School finance history is characterized by varying degrees of local, state, and federal support. Throughout history, local support of schools has suffered from glaringly inequitable tax structures resulting in wide variations in funding. State intercession has reduced local control but increased equalization in funding through regulations based on conditions associated with state aid. Federal financial activity evolved rapidly in the latter half of the twentieth century with contributions reaching their highest levels in the 1970s and again in the late 1990s. Federallevel rhetoric about support of education reemerged at the beginning of the twenty-first century, but the levels of funding and programmatic efforts were fractured along political divisions. These trends may be viewed within a historical perspective that encompasses five periods, beginning in 1607.
The Colonial Period
The colonial period began with the establishment of the permanent settlement at Jamestown and ended with the conclusion of the Revolutionary War in 1783. During this period, support and control of schooling were exclusively a local matter. Local support, grounded in either the church or the home, grew from limited support of European investors. Monies that were earmarked for education were often redirected to other community needs, such as the building of hospitals. Schooling in the southern colonies was based on apprenticeships or the use of pauper schools. Wealthier areas in the Northeast supported community-financed grammar schools. The wide disparity in a revenue base for schooling mirrored similar disparities in quality of teaching, buildings, and curricula.
Once agreement had been reached to build and finance a school, local communities identified revenue sources that included subscriptions (specified amounts paid by townspeople), rents, donations, bequests, land grants from the British Crown, and other efforts made from the resources of the town. Puritan-Calvinist New England supported taxation to support an education system of common schools for all students, Latin schools for upper grades, and a college for ministerial preparation. A different system evolved in the mid-Atlantic colonies because these colonies did not have a church majority. Parochial schools dominated, despite their inevitable decline because of a lack of state regulation. State interference was resented and opposed. The state had no role or obligation to support such schools. The dominant trend emerging from the colonial period was that public education should not be limited to poor children or require tuition.
The National Period
The national period began with the close of the Revolutionary War and extended through the end of the Civil War. Publicly supported and controlled education was implemented slowly. Financing of schools suffered because of needs associated with national security, the economy, and a significantly rapid increase in population. Local schools became less accessible due to westward expansion. Greater dispersion of the general population resulted in town decentralization and the establishment of the school district. Creating districts extended the concept of local control but resulted in poorer financing and reduced quality. Despite such limitations, the idea of the common school prospered between 1830 and 1865. The idea of tax-supported schools for all children also prospered. The driving mechanism for the common school movement was an expanding national economy based on manufacturing, trade, and industry.
Tax support during this period took a tremendous step forward. The designation in the western territories of sixteenth section township revenue increased support to common schools. (Revenue from the sixteenth section of each township was earmarked for the support of the township’s common school.) Revenue obtained from two other sections within each township was also set aside to endow a university. States from the original colonies that did not have township revenue looked to other methods of tax support including literary funds (New York, Maryland, and New Jersey); liquor-license fees (Connecticut); and state lotteries (New York). Bank taxes were also used between 1825 and 1860. States that did not use direct taxation looked to the property tax, but widespread use of this form of taxation was hard-won. Critics of pauper schools argued that the segregation of the poor into special schools did not represent the American ideal of an egalitarian democracy. Free schools also came under attack, because many were not actually free. In many cases, these schools were supported by rate bills that required a family to pay a tuition based on the number of children attending the school.
One of the main outcomes of the national period was an increase in state supervision with accompanying state requirements. Both outcomes were based on conditional state aid, a tactic also followed by the federal government. Government aid through land endowments to church schools was effectively ended. An outcome of the increase of sectarian control (loss of church dominance) over education was a decrease in the quality of local education and school attendance. This condition continued until state supervision over local outcomes began to increase.

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