Education Finance:

Extent of Federal Funding in State Education Agencies

HEHS-95-3: Published: Oct 14, 1994. Publicly Released: Oct 14, 1994.

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Pursuant to a congressional request, GAO reviewed federal funding for education, focusing on: (1) the amount of federal dollars used by state education agencies (SEA) to fund their administrative and other operating costs; (2) how SEA are using these funds to support their operating activities; and (3) anticipated changes in the funding balance from fiscal year (FY) 1993 to FY 1995.

GAO found that: (1) although the federal government only provided about 7 percent of elementary and secondary school funding in FY 1993, states relied heavily on federal support for SEA staffing and operating costs; (2) although most federal and state funding received by SEA is passed on to local education agencies, some federal and state funding is kept at SEA for state-level operations; (3) the level of federal support for SEA varies widely among states depending on the number and types of federal and state programs SEA operate; (4) the average level of support for the 10 core programs was about 29 percent in FY 1993; (5) overall, states reserve a greater share of federal funds for state-level operations; (6) the difference between federal and state fund reserves may be due to the administrative and regulatory requirements imposed by federal programs; (7) state funding for education in 1993 far exceeded total federal funding by $96.3 billion; and (8) most states foresee little change in their federal funding share for SEA from 1993 to 1995.

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