Over the last several decades, education financing has developed into two separate fields: financing day-to-day school operations and financing education facilities. While the cost of school operations traditionally has been divided between state and local governments, the cost of school facilities has been seen as much more of a local issue.
According to "The State's Role in Addressing the School Facility Crisis," published
in the December 2000 edition of the Association of School Business Officials'
School Business Affairs, 38 states have some program that directs funds
to school districts for capital expenditures. These funding programs break-up
into the following categories:
Flat Grants: This program provides school districts a certain amount
of financing for capital costs. The funds can be distributed on a per-student basis (Indiana, for example, provides $40 per student) or as a grant to a school district (Virginia). Currently, five states (Alabama, Indiana, Kentucky, South Carolina, and Virginia) have some form of flat grant.
Equalized Funding: This funding method provides capital outlay funds to schools based on their wealth. The higher a district's wealth the lower the percentage of cost the state will pay for a facilities project. Twenty-two states have this program (Alabama, Connecticut, Delaware, Georgia, Illinois, Kansas, Kentucky, Maine, Maryland, Massachusetts, Montana, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, Texas, Utah, Virginia, Washington, Wisconsin, and Wyoming).
Grants Based on Need: These programs provide state grants to poor school districts that do not have the financial ability to finance their
needed capital outlay projects. Twelve states have a form of this program
(Alaska, Arizona, California, Florida, Georgia, Minnesota, Mississippi,
New Hampshire, New Jersey, New Mexico, Vermont, and West Virginia).
Basic Support: Under this program, states provide school districts
with an amount of funding per student based on the district's wealth. These
funds are distributed to districts each year regardless of their facility
needs. Four states have a basic support program (Arizona, Arkansas, Colorado,
Full State: In this case, the state provides for 100% of capital
cost. Only two states have a full funding program (Arizona and Hawaii).
Twelve states provide no direct funding to school capital construction cost
(Idaho, Iowa, Louisiana, Michigan, Missouri, Nebraska, Nevada, North Carolina,
North Dakota, Oklahoma, Oregon, and South Dakota).