Even MORE evidence that money actually matters to student achievement!

Despite repeated claims that “money does not matter”, solid research evidence continues to mount that money, in fact, does matter to student outcomes.  Yet, many state legislatures  have failed to return funding amounts to pre-recession levels and most certainly have not invested in education systems to meet the higher expectations for student outcomes adopted by most states in the past few years.

Unfortunately, Pennsylvania is one of these states. In fact, report after report continues to find that Pennsylvania has one of the least equitable school finance “systems” in the country (https://www.washingtonpost.com/local/education/pa-schools-are-the-nations-most-inequitable-the-new-governor-wants-to-fix-that/2015/04/22/3d2f4e3e-e441-11e4-81ea-0649268f729e_story.html) and does not have a particularly adequate system either. Indeed, the governor and legislature still cannot agree on last year’s budget that called for increases in the fiscal investments in the state’s K-12 education system.

New research (http://www.nber.org/papers/w22011?utm_campaign=ntw&utm_medium=email&utm_source=ntw) by Julien Lafortunewas, Diane Whitmore Schanzenbach, Jesse Rothstein was  recently released that examined the effects of increasing state expenditures in K-12 education and the degree to which funding was equalized between affluent and poor districts.

In short, the authors found the following:

“Using an event study design, we find that reform events–court orders and legislative reforms–lead to sharp, immediate, and sustained increases in absolute and relative spending in low-income school districts.”

Further, they found that the increases in spending–particularly in poor districts–improved student outcomes. Specifically, the authors note:

“Using representative samples from the National Assessment of Educational Progress, we also find that reforms cause gradual increases in the relative achievement of students in low-income school districts, consistent with the goal of improving educational opportunity for these students.”

In sum, the authors find that increasing K-12 education spending has a “large” effect on educational achievement.

The authors note that many critics of school funding reforms argue that voter behavior on tax referendums offset the influence of school finance reform, thus efforts to change school finance systems is not worth the effort. The authors of this study, however, found that this was not true. Indeed, the authors actually conclude that, “Courts and legislatures can evidently force improvements in school quality for students in low-income districts.

Moreover, the authors conduct a cost-effectiveness analysis of the increases in expenditures and find a benefit to cost ratio of almost 1.4 to 1. They also note that due to data limitations, these cost benefits are underestimated and the true benefits are actually much larger.

This new research adds to a large number of studies tat consistently find that increases investments in K-12 education improves student achievement and is cost-effective in the long-run.Further, the research consistently finds that reducing inequities across poor and wealthy districts also reduces the achievement gap between such districts by increasing achievement in poor districts at a faster rate.

Unfortunately, rather than taking a long-term view on achievement and a state’s economic future, many states have generally looked to quick-fixes that are cheap relatively to school finance reform (see http://nepc.colorado.edu/files/PB-ProductivityResearch%20%282%29.pdf). Such efforts not only waste money in the long-term, they miss opportunities to educate children so that they might have a brighter (and more productive) future.

Why Pennsylvania policymakers continue to fight over investing in K-12 education as a driver of future state economic growth remains bewildering. As this research shows, investments in K-12 education will result in economic benefits to the Commonwealth over the long run. It is finally time for Commonwealth leaders and courts to act!

Additional resources:

Does Money Matter in Education? by Bruce Baker (Rutgers University)

Jackson, C.K., Johnson, R.C., & Persico, C. (2016). The effects of school spending on
educational and economic outcomes: Evidence from school finance reforms.
Quarterly Journal of Economics, 131(1).
Previous version of the paper can be found for free at: http://www.nber.org/papers/w20847

Papke, L. (2005). The Effects of Spending on Test Pass Rates: Evidence from
Michigan. Journal of Public Economics 89(5), 821-839.

Abstract:This study uses data on standardized test scores from 1992 through 1998 at Michigan schools to determine the effects of spending on student performance. The years in the data set straddle 1994, when Michigan dramatically changed the way that K-12 schools are funded, and moved toward equalization of spending across schools. Focusing on pass rates for a fourth-grade math tests (the most complete and consistent data available for Michigan), I find that increases in spending have nontrivial, statistically significant effects on math test pass rates, and the effects are largest for schools with initially poor performance.









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