K-12 Education Spending Spotlight 2025: Annual public school spending nears $1 trillion

This decade could go down as one of the most consequential in the history of U.S. public education. Between COVID-19 school closures, historic declines in public school enrollment, and the rise in school choice policies, the decisions made by state lawmakers in the coming years will help shape generations to come.

Policymakers must have the best data possible to inform their public education decisions. The following analysis from Reason Foundation’s K-12 Education Spending Spotlight brings together the latest figures from the U.S. Census Bureau and National Center for Education Statistics and highlights five key insights from our tool and their implications for state policymakers and other stakeholders.

These critical insights include examining and ranking every state’s total K-12 and per student public school funding, the public school enrollment levels in every state and how states continue to hire more non-teaching staff even as they lose students, how and why teachers’ salaries are failing to keep up with inflation in nearly every state, how much public school funding is increasingly being shifted to cover pension debt, and the disappointing student scores on key standardized tests since the pandemic.

Total U.S. public school funding is approaching $1 trillion and now exceeds $25,000 per student in eight states.

Nationwide, public school funding increased by 35.8% between 2002 and 2023, rising from $14,969 per student to $20,322 per student after adjusting for inflation, Reason Foundation’s K-12 Education Spending Spotlight finds.

In total, U.S. public schools received $946.5 billion in funding in 2023, with New York topping all states at $36,976 per student, followed by New Jersey at $30,267 per student.

Notably, eight states exceeded $25,000 per student in 2023: New York, New Jersey, Vermont ($29,169 per student), Connecticut ($28,975), Pennsylvania ($26,242), California ($25,941), Rhode Island ($25,709), and Hawaii ($25,485).

The lowest-spending state, Idaho, was the only state spending less than $12,000 per student. Utah, Oklahoma and North Carolina spent less than $14,000 per student.

Since the start of the COVID-19 pandemic, the largest increase in per-student spending has occurred in California, rising 31.5% from $19,724 in 2020 to $25,941 in 2023.

Michigan, Kentucky and Missouri were the next biggest percentage increasers, all spending 17% more per student in 2023 compared to 2020.

Per student spending also rose by over 15% from 2020 to 2023 in Hawaii, New Mexico, Arizona, Mississippi and Alabama.

Nationally, compared to pre-pandemic levels, K-12 funding is up by 8.6%, rising by $1,610 per student in real terms between 2020 and 2023. However, the bulk of these new education dollars, since 2020—approximately $1,181 per student—are from the $190 billion in federal COVID-19 relief funding that public schools received during the pandemic. While non-federal dollars increased by $429 per student during this time, this is a departure from pre-pandemic trends, when state and local funding rose by $1,089 per student between 2017 and 2020.

Policy implications of K-12 funding levels

For policymakers, K-12 funding has increased dramatically in the past couple of decades, with public schools in all 50 states seeing substantial increases. However, with federal pandemic relief funding now expired, combined with rising economic uncertainty, declining public school enrollment, and increased competition from school choice and homeschooling, the era of unrelenting public school funding growth may be coming to an end. Public school funding is at record levels, and state and local policymakers should shift the focus to maximizing the impact of existing K-12 dollars in ways that can improve student outcomes.

Public school funding is increasingly spent on employee benefits, including teacher pensions.

Inflation-adjusted K-12 education spending on employee benefits—which includes teacher pensions, health insurance, and other expenses—increased by 81.1% between 2002 and 2023, rising from $2,221 per student to $4,022 per student, Reason Foundation’s analysis shows.

In comparison, real spending on employee salaries grew modestly, rising from $8,449 per student to $9,098 per student, a 7.7% increase. As a result, for every new $1 that public schools spent on employee salaries between 2002 and 2023, benefit expenditures rose by $3.27. In 12 states, growth of employee benefits exceeded 100%, including Hawaii (194.1%), Vermont (171.3%), Illinois (169.9%), New Jersey (167.1%), and Pennsylvania (166.4%), as shown in Table 2.

In 2023, employee benefit costs in New Jersey were $8,333 per student. In New York, the cost was $7,949 per student. Vermont and Connecticut also spent more than $7,000 on employee benefits per student they serve.

Employee benefit costs also exceeded $5,000 per student in Pennsylvania, Illinois, Michigan, Massachusetts, Delaware, New Hampshire, Rhode Island, Wyoming, and Alaska.

Policy implications of rising benefits costs on K-12 spending

Research shows that teacher pension debt is the primary driver of rising benefit spending. For years, states have failed to set aside enough money to cover the pension benefits promised to teachers, resulting in hundreds of billions of dollars in unfunded liabilities (i.e., the difference between the total pension benefits owed to teachers and the dollars available in pension funds). Today, this means that more K-12 education funding must be used to cover pension costs, even while many states have reduced benefits for teachers, rather than in classrooms.

Policymakers should take steps to reverse this trend by paying down pension debt as fast as possible to avoid high-interest costs and modernizing antiquated assumptions and benefit designs. Otherwise, pension costs will continue to eat up a greater share of teachers’ paychecks and school districts’ budgets.

Despite plummeting enrollment, the surge in public school staffing has persisted.

Between 2002 and 2023, the number of public school staff increased by 15.1%, while student enrollment grew by only 4.1%. The bulk of new K-12 hires were non-teachers, which increased by 22.8%, such as counselors, social workers, speech pathologists, and instructional aides.

In comparison, the number of teachers rose by 7.6% during this time. Nationwide, non-teaching staff now account for over half, 52.5%, of all public school employees, up from 49.2% in 2002. Table 3 shows the growth in non-teaching staff, while Table 4 displays enrollment growth.

Since the start of the COVID-19 pandemic, the public school staffing surge has persisted. Despite public school enrollment falling by 1.18 million students between 2020 and 2023, public schools added over 81,000 non-teaching staff to their payrolls during that period.

For example, California has lost 318,532 students since 2020, but has added 3,400 non-teaching staff members, while New York has lost 159,701 students but has added 6,996 non-teaching staff members.

Public school enrollment fell in 39 states from 2020 to 2023.

The 2% increases in public school enrollment in Idaho and North Dakota were the largest gains in the country. The only other states where public school enrollment grew from 2020 to 2023 were South Dakota, Delaware, Louisiana, Utah, Alabama, Montana, Texas, Florida and South Carolina.

With a 6% decrease in public school enrollment, Hawaii has experienced the largest decline in public school students since the pandemic. Enrollment also decreased by more than five percent in New York, Mississippi, Oregon, and California, and by at least four percent in New Mexico, New Hampshire, Illinois, West Virginia, Colorado, Kentucky, Washington, Rhode Island, and Michigan, according to Reason Foundation’s analysis.

Policy implications of decreased public school enrollment and current staff sizes

With the National Center for Education Statistics projecting a 5.3% decline in public school enrollment between 2024 and 2032, current staffing levels are unsustainable. School closures are on the horizon in places like Boston, Houston, Seattle, and Oakland, but it will also be important to reduce staffing to levels that match enrollment.

To minimize the need for layoffs, school districts can leverage staff resignations and retirements, while also giving greater scrutiny to costly across-the-board pay increases. Critically, public schools should also consider the return on investment from decades of adding non-teaching personnel to their payrolls and whether this aligns with their core educational mission.

The average teacher salary has declined significantly since the onset of the COVID-19 pandemic.

Nationwide, the average inflation-adjusted teacher salary fell from $75,152 in 2002 to $70,548 in 2022, the most recent year with complete data available, a 6.1% decline, Reason Foundation finds.

However, most of this drop in teachers’ salaries occurred in the aftermath of the COVID-19 pandemic. Between 2002 and 2020, the average teacher salary remained virtually flat, decreasing by 0.6% to $74,698—but then from 2020 to 2022, it dropped by $4,151, or 5.6%.

From 2020 to 2022, the average teacher’s salary decreased by more than five percent in 38 states. They declined the most in North Carolina (−9.6%), New Mexico (−8.8%), South Carolina (−8.7%), West Virginia (−8.6%), and Mississippi (−8.2%).

Only one state, Minnesota, increased teachers’ salaries after the pandemic.

As a result of the decreases following the pandemic, only 10 states experienced positive gains in average teacher salary between 2002 and 2022, with Washington (18.6%), New York (12%), and Massachusetts (11.7%) leading the list, as shown in Table 5.

In comparison, three states saw teacher salaries decline by more than 20% from 2002 to 2022: North Carolina, Michigan, and Indiana.

Policy implications of teachers’ salaries declining

For over two decades, large and regular increases in public school funding haven’t boosted teacher salaries, and this is unlikely to change without structural reforms.

First, it’s important to understand why teacher salaries stagnated between 2002 and 2020. Public school revenue grew by $3,742 per student (25%) during this period, but funding increasingly went to cover the costs of support services spending, which rose by $1,135 per student (25.4%), and employee benefits, which increased by $1,745 per student (78.6%).

Because teacher pay is tied to years of experience and educational attainment—and teacher salaries vary substantially by state—it’s also possible that demographic shifts in the teacher population contributed to the observed trends. However, available federal data make it difficult to draw firm conclusions. While the share of teachers with over 20 years of experience has declined, educational attainment has increased, with the proportion of teachers holding only a bachelor’s degree falling over time.

What drove the decline in teacher salaries between 2020 and 2022?

Teacher turnover and other factors played a role, but historic inflation levels were likely the most significant factor. In the 2022 school year, the average monthly price level was 9.6% higher than it had been just two years earlier, negating funding increases from state legislatures and eating into teacher paychecks. Large and widespread increases in nominal pay would’ve been required just for teacher salaries to keep pace with inflation, let alone increase, during these years.

For policymakers, the key takeaway is that public school spending decisions, combined with rising pension costs, are eating into teachers’ paychecks. Even if teacher demographics have shifted over time, school officials are increasingly prioritizing spending education funding on non-teaching personnel, while unfunded pension liabilities also consume a larger share of K-12 dollars.

Student outcomes were falling even before the COVID-19 pandemic, despite record funding levels.

The National Assessment of Educational Progress (NAEP) is the gold standard for measuring national and state K-12 outcomes in math, reading, and other subjects. While the National Center for Education Statistics (NCES) publishes average scale scores that are precise, they also publish more intuitive proficiency levels: Basic, Proficient, and Advanced.

Importantly, the proficient benchmark is an aggressive target that doesn’t equate with grade-level proficiency or meeting state standards. According to NCES, “Students performing at or above the NAEP Proficient level on NAEP assessments demonstrate solid academic performance and competency over challenging subject matter.” For this reason, our analysis focuses on the share of students who perform below the basic performance threshold.

Across all four subjects examined—4th and 8th-grade math and reading—the trend is clear: the share of students scoring below NAEP basic fell between 2003 and 2013, increased by 2019, and then grew sharply in the wake of the COVID-19 pandemic in 2022. Except for 4th-grade math, scores regressed again from 2022 to 2024, and outcomes in all four subjects were worse in 2024 than in 2003. These figures are presented in Table 6 below.

For low-income students, a similar trend is observed, as shown in Table 7. Student performance improved from 2003 to 2013, worsened before the pandemic in 2019, and then dropped dramatically in 2022.

By 2024, low-income 8th graders fared worse than they did in 2003, while 4th-grade students still performed slightly better. Notably, performance in three of the four subjects was worse in 2024 than in 2022.

Policy implications of NAEP scores

For policymakers, a pressing concern is the widespread failure of public schools to get students back up to speed in the wake of the COVID-19 pandemic, despite receiving $190 billion in federal Elementary and Secondary School Emergency (ESSER) relief funding during the pandemic.

Research shows that public schools were given more than enough money to reopen safely; yet, many used the windfall to prioritize things other than academics, even as students fell behind. For instance, researchers at Georgetown University’s Edunomics Lab estimate that approximately 20% of the federal pandemic relief dollars were allocated to school facilities, including building repairs and HVAC upgrades. While this was permitted under the law—and some public schools used their federal relief funds wisely—ESSER was a policy failure, especially when viewed through the lens of student achievement.

It’s also notable that, even before the pandemic, student outcomes were trending downward despite record education funding levels across states. For example, 34% of 4th graders and 27% of 8th graders scored below basic on NAEP reading in 2019. While gains were made between 2003 and 2013, a large share of students still scored below the lowest performance threshold in this peak year.

Conclusion

In the years ahead, policymakers will need to address a complex set of K-12 challenges, including declining public school enrollment, bloated staffing for current and projected enrollment levels, mounting pension costs and debt, stagnant teacher salaries, and underwhelming academic outcomes. These problems arose during a period when public schools saw historic funding increases, and money alone won’t solve them.

Instead, lawmakers will need policy solutions that address their root causes and maximize the use of existing K-12 funding. Reason Foundation’s K-12 Education Spending Spotlight aims to help them get started.

Related: K-12 Education Spending Spotlight Archives

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Source: https://reason.org/k12-ed-spending/2025-spotlight/