Civics 101: Breaking down where the money goes — and how it shapes life in Delaware

Part 3 of the Delaware Civics 101 Series:
Understanding How Delaware Organizes, Spends, and Balances Its Money

As our lives roll on from day to day, it can be tough keeping track of where all our money goes. We save for vacation — then get hammered with a car repair bill. We budget for groceries — then watch inflation dilute our dollars.

To some extent, the folks in charge of Delaware’s budget face the same kind of challenges: Each year, they must find a way to divvy up the cash needed to fund the absolute necessities of a modern society — public safety, education, healthcare. 

But the decisions get tougher once those “must-have” spending obligations have been met: Like any household, the state must find a way to achieve its dreams with the money that remains after the mandatory bills have been paid.

Should we invest in new schools, or new corporate tax incentives? Give residents a tax cut, or put more road crews on the street? Sock the money away for a rainy day, or spend it on something that might — or might not — create a better Delaware for everyone?

From teacher pay to Medicaid, from bridge repairs to clean water projects, each dollar spent represents a public decision about our shared priorities as Delawareans.

The Big Picture: $15 Billion to Serve 1 Million Delawareans

Delaware’s total state budget (for Fiscal Year 2026) is about $15 billion — roughly $15,000 per

resident. That money comes from four main “buckets” (see Part 1 for more on these buckets):

• General Fund — everyday operating dollars from state taxes.
• Special Funds — dedicated fees (like gas tax, Transportation Trust Fund (TTF), or licensing).
• Bond Bill — one-time capital investments for infrastructure.
• U.S. Federal Funds — Grants and reimbursements for programs like Medicaid and Title I education.

Remember this: Most state spending (about two thirds of the General Fund) is not up for debate. Certain programs must be fully funded by law, and are mostly beyond the power of the governor or lawmakers to change or cut. 

Lawmakers refer to these baked-in spending obligations as “door openers,” and they are largely driven by Medicaid reimbursements (based on patient volume), school funding formulas (based on student counts), and state employee/retiree benefits (including pensions and healthcare). The total costs of these door openers has been on the rise, thanks to  inflation and population growth. The state’s annual contribution to its pension system has also become a major driver of overall budget growth in recent years.

Other budget items also are driving cost increases, especially state employee and teacher pay raises, which aim to address recruitment and retention issues. The rest of the state’s spending is more discretionary, meaning that lawmakers can decide who gets money, and how much they get. It’s this portion of the budget that frequently generates fireworks, and creates dilemmas. If the state’s mandatory spending obligations grow too fast, and revenue doesn’t keep pace, there may not be much left for “new” ideas — like universal pre-K, environmental programs, or additional tax credits.

“There’s less squawking in tight budget years than when there’s a lot of money,” said Charlie Copeland, director of the Center for Economic & Fiscal Policy at the Caesar Rodney Institute and a former Delaware Senate leader. “When there’s money available, everybody’s got an idea. Everybody comes in with their favorite plan.”

Where the Money Goes (By Function)

• K–12 Education (~35%) — Teacher pay, school buses, special education
• Higher Education (~5%) — University of Delaware, Delaware State University, Delaware Technical Community College operations
• Health & Social Services (~20-25%) — Medicaid, foster care, public health, mental health
• Public Safety & Corrections (~10-15%) — State Police, prisons, courts
• Transportation & Infrastructure (~10–15%) — Roads, bridges, DART buses
• Environmental & Community Development (~5%) — Clean water, parks, cultural centers
• General Government Operations & Debt (~5–10%) — State employees, IT, debt service

Education: Investing in the Future

Delaware spends about 35-40% ($2.4 billion) of the General Operating budget on public education, and about a quarter of Bond Bill funds (over $200 million) go toward building new schools. The federal government allocates more than $300 million in funds for low-income students, students with disabilities, school lunches, headstart and other programs.   

The remainder of the funds needed by schools is raised through local property taxes. This mix of state, federal and local funds is known as a “tri-share” financing model, and here, Delaware is a bit of an outlier: Many states rely more heavily on local property taxes instead of state allocations. (NOTE: The state is currently debating an overhaul of its school spending model that aims to enhance flexibility.)

Altogether, Delaware spends more than $3 billion a year on public education using state and federal funds. That’s excluding revenue from local property taxes, which total more than $1 billion, accounting for 30% of the budget for the 19 school districts. About 35–40% of Delaware’s General Fund goes to education — by far the largest share.

Education Spending:

• Salaries for teachers, principals, and school staff (teacher shortages have been pushing salaries higher)
• Classroom materials, school buses, and support staff
• Special education programs
• Higher education institutions like UD, DSU, and DelTech

Which Buckets Pay:

• General Fund — daily operations and staff pay
• Special Funds — lottery proceeds for scholarships and early learning
• Bond Bill — new school construction and major renovations
• Federal Funds — Title I and IDEA (special education) grants

Picture It:

• Your child’s teacher salary and classroom? General Fund.
• The new science wing being built? Bond Bill.
• The reading program for low-income students? Federal Title I funds.
• The college grant your neighbor’s child received? Lottery Special Funds.

Health & Social Services: Caring for Delawareans

Health care and human services make up about one-fourth of Delaware’s budget — and they’re the largest areas supported by federal dollars. They’re also arguably where state spending has the greatest power to directly support the well-being of its constituents.

But those moral obligations can impose some tough financial realities for the state. About a quarter of all Delawareans rely on Medicaid, and the state is mandated by law to pay for the care of every qualified recipient. A school can delay a new heating system due to lack of funds, but by law the state is not permitted to “run out” of Medicaid money in any given year.

That can mean making some tough choices. If medical costs suddenly jump (as they are expected to in 2026, by 5%), funding must be cut from other areas, like parks or libraries.

What’s Funded:

• Medicaid and Children’s Health Insurance Program (CHIP)
• Public health programs and community clinics
• Child welfare and foster care
• Behavioral and mental health services
• Addiction treatment and recovery programs

Which Buckets Pay:

• General Fund — Delaware’s Medicaid match, DHSS operations
• Federal Funds — Medicaid reimbursements, Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF)
• Special Funds — Tobacco settlement dollars, health licensing fees

Picture It:

• A low-income mother’s doctor visit? 60% paid by federal funds, 40% by Delaware’s General Fund.
• A behavioral health clinic in Sussex County? State and federal mix.
• Child-care subsidies for working parents? Both state and federal dollars.

Public Safety & Corrections: Protecting Communities

Roughly 10–15% of the General Fund supports Delaware’s justice and public safety system, most of it to pay salaries in this personnel-heavy sector. In recent times, there’s been ongoing pressure to spend more on officer pay, to stay competitive with other states and localities contending with their own officer shortages.

These recruiting challenges also create their own budget pressures. When officers work mandatory overtime to make up for staff vacancies, a vicious cycle can occur: Too much overtime work increases burnout, leading to more resignations, deeper shortages, and consequently even more overtime.

What’s Funded:

• Delaware State Police and emergency response
• Department of Correction
• Courts and public defenders
• Fire prevention, homeland security, and 911 systems

Which Buckets Pay:

• General Fund — daily operations, officer pay, and training
• Bond Bill — facility upgrades
• Special Funds — homeland security and emergency grants

Picture It:

• The trooper on Route 1, the judge presiding over a case, and the correctional officer — all paid through Delaware’s General Fund.
• The new courthouse in Kent County? Bond Bill funds.

Operating Government: Keeping the Lights On

Running a state means funding the everyday machinery of government, from motor vehicle inspections to salaries for its roughly 31,000 employees.

What’s Funded:

• State employee salaries and benefits
• Finance, licensing, elections, and IT systems
• Administrative and property management

Which Buckets Pay:

• General Fund — agency operations
• Special Funds — licensing and business filing fees
• Bond Bill — modernization projects

Picture It:

• The DMV office that renews your license? Special Funds.
• The IT team managing state cybersecurity? General Fund and Bond Bill.
• The Board of Elections preparing ballots? General Fund.

Transportation & Infrastructure: Connecting Delaware

Infrastructure spending sits mostly outside the General Fund, relying instead on Special Funds, Federal Funds, and the Transportation Trust Fund (TTF). The Bond Bill then authorizes the state to use these funds.

What’s Funded:

• Roads, bridges, and public transit (DART)
• Bike and pedestrian projects
• Airport and port upgrades
• Clean water and environmental projects

Which Buckets Pay:

• Special Funds — Transportation Trust Fund
• Bond Bill — highway and bridge construction
• Federal Funds — highway and transit grants

Picture It:

• A new bridge replacement on Route 13? Bond Bill and federal funds.
• A DART bus route in Wilmington? Transportation Trust Fund.
• A bike path in Milford? Bond Bill and environmental funds.

Helping Low-Income Delawareans: The Human Side of the Budget

Delaware invests heavily in programs that support low-income families — through a mix of General Fund, Federal Funds, Special Funds, and Bond Bill resources. Total spending is estimated at $1.4 billion.

Major Programs:

• Medicaid & CHIP — Health coverage for low-income residents (General Fund, Federal Funds, Special Funds)
• SNAP & TANF — Food and cash assistance (Federal Funds)
• Child Care & Early Learning — Child care and preschool support (General + Federal Funds)
• Affordable Housing — Rent aid, development, homelessness prevention (Federal Funds + Bond Bill)
• Title I & School Nutrition — Free meals and support for low-income schools (Federal + General Fund)
• Community Grants — Nonprofit aid and workforce training (General + Bond Bill)

Picture It

• A Medicaid card, a school breakfast, a childcare subsidy, and an affordable housing grant — all funded by different buckets, but all serving Delawareans in need.

Spending Per Person: The $15,000 Delaware Snapshot

Here’s how the state’s spending would look ifthe $15 billion were divided equally among 1 million residents:

• Education (~35%) — $5,250 per person
• Health & Social Services (~25%) — $3,750 per person
• Public Safety (~10%) — $1,500 per person
• Transportation & Infrastructure (~12%) — $1,800 per person
• General Government & Debt (~8%) — $1,200 per person
• Environment & Community (~10%) — $1,500 per person

Including these and other spending categories, state spending amounts to $15,000 per Delawarean, every year — funded through a mix of state taxes, fees, bonds, and federal grants.

Key Takeaways

• Education and Health Care together make up roughly two-thirds of Delaware’s General Fund.
• Transportation is mostly outside the General Fund — funded by gas taxes, tolls, and federal aid.
• Federal Funds are crucial for health care, schools, and safety-net programs.
• The Bond Bill keeps long-term investments separate from day-to-day services.
• Low-income support is powered primarily by federal programs, with state funds ensuring delivery.

Next in the Series

Part 4 — How Delaware’s Budget Is Decided — and How You Can Participate
Take a journey through the budget-making process, from the time agencies submit their requests to the high-pressure legislative sessions where the final spending plan gets approved.

About the Civics 101 Series: Civics 101 is a continuing explanatory series by Delaware LIVE and the Spotlight Delaware content marketing team designed to help readers understand how state government works and how budget decisions affect everyday life in Delaware. To read other stories in the series, visit the Civics 101 home page.