America’s trillion-dollar school system: 5 trends explain where the money goes

In April, the National Center for Education Statistics reported that the 50 states and Washington, D.C., took in $1 trillion in federal, state and local revenue for K-12 public education in the 2023-24 school year.

One. Trillion. Dollars. 

That’s a remarkable milestone. And while it doesn’t tell the whole story — it represents only revenues, not expenditures — it speaks to five trends that help explain where K-12 finance stands today.

More money, fewer students 

On an inflation-adjusted basis, schools had 22% more money to spend in 2023-24 than a decade earlier. One-time federal relief funds played a role here, and as a result, federal revenues had the largest jump in percentage terms (up 65%). But schools rely much more heavily on state and local funding, and those revenues also rose by 18% each. Meanwhile, schools served about 500,000 fewer students, a decline of 1.1%. 

Put differently, schools are serving fewer students with substantially more money than they did a decade ago.

The national averages mask wide variation across the states 

On average, public schools spent $17,619 per student in the 2023-24 school year. But there was enormous variation, with places like New York and the District of Columbia spending more than $30,000 per student, while states like Idaho, Utah, Arizona, Oklahoma and Mississippi spent closer to $11,000 or $12,000 per child. 

These figures don’t account for cost-of-living differences, but they reflect real distinctions in how public education looks in various parts of the country. As one example, consider how different staffing levels vary across states. In Vermont, schools employ one full-time staff member for every 4.3 students. Maine, Connecticut, D.C., New Hampshire and Wyoming all have similar ratios. Meanwhile, the average school in Utah has 11.3 students for every employee. Arizona, Idaho, Nevada, Alabama and California are also on this lower end of staffing. This all means students have very different public school experiences depending on where they live. 

States also haven’t followed the same path over the last decade. In real per-pupil terms, school spending was up in 47 out of 50 states and the District of Columbia, led by increases of 65% in California, 49% in New Mexico and 46% in Hawaii. At the other end, Alaska’s real per-pupil spending fell 13%, Montana’s declined 6% and Wyoming’s fell 1%. 

Where is the money going? Not to teacher salaries 

Education is labor-intensive, and teachers are by far the largest group of workers. But as I’ve written before, higher spending is not making its way into teachers’ pockets. According to the NEA Rankings and Estimates report, public school teachers earned an average salary of $72,030 in the 2023-24 school year. A decade prior, they earned $56,610. That’s a nominal raise of almost $16,000, but in real, inflation-adjusted terms, it represents a decline of about $2,500. In other words, on average, teachers today have less purchasing power than they did a decade ago. 

Why? Because districts employ more workers, who have more expensive benefits 

As I and others have written, schools employ more people than they used to. They have more teachers and a lot more instructional aides, principals, assistant principals, guidance counselors and student support staff. In metaphorical terms, schools have gradually split up their pie into smaller and smaller pieces. 

Beyond salaries, each of those employees also needs health insurance and retirement benefits, and those, too, have risen rapidly. In 2023-24, schools spent $197 billion on employee benefits. As another way to look at it, for every $1,000 that a school spent on salaries, it also paid $438 in benefit costs. These trends may help explain why districts with rising personnel costs are not boosting take-home pay for their workers. 

Within states and districts, spending is more progressive than you might expect

The biggest variation in school spending is across state lines (see above), and the wealthier states tend to spend more. But within states and districts, schools serving needier students tend to get more funding. As one research summary estimated, “Black and Hispanic students receive $487 and $266 more per pupil than white students, respectively, and [free- and reduced-price lunch] students receive $355 more than non-FRL students.” 

The School Spending and Outcomes Snapshot tool from the National Comprehensive Center lets users see school-level spending figures for their communities. As one example, I’ve chosen to focus on elementary schools in Atlanta. In the chart below, each bar represents one school, and the schools are color-coded based on the percentage of economically disadvantaged students they serve, with green being higher-income and red being lower-income. The schools are organized left to right by lower to higher spending levels. 

Atlanta illustrates the national pattern. With the exception of several charter schools, higher-poverty elementary schools generally receive more funding per student than lower-poverty schools.

Of course, how much money is spent doesn’t tell us how the money is spent. At the national level, the researchers found that low-income and Black students have more staff allocated toward their education, but those staff tend to be less experienced, and thus lower-paid. 

It’s unclear if having more, lower-paid staff is better or worse for students than having fewer, higher-paid teachers, but policymakers need to understand the underlying trends to avoid making expensive errors. For example, when New York state tried to impose a class size cap on New York City, the teachers union claimed that “priority will be given to schools with higher poverty rates” — but researchers found those schools already had the smallest classes. Meeting the new statewide cap would therefore require shifting resources toward wealthier schools, at a cost of as much as $1.9 billion.

Crossing the trillion-dollar threshold presents an opportunity to ask harder questions than whether schools simply need more money. Enrollment is falling, spending has risen substantially and staffing has expanded, yet teacher pay has stagnated and student outcomes remain uneven. The next decade of school finance will be determined by whether policymakers can resolve these competing challenges.