Where Does the Money Go? Understanding How Missouri Funds Public Schools

When people talk about school funding, they often hear phrases like "state funding," "property taxes," or "education budget." But how does Missouri actually pay for its public schools? Where does the money come from, and why do some districts have more financial resources than others?

Missouri's public education system receives funding from three primary sources: (1) state funding; (2) local funding; and (3) federal funding. Understanding how these funding streams work helps explain many of the education issues discussed across the state, from teacher salaries and rural school finances to charter schools and school choice. It also helps explain why changes over time, even when they seem small statewide, can affect districts differently.

Three Sources of School Funding

Missouri public schools receive funding from three primary sources:

Unlike many states, Missouri relies heavily on local revenue to fund its public schools. The National Education Association reports that local sources account for 61.7% of Missouri's public school revenue, with the state contributing only 30.6%. Nationally, states provide an average of about 47.1% of K-12 funding, making Missouri one of the states that contributes the smallest share of education funding at the state level.

This funding structure means that local communities play a much larger role in supporting public schools than they do in many other states.

Why Districts Receive Different Levels of Funding

Although every public school district receives funding from the same three sources, the mix varies considerably across Missouri.

Communities with higher property values and larger local tax bases are generally able to raise more revenue locally. Districts with lower taxable resources frequently rely more on state funding to maintain their educational institutions.

These differences are often most apparent when comparing suburban and rural districts. Wealthier suburban districts are often able to finance a larger share of their budgets locally, while many rural districts rely on the state for more than half of their total revenue.

For example, districts such as Naylor R-II, Richwoods R-VII, Potosi R-III, and Niangua R-V receive roughly 56% to 61% of their funding from the state. Many of these districts also serve relatively small student populations, which limits their ability to generate additional revenue locally.

Funding Differences Can Affect Teacher Salaries

One way these funding differences appear across Missouri is in teacher salaries.

Our analysis of district finance data found that districts receiving a larger share of their revenue from local sources generally pay higher average teacher salaries.

Some of the highest-paying districts, including Clayton, Kirkwood R-VII, and Ferguson-Florissant R-II, report some of the highest calculated average teacher salaries in the dataset. Clayton and Kirkwood also have among the highest shares of local revenue, with local funding making up more than 90% of total revenue in both districts. Ladue is no longer among the top five highest-paying districts in this dataset, but it still has one of the highest local revenue shares, at about 94.9%. Meanwhile, several districts with greater dependence on state funding report substantially lower calculated average salaries. Across Missouri, calculated average teacher salaries range from about $10,900 in Grandview R-II to more than $93,000 in Clayton. These funding differences point to wide gaps in local fiscal capacity across districts, which remains an important part of Missouri’s teacher compensation picture.

Many factors influence teacher compensation, including labor markets and district priorities. However, the data suggest that local fiscal capacity continues to be an important part of the picture.

Funding Does Not Change Student-by-Student

Enrollment changes do not translate directly into proportional changes in school spending.

Many district expenses remain even if enrollment declines. Schools must continue operating buildings, maintain transportation routes, pay utility bills, and employ administrators and many instructional staff. These are largely fixed costs that cannot be reduced immediately when only a small number of students leave a district.

This is one reason why discussions about enrollment changes or school choice programs often focus on more than simply the number of students involved. A district may experience reductions in revenue without seeing an equivalent reduction in operating costs.

How Missouri's Funding System Has Changed

While Missouri's overall public school enrollment has changed relatively little over the past decade, other parts of the education funding system have evolved. Looking at enrollment, school choice, dedicated education revenue, and teacher compensation together helps show that Missouri's funding debate is not only about where the money comes from today, but also about how those funding streams have shifted over time.

From 2015 to 2023, Missouri's total public school enrollment decreased by approximately three percent. Specifically, the number of enrolled students dropped by 27,986 (or about 3%) from 919,234 in 2015 to 891,248 students in 2023. Enrollment had reached a low point of 882,477 students in 2020, with only a partial recovery afterward.

During roughly the same period, the MOScholars scholarship program expanded rapidly, growing from 1,363 students in 2022-23 to 6,411 students in 2025-26. That means participation increased by 5,048 students in four school years — a growth rate of more than 370%.

The program's funding has also changed. During its early years, MOScholars scholarships were primarily supported through tax-credit-backed private donations. Beginning in Fiscal Year 2026, lawmakers appropriated $50 million in general revenue for the program. That shift matters because general revenue is also an important source for state support of public education, even though the exact fiscal impact on individual districts is not simple to measure from the available data.

At the same time, another education funding source has remained relatively stable. Missouri's casino gaming tax generated approximately $362 million for the Education Fund in Fiscal Year 2025, similar to recent years. However, because those revenues have not kept pace with inflation, their purchasing power has declined over time. Adjusted for inflation, the Education Fund received roughly $126 million less in FY2025 than it would have if gaming revenue had simply kept pace with inflation.

These trends illustrate why Missouri's school funding system cannot be understood through any single number or funding source. Local property wealth, state aid, federal support, enrollment changes, and dedicated revenue streams such as gaming taxes all interact to shape district finances. As those factors change over time, and their effects are not felt equally across Missouri, making school funding an ongoing policy issue rather than a fixed financial formula.