible students who are receiving special education services. Funds may be used in the provision of service to all eligible students aged three through twenty-one.


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“{Cheat Sheet} An Overview of Federal Education Funding.” Selling To Schools, July 18, 2018.

U.S. Department of Education. “10 Facts about K-12 Education Funding,” September 19, 2014.

Monet Hendricks is the blog editor and social media/meme connoisseur for Social Studies School Service. Passionate about the field of education, she earned her BA from the University of Southern California before deciding to go back to get her master’s degree in educational psychology. She currently attends the graduate program at Azusa Pacific University pursuing advanced degrees in school psychology and Applied Behavior Analysis. Her favorite activities include watching documentaries on mental health and cooking adventurous vegetarian recipes.

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