Funding Sources and Methods For K-12 Distance Education

Executive Summary

The entire report can be found at

The majority of the states are using what has become traditional funding for distance learning. This includes general education funds, lottery generated funds (which in most cases does not increase the educational funding but relieves the state funds by the amount that the lottery adds)e-rate funds, Challenge grants, State Challenge grants, Star Schools. A limited group relies heavily on corporate and foundation donations. The following is a summary of the innovative funding for distance learning at the state level.


Corporate Donations

  • The Intergraph Corp., Huntsville, is providing technology services and products that include the use of e-mail, Webcasts, virtual notebooks, and production of CD-ROMs.


Corporate Donations
Technology Capital Levy

  • A development program focuses on direct corporate giving and corporate foundations ($3.2 billion annually).
  • A state fund provides the cash matches for grants. A state "technology capital levy" will provide funds to schools to meet technology funding deficits.


State Bond Issues
CDC Funds

  • State Bond Issues fund an annual $10.4 million competitive grant program for distribution/infrastructure systems (computers are not usually included).
  • Funding from CDC's Health Alert Network grant added distance learning coordinator position.


Capital Improvement Bonds (CIB)

  • Allocates $17.5M a year to technology for a system estimated to cost $40 million ($14M from CIB and $3.5M for ed tech).
  • eschool, asynchronous Web based courses, for high school credit.
  • Cyberspace Entrepreneurs, an offshoot of eschool, allows schools/students to develop products and market them on the Internet.


Corporate Donation

  • A one-time Albertson Foundation donation was used to accelerate the state's implementation of technology in schools.


Allocates technology funds through a specific line item
Low Interest Loan Program

  • Technology for Success, the specific line item: $43.8M FY98; $46.3M FY99.
  • Low Interest Loans of $60M for technology to districts by FY 2001.


Technology leadership awards to students
$10M one-time appropriation

  • Awards to students who have done innovative Web work for their school.
  • 1999 one time $10M award for technology which districts matched at 100 percent.


Oil company legal settlement
Surplus Funds

  • Funding for distance learning and graphing calculators came from a legal settlement with an oil company.
  • Most funds came from surplus money in the state's general fund; $37.1M FY98; $25M FY99.


Bell Atlantic legal settlement
Maine Learning Technology Endowment
Bond Issue

  • The Bell Atlantic settlement has provided over $10M for educational tech. The oversight board had the company collect tech data from schools 98/9 and placed the findings on a Web site.
  • The Maine Legislature established the Maine Learning Technology Endowment with $30M to start no later than 2002/3 school year, and based on a learning technology plan adopted by the legislature.
  • 1995 - five year bond issue of $15M for educational technology.


General Fund
Web Price Discounts School Portal
Youth Tech Entrepreneurs- Student technicians

  • FY98 $30M; FY99 $37M appropriate for technology from the general fund.
  • State Web-based virtual marketplace for schools to get large discounts by negotiating with technology companies - five-years estimated savings $10M.
  • Youth Tech Entrepreneurs will train students as technical support personnel and become a self-supporting program.


Gambling Revenues

  • Michigan Renaissance Fund, gambling revenue supported independent economic-development fund, $7M over three years for teacher training in technology.


Legislated Funding for Outstanding Schools Act grant program
Legislated Funding for Technology Acquisition and Enhancement Grant
Tax on video tape rentals

  • Sixth year of funding at $5M to help schools acquire new technology.
  • Fifth year of $10M for school technology grants.
  • An older funding mechanism generated about $5M per year from videotape rental.


Funding from Timber Harvest

  • 1998 timber cutting funds on state owned land was used to fund educational technology at $1.5M. Funds for 2000 are not realized yet.


Star Schools CLASS Project

  • High school diploma sequence with 54 Web-based courses.


Sales tax, property and gaming taxes for technology

  • Allocated $36.1M for technology in FY98 and FY99 from two funds, infrastructure and for maintenance, professional development, and planning.

New Hampshire

Corporate Donation

  • Bell Atlantic and Cabletron, a local cable company, committed to providing Internet access to every school and library building in the state, two years of free telephones, mobile computer lab for teacher training.

New Jersey

Corporate Donation
General Fund legislation for Distance Learning Network Aid

  • Bell Atlantic offers discounts on school Internet access estimated savings of $13M over four years; they will establish a statewide network.
  • $50M ($40 per pupil) for Distance Learning Network Aid for electronic communities.


Surcharges on all telephone lines
Settlement with SWB over rate overcharges.

  • Surcharges on all telephone lines generated $1M to establish teacher-training centers for technology in FY98.
  • A settlement with Southwestern Bell about rate overcharges generated $1M annually for distance learning in FY98 and 99.

South Dakota

Settlement for school milk prices lawsuit

  • Schools won $250,000 in a lawsuit about school milk prices. The funds were given to the state and designated for education technology in FY 98, with some rollover into FY 99.


Local Business Donations

  • Since July 1993, $100M appropriated for education technology.
  • Connect Tennessee Students, a nonprofit group working in partnership with the state and private businesses to foster technology use, encourages local businesses to give $2 per student to schools to reimburse them for Internet costs.


Fees from telecommunications companies
State textbook allotment

  • FY98 appropriated $110 ($30 per pupil) for educational technology.
  • Fees collected from telecommunications companies support the Telecommunications Infrastructure Fund for statewide technology initiatives.
  • Districts may use portions of the state textbook allotment for electronic technology.


Used Medicaid reimbursement funds

  • Used Medicaid reimbursement funds to purchase 1,600 computers for schools. The state has joined with local businesses to develop one integrated information system for student data, curriculum management, and financial management.

West Virginia

State Building Authority Funds used
Corporate Funding

  • In FY 98, West Virginia appropriated $22.4M for technology, the state's building authority spent $2.5M for school wiring.
  • Bell Atlantic gave $8M grant to network schools.


State Universal Service Fund

  • Provides discounted telecommunications access for school districts through TEACH Wisconsin.