With OpenAI seeking $500B in funding while US education spending declines, we examine whether society is prioritizing artificial intelligence over investing in our children's future.
OpenAI recently announced Project Stargate, an ambitious initiative that aims to secure an anticipated funding of up to $500 billion over four years from several equity partners. This news has reignited a critical debate about societal priorities: are we investing more in artificial intelligence than in the education of future generations?
While seemingly disparate, these two areas are inextricably linked.
A strong education system helps develop creative, strategic thinkers who can shape how AI technology serves humanity. Conversely, AI has the potential to revolutionize education, offering personalized learning experiences and addressing the needs of diverse learners.
This article examines the data on US Federal education funding and AI investment over the past decade to assess whether the central question of this article - that we are now spending more on AI than on educating American children - holds true.
And if you prefer the TLDR; yes we are.
US Federal Education Funding: A Decade in Review
Examining the trends in US federal education funding over the past ten years reveals a complex picture. While overall spending has increased, it has not kept pace with inflation and the growing needs of the education system.
Federal funding for elementary and secondary education comes primarily through the U.S. Department of Education, amounting to more than $40 billion annually. However, this funding is often subject to political shifts and changing priorities. For example, between 2009 and 2015, funding for Improving Teacher Quality State Grants remained relatively stable at around $2.3 billion per year, while funding for postsecondary Pell Grants fluctuated significantly. The National Center for Education Statistics reports that approximately 80% of school funding in years 2000-01, 2010–11, and 2016-17 was dedicated to salaries and employee benefits.
Despite increases in per-pupil spending, the overall share of the federal budget dedicated to children has remained around 10 percent since the early 2000s. This share is projected to decline significantly over the next decade, from 9 percent in 2023 to 6 percent by 2034. This decline raises concerns about our long-term commitment to nurturing young minds and supporting their development in an era of rapid technological advancement. If the nation is prioritizing AI, what does this shift in funding priorities signal about how we value the next generation's creative potential and their role in shaping our collective future?
Furthermore, the distribution of education funding varies significantly across states. In the 2016-17 school year, for instance, Vermont relied on state funds for 90 percent of its education budget, while Nebraska, New Hampshire, and South Dakota received only about a third of their funding from state governments. These disparities can exacerbate existing inequalities and limit educational opportunities for children in underfunded states. Adding to the complexity of funding distribution, the presence of children living on federal property can create a financial burden on local educational agencies (LEAs) because such property is exempt from local property taxes. Impact Aid helps replace the lost local revenue that would otherwise be available to LEAs to pay for the education of these children .
The COVID-19 pandemic brought a temporary surge in federal education funding through emergency relief programs like the CARES Act and the American Rescue Plan. These funds provided crucial support to schools and students during a time of unprecedented disruption. In 2021, public K-12 schools spent $17,280 per pupil, with expenditures totaling $857.2 billion. However, as these funds expire, schools face the challenge of sustaining the progress made and addressing the ongoing impact of the pandemic on student learning.
The Rise of AI Investment: A Global Phenomenon
In contrast to the relatively stable, albeit uneven, trajectory of US federal education funding, investment in AI has skyrocketed over the past decade. Globally, AI startups have raised over $650 billion in venture capital. The following table shows the substantial growth in average deal and exit values for AI venture capital from 2013 to 2021, followed by a recent dip:
In 2024 alone, AI-related companies worldwide attracted over $100 billion in global venture funding, surpassing every year in the past decade, including the peak funding year of 2021 . This surge in investment reflects the growing recognition of AI's transformative potential across various sectors, from healthcare and finance to transportation and entertainment.
Comparing Investments: A Stark Reality
Comparing the data on US federal education funding and AI investment reveals a potentially concerning trend. While exact figures for total AI funding over the past decade are not readily available, the evidence suggests that investment in AI is rapidly approaching, if not already exceeding, federal spending on education. This stark contrast raises fundamental questions about societal priorities and the allocation of resources. While AI holds immense promise for technological advancement, it is crucial to remember that investing in education is an investment in humanity's future - nurturing the creative minds and critical thinkers who will shape how we use these powerful tools.
Historical Context: Lessons from the Past
The current situation has historical parallels. Throughout history, technological advancements have often led to shifts in funding priorities and societal concerns. Just as the printing press transformed education in the 15th century (as detailed in our article on the future of education with AI), today's AI revolution is reshaping how we think about learning and development.
Similarly, the rise of the internet and digital technologies in the late 20th century prompted increased investment in educational technology and efforts to bridge the digital divide. This technology also expanded parental options through Supplemental Educational Services under the No Child Left Behind Act, offering more choices to students who might not otherwise have access to them due to geographical limitations. However, these investments were often unevenly distributed, exacerbating existing inequalities and raising concerns about the impact of technology on student learning and development.
Now, as AI emerges as a transformative force, we are witnessing another potential shift in funding priorities.
Unlike previous technological advancements, the rise of AI coincides with the end of the Elementary and Secondary School Emergency Relief (ESSER) funding program, which provided pandemic recovery funds that many districts used to invest in educational software and systems. With these funds expiring in September 2024, schools have been trying to determine their best use of technology as they face the prospect of diminishing resources.
This confluence of factors creates a unique challenge for education, raising questions about how schools can effectively integrate AI while facing potential funding constraints.
These historical examples highlight the importance of considering the long-term implications of technological advancements and ensuring that education remains a priority even as new technologies emerge.
The Potential Benefits and Risks of Increased AI Funding
Increased AI funding has the potential to bring about significant benefits, including:
- Innovation and progress: While AI can drive innovation, it requires creative and strategic human minds to guide its development and application in ways that benefit society.
- Improved healthcare: AI can revolutionize healthcare by enabling personalized treatments, earlier disease detection, and more efficient drug discovery.
- Enhanced education: AI can personalize learning experiences, provide individualized support to students, and address the needs of diverse learners.
- Increased safety and security: AI can enhance safety and security in various domains, from transportation to cybersecurity.
However, increased AI funding also carries risks, as well, such as:
- Job displacement: AI-powered automation could lead to job losses in certain sectors, requiring workforce retraining and adaptation.
- Bias and discrimination: AI algorithms can reflect and amplify existing biases, leading to unfair or discriminatory outcomes.
- Ethical concerns: The development and deployment of AI raise ethical questions about privacy, autonomy, and the potential for misuse.
- Exacerbating inequality: Unequal access to AI technologies and education could worsen existing social and economic disparities. This concern is particularly relevant in the context of education, where the digital divide already poses a significant challenge. Expanded use of AI tools has the potential to further disadvantage students from low-income backgrounds or those with limited access to technology and high-quality internet connectivity.
To learn more about some ethical concerns as it relates to AI, check out this TechCrunch article from 2016 and the follow up from 2019.
Global AI Investment Trends (in billion U.S. dollars)
*Projected values
Conclusion: Investing in Our Future
The significant investment in AI, exemplified by OpenAI's Project Stargate, raises questions about societal priorities and the need for a balanced approach to funding both technological advancement and human development.
While AI will be an incredible force for good, it is important to remember that investing in education is an investment in humanity's future - nurturing the creative minds and critical thinkers who will shape how we use these powerful tools.
By prioritizing education alongside AI, we can ensure that future generations develop the creativity, critical thinking abilities, and ethical framework needed to guide AI development in service of humanity. This requires a long-term commitment to public investment in education, innovative funding models, and a focus on equity and inclusion to ensure that all children have the opportunity to develop their unique potential.
As we stand at the cusp of this technological revolution, we must ask ourselves: are we truly prepared to nurture the creative and strategic minds needed to guide humanity through an AI-driven future? Or are we risking a future where technological advancement outpaces human wisdom and ethical development? The answer to this question will shape not only the future of education but also the future of human society as a whole.
The harsh reality is that AI won't fix broken processes—it will only make them fail faster.
As detailed in our guide to applying AI, successful AI implementation requires new skills and approaches. Our education system must evolve to prepare students for this new reality, where they'll need to be "conductors of digital symphonies" rather than passive users of technology.
