Federal funding for education is generally given to the states and is collected by income tax. These funds are given to states, but are often far short of what is needed to run the school systems. This gap is what makes many state and local governments choose to levy property taxes in order to raise money for schools.
States often have property tax, and most often the majority of property tax income will be used on education. Very rarely do all property taxes go to funding a school system, but a large number of schools rely on this funding to get them through.
Local property taxes often make up the majority of a school's funding, sometimes making up for over half of total funding. A study done by Bowling Green University showed half of all property taxes went to support elementary and secondary schools, and in Ohio the number was as high as 70 percent as of 2008. Schools tend to rely on property taxes more and more because of cuts in federal and state funding of education.
There is some major controversy surrounding property taxes and the funding of public schools. Perhaps the most common argument is that of funding inequality. Wealthier neighborhoods collect more property taxes, which leads to better schools and more resources, which leads to better student performance. These students are then the ones going to college, making more money, and then funding better schools, keeping the vicious cycle going.
Many states have tried to balance out this inequity by taking state property taxes, and applying them to state public schools using a "foundation aid" method. Foundation aid is when the state works with local governments to guarantee a minimum level of funding per student based on a combination of state and local funding. Districts that are poor in relation to property wealth then get a chance to get more of the funding than districts that already have good funding due to wealthy properties. As of 2008, 41 states used some type of foundation aid method.