Money matters in education, but it’s no guarantee of student success.
Take New York, for example. In its latest “Making the Grade” report, the Education Law Center adjusted school spending figures relative to their regional labor market costs. It gave New York’s school funding system an A for the total amount of money it sent to public schools, a B for the distribution of those funds among schools and an A for the amount of money it spent relative to the state’s overall gross domestic product per capita.
Overall, New York came out as one of the top-rated school funding systems, if not the highest-rated.
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And yet, New York students perform slightly below national averages. While its schools spent $33,970 per student, $15,509 more per pupil than the rest of the country, in Fiscal Year 2022 its students trailed overall student performance in fourth-grade math on the National Assessment of Educational Progress — the “Nation’s Report Card.”
But it’s not just New York. The relationship between school spending and student outcomes is weaker than you might imagine. To make the fairest comparison possible, I used the Education Law Center’s spending figures, which are adjusted for cost-of-living differences, and the demographically adjusted NAEP scores from the Urban Institute.
The graph below shows the results for 2022, the latest year for which comparable spending figures are available. As you can see, New York is an extreme outlier: It spent more than any other state, and its results were in the bottom half. Other high-spending states like Vermont, New Jersey and Connecticut also got pretty poor results given their investments.
Which states do well on this metric? Texas, Florida and Mississippi all stand out for getting strong student outcomes despite not spending that much.
What about staffing levels? Education is mostly a people business, and the bulk of school spending goes toward salaries and benefits. But staffing levels are also not well correlated with student outcomes.
The graph below shows the number of staffers for every 500 students — think of a typical elementary school — versus the same demographically adjusted fourth-grade math scores as above. Here, Vermont and Maine stand out as having exceptionally high staffing levels without positive student outcomes to show for them. Meanwhile, Mississippi, Texas and Florida all stand out as states showing strong student test scores without high levels of staffing.
These are merely correlations, and readers should not take these arguments too far. For example, Matt Ladner, a senior adviser for The Heritage Foundation, made the case in a recent report that the states that increased spending the most over the last two decades did not see equivalently large achievement gains. But it would harm students in, say, New York or Vermont, if state policymakers decided that schools needed to cut back on spending or staffing.
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That’s because the best research on school finances suggests that a $1,000 increase in annual per-student spending improves test scores by 0.008 standard deviations and boosts college-going rates by 2.8 percentage points. Infusions of federal ESSER funds produced similar, albeit smaller, effects. Perhaps no one was or is satisfied with the magnitude of the returns on increased spending for public schools, and the gains are small enough that you can’t just eyeball them on a chart, but they are statistically significant and academically meaningful. Moreover, this research shows that school spending does cause test scores to rise. It would be irresponsible for policymakers to ignore these general trends.
At the same time, it is fair to note that the gains from higher spending are small, and policy is not made in a vacuum. Some places, especially the Mountain West, probably could see real gains from higher spending. Meanwhile, other places, especially in the Northeast, could benefit from more time thinking about cost effectiveness and how to drive improvements without additional funds.
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The best modern example of the latter is Mississippi. Mississippi is the poorest state in the country, and it would not have been a positive outlier on these types of charts 10 or 20 years ago. But since 2013, the state has put in place a number of policy changes, including new curricular materials, a muscular school accountability system focused on the students who are the furthest behind and a third grade reading requirement that brought greater attention to children who struggle with the basics. Some of these initiatives even cost money, but they didn’t add up to that much relative to the state’s overall education budget, and they helped students in Mississippi leap over their peers in higher-spending states.
It’s hard to have these types of nuanced conversations when some advocates continue clamoring for more money, even in well-funded states and communities, while others have used — and continue using — the modest gains from spending increases as evidence in favor of school choice or other reforms. For policymakers, the only way to correctly understand the nuances of school spending is to recognize that it matters while also understanding its limitations.