27. How Property Taxes Fund Local Schools — and Why That Matters

27. How Property Taxes Fund Local Schools — and Why That Matters gives you a clear, step-by-step way to understand what drives your bill, what to verify on your notice, and what to do if the numbers look off.

In most U.S. communities, a large portion of local school funding comes from property taxes. This funding mechanism has huge implications for school quality and local budgets. To understand your tax bill, it helps to know where that money goes.

• Significant share of school budgets: Nationwide, about 36% of public school revenues came from

local property taxes in 2020–21. This means roughly one-third of what schools spend is raised by taxing local real estate. In some states (like New Hampshire or Connecticut), local property taxes cover over 50% of school funding. In others (such as Hawaii or Vermont, which operate single statewide systems), virtually no local property tax is used for schools. 3

• Why property taxes? Public schools are largely run by local districts and counties, each with its own

budget. By law in most states, these budgets are funded by levies on property. When a local board votes for a new school bond or increase in the levy, property tax rates go up accordingly. That means every time property taxes rise (or fall), local schools feel it directly.

• Equity and disparity: This funding model leads to stark differences between affluent and poorer

areas. As one school funding expert observes, “schools in wealthier areas receive more funding than those in poorer areas” because of property values. In wealthier suburbs, high home values generate huge tax revenue, enabling smaller class sizes, newer buildings, and more programs. In contrast, lower-income or rural districts often struggle with fewer resources. Racial and economic disparities can result: for example, the collective research finds that Black and Hispanic families’ homes tend to be worth less, meaning their schools get a smaller share of funding. (States try to balance this with state aid formulas, but gaps remain.) Why It Matters to Homeowners Because of this system, any change in your property taxes can affect local schools and vice versa:

• School bonds and tax levies: If your district needs a new school or to pay teachers, voters may approve a

bond or tax increase. That raises your property tax rate. Conversely, cutting school budgets often requires voter approval or legislative action. Understanding local school ballot measures can help you anticipate tax changes.

• Accountability: Taxpayers can and should track how their tax dollars are spent. Many districts provide

breakdowns of the school budget online. Attend school board meetings or review budget reports to see how your money is allocated. Awareness ensures you’re getting value for your taxes (books, buses, teachers’ salaries, etc.).

• Advocacy: If you believe school funding is unfairly low in your area, consider advocating for state-level

changes. Some states implement “equalization” grants so that poorer districts receive more state funds. Others (like California’s Proposition 13 or the Pennsylvania Fair Funding Formula) have attempted to limit local disparities. Being informed can help you support policies that balance educational quality. How to Use This Information

• Check your tax bill’s breakdown: Your bill may specify portions going to “school district” versus city,

county, or special districts. This tells you exactly what share of your payment supports schools.

• Consult PropTaxHelper’s tools: We offer guides explaining typical uses of property taxes in your

state and tools to compare school funding. For example, our School Budget Analyzer (hypothetical tool) could show you how much per-pupil funding comes from local taxes in your district.

• Budget accordingly: If you live in an area where property taxes fund schools heavily, plan for some

portion of your taxes to go that way. Higher taxes often mean better-funded schools (which can in turn raise local property values). If you’re concerned about school funding, consider how paying more in taxes now may affect education quality and property values later. Key takeaway: Property taxes are the lifeblood of local schools in most U.S. communities. Understanding this link can motivate taxpayers to be more engaged in school budgeting and to advocate for fair funding. By staying informed, you can help ensure your community’s children get the resources they need — and that your taxes are being put to good use. 4

Next steps

• Use the Property Tax Estimator to sanity-check your bill.
• If something looks off, run a quick Appeal Savings scenario.
• Scan the Articles list for related topics like exemptions, deadlines, and escrow planning.