From February to April 2025, Education Commission of the States conducted a national survey of SLDS leaders to better understand how their systems are funded. An invitation to participate in a short survey was sent via email to SLDS leaders in 32 states ECS identified as maintaining active SLDSs as of February 2025. We sent emails to state systems for whom we could identify a clear contact. (For more information on ECS’ criteria for defining an SLDS, see The Statewide Longitudinal Data System Landscape.) The survey was designed to provide insights into how SLDSs are funded, the present challenges, and the strategies leaders are using to maintain and improve their systems. Twenty-seven state leaders responded to the survey for a response rate of 84%.

These survey responses were supported by follow-up interviews with select state leaders conducted in June 2025. Three case summaries states were selected to explore how different financial strategies — ranging from reliance on federal grants to primarily state-funded approaches — can affect a system’s ability to operate, adapt and grow. Interviews were conducted via video call, transcribed and summarized into three case summaries included below. Given the sensitive nature of financial strategy discussions, all responses have been de-identified and aggregated to protect participants’ anonymity. Throughout, the percentages are calculated out of all 27 respondents.

Data collections focused on two critical dimensions of financial health: 1) adequate and 2) sustainable funding. Adequate funding refers to sufficient resources to comfortably support a system’s operations. This includes maintaining core functionality, addressing user needs and advancing system goals without undue financial pressure. Sustainable funding refers to reliable, non-revertible and renewable sources of financial support — typically guaranteed for a minimum of three years. Sustainable funding ensures a system can continue operating effectively while pursuing long-term priorities free from the disruptions of uncertain or temporary financial arrangements.

• All 27 states identify research and analytics as a very important or important function of their SLDS, and 26 (96%) cite public reports that support accountability and illuminate outcomes. In contrast, only 10 states (37%) say it is very important or important to provide personalized services to individuals so they can access education and public services (Chart 1).
  
  
• Core SLDS functions reported across states include data management in all 27 states, governance and organizational leadership in 26 states (96%), research and analytics in 26 states (96%), communications in 22 states (81%), project management in 22 states (81%) and information technology (IT)/system support in 20 states (74%) (Chart 2).
  
  
• SLDSs offer products and services that support the core functions above. Twenty-five states (93%) offer public reports and interactive dashboards. Eighteen states (67%) provide open data files containing aggregate data for download and analysis, secure data enclaves for researchers, and responses to requests for data, including personally identifiable information (PII), from researchers. Eleven states (41%) offer data portals or other tools that allow authorized staff in state agencies to access individual-level student data (Chart 3).
  
  
• Twelve states (44%) manage technology infrastructure for their SLDS entirely in-house while 10 states (37%) use hybrid management models that involve collaboration between state agencies and external vendors. Only two states (7%) depend fully on external vendors (Chart 4).

• State appropriations are the most common primary funding source for SLDSs, which 16 states (59%) cite. Many fewer states point to federal grants (eight states; 30%) or private philanthropy (two states; 7%) as primary sources. States are more likely to describe federal and philanthropic funds as supplemental sources. (Chart 5)
  
  
• State appropriations are most often allocated to sustaining and expanding current operations. Twenty-four states (88%) report receiving state funds, and 21 (78%) use them to sustain ongoing activities and 17 (63%) apply them to expanding or improving operations. (Chart 6)
  
  
• In contrast, states are more likely to use federal funding for shorter-term investments. Twenty states (74%) report receiving federal funding (Chart 5), and 17 (62%) use such funds to drive system improvements and modernization efforts, such as upgrading infrastructure, developing advanced analytics, and piloting new technologies or services (Chart 6). Even so, the eight states (30%) that use federal funds as their primary funding source for sustaining operations may face uncertainty as the federal funding landscape continues to change (Chart 5).
  
  
• Private foundation funding, while flexible, is limited in scope. Only 12 states (44%) report receiving any philanthropic support, which they typically use to supplement state and federal funding. Six states (22%) use it to support expansion and four (15%) rely on it for operational or ad hoc expenses (Chart 6).
  
  
• States are less likely to use alternative funding sources like fees or in-kind contributions (Chart 5). States report using in-kind contributions (e.g., staff, technology or infrastructure) primarily to support ongoing operations (8 states) or to support ad hoc needs (6 states). Only eight states (30%) report collecting fees for responding to data requests, and they apply those fees to various expenses, including ad hoc costs and sustaining or expanding operations (Chart 6).
  
  
• Most respondents report little or no diversity in their funding sources: 13 states (48%) report no more than two sources of funding and 4 states (15%) rely solely on state appropriations (Chart 7). Thirteen states (48%) report efforts to reduce financial risk by broadening their funding portfolios. Meanwhile, 14 states (52%) indicated they have not implemented strategies to diversify their funding (Chart 8).

Survey responses reveal that SLDSs have diverse priorities for directing their resources, ranging from IT and application development to data management, research and analytics, and data governance. Those priorities may change from year to year depending on where SLDSs are in their trajectories — creating infrastructure, developing or strengthening governance, modernizing systems, improving data collection and management, or creating public reports and dashboards.

Because state priorities and goals are so diverse, it may be difficult to estimate the cost of building, sustaining or expanding SLDSs. The Education Systems Center at Northern Illinois University provides a tool to help state leaders budget for their own particular system goals.

• Twenty states (74%) point to data management as one of their top three expenses (Chart 9). Eight states (30%) indicate a need for critical or significant additional funding in that area (Chart 10).
  
  
• Other top-three expenses are IT and systems support, which 17 states (63%) cite, and application development and data collection, which 12 states (44%) cite (Chart 9). Fifteen states (56%) say they need critical or significant additional support for IT and systems support, and 13 states (48%) say the same for application development and data collection (Chart 10).
  
  
• Seventeen states (63%) report a critical or significant need for additional investment in research and analytics — a function almost every respondent characterized as core to their SLDS (Chart 10).
  
  
• States devote less money to functions like governance and leadership or help desk and customer support (Chart 9). Most states report that those functions require moderate or no additional support (Chart 10). This finding does not suggest that system leaders underestimate their importance. As the Education Systems Center’s SLDS Cost Model suggests, personnel costs of governance, leadership and customer support can be lower than a system’s technology costs.

• Nineteen states (70%) report that staffing was inadequate or only somewhat adequate for high-priority functions like research and analytics. Twenty states (74%) report inadequate or somewhat adequate staffing for application development and data collection (Chart 11).
  
  
• Eighteen states (67%) note similar concerns about staffing for IT and systems support and communications. (Chart 11)
  
  
• Project management receives a more favorable report. Nineteen states (70%) indicate that staffing was adequate or more than adequate in this area (Chart 11).

• Twelve states (44%) indicate that their funding supports incremental improvements through annual budgets. Ten states (37%) say they have flexibility to allocate resources as needed, and an equal number report relying on short-term grants or project-based funding (Chart 12).
  
  
• Six states (22%) report having dedicated funds for technology upgrades, and an equal number report sharing infrastructure costs through partnerships (Chart 12).
  
  
• Six states (22%) say their funding does not support modernization or scalability (Chart 12).
  
  
• Though most states report mechanisms for supporting modernization, 16 states (59%) disagree with the statement “Our SLDS is financially equipped to adapt to changes in technology or user needs” (Chart 13).

• Twenty-four states (89%) say establishing or deepening links with additional datasets would be a top investment area if they had more funding (Chart 14).
  
  
• Other high priorities include research and analysis and public-facing dashboards — each identified by 20 states (74%) (Chart 14).
  
  
• Fifteen states (56%) identify strengthening data quality and validations; compliance reporting received less emphasis. Three states (11%) prioritize compliance reporting at the state level, and two states (7%) prioritize compliance reporting at the federal level (Chart 14).

• When asked in two separate questions to identify up to three risks to their SLDS — first regarding funding over the past three years and then regarding long-term sustainability — leaders report much greater risks to future sustainability than they perceived in the past. While 10 states (37%) report no risks to their SLDS funding over the past three years, only one respondent anticipated no risks to their long-term sustainability (Chart 15).
  
  
• The starkest difference involves state appropriations, which most states describe as their primary funding source. Only two states (7%) report risks related to state appropriations over the past three years, yet 16 states (59%) identify decreasing state appropriations as a leading long-term risk (Chart 15).
  
  
• This pattern characterizes every risk category surveyed. The number of respondents that identified each risk jumped markedly from past experience to future expectations: changes in federal policies (from eight states to 14 states); changes in state policies and priorities (from three to 12 states); limited grant renewals (from five to nine states); and lack of stakeholder support or engagement (from four to eight states) (Chart 15).
  
  
• Fourteen states (52%) consider their current funding adequate, but fewer — 11 states (41%) — view it as sustainable over the long term (Chart 13).
  
  
• States report considerable confidence in governance structures: 19 states (70%) agreed that they support long-term sustainability planning. However, only 10 states (37%) believe their funding model enables long-term upgrades and innovation, which indicates that despite strong leadership, limited resources may impede planning (Chart 13).
  
  
• When asked about resource constraints in an open response question, respondents identify challenges related to recruitment and retention. Factors such as uncompetitive salaries and reliance on grant-funded positions contribute to staffing uncertainties. Shortages of technical and governance staff also limit capacity and opportunities for collaboration. Dependence on variable federal funding combined with limited state appropriations restricts growth and outreach while annual funding cycles complicate long-term planning. Procurement rules and cost-recovery models are often misaligned with system needs. Limited budgets for infrastructure and cloud integration constrain upgrades and innovation. Additionally, growing demand for data exceeds available capacity, which affects responsiveness and the development of public-facing tools despite generally adequate support for internal systems.

Like most of the respondents to the survey, the hybrid-funded state funds its SLDS through a hybrid model that includes both federal SLDS grants and state appropriations. Roughly two-thirds of the funding comes from federal sources to support a centralized team that drives a collaborative research agenda. While this model allows for flexibility and innovation, it creates uncertainty about long-term sustainability. This problem is amplified by federal funding uncertainties as well as rising technology and security costs. The system’s infrastructure is custom-built and cloud based. SLDS leaders say the cloud technology makes it scalable but also resource-intensive to maintain.

This state's SLDS leaders counsel those developing a new system to budget for regular increases to subscription-based technology services and to avoid building systems larger than they can sustain.

The state has also found that maintaining the system’s visibility is essential to justifying continued investment. Despite contributing valuable insights to state policy discussions, the SLDS is not always recognized as the source of that work. The leader said, “We do the work, and it gets put into a policy discussion … but I don't know that it's being consciously appreciated as the work of the SLDS system.” This challenge has prompted the team to consider new strategies for demonstrating return on investment and strengthening their case for more stable state support.

This state's SLDS model has been funded primarily through state appropriations. The state-funded system operates with stable state appropriations and does not currently rely on federal grants or other external funding sources. This funding stability has allowed the SLDS team to focus on maintaining high-quality data, supporting research and improving dashboard tools without major concerns about financial uncertainty. Like the hybrid-funded system above, the state-funded system uses a combination of commercial tools and in-house development to support its technical infrastructure, and it is considering moving some of the system into the cloud.

Crucially, SLDS leaders of the state-funded system report that their system has earned the trust of both agencies and legislators, which has translated into reliable funding year after year. As one leader explained, “We’ve never had to go to bat for funding … the system advertises itself because people rely on it.”

While additional resources would enhance usability and visualization tools, the system’s leaders say its core infrastructure is considered well-supported. This state’s experience highlights the importance of aligning the SLDS with legislative priorities, cultivating strong partnerships with key data users in leadership positions and consistently demonstrating value to maintain funding support over time.

This state’s SLDS was initially built with federal grant funding but now relies on contributions of funding and staff time from partner agencies. This shift revealed and amplified pre-existing challenges, particularly in sustaining legal and analytic capacity, that had previously been buffered by federal grant support. Although the governance structure provides clear direction and partners have a shared vision, the lack of centralized, reliable funding has made it difficult to staff the system to meet its full potential. A SLDS leader reported that this mixed-source funding approach has affected the system’s ability to deliver on some long-term goals — particularly in scaling up research efforts and improving responsiveness to agency needs.

The agency-supported system’s experience suggests that transitioning from federal funding to state and agency-based funding requires intentional planning and advocacy. As the SLDS leader reflected, “making that jump from federal funding to state appropriations or state funding of some kind is a make-or-break point for a lot of the systems.”