The financing of education from the public purse is currently based on the following arrangements:

• Most educational institutions are maintained by public authorities.
• They receive the greater part of their funds from public budgets.
• Certain groups undergoing training receive financial assistance from the state to provide them with the money they need to live and study.
• The public financing arrangements for the education system are the result of decision-making processes in the political and administrative system in which the various forms of public spending on education are apportioned between Federation, Länder and Kommunen (local authorities) and according to education policy and objective requirements.

Public spending on education

The political and administrative hierarchy in the Federal Republic of Germany is made up of three levels: 1) Federation; 2) Länder; and 3) local authorities (Kommunen), i.e. districts, municipalities with the status of a district and municipalities forming part of districts. Decisions on the financing of education are taken at all three levels, but around 90 per cent of public expenditure are provided by the Länder and the local authorities.

Since 2008, the Federal Statistical Office (Statistisches Bundesamt) has prepared an annual Education Finance Report on behalf of the Federal Ministry of Education and Research (Bundesministerium für Bildung und Forschung – BMBF) and in consultation with the Standing Conference of the Ministers of Education and Cultural Affairs in the Federal Republic of Germany (Kultusministerkonferenz ). The Educational Finance Report compiles the most important information that is available on the education budget. The Educational Finance Report is part of education reporting, which continuously provides data-based information on the framework, input, progress, results and effects of educational processes. It serves as the basis for the following comments on expenditures in the individual education areas.

The expenditure (basic funds) of the Federation, Länder and local authorities in Germany are shown in the demarcation of the financing statistics of the public budgets. In 2023 according to the Education Finance Report, the public sector expended a total of Euro 184.6 billion on day-care centres for children, general and vocational schools, higher education institutions, financial assistance for pupils and students, other educational expenditure as well as out-of-school youth education and youth association work. This amounted to Euro 11.6 billion for the Federation, Euro 126.1 billion for the Länder and Euro 46.9 billion for the local authorities. This corresponds to 6 per cent of gross domestic product and 20.2 per cent of the total public budget.

In-company training within the duales System, which is maintained by industry and by other training companies and institutions, is mainly financed by the companies. The Berufsschulen (vocational schools) which are, together with the training companies, jointly responsible for education and training within the dual system receive public financing.