Cato Policy Analysis No. 518 July 7, 2004

A Lesson in Waste: Where Does All the Federal Education Money Go?
by Neal McCluskey

Neal McCluskey is an education policy analyst at the Cato Institute.

Executive Summary

Since the 1965 passage of the Elementary and Secondary Education Act, which concentrated unprecedented authority over American education in the hands of the federal government, federal lawmakers have passed increasingly restrictive laws and drastically escalated education spending, which ballooned from around $25 billion in 1965 (adjusted for inflation) to more than $108 billion in 2002.

For many years that phenomenon appeared to be of little concern at the state and local level. Under the No Child Left Behind Act, however, that seems to be changing-citizens and policymakers are aggravated by the law's dictates, and a revolt against federal control of education is brewing. Of course, states can refuse their share of billions of federal education dollars and thereby avoid having to adhere to federal regulations, but turning down the money is difficult, especially since the federal government took the money out of state taxpayers' pockets in the first place.

And it's not just state unrest that's calling federal control of education into question: Despite the huge infusion of federal cash and the near tripling of overall per pupil funding since 1965, national academic performance has not improved. Math and reading scores have stagnated, graduation rates have flatlined, and researchers have shown numerous billion-dollar federal programs to be failures.

Both state unrest and academic failure necessitate an examination of federal spending on education. States must decide if the benefits of federal funding outweigh the costs of complying with federal rules, and the nation as a whole must determine if the federal presence in American education should continue at all.

The answers, fortunately, are not elusive. Even when projects are measured against the Department of Education's own mission statement, it is clear that federal dollars are going to projects that should not be receiving them. More important, when evaluated using academic results, the strictures of the Constitution, and plain common sense, almost no federal funding is justified. For all those reasons, the federal government should withdraw from its involvement in education and return control to parents, local governments, and the states.