A working paper written by researchers from Northwestern University and UC-Berkeley indicates that increases in education spending as a result of court-mandated school finance reforms lead to more completed years of education, higher wages, and a reduction in adult poverty.
Here are some of the findings:
- A 10 percent increase in per pupil spending each year for all 12 years of public school leads to approximately ¼ years more of education, 7% higher wages, and 4% less poverty in adulthood.
- Increases in school funding resulting from court-mandated school finance reforms have a much stronger impact on students from low-income families and therefore tend to reduce the achievement gap between high- and low-income students.
- Reform-induced school spending increases were tied to fewer students per teacher, higher teacher salaries, and longer school years.
- Increasing per-pupil spending for low-income students by approximately 20 percent across 12 years of education would eliminate the educational attainment gap between high- and low-income students.
- Increasing per-pupil spending for low-income students by approximately 10 percent across 12 years of education would increase family income by over 15 percent.
- Students exposed to increased spending for a longer period of time had larger improvements than students exposed to increased spending for a shorter period of time, who in turn had improvements not experienced by students exposed to no increased spending.
- Students exposed to larger spending increases had larger improvements than students exposed to smaller spending increases, who in turn had improvements not experienced by students exposed to no increased spending.
- State mandated school finance reforms can be categorized into four categories; foundation plans, spending limits, reward for effort plans, and equalization plans.
- For states where funding reform did not include a spending limit, reforms increased per-pupil spending in low income districts by almost $600 over ten years, and decreased spending in high income districts by over $100 in this same time.
- For states where funding reform did include a spending limit, reforms still increased per-pupil spending in low income districts by almost $600 over ten years, but decrease spending in high income districts by over $600 in this same time.
The paper, entitled “The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms,” which is part of the National Bureau of Economic Research’s working paper series, describes a statistical analysis involving a nationally-representative sample of over 15,000 people born between 1955 and 1985 who were tracked from 1968 through 2011. Students in districts impacted by state school finance reforms enacted between 1971 and 2010 were compared to those from similar states which did not experience reforms. In addition, students at different points in their educations when the reforms were enacted were compared. The goal was to determine how the changes in funding related only to the finance reform impacted educational outcomes.
Studies like these are often the topic of debate between proponents of school funding increases and those who feel that the amount of money being spent per pupil is not the most important factor in student success. Some of the common issues identified with studies comparing school funding and education outcomes are listed below, along with how this study addresses them:
- Correlation and prediction are not causation. Many studies showing a correlation between spending and outcomes, or even showing the predictive ability of spending on outcomes via regressions, analysis of variance, or other statistical methods will indicate that the results show proof of causation. This study does say that the results strongly imply that increases in funding brought about by school finance report lead to better outcomes, but it acknowledges that the statistics do not prove this causal relationship.
- Failure to look at other related factors. Many studies will look at school funding-related variables and how they relate to student outcomes without considering all the other variables that impact student outcomes. This study controlled for a wide variety of factors related to the student, the school system, and the community to avoid these biases.
- Level of specification. Many studies look at state-level or district-level data. Looking at aggregated data masks some of the things that may be happening at the student level; particularly across different groups of students. This study uses student-level data and contrasts students coming from different economic backgrounds.
- Amount versus change in amount. Many studies look at overall funding levels rather than the amount to which funding changed during a particular period. This study looks at funding in terms of percent increases or decreases.
- Overgeneralization. Most studies that look at overall funding levels, even if they do consider the percent change during a particular period, do not consider the reason for the change in dollar amounts. This study specifically targets changes in education funding resulting from court-mandated school finance reforms by comparing students in states and districts affected by such reforms to students in states and districts not affected by reforms (matching them based on their characteristics before the reform was introduced).
- Bad data. Many studies rely on scores or benchmarks obtained on standardized tests such as NAEP, ACT, and SAT. Each such measure has issues related to percent participation, representativeness of samples, availability of subgroup data, etc. This study avoids standardized test scores altogether.
- Depth of field. Many studies compare current year funding with current year outcomes. Students are in public schools for approximately 12-13 years, so looking at snapshots of data rather than data from across multiple years does not uncover long term and collective effects. This study looked at overall changes in funding across students’ entire time in public schools.
This study, along with providing some very interesting results, also provides an example of good research and analysis practices that should be the goal of any research of this nature. Granted, these things are not always possible given the constraints of time and availability of data, but they are worth striving towards nonetheless.