Governance and Finance of U.S. Schools Practice Test

Funds designated for a specific purpose are known as categorical aid. In school finance, the state or federal money set aside specifically to cover the costs of educating students with disabilities is restricted to that purpose. These funds are used for eligible special education services—such as evaluations, IEP development, and related therapies—and must be spent on those activities rather than on general operations. Block grants are broad, flexible funds for multiple uses; general funds cover everyday district operations; foundation aid is base funding per pupil meant to ensure a minimum level of resources rather than paying for a defined program.