Education is primarily a State and local responsibility in the United States. It is States and communities, as well as public and private organizations of all kinds, that establish schools and colleges, develop curricula, and determine requirements for enrollment and graduation. The structure of education finance in America reflects this predominant State and local role. Of an estimated $909 billion being spent nationwide on education at all levels for school year 2004-2005, about 90 percent comes from State, local, and private sources.

That means the Federal contribution to national education expenditures is about 10 percent. This 10 percent includes educational expenditures not only from the Department of Education (ED) but also from other Federal agencies, such as the Department of Health and Human Services' Head Start program and the Department of Agriculture's School Lunch program. Subtract these other dollars, and ED is left with less than 8 percent of total education spending. ED's $71.5 billion appropriation, by the way, is about 2.9 percent of the Federal Government's nearly $2.5 trillion budget in fiscal year 2005.

Although 8 percent may not sound like much, ED works hard to get a big bang for its taxpayer-provided bucks by targeting its funds where they can do the most good. This targeting reflects the historical development of the Federal role in education as a kind of "emergency response system," a means of filling gaps in State and local support for education when critical national needs arise.

http://www.ed.gov/about/overview/fed/role.html