** NEW SECOND EDITION
This report presents a comprehensive review of the high-quality empirical evidence on whether and how money matters in education, written by Rutgers Professor Bruce Baker. This is the second edition of the report originally released in 2012. It has been updated by the author.
Baker concludes that, despite recent rhetoric, “on average, aggregate measures of per-pupil spending are positively associated with improved or higher student outcomes,” while “schooling resources which cost money … are positively associated with student outcomes.” Finally, reviewing the high-quality evidence on the effect of school finance reforms, he asserts: “Sustained improvements to the level and distribution of funding across local public school districts can lead to improvements in the level and distribution of student outcomes.”
The full report is available below. The executive summary is pasted directly below.
This second edition policy brief revisits the long and storied literature on whether money matters in providing a quality education. It includes research released since the original brief in 2012 and covers a handful of additional topics. Increasingly, political rhetoric adheres to the unfounded certainty that money doesn’t make a difference in education, and that reduced funding is unlikely to harm educational quality. Such proclamations have even been used to justify large cuts to education budgets over the past few years. These positions, however, have little basis in the empirical research on the relationship between funding and school quality.
In the following brief, I discuss major studies on three specific topics: (a) whether how much money schools spend matters; (b) whether specific schooling resources that cost money matter; and (c) whether substantive and sustained state school finance reforms matter. Regarding these three questions, I conclude:
Does money Matter? Yes. On average, aggregate measures of per-pupil spending are positively associated with improved or higher student outcomes. The size of this effect is larger in some studies than in others, and, in some cases, additional funding appears to matter more for some students than for others. Clearly, there are other factors that may moderate the influence of funding on student outcomes, such as how that money is spent. In other words, money must be spent wisely to yield benefits. But, on balance, in direct tests of the relationship between financial resources and student outcomes, money matters.
Do schooling resources that cost money matter? Yes. Schooling resources that cost money, including smaller class sizes, additional supports, early childhood programs and more competitive teacher compensation (permitting schools and districts to recruit and retain a higher-quality teacher workforce), are positively associated with student outcomes. Again, in some cases, those effects are larger than in others, and there is also variation by student population and other contextual variables. On the whole, however, the things that cost money benefit students, and there is scarce evidence that there are more cost-effective alternatives.
Do state school finance reforms matter? Yes. Sustained improvements to the level and distribution of funding across local public school districts can lead to improvements in the level and distribution of student outcomes. While money alone may not be the answer, more equitable and adequate allocation of financial inputs to schooling provide a necessary underlying condition for improving the equity and adequacy of outcomes. The available evidence suggests that appropriate combinations of more adequate funding with more accountability for its use may be most promising.
While there may in fact be better and more efficient ways to leverage the education dollar toward improved student outcomes, we do know the following:
- Many of the ways in which schools currently spend money do improve student outcomes.
- When schools have more money, they have greater opportunity to spend productively. When they don’t, they can’t.
- Arguments that across-the-board budget cuts will not hurt outcomes are completely unfounded.
In short, money matters, resources that cost money matter, and a more equitable distribution of school funding can improve outcomes. Policymakers would be well-advised to rely on high-quality research to guide the critical choices they make regarding school finance.
Journalists interested in the report can contact Professor Baker directly – bruce.baker [at] gse.rutgers.edu