School funding stretched thin as costs rise, corporate revenue source shrinks

August 8, 2026 - 01:38

State education officials are sounding the alarm over a growing mismatch between available dollars and the actual cost of running public schools. Even with a $350 million increase in state funding this year, the so-called "adequacy gap" has widened for the third consecutive year, leaving districts across the state struggling to balance their books.

The adequacy gap is the difference between what schools need to provide a basic education and what they actually receive. According to the latest annual report, that shortfall now stands at roughly $1.2 billion, up from $980 million just two years ago. The primary drivers are familiar: rising health insurance premiums for staff, higher utility costs, and the ongoing need to replace aging buses and heating systems. But there is a new factor making things worse.

Corporate revenue, which once helped cushion the blow, is shrinking. A decade ago, local business taxes and voluntary corporate contributions made up nearly 15 percent of supplemental school funding in many districts. That figure has dropped to under 8 percent this year. Some companies have moved operations out of state, while others have redirected their charitable giving toward workforce training programs that do not directly benefit K-12 classrooms. One large manufacturing firm that used to donate $2 million annually to local school foundations now gives only $250,000, with the rest going to a community college scholarship fund.

School superintendents say the gap forces tough choices. In the past year, at least six districts have cut art and music programs, and three have shortened the school week to four days to save on transportation and heating. Others are dipping into reserve funds that were meant for emergency repairs. "We are not talking about luxury programs anymore," said one rural superintendent. "We are talking about whether we can keep the lights on in the gymnasium and still pay for a reading specialist."

State lawmakers acknowledge the problem but disagree on the solution. Some propose raising the statewide sales tax by half a cent, which would generate an estimated $400 million annually. Others want to cap administrative spending at the district level, arguing that money is being wasted on non-classroom positions. A third group suggests creating a new state fund that would match corporate donations dollar for dollar, hoping to reverse the decline in private support.

For now, school boards are left to patch together budgets with no clear end in sight. The report notes that even if the state fully closed the gap next year, inflation and rising special education costs would likely reopen it within two years. Parents are starting to feel the impact directly, with more schools asking for voluntary fees for supplies and field trips. One district in the northern part of the state has already announced it will not offer advanced placement chemistry next fall due to a lack of lab equipment.

The debate over how to fix the funding formula is expected to dominate the next legislative session. But for the thousands of students heading back to class this month, the immediate reality is simpler: fewer electives, larger class sizes, and a growing sense that the system is running on fumes.