Does money matter in public education? Let us count the ways.

By: - September 17, 2019 2:29 pm

Powerful new research confirms numerous benefits of substantially increasing public investments

For decades, a debate raged in education policy circles: does money matter? While this question has definitively been answered by academics, it will undoubtedly be the subject of heated debate over the next year in North Carolina.

In June, court-appointed consultants submitted a much-anticipated report detailing how North Carolina can meet its constitutional requirement to provide a “sound, basic education” to all students. For the time being, the report – part of the longstanding Leandro court case – remains confidential. But most observers anticipate the report will recommend that the state substantially boost its investment in public schools.

North Carolina has never done a great job funding its public schools. Even at our peak school funding levels ten years ago, we ranked just 42nd in terms of school funding effort and Education Week gave North Carolina an “F” for our school funding level. A subsequent decade of austerity budgets have made things worse, reducing funding for teachers, support staff, teacher assistants, textbooks, and supplies. South Carolina’s per-pupil spending is now a whopping 21 percent above North Carolina’s even though North Carolina is a substantially wealthier state.

If the Leandro consultant’s report calls for big increases in public school spending, it is likely to re-spark the debate over whether additional funding helps students. But that debate should be put to bed. A review of the relevant research shows that, of course, money matters.

For many years, establishing a causal relationship between the amount of money spent on schools and school performance was difficult. Experiments on school funding face substantial logistical and political barriers. Additionally, researchers had difficulty disentangling the impact of school funding changes from regional cost factors and student demographics.

Luckily, advances in statistical methodologies and data availability have allowed researchers to more precisely estimate the impact spending has on education. Most notably, state-level funding expansions, particularly those brought on by court orders, have provided natural experiments that allow researchers to estimate the impact of funding on student achievement. These newer studies have uniformly found that increases in funding have improved student outcomes.

Notably, a 2015 study found that court-ordered increases in school spending (just like what might be emerging from the Leandro case) cause students to attend college at higher rates and earn more money as adults. Other recent studies have found that increased state spending boosts test scoresraises graduation ratesreduces the likelihood of both poverty and incarceration in adulthood, and improves intergenerational social mobility. Similar results have been found in state-level studies in CaliforniaKansasMassachusettsMichiganNew York, and Ohio. Importantly, almost all of these studies show that the benefits from state funding increases tend to be larger for Black students and students from families with low incomes (i.e., the very children who have been denied access to a sound, basic education in North Carolina).

On the flip side, school funding cuts like we’ve experienced in North Carolina have been shown to have negative impacts on student test scores and graduation rates. It’s no coincidence that a decade of austerity budgets in North Carolina has been associated with declining scores relative to other states and increases in racial and economic achievement gaps.

The research is clear that boosting funding for North Carolina schools will likely lift student performance across the board. And if deployed where schools face the greatest barriers to success, the additional investment will particularly benefit those children who have disproportionately been denied their right to a sound, basic education – Black students, Latinx students, students with disabilities, and those from families with low incomes. As Kirabo Jackson, one of the authors of the 2015 study on court-ordered funding increases, explains, “The notion that spending doesn’t matter is just not true…exposure to higher levels of public K-12 spending when you’re in school has a pretty large beneficial effect on the adult outcomes of kids, and…those effects are much more pronounced for children from low-income families.”

Some conservative critics – ignoring the preponderance of high-quality evidence – claim that the level of school funding is unimportant. In their misguided view, it’s all about how schools spend their money. In theory, that argument might make sense. We’ve all heard unfortunate tales of laptops that never make it from the storage closet to the classroom, or professional development sessions baring no relevancy to educators’ in-class realities. If additional spending isn’t spent wisely, of course it won’t help students.

Luckily, our schools do a good job of deploying their financial resources in ways that help students. When districts get additional money, they tend to use those funds to reduce class sizes, raise salaries, increase instructional time, and hire support staff like psychologists, nurses, and counselors, who are all integral to student development. These types of expenditures are all positively associated with improved student outcomes.

Additionally, it’s important to remember that schools can’t spend money wisely on “things that work” if they don’t have money!

All of this is why the Leandro consultant’s report has the potential to substantially transform our public schools for the better. The research clearly shows that additional investment in our schools will boost test scores, graduation rates, and lifetime earnings. Money matters. Reversing decades of financial neglect will finally bring North Carolina’s children the sound, basic education that they legally – and morally – deserve.

Kris Nordstrom is a senior policy analyst at the North Carolina Justice Center’s Education & Law Project.

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Kris Nordstrom
Kris Nordstrom

Kris Nordstrom is a Senior Policy Analyst with the North Carolina Justice Center's Education & Law Project. He previously spent nine years with the North Carolina General Assembly’s nonpartisan Fiscal Research Division.