Shortchanging Future Generations

Most public education funding comes from state and local sources, as federal spending represents only 7 cents of each public dollar spent on education. But the federal government plays an important role in supporting at-risk students, and—as shown in recent years—it helps stabilize total education spending amid national economic downturns.

During the Great Recession, Congress increased federal funding for education to help fill the gap left by state and local budget shortfalls and funding cuts, which kept total public education spending steady. But because of a slow economic recovery, the temporary increase in federal funding ended before nonfederal funding rebounded. Coupled with further cuts aimed at curbing federal deficits, this led to total public education spending falling to its lowest point in 2013, four years after the recession’s peak.

Total public education spending has climbed back to prerecession levels as state and local budgets have recovered. But because of state and local balanced-budget requirements, nonfederal education funding remains vulnerable to cuts during future economic downturns.

Increased mandatory spending on health programs for children and adults is putting pressure on education spending and other discretionary spending on kids. In 2018, federal spending on education dropped by $1.9 billion. This is part of a long-term trend, as 2018 federal spending on elementary and secondary education was 48 percent below peak spending during the recession (in 2010) and 14 percent below prerecession spending (in 2008).

The forecast for future public spending on education isn’t more optimistic. Federal spending on education programs is projected to fall from $41 billion in 2018 to $36 billion in 2029, accompanied by declines in other discretionary spending programs. Mandatory health spending on children is the only category with strong growth projected over the next decade, which is consistent with long-term trends in all federal health spending.

Federal spending is projected to rise over the next 10 years, and revenues aren’t expected to keep up. As spending exceeds revenues year after year, the national debt will continue to climb. Combined with forecasted higher interest rates, this growing deficit means interest payments on the debt will nearly double by 2029 as a percentage of gross domestic product (and more than double in real dollars).

Despite the rise in overall federal spending as a share of the economy, spending on children is projected to fall over the next decade. Under current policies, interest payments on the debt are projected to exceed spending on children in the next few years.