School Districts: How they are funded

A school district budget includes revenues from many sources, but the vast majority of funding for public schools typically comes from local property taxes paid by local homeowners and businesses. For instance, in fiscal year 2022, 83.3% of High School District 214’s operating revenues came from property taxes. 

Each year school districts examine their expected operating expenses for the coming year, and make a levy request for the property tax dollars needed to meet those needs. Operating expenses are affected by many factors, including the number of students served, as well as personnel costs, building maintenance needs–and the effect of inflation.

In addition to regular property taxes, districts receive revenues via the Corporate Personal Property Replacement Tax, a tax on businesses and utilities that takes the place of the abandoned tax on personal property. This revenue stream is significant for some school districts but not for others, depending upon the amount of local business and industry. It is collected by the state and distributed to school districts and other taxing bodies.

School districts also can receive funding from the state, the federal government, private or philanthropic organizations, local communities and school district foundations. Much of this additional funding is designated for special purposes, including money for school meals and grants for specific programs. Districts also can receive miscellaneous income from facility rentals and interest on reserve funds that are invested and fees for such services as paid busing, parking and driver education.