I can only speak from my own experience, but every child in my homeschool group reads for pleasure. To top it off, our group meets weekly at Barnes and Noble for 'social time' that is often spent having a snack and discussing books, or the older kids reading to the younger kids back in the child's section. Usually half the kids or so leave with a new book they've picked out, and the rest might have an ISBN to go find online for less. It is definitely a culture that cultivates the intellectual love of reading and awareness of books.
Perhaps that is because they are allowed to read what they want - including current popular fiction. No 'reading books full of boring ol stories no one wants to read' are used with long droning busy work of explaining the symbols or WHATEVER it is that I used to have to do that made reading my least favorite class.
As far as teachers' losing their respect, I'd have to wonder if that is because the market on information is saturated. :) Lower level teachers now have competition from knowlegeable parents and siblings, Leap Frog, tv programs and documentaries, Internet articles, Cosmeo, books, accessible libraries, and even You Tube.
I think the rare jewel teacher with the really incredible knowlege and gift for inspriation and wonder will always be well respected, sought out, and well compensated.
Perhaps I am just being the devil's advocate here, but I don't think more funding is going to help anyone learn to read, unless it actually buys a child a book they WANT to read.
RE: Reading habits dropping