Don’t Be Fooled: Money Does Matter In Education

Gov. Dennis Daugaard picked up on a popular meme this year when he talked about the relationship between education outcomes and funding. Pointing to relatively flat student achievement scores and increased state funding for education, he concluded that simply pumping more money into the system is not an acceptable solution.

Daugaard is not the first governor to state that conclusion in recent years, nor will he be the last, I’m willing to bet.

We’ve also heard the same sentiment voiced during debates on the funding of the Yankton School District. The argument goes that $2 million can be cut from the budget with no effect on education quality. In fact, it seems that some think cutting funds may actually improve education.

However, the body of research in the issue shows the opposite. Money does indeed matter. You can spend money foolishly, of course. But spending it on the right things does have a positive impact. These is, of course, still plenty of debate about what the “right things” are.

Rutgers University professor Bruce Baker recently wrote “Revisiting the Age-Old Question: Does Money Matter in Education?” The brief reviews the body of research on spending and educational quality.

Here is the executive summary of his findings:

This policy brief revisits the long and storied literature on whether money matters in providing a quality education. 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 selected major studies on three specific topics; a) whether money in the aggregate 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:

  1. Does money matter? Yes. On average, aggregate measures of per-pupil spending are positively associated with improved or higher student outcomes. In some studies, the size of this effect is larger than in others and, in some cases, additional funding appears to matter more for some students than 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.
  2. Do schooling resources that cost money matter? Yes. Schooling resources which cost money, including class size reduction or higher teacher salaries, are positively associated with student outcomes. Again, in some cases, those effects are larger than 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.
  3. 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 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.

Baker adds in his concluding thoughts:

Given the preponderance of evidence that resources do matter and that state school finance reforms can effect changes in student outcomes, it seems somewhat surprising that not only has doubt persisted, but the rhetoric of doubt seems to have escalated. In many cases, there is no longer just doubt, but rather direct assertions that: schools can do more than they are currently doing with less than they presently spend; the suggestion that money is not a necessary underlying condition for school improvement; and, in the most extreme cases, that cuts to funding might actually stimulate improvements that past funding increases have failed to accomplish.
To be blunt, money does matter. Schools and districts with more money clearly have greater ability to provide higher-quality, broader, and deeper educational opportunities to the children they serve. Furthermore, in the absence of money, or in the aftermath of deep cuts to existing funding, schools are unable to do many of the things they need to do in order to maintain quality educational opportunities. Without funding, efficiency tradeoffs and innovations being broadly endorsed are suspect. One cannot tradeoff spending money on class size reductions against  increasing teacher salaries to improve teacher quality if funding is not there for either – if class sizes are already large and teacher salaries non- competitive. While these are not the conditions faced by all districts, they are faced by many.
It is certainly reasonable to acknowledge that money, by itself, is not a comprehensive solution for improving school quality. Clearly, money can be spent poorly and have limited influence on school quality. Or, money can be spent well and have substantive positive influence. But money that’s not there can’t do either. The available evidence leaves little doubt: Sufficient financial resources are a necessary underlying condition for providing quality education.

Read the entire paper here. It is worth reading the entire document.

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