Shanker Blog: New Report: Does Money Matter in Education? Second Edition

In 2012, we released a report entitled “Does Money Matter in Education?,” written by Rutgers Professor Bruce Baker. The report presented a thorough, balanced review of the rather sizable body of research on the relationship between K-12 education spending and outcomes. The motivation for this report was to address the highly contentious yet often painfully oversimplified tribal arguments regarding the impact of education spending and finance reforms, as well as provide an evidence-based guide for policymakers during a time of severe budgetary hardship. It remains our most viewed resource ever, by far.

Now, almost four years later, education spending in most states and localities is still in trouble. For example, state funding of education is lower in 2016 than it was in 2008 (prior to the recession) in 31 states (Leachman et al. 2016). Moreover, during this time, there has been a continuing effort to convince the public that how much we spend on schools doesn’t matter for outcomes, and that these spending cuts will do no harm.

As is almost always the case, the evidence on spending in education is far more nuanced and complex than our debates about it (on both “sides” of the issue). And this evidence has been building for decades, with significant advances since the release of our first “Does Money Matter?” report. For this reason, we have today released the second edition, updated by the author. The report is available here.

The new edition includes a discussion of the relevant new research that has been released since the previous report, as well as new and/or expanded treatment of a few topics, including (but not limited to) charter school finance, teacher compensation, cost functions, and the main sources of doubt and uncertainty surrounding the issue of money in education.

Overall, however, the research discussed in Baker’s review does not lend itself to broad, sweeping conclusions. Some things are effective whereas others are not, and so the strength and consistency of the money/results relationship varies by how money is spent, the students on whom it spent, and other factors. Sometimes effects are small, and sometimes they’re more substantial.

Nevertheless, the review indicates that there is a consistently positive effect of higher spending on achievement. Interventions that cost money, such as higher teacher salaries, have a proven track record of getting results, while state-level policies to increase the adequacy and equitability of school finance have also been shown to improve the level and distribution of student performance.

Finally, the common argument that we can reduce education funding without any harm to (and, some argue, actual improvement of) achievement outcomes has no basis in empirical evidence.

Put differently, money matters.

Read the full report here.

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Matthew Di Carlo

Matthew Di Carlo is a senior fellow at the non-profit Albert Shanker Institute in Washington, D.C. His current research focuses mostly on education policy, but he is also interested in social stratification, work and occupations, and political attitudes/behavior. He also writes for the Institute’s blog, Shanker Blog. Matt has a...