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Status of Education in Rural America
NCES 2007-040
June 2007

3.1. Public school revenues


Compared with city and suburban public schools, rural public schools tended to receive a greater proportion of their revenues in 2003–04 from state sources and a smaller proportion from local sources. Rural public schools received a smaller proportion of their revenues from federal sources than city public schools, but a greater proportion than suburban public schools.

In 2003–04, U.S. public elementary and secondary school revenues totaled $453.4 billion (table 3.1). These revenues came from federal, state, and local sources in varying proportions by locale.

Rural public schools received a smaller percentage of their revenue from federal sources (9 percent) than city schools (11 percent), but a larger percentage than suburban schools (6 percent) (figure 3.1). Rural schools also received a larger percentage of their revenue from federal Impact Aid (0.7 percent)1 than schools in other locales (0.1 to 0.3 percent) (table 3.1).

In the nation as a whole, rural public schools relied on state funding more than city and suburban schools.2 Specifically, 52 percent of rural schools' revenues came from state sources compared with 42 and 46 percent, respectively, for suburban and city schools (figure 3.1). Conversely, a smaller percentage of rural school revenues came from local sources (primarily, local property taxes) (39 percent) than suburban schools (52 percent) and city schools (43 percent). Little difference was noted in the distribution of revenues by source between rural and town schools.

Within rural areas, public schools in remote rural areas received a greater percentage (2 percent) of their revenue from federal Impact Aid than those in fringe (0.3 percent) or distant (0.4 percent) rural areas, while schools in fringe rural areas relied more on local funding (43 percent) than those in distant (36 percent) or remote rural (35 percent) areas.

Rural public schools located in high-poverty school districts received a larger percentage of their revenue from federal sources (19 percent) than rural schools located in districts at each of the other poverty levels (3 to 12 percent) (table 3.1).3 Rural schools located in high-poverty districts also received a smaller percentage of their revenues from local sources (23 percent) and a larger percentage from state sources (58 percent), when compared with other rural schools. These same patterns were noted in each of the other locales, to varying degrees, and within rural areas.

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1 The Impact Aid program, originally enacted in 1950 under P.L. 815 and 874 (now Title VIII of P.L. 107-110, the No Child Left Behind Act of 2001), compensates local school districts for any "substantial and continuing financial burden" resulting from federal ownership of land that exempts it from property taxes as well as from the enrollment of children residing on Indian lands, military bases, low-rent housing properties, or other federal properties.
2 This general national pattern was not true in all states; the most notable exceptions were Connecticut and Rhode Island where rural public schools relied more on local funding than city and suburban schools.
3 District poverty was determined by ranking school districts by the percentage of enrolled children ages 5–17 from families with an income below the poverty threshold, and then dividing these districts into five categories with equal proportions of the total enrollment. The low-poverty district category consists of the 20 percent of students nationally in districts with the lowest percentages of poor school-age children. Conversely, the high-poverty district category consists of the 20 percent of students nationally in districts with the highest percentages of poor school-age children. For a comparison of poverty definitions see appendix B.

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