Money is not the answer

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Decades of cross-sectional research shows a weak relationship between K-12 spending and academic outcomes. During the Jeb Bush era in Florida, for instance, we saw the following outcomes:

For those squinting at your iPhone, that’s a very weak relationship between state spending increases and academic gains. While Florida had the smallest increase in funding, it was among states with the largest academic gains. Wyoming and New York had spending increases six times greater than Florida, but posted much smaller academic gains.

Digging deeper: We’ve seen reporting recently that claims the existence of a much stronger relationship between spending and outcomes. There is this piece, for example, in The Economist. But like a lot of research, it rests upon questionable methodological assumptions. Which are you going to believe: academic assumptions regarding the exogenous nature of court-ordered funding increases, or your own lying eyes (refer again to the chart above)?

·       Following the period covered in the chart, Arizona led the nation in academic gains as measured by the National Assessment of Educational Progress (NAEP) while suffering through some of the nation’s largest Great Recession-induced cuts in K-12 spending.

·       The mantra that “money doesn’t matter” also seems over-simplified when examining the international data. It does take money to run a school after all.

Taking things one step further: The Organisation for Economic Co-Operation and Development (OECD) published this graphic plotting national averages on spending and how students in both developing and economically advanced nations fared on the Program for International Student Assessment, an international test that every three years measures reading, mathematics and science literacy of 15-year-olds:

Breaking it down: Developing nations show a strong positive relationship between higher levels of spending and higher reading scores. Once countries pass a certain threshold of expenditure, however, the relationship becomes much weaker.

·       You can combine these two charts with the understanding that all American states would be past the global point of diminishing marginal utility (the United States is the second highest spending country in the OECD chart).

·       In other words, throwing money at American school districts and hoping for the best remains a poor strategy for improving K-12 outcomes. In the end, this largely is a moot point; unless states get control of their health care budgets, they likely will lack money to throw.

Conclusion: State policymakers should focus their efforts on increasing the bang for the education buck regardless of spending level. If increasing spending had a large positive impact on student achievement in the American K-12 system, our African American and Hispanic students would not be posting scores closer to the average scores of students in Chile and Mexico; their scores would be more in line with European, Asian and white American students.

To read more on the topic of education spending, click here.

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