Shanker Education Report: Money Matters, Affects Student Performance, Outcomes

Amid major slashes to public funding, political leaders have cited assertions that money doesn't affect student learning to sometimes justify cutting billions in education dollars. But a new report stifles the money-means-education debate, saying that money does matter, and the common political rhetoric has little basis in research.

Friday's report by the Albert Shanker Institute, titled "Revisiting The Age-Old Question: Does Money Matter In Education?" cites empirical evidence that shows many of the ways in which schools currently spend money do improve student outcomes, and when schools have larger budgets, they're empowered to spend more opportunistically and productively. Bruce Baker, a professor in the Graduate School of Education at Rutgers University, authors the report. The Shanker Institute is an independent nonprofit endowed by the American Federation of Teachers.

"In short, money matters, resources that cost money matter, and the more equitable distribution of school funding can improve outcomes," Baker writes. "Policymakers would be well advised to rely on high-quality research to guide the critical choices they make regarding school finance."

But this idea isn't always reflected in practice, whether by necessity or ideology -- or both. A survey published last October by the Center on Budget and Policy Priorities examined 46 states -- where 95 percent of the country's elementary and secondary students reside -- and found that 37 have trimmed K-12 educational funding since the year before, after adjusting for inflation. Of those states, 19 cut funding by more than 5 percent.

Looking back to before the recession, at least 30 states are funding schools at levels lower than they were in 2008. More than half of those -- 17 -- have cut funding by more than 10 percent, while Arizona, California, Hawaii and South Carolina saw the deepest spending cuts, slashing educational funding by more than 20 percent since pre-recession.

In New York last week, Gov. Andrew Cuomo presented himself as "the student lobbyist," announcing plans to create a commission to design an "overall plan" for the state's education system to improve student performance. But those declarations come as the state's districts are facing a loss of more than $1 billion in state and federal funds. Cuomo asserts, however, that money won't solve the problem -- noting that while New York is first in spending on schools, but 34th in performance, the Associated Press reports.

And in his first budget last year, Cuomo turned around a decade-long practice of granting greater proportions of state funding to schools -- by doling out about the same percentage of funds to poor districts as to wealthy districts. But that move could revert back to the old method, depending on how the state's "education overhaul" plays out in coming weeks.

Neighbor New Jersey Gov. Chris Christie is taking on the state Supreme Court, fighting the court's decision in May that the governor's educational funding cuts were unconstitutional. He was subsequently ordered to funnel $500 million more to around 30 of the state's poorest and most underfunded districts, The Wall Street Journal reports.

"The political message has gone several steps beyond questioning whether or not a systematic relationship exists between funding and school quality -- a classic research framing of the issue -- to bold assertions that we now know, with certainty, that money doesn't matter and that the path to school improvement can be accomplished despite -- or even because of -- reductions in spending," Baker writes in the Shanker report.

But based on his compilation of empirical evidence, Baker draws the following conclusions:
  • In direct tests of the relationship between financial resources and student outcomes, money matters.
  • Schooling resources which cost money, including reducing class sizes and increasing teacher salaries, are positively associated with student outcomes.
  • 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.

In Texas, teachers pointed the finger at Gov. Rick Perry, who underfunded the state's schools by $5.5 billion despite access to a $9.4 billion rainy day fund. The cuts led to -- among other things -- a shortage of education jobs and massive school overcrowding.

The student-teacher ratio has spiked since the recession amid teacher layoffs. One class at a Texas high school had 50 students at the start of the year. A Las Vegas elementary school kindergarten class had 41. So when less money goes to schools, more students are placed in a single classroom -- and Queens, New York teacher Monique Bertolotti told The Huffington Post in October that "learning is greatly affected" as a result.

At the same time, a 1980s Tennessee study found that there isn't a definite, across-the-board rule to how student performance is affected by funding and smaller class sizes. The report, known as STAR, concluded that smaller classes benefited students in early years as they learned to read and add, but less so in later grades.

Groups of school districts in Texas are also putting Cuomo's policy, and Baker's assertion with respect to distribution of funding, to the test. In the fall, groups of school districts filed suit against the state, alleging that the system of financing public education is inadequate and unfair to low-income and English-learning students. The plaintiffs argue that the current system of using property taxes for more than half of public school funding is unfair, creating a revenue and funding gap between schools zoned to higher-income neighborhoods and those in lower-income communities -- a gap as large as $1,000 per student.

A separate suit filed by Texas districts accuses the state of inadequately funding schools, and another filed in October claims that the funding system is unfair, inefficient and unconstitutional by taking an "arbitrary hodgepodge" approach, exacerbating flaws in the system by slashing resources for schools but at the same time heightening performance standards.

In the Shanker policy brief, however, Baker notes that the "primary source of doubt" with regards to a positive funding-to-performance correlation is a 1986 finding by Stanford University economist Eric Hanushek that "There appears to be no strong or systematic relationship between school expenditures and student performance." Data-driven reformers have also regularly pointed to figures that show educational expenditures ballooning while student test scores have plateaued.

But Baker argues that the evidence on which those are based are flawed. The National Assessment of Education Progress, he says, ignores through standardized testing the fact that achievement gaps have narrowed, while the "true effect" of funding on educational outcomes is hard to isolate.

"Using the simple juxtaposition of two trends -- spending and average test scores -- to draw causal inferences about how one affects the other is irresponsible and not at all compelling," Baker writes. "No rigorous empirical study of which I am aware validates that increased funding for schools in general, or targeted to specific populations, has led to any substantive, measured reduction in student outcomes or other 'harm.' Arguably, if this were the case, it would open new doors to school finance litigation against states which choose to increase funding to schools."

Baker acknowledges that while money alone may not be the answer, more equitable and adequate allocation of school funding at least provides a needed foundation to help boost student performance.

"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," Baker writes. "The available evidence leaves little doubt: Sufficient financial resources are a necessary underlying condition for providing quality education."