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a division of Home School Legal Defense Association
October 12, 2000

Federal Education Spending

Where Does the Money Go? When Will it Stop?

By: Caleb Kershner & Chris Klicka

The 1996 Congressional Discovery

On February 28, 1996, Republican leaders in the House of Representatives held a comprehensive meeting on abolishing the Department of Education. House Majority Leader Dick Armey (R-TX), flanked by Congressman Bill Goodling (R-PA), “Buck” McKeon (R-CA) and others, produced the results of an investigation by the Economic and Educational Opportunities Committee. The committee documented 760 unconstitutional federal education programs located in 39 separate agencies, departments, commissions and boards. The combined unconstitutional funds totaled $120 billion! Further, the committee found that only six percent of these programs have as their primary function the teaching of math, reading, or science!

“This massive list of federal education programs clearly demonstrates what many of us had suspected for quite some time that Washington is out of control and out of touch” said Goodling. Pointing to a huge stack of regulatory papers required for all the Education Department’s programs, McKeon remarked, “The Clintons say that it takes a village to raise a child, but that is only because it takes a village to fill out this paper work.”

More Dollars Don’t Make “Sense”

A new study conducted and released on August 25, 2000, by the American Legislative Exchange Council (the nation’s largest bipartisan, individual membership association of state legislators, with nearly 2,400 members across America) found that there is no correlation between increased spending and student performance. The study reported on state education performance, noting that Minnesota’s public school performance ranked highest in the nation spending at an average of $6,245 per student and the District of Columbia’s public school performance ranked last-even with spending $8,670 per student. According to ALEC Chairman Ray Hynes, “This study shows the path of least resistance fails our children, and that throwing more money at the problem is not the answer.”

Over the last decade, spending per pupil has increased by 23 percent nationwide in real dollars, yet our public schools continue to perform poorly. On the other hand, home schoolers spend on average less than $600 per pupil per year according to a 1998 study conducted by Dr. Lawrence M. Rudner. They are also scoring higher across the board on standardized achievement test like the ACT and the SAT. Clearly, legislators should consider the success of home schooling and realize “more dollars do not make scholars.”

Extensive Federal Education Spending Examined

The federal government provides support for education well beyond the programs funded through the Department of Education. According to the National Center for Education Statistics, federal education spending was at an estimated $107.2 billion in fiscal year 1998 alone. This is a spending increase of 71 percent since 1990 and 170 percent in current dollars since 1980.

One important measurement of the influence of federal spending on education is the difference between “on--budget” and “off--budget” spending. Off--budget spending is nonfederal funds made available for education purposes when federal programs require matching funds or offer incentives or subsidies. These funds are basically federal guarantees and subsidies for student loans made by banks and public and private lending authorities but are excluded from the federal budget. This creates an obligation by the federal government and results in additional government spending that must be financed through tax revenue. Over $32.2 billion in off-budget spending did not appear on the authorized outlays for education in FY 98. Off-budget spending makes up over 30 percent of total federal education spending.

To put the growth of off-budget and nonfederal funds spending generated by federal legislation in perspective, it has grown from zero dollars in 1965 to inflation--adjusted $4.1 billion in 1975. Between 1980 and 1998, off-budget support grew 232.9 percent after inflation.

Federal On-Budget Program Funds for Education, by Level or Other Education Purpose:
[Amounts in Billions of Current Dollars]
Level of Education or
Education Purpose
Fiscal Year
1990 1998 Percentage Change
FY 1980-1998
Elementary and Secondary 16 16.9 18.6 22 36.8 129.7
Postsecondary Education 11.1 11.2 10.7 13.7 16 43.8
Other (Libraries, Museums, Cultural Events) 1.5 2.1 3 3.4 5.2 233.9
Research at Education Institutes 5.8 8.8 11.3 12.6 17.1 194.7
Total 34.5 39 43.5 51.6 75.1 117.7

On-budget programs, monies authorized by Congress for specific programs, institutions or research have also increased significantly. In fiscal year 98, Congress legislated $75.1 billion-an increase in current dollars of 118 percent since FY 80. More than half of this increase occurred between FY 90 and FY 98. Elementary and secondary education programs received $36.8 billion, nearly 50 percent of all appropriated education spending. Furthermore, the Department of Education received a whopping 41 percent of all the on-budget funds among agencies.

US Department of Ed Spending
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Growth of the Department
Since the 1979 inception of the U.S. Department of Education, it’s spending has grown astronomically. Excluding expenditures on loans such as higher education loans, the Department spent $14,612 million in 1980, one year after its inception. By 1989, the ED’s budget had increased to $18,145 million and grew to $25,832 by 1992. Today, the Department of Ed’s outlays continue to grow, reaching $32 billion in 1999 and an estimated $36 billion for the year 2000. The Departments yearly outlay is expected to reach over $47 billion by the year 2005.

With an annual budget now approaching $36 billion, the ED employs over 5,100 people (89.4% of whom were deemed nonessential during the November 1995 government shutdown). Furthermore, the education-spending rate since the Department’s founding has risen three times as fast as non-defense discretionary programs (29.5% versus 7.9%).
US Department of Ed Spending
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Despite the fact that no positive correlation between spending and student performance has been found, Congress continues to fund the Department of Education, spending a total of $450,146,000,000 taxpayer dollars between 1980 and 1999.

Red Tape

Although statistics show that only seven to eight % of an average school’s budget is subsidized by the feds, local districts complain about overwhelming paperwork and red tape required to receive these skimpy funds. A 1991 survey of Ohio school districts found that each district was required to fill out an average of 330 forms-157 were from the state and 173 from the federal government. Responsible for only seven to eight percent of the budget, the federal government causes 55% of the red tape.


The federal government’s involvement in education represents everything that is wrong with many of our government agencies: they are unconstitutional, wasteful, expensive, and out of touch. The Founders of America tried to prevent this when they added the 10th amendment to the U.S. Constitution, declaring, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Under their interpretation, education was an issue to be dealt with at the state and local level, not by the national government. The Department of Ed is unconstitutional and it is the duty of Congress to abolish not only the Department, but also the entire federal involvement in education. If Congress refuses to do its duty, the bureaucracy will continue to grow, and American education will continue to decline.

In 1979, Representative L.H. Fountain (D-NC) made an accurate prediction about the Department of Education that could be applied to the whole federal role in education. Fountain stated,

I am opposed to this ill-advised and unnecessary legislation to establish a department which will grow and grow, cost the taxpayers of this nation unnecessary billions of dollars, and ultimately become an unmanageable monster bureaucracy.