School Funding and Student Achievement: How Money Impacts Education Quality

More school funding has typically led to increased student performance based on various research studies. Here we look at the evidence for a positive relationship between education funding and learner outcomes a little more closely.

Does Money Matter in Student Academic Achievement?

Former Secretary of Education, Betsy DeVos, recently argued during a congressional budget hearing that the continued funding to try and fix the country's educational problems hadn't yielded the desired results. Her controversial budget recommendations included funding reductions, multiple reforms, increased alternative education strategies, and more school choice options.

The Education Commission, on the other hand, argued that to achieve the necessary access to high-quality education, the world would need increased spending on education to steadily rise from the current $1.2 trillion a year to around $3 trillion by the year 2030. This proposed education spending should be spread across all low and middle-income countries.

Correlation does not mean causation, but a lack of correlation doesn't necessarily indicate a lack of causation. Do school funding and student achievement go hand in hand? The evidence is mixed, but in general, when funds are appropriately allocated to address local needs, many early studies support the ‘funding equals results hypothesis’.

For example, prior to 1971, most public schools in the US were principally funded by local property taxes. This meant richer neighborhoods had better-funded schools than poorer neighborhoods where most black students went. Most states have since undergone extensive education funding reforms, moving away from local funding to reduce school funding inequalities.

The first wave of these reforms saw an increase of 10% in per pupil spending, which led to 0.31 more completed educational years, 7% higher wages, and an astonishing 3.2% reduction in adult poverty incidences. These effects were far more pronounced in schools with a large proportion of low-income students.

Another recent school finance reform study found that increasing the per pupil annual spending by $1,000 for 10 years led to higher test scores and higher high school graduation rates.

The Great Recession of 2007 to 2009 led to a sharp drop in local funding for school districts that heavily relied on state taxes. As a result, one study showed that a 10% drop in local funding for these schools reduced test scores by a significant amount (i.e., a 7.8% standard deviation). Another study, summarized in the Vegas and Coffin report, found econometric specifications where increased per-pupil spending resulted in better student test scores and outcomes.

What evidence exists for a more cautionary view? A 2018 World Development Report focused less on a  blanket ‘funding always equals better results’ conclusion by showing a lack of correlation between school spending and better student learning outcomes as measured by student test scores across a wide range of schools in different countries. That report noted the fact that many children arrive at school unprepared, teacher effectiveness is sometimes lacking, and inadequate management undermines education quality - simply adding new funds in such an environment often produces few, if any, concrete results.

Does the Type of Spending Matter?

States currently spend an average of $13,000 per pupil per year. A report by Bruce Baker found that this number should be closer to $20,000 per pupil per year when talking about poor students in low-income school districts. How those funds are allocated to achieve the highest quality outcomes varies from district to district and school to school.

Teacher quality is often cited as a major issue. One international study found that teachers who are paid better tend to perform better, and as a result, the students they teach do well in national assessment tests.

Research on the importance of new school facilities shows that academic outcomes often improve when states and school districts enact education policy priorities that offer additional funding to well-proven educational initiatives, particularly for poor students.

For example, when there was a $10 billion boom in school construction in LA between 2002 and 2012, researchers from UC Berkeley noted a modest improvement in academic performance within the first four years of the students moving to the newly constructed institution. This was particularly notable in English and language test scores. There was also a slight improvement in math-test scores. Apart from educational improvement, the average daily attendance improved by four days.

Whether school funding and student achievement go hand in hand is an open debate, perhaps because there are so many different ways in which available funding can be used, and not all of the existing or new funding allocations will be effectively deployed. Reliable measures of how funding impacts learning are also in relatively short supply. In essence, the on-going and vibrant debate about the proper levels of school funding is a healthy consequence of the fact that there is no majority consensus on the best ways to achieve the best possible results with the funds available, let alone the priorities for any increased funding allocations.

What is certain is that with the right kind of guidance, and constant supervision, virtually any student in any institution can succeed and graduate with a quality education. Pathways is an excellent way to help achieve that and so much more. Find out more about Pathways by contacting Education Advanced.

If your school is interested in new ways to improve the learning experience for children, you may also be interested in automating tasks and streamlining processes so that your teachers have more time to teach. Education Advanced offers a large suite of tools that may be able to help. For example, four of our most popular and effective tools are:

• Cardonex, our master schedule software, helps schools save time on building master schedules. Many schools used to spend weeks using whiteboards to organize the right students, teachers, and classrooms into the right order so that students could graduate on time and get their preferred classes. However, Cardonex can now be used to automate this task and deliver 90% of students' first-choice classes within a couple of days.
• Testhound, our test accommodation software, helps schools coordinate thousands of students across all state and local K-12 school assessments while taking into account dozens of accommodations (reading disabilities, physical disabilities, translations, etc.) for students.
• Pathways, our college and career readiness software, helps administrators and counselors create, track, and analyze graduation pathways to ensure secondary students are on track to graduate.
• Evaluation, our teacher evaluation software, documents every step of the staff evaluation process, including walk-throughs, self-evaluations, supporting evidence, reporting, and performance analytics.