The Federal Government and Public Education (A Budget Analysis)

by Watson Scott Swail, President & CEO, Educational Policy Institute

I’ve written lately on the issues related to the Trump Administration and Education Secretary Betsy DeVos. There are certainly red flags about the direction of the Administration, but these issues will take a while to play out, even though many of us have concerns about recent changes to student loans and the federal budget. But let us take a step back to look at the role that the US Department of Education, as well as other Departments, means for education nationally.


Without a history lesson, the US Department of Education has played an important role in public education by using both bully pulpit and directed funds to protect the needs of low-income, minority, and disabled students. The official funding of the US Department of Education is $67 billion per year, but other estimates suggest that total education funding across the entire federal budget accounts for $108 billion (see here for more information). This last number represents approximately three percent of total federal spending.

Exhibit 1. Federal Education Spending, Fiscal year 2012 (in billions)


As illustrated in the graphic above, $15 billion of funding for nutritional programs (e.g., school lunch) comes from the US Department of Agriculture and $8 billion in Head Start funding comes from the Department of Health and Human Services (HHS). Understand that these calculations can get very cranky because many funds occur through refundable and other forms of tax credits.

I have taken a fair bit of time to compile the US Department of Education budget for 2017 (the current budget, not the President’s budget, which is for FY 2018). This is a challenging budget because of the sheer complexity of a massive department with countless idiosyncrasies and programs. But, alas, I was able to make some sense of it and provided a few graphics as well as a downloadable excel sheet for readers who have further interest. (Download the Excel here).

The graphic below (Exhibit 2) illustrates the US Department of Education budget without those other important add-ons from other federal departments. A second illustration, Exhibit 3, simply aggregates these line items into grand categories.

Exhibit 2. US Department of Education Spending 2017 Budget


The Trump Administration has said that it plans to shrink the US Department of Education. Some people want the entire department eliminated. The latter item is untenable; there are simply too many important aspects to the Department’s work that need to happen, regardless of political ideology. The former is difficult due to the way budget funding is distributed. From Exhibit 3, note that almost half of all Department funding goes towards financial aid via grants (e.g., Pell, SEOG) and student loans. Student loans are a special category because they are what we refer to as “revolving” funds. That is, the government pays out student loan funding to students who in turn pay it to institutions (seamlessly due to Title IV provisions), but they also collect it when the loan becomes due. Thus they “revolve.” The Department does spend money on servicing the loans (although there are fees to help with those costs) and they also spend money to subsidize loans via zero interest during school for low-income students. These numbers add up significantly.

Exhibit 3. US Department of Education Spending 2017 Budget (aggregated)


Readers can also see that over $32 billion, or 37 percent of funds, go towards programs and services for students with disabilities. This is arguably one of the most moral and ethical services that the federal government provides: providing assistance in research and services to those with significant handicaps. These funds pass through the Office of Special Education and Rehabilitation Services (OSERS), which also houses the Office of Special Education Programs (OSEP). One interesting funding piece is that the Department funds Gallaudet University in Washington, DC, the worlds’ only university designed to be barrier free for people with hearing disabilities. Without an annual appropriation of $121 million, Gallaudet ceases to be.

Special Education and Student Financial Assistance account for 86 percent of the US Department of Education budget. It is hardly likely that any real cuts can be made in these two areas unless the Administration chooses to provide less financial aid to students and lowers its support to those who have extraordinarily special needs. Surely, a  hard fight in Congress and in the public arena. The other 14 percent of the budget provides many other important programs, including Title I programs for low-income students in elementary schools (e.g., Early Reading and Readiness programs), TRIO and GEAR UP programs for low-income students, and school improvement programs, such as Investing in Innovation (i3) and Race to the Top grants to school districts and states. A critical piece of funding is in the research and development in education through the Institute for Education Sciences (IES) and the National Center for Education Statistics (NCES). Our critical studies of student pathways, college affordability, and student learning come from IES. It is one component of the US federal government that really differentiates itself from the rest of the world: world class research with free and available data for researchers and policymakers. I use these data consistently for our EPIGraphs and for other projects. Without such data, we would have great difficulty determining the purpose and utility of our public policies.

Simply put, there isn’t a lot of waste in the US Department of Education. Remember: only three percent of the entire federal budget is devoted to education. In contrast, the Military accounts for 16 percent of the total federal budget, Social Security 25 percent, and Health and Human Services 28 percent (which includes Medicare and Medicaid). Some programs can be cut to save money, and some probably should be. But it could similarly be argued that the Department could be enlarged to provide more support in research and programming to aid states, districts, and colleges.

We will continue to watch and learn.




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