(CNN) -- The families of the 26 Newtown school shooting victims each would receive $281,000 from donated funds under a proposal introduced at a public hearing in Newtown.
Under the proposal, additional money also would be allocated to other members of the school community.
Two teachers who were shot but survived the massacre would split $150,000. The families of the 12 additional children who were in the two classrooms shooter Adam Lanza entered would receive $20,000 each, said Alan Nevas, chair of the distribution committee that recommended how much and to whom funds would be distributed.
All of the money was raised through the Sandy Hook School Support Fund, a fund organized by the United Way of Western Connecticut and the Newtown Savings Bank immediately after the December 14 shooting.
The money totals just under $7.7 million, an amount designated by the Newtown Sandy Hook Community Foundation.
The fund has raised $11.6 million to date, according to Foundation spokesman Patrick Kinney.
The difference between the two amounts prompted questions about why more is not going to the people most affected by the tragedy.
Caryn Kaufman, a victim's advocate and public relations specialist who represents families who lost loved ones during the Columbine, Virginia Tech, Aurora and Oak Creek Sikh Temple shootings, was among those who spoke at the public hearing Thursday night. She said she feels the process involved in setting up funds for victims of tragedies is fraught with frustration and unnecessary bureaucracy, and does not serve the victims fairly.
"When they donated money, the American public intended to help those people who lost loved ones and those who were injured," Kaufman said. "Give 100% of the money to the victims. We need to stop re-victimizing the victims with this ridiculous process."
She noted that some Newtown victims' families have publicly expressed frustration with the process.
Anne Ragusa, a 25-year resident of Newtown and a member of the Newtown Sandy Hook Community Foundation, told CNN that the balance of the money raised, currently about $3.9 million, will be used to meet the long-term needs of the community.
"It's important to understand that the mission of the foundation has been to be a community fund, not a victims' compensation fund," Ragusa said.
She said the decision to allocate just $7.7 million of the money raised came after evaluating other similar situations and meetings with advisers. The remaining money would go toward helping the community-at-large move forward, perhaps through helping other school staff members or first responders to the tragedy.
The allocation of these funds would go through a similar distribution committee process, Ragusa said.
"We also looked at other victim communities and victim compensation funds and came up with an overall guiding principle that a majority of funds should go to families. But we've been advised that we're looking at a marathon, not a sprint," Ragusa said.
Kaufman said she feels that the Foundation misled the public into thinking all donated money would directly help victims' families.
"Before you can have a conversation for how that money is going to be used for anyone other than the victims, you need to look at the other resources you have," Kaufman said. "There has been a lot of state and federal funding to help first responders and the community."
The distribution committee that recommended how to allocate the $7.7 million was composed of Nevas; Dr. John Woodall, a Newtown resident and psychiatrist; and Joseph Smialowski, a Newtown resident and financial executive, Kinney said. They were also advised by Kenneth Feinberg, an attorney who has assisted with victims' funds from September 11, the Virginia Tech shooting, and the Boston Marathon bombing.
Nevas told CNN that the decision to allocate the amounts to each of the victims' families came about "after long deliberation." He declined to comment further.
"The bottom line is it's impossible to assign a dollar figure to people's anguish. Inevitably you fall short. There's nothing that can compensate people for their losses," said Woodall, founder of the Unity Project, which provides resilience training to youth.
Woodall says he understands the controversy surrounding the $7.7 million victim allocation amount, but it is necessary to designate some money to the larger community, rather than give all of the money to the victims' families.
"The whole town was a victim," he said. "Everyone recognizes that the cause that raised the money was the loss of these precious lives. But the effects are far beyond the immediate families who lost loved ones. They have rippled through the whole community; therefore the response has to be for the whole community."
A final fund allocation plan will be distributed to Newtown families on July 15 and they will have until August 2 to file claim forms. Once they are reviewed and final payments are determined, allocated funds will be given to families "approximately on August 16," the proposal states.
If that schedule holds, the money would be distributed just over eight months after the lone gunman stalked through Sandy Hook Elementary School in Newtown last December. After fatally shooting his mother at home, Lanza killed 20 children and six educators before taking his own life.