The Buck Stops With States 

Our work with state leaders and advocates to revise state school funding formulas typically excludes federal funds. It sounds counterintuitive, but it’s a practical and principled choice based on several factors: 

• Responsibility — States are constitutionally responsible for education. How states define this responsibility varies but one thing’s clear: The buck stops with states (and always has). That responsibility is reflected in funding breakdowns for public schools. State and local resources make up about 90% of total public education funding, on average. Federal funding comprises the remaining 10% of total K-12 funding, mostly targeting schools serving students from low-income families, students with disabilities, and English learners (ELs). Although federal funding is an important piece of the K-12 funding picture, it only meets a small fraction of the resource needs of these students.  

• Flexibility — Most big pots of federal funding for schools are highly targeted, with restrictions on how states can distribute funds and how districts and schools can spend the money. Federal law requires that federal funds “supplement, not supplant” state and local funding. Federal K-12 funds are meant to sit on top of a fully funded and functional state system. 

• Predictability — Federal funding decisions are outside of state leaders’ control. There are never any guarantees with federal aid and, as we’re seeing now, state leaders cannot assume that federal funds will be timely or consistent. 

Even if state leaders build strong state funding systems, sudden swerves at the federal level can still cause big problems. The effects of the Trump administration’s promised budget cuts, widespread contract cancellations, mass layoffs of the federal workforce, and executive order to shutter the U.S. Department of Education are still unfolding. But we know from experience that school budgets are fragile and complex, that uncertainty is a barrier to responsible budgeting, and that federal budget cuts and data blind spots will hit under-resourced schools the hardest.   

So, where does that leave state leaders and advocates making decisions about K-12 funding in the current political climate? 

It’s no coincidence that more state leaders are accelerating efforts to reform their school funding formulas. States can weather what the federal government throws their way if their funding systems are strong and responsive to student needs. And, if federal funding becomes more flexible in the Trump administration, states will face new questions about allocating and using K-12 resources to support student success.  

These questions and more make for a dynamic policy environment — one that our team continues to track at the state and federal levels on a daily, and sometimes hourly, basis. 

—Jennifer O’Neal Schiess and Bonnie O’Keefe 

The Big Picture: Trends We’re Watching  

Amid moves to close the U.S. Department of Education it’s unclear how the Trump administration may handle the billions of dollars in formula funding tied to the Every Student Succeeds Act and the Individuals with Disabilities Education Act. One possibility: block grants, which are flexible with few federal restrictions on how funds are used by states. 

Pros and cons abound for block grants. Regardless of one’s stance on them, it’s important for states to prepare to effectively implement flexibility if they get it. Our team’s recent memo separates some signal from noise in the K-12 funding space to that end. 

State Spotlights: Notable News From Statehouses  

There are hundreds of school funding bills introduced every year, many of which boil down to funding increases within the current formula structure, or smaller amounts of add-on funding around specific programs or priorities. But what makes a state education finance bill interesting? When a state invests in schools, it’s typically good news. When a state adds significant money to its formula and improves how that money is allocated and spent to better align with student needs, it’s even better news. Conversely, cuts to schools are rarely anything to celebrate, especially cuts that get hidden amid complex formulas or seemingly innocuous updates. States we’re watching: 

• Alabama’s bipartisan report on Modernizing K-12 School Education Funding diagnoses its current formula as under-resourced, inefficient, and inflexible. The legislature is now considering a hybrid approach that would layer targeted student funding weights on top of the current system in ways that could increase resources for students from low-income families, students with disabilities, and ELs. (Disclosure: Bellwether provided research and analytic support to A+ Education Partnership in Alabama that contributed to the work of the Joint Legislative Commission.) 

• Delaware’s Public Education Funding Commission will review potential school funding models in April. Models under consideration include the current unit-based system, a weighted student funding formula recommended by a 2023 AIR report, and a proposal from the Delaware Association of School Administrators to adjust existing unit ratios for students from low-income families and ELs.  

• Maryland Gov. Wes Moore proposed an education spending bill in January that would restructure and slow implementation of the state’s long-term education funding and improvement plan, “The Blueprint,” as part of a broader effort to address a projected $3 billion budget deficit. The proposal drew pushback from superintendents, teachers, and education advocates, who warned that cutting or delaying funding would undermine the early progress districts are seeing. The House of Delegates voted along party lines to advance a revised version of the bill that rejects most of the governor’s proposed cuts — instead, preserving planned funding increases for students in poverty and ELs and maintaining funding for community schools along with investments in teacher recruitment and training.  

• Oregon legislators are debating findings from a six-part AIR report on school funding commissioned by the state. The report finds that while Oregon devotes a substantial amount of funding to K-12 education compared to peer states, funds are not distributed equitably based on student need. The report recommends significant new investments and reforms — such as directing more resources to high-poverty districts, incorporating regional cost adjustments, and expanding special education funding. Gov. Tina Kotek has said that more funding must come with stronger accountability for academic results. House Bill 2009 and Senate Bill 141 would establish a statewide accountability system requiring districts to track and report progress with escalating state support and funding oversight for those that fall short. Meanwhile, House Bill 2953, which would eliminate Oregon’s cap on special education funding, is in committee. 

• Virginia passed a budget that, for the first time, introduces a student-based funding weight for students with disabilities as an add-on to its current formula. The budget allocates $52.8 million in fiscal year 2026 to provide an additional 4.75% of basic aid for students receiving Level I special education services and 5.25% for those receiving more intensive Level II services. 

Follow the Money: What We’re Reading  

• Bellwether released two Splitting the Bill briefs, part of our ongoing series of “101-level” issue briefs on student education finance equity. The latest tackle two timely topics: How Do States Fund Pre-K? How Do School Finance Systems Respond to Enrollment Changes? 

• Education Commission of the States released a K-12 Funding Toolkit with guidance on how states can redesign their funding systems to be more “transparent, student centered, adequate, fair and sustainable.” (Disclosure: Bellwether participated in the working group of national experts and state leaders that informed the toolkit and its guidance.) 

• The Association for Education Finance and Policy released a Live Handbook as a hub for evidence-based education policy, including sections on school funding.  

• EducationCounsel has a running list and summary of President Trump’s executive orders and administrative actions on education, including a dedicated section on education funding. 

Thank you to our colleague Linea Harding for research assistance on this edition.