$3.50 per student sounds generous for elementary. $2.00 or even less that a
$1 per kid are typical amounts, as others can tell you. However, those low
budgets probably are not for a first year of supplying the art room, and the
teachers have supplies left over from previous budgets that help stretch things
along. If you are starting from nothing, you need more for paint brushes, glue
bottles, scissors, colored pencils and other kinds of tools/ materials that you
will keep and use for several years. And you need to include storage cabinets
in the budget if you don't have them.
I don't have too much trouble with a sense of ownership/ caring for supplies
(except with pencils and erasers, which they seem to mangle.) We just make
that pert of the routine in the lessons, and students get the idea that
whenever they come, the supplies are only going to be as nice as they leave
them. You can number items to help kids be accountable if loss or stealing
seems like a problem. It does add a step to your management, but you can have
students count things and check things in.