Without federal education funding, SC would need $680M to cover school costs
If South Carolina refused to accept federal education funding, it could cost the state hundreds of millions of dollars, according to a September 2025 report by the state Legislative Audit Council.
Members of the South Carolina General Assembly requested an audit of the federal funding that South Carolina receives, including the ramifications of refusing such funding or complying with federal education requirements.
According to the report, a lack of federal funding could result in an increased tax burden or a possible reduction in services. It would take at least $411 million and up to $680 million to cover expenses, either through increasing state taxes or decreasing funding in other areas.
The report also pointed out that the state could be sued by both school districts and parents on the basis of “insufficient funding” to provide a “minimally adequate” education, and the impact of lost services on “disadvantaged, disabled, or other special needs students.”
South Carolina spent $2.1 billion in federal dollars on education during the 2023-24 fiscal year, the report found. It accounted for nearly one third — 29% — of expenditures by the state Department of Education.
Much of that spending came from grants via the U.S. Department of Education. The state received $1.7 billion from the U.S. Department of Education. Approximately $1 billion was temporary COVID-19 funds, and the other $700 million came from a variety of Title grants under the Every Student Succeeds Act.
No state has ever elected to opt out of major federal grant programs for elementary and secondary education, according to the National Conference of State Legislatures, though Oklahoma, Tennessee and Utah have considered it. Because no state has done so, the the Legislative Audit Council said it “could not definitively determine which grants would be affected or what actions the U.S. Secretary of Education may take.”
Where does the money go?
The Every Students Succeeds Act, or ESSA, was a law passed by Congress in 2015. It replaced the No Child Left Behind Act passed in 2002, which was aimed at closing achievement gaps and increasing accountability, was known for its emphasis on standardized testing.
ESSA instead shifted the responsibility of educational outcomes from the federal government to states and local districts, allowing for more flexibility in setting standards and measuring success.
Some $700 million were funneled to South Carolina schools through ESSA during the 2023-24 fiscal year.
- $318,602,023 in Title I funds, meant to provide all children a fair, equitable and high-quality education, and to close educational achievement gaps. This includes school improvement funds.
- $35,174,275 in Title II funds, meant for programs for teachers, principals and school leaders; literacy; and American history and civics education.
- $5,937,922 in Title III funds, meant to support education for English learners
- $46,325,291 in Title IV funds, meant for student health and safety, technology, afterschool care, charter schools and magnet schools.
- $3,359,709 in Title V funds, meant for rural education.
- $1,929,392 in Title IX funds, meant for education for homeless children and youth.
The state also received $481 million from the U.S. Department of Agriculture and $1.7 million in “other grants” for the same year.
- $232,621,305 under the Individuals with Disabilities Education Act for children with disabilities.
- $23,805,562 in Perkins V funds for career and technical education.
- $10,334,871 for adult education and literacy programs.
- $119,638 to provide the public with reliable information about education practices.
- $423,254 in Institute of Education Sciences funding to develop and implement statewide student data systems.
- $150,105 under the Rehabilitation Act for transition services for children and youth with disabilities.
- $480,642,550 from the U.S. Department of Agriculture for child nutrition and school lunches.
ESSA funding does require some compliance, according to the report. Compliance includes participating in the Nation’s Report Card, a measure for student achievement, or ensuring that the teachers paid by ESSA funds have the necessary licenses and certifications. But no standardized testing is required, according to the report. And refusing ESSA funds would not eliminate testing requirements as set forth in ESSA.
The federal government has little say in schools’ curriculum, materials, principals or teachers. It is the state board of education that oversees academic standards. The majority of assessments in South Carolina are state-mandated, rather than federally-required, and South Carolina already goes above and beyond what the U.S. Department of Education asks in terms of testing.
“ESSA allows for the elimination of unnecessary assessments when feasible and offers grant money to audit existing assessments for efficacy and effectiveness,” the report read.
ESSA, according the report, allows state’s to determine their own needs and how to address them.
This story was originally published September 30, 2025 at 5:00 AM.
