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Education Spending

  • The Progressive School Funding Option

    Written on September 4, 2019

    One of the more striking findings in our recent report presenting data from the School Finance Indicators Database concerns funding progressivity, or fairness. A state’s finance system is considered progressive (or fair) to the degree districts serving higher-needs students (e.g., lower-income students) receive more funding than districts serving lower-needs students.

    The graph below is taken directly from our report (my co-authors are Bruce Baker and Mark Weber), and it provides a rough illustration of progressivity in the U.S. as a whole. The numbers in the graph are state and local per pupil revenue by district poverty quintile. They are not dollar amounts because they are centered around the average for each district’s labor market to make them more comparable. If funding were progressive, the bars in the graph would slope upward left-to-right, since it would indicate that higher poverty districts receive more revenue than lower poverty districts. Regressive funding, in contrast, would be characterized by a downward right-to-left slope. Instead, what we find is that the bars are virtually flat – that is, higher-poverty districts receive no more or less state and local revenue than lower-poverty districts. Moreover, this has been the case for 20 years.

    I would reiterate that this is just an approximation of the national average. But it is consistent with what you see if you examine the situation state-by-state – there are a handful of truly progressive states and a few that are truly regressive, but most states are basically flat. It is also consistent with other analyses that use alternative methods (e.g., Chingos and Blagg 2017).

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  • A Myth Grows In The Garden State

    Written on July 15, 2016

    New Jersey Governor Chris Christie’s recently announced a new "fairness funding" plan to provide every school district in his state roughly the same amount of per-pupil state funding. This would represent a huge change from the current system, in which more state funds are allocated to the districts that serve a larger proportion of economically disadvantaged students. Thus, the Christie proposal would result in an increase in state funding for middle class and affluent districts, and a substantial decrease in money for poorer districts. According to the Governor, the change would reduce the property tax burden on many districts by replacing some of their revenue with state money.

    This is a very bad idea. For one thing, NJ state funding of education is already about 7-8 percent lower than it was in 2008 (Leachman et al. 2015). And this plan would, most likely, cut revenue in the state’s poorest districts by dramatic amounts, absent an implausible increase in property tax rates. It is perfectly reasonable to have a discussion about how education money is spent and allocated, and/or about tax structure. But it is difficult to grasp how serious people could actually conceive of this particular idea. And it’s actually a perfect example of how dangerous it is when huge complicated bodies of empirical evidence are boiled down to talking points (and this happens on all “sides” of the education debate).

    Pu simply, Governor Christie believes that “money doesn’t matter” in education. He and his advisors have been told that how much you spend on schools has little real impact on results. This is also a talking point that, in many respects, coincides with an ideological framework of skepticism toward government and government spending, which Christie shares.

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  • Basic Facts About Who Pays State And Local Taxes

    Written on June 24, 2016

    Taxes, particularly income taxes, are among the most divisive and controversial issues in any nation, and this makes perfect sense – people care about how much they pay and how it is spent. Yet most of the constant, heated debate about taxation focuses almost entirely on federal taxes, with state and local taxes receiving far less attention.

    Periodically, the Institute on Taxation and Economic Policy (ITEP) releases an important and interesting analysis of who pays state and local taxes – that is, the tax burdens among households with different incomes. The latest version of this report was published last year. The findings are worth knowing for anyone interested in public sector services, including education.

    ITEP reports that state and local taxes overall are highly regressive, which means that poorer households pay a larger share of their income in state and local taxes than do higher income households. This finding is summarized in the figure below, which is taken directly from the report (note that these are national averages, and that the breakdown varies by state).

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  • New Research Report: Are U.S. Schools Inefficient?

    Written on June 7, 2016

    At one point or another we’ve all heard some version of the following talking points: 1) “Spending on U.S. education has doubled or triped over the past few decades, but performance has remained basically flat; or 2) “The U.S. spends more on education than virtually any other nation and yet still gets worse results.” If you pay attention, you will hear one or both of these statements frequently, coming from everyone from corporate CEOs to presidential candidates.

    The purpose of both of these statements is to argue that U.S. education is inefficient - that is, gets very little bang for the buck – and that spending more money will not help.

    Now, granted, these sorts of pseudo-empirical talking points almost always omit important nuances yet, in some cases, they can still provide important information. But, putting aside the actual relative efficiency of U.S. schools, these particular statements about U.S. education spending and performance are so rife with oversimplification that they fail to provide much if any useful insight into U.S. educational efficiency or policy that affects it. Our new report, written by Rutgers University Professor Bruce D. Baker and Rutgers Ph.D. student Mark Weber, explains why and how this is the case. Baker and Weber’s approach is first to discuss why the typical presentations of spending and outcome data, particularly those comparing nations, are wholly unsuitable for the purpose of evaluating U.S. educational efficiency vis-à-vis that of other nations. They then go on to present a more refined analysis of the data by adjusting for student characteristics, inputs such as class size, and other factors. Their conclusions will most likely be unsatisfying for all “sides” of the education debate.

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  • New Report: Does Money Matter in Education? Second Edition

    Written on January 20, 2016

    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.

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  • Why We Defend The Public Square

    Written on May 7, 2015

    The following are the texts of the two speeches from the opening session of our recent two-day conference, “In Defense of the Public Square,” which was held on May 1-2 at Georgetown University in Washington, D.C. The introduction was delivered by Leo Casey and the keynote address was delivered by Randi Weingarten. The video of the full event will be available soon here.

    Remarks by Leo Casey

    We meet here today in “defense of the public square.”

    The public square is the place where Americans come together as a people and establish common goals in pursuit of our common good.

    The public square is the place where Americans – in all of our rich diversity – promote the general welfare, achieving as a community what we never could do as private individuals.

    The public square is the place where Americans weave together our ideal of political equality and our solidarity with community in a democratic political culture, as de Tocqueville saw so well.

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  • Recent Trends In The Sources Of Public Education Revenue

    Written on March 24, 2015

    Every year, the U.S. Census Bureau issues a report on the overall state of public education finances in the U.S. There is usually a roughly 2-3 year lag on the data – for example, the latest report applies to the 2011-12 fiscal year – but the report and accompanying data are a good way to keep an eye on the general education finance situation both in individual states as well as nationwide, particularly among those of us who are somewhat casual followers (though it bears keeping in mind that these data do not include many charter schools).

    One of the more interesting trends in recent years is the breakdown of total revenue by source. As most people know, U.S. public school systems are funded by a combination of federal, state and local revenue. Today, although states vary considerably in the configuration of these three sources, on the whole, most funding comes from state and local revenue, with a smaller but still significant contribution from federal government sources (total revenue in 2011-12 was about $595 billion).

    But there has been some volatility in these relative contributions over the past few years (at least the past few years for which data are available). The graph below presents the percent of total elementary/secondary education revenue from federal, state and local sources between 1989-90 and 2011-12.

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  • Unreliable Sources: Education Revenue During The Recession

    Written on June 6, 2013

    For the better part of the past century, U.S. public education revenue has come predominantly from state and local sources, with the federal government contributing only a relatively small share. For most of this time, local revenue (primarily property taxes) comprised the largest proportion, but this began to shift gradually during the 1970s, to the point where state funds constituted a slightly larger share of overall revenue.

    As you can see in the simple graph below, which uses data from the U.S. Census Bureau, this situation persisted throughout the 1990s and most of the 2000s. During this period, states provided roughly 50 percent of total revenue, localities about 45 percent, and the federal government approximately 5-8 percent. Needless to say, these overall proportions varied quite a bit by state. Vermont represents one of the most extreme examples, where, as a result of a 1997 State Supreme Court decision, education funding comes almost entirely from the state. Conversely, since Hawaii’s education system consists of a single statewide district, revenue on paper is dominated by state sources (though, in Hawaii's case, you might view the state and local levels as the same).

    That said, the period of 2008 to 2010 was a time of pretty sharp volatility in the overall proportions contributed by each level of government.

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  • The Relatively Unexplored Frontier Of Charter School Finance

    Written on May 3, 2012

    Do charter schools do more – get better results - with less? If you ask this question, you’ll probably get very strong answers, ranging from the affirmative to the negative, often depending on the person’s overall view of charter schools. The reality, however, is that we really don’t know.

    Actually, despite uninformed coverage of insufficient evidence, researchers don’t even have a good handle on how much charter schools spend, to say nothing of whether how and how much they spend leads to better outcomes. Reporting of charter financial data is incomplete, imprecise and inconsistent. It is difficult to disentangle the financial relationships between charter management organizations (CMOs) and the schools they run, as well as that between charter schools and their "host" districts.

    A new report published by the National Education Policy Center, with support from the Shanker Institute and the Great Lakes Center for Education Research and Practice, examines spending between 2008 and 2010 among charter schools run by major CMOs in three states – New York, Texas and Ohio. The results suggest that relative charter spending in these states, like test-based charter performance overall, varies widely. In addition, perhaps more importantly, the findings make it clear that there remain significant barriers to accurate spending comparisons between charter and regular public schools, which severely hinder rigorous efforts to examine the cost-effectiveness of these schools.

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  • New Report: Does Money Matter?

    Written on January 6, 2012

    Over the past few years, due to massive budget deficits, governors, legislators and other elected officials are having to slash education spending. As a result, incredibly, there are at least 30 states in which state funding for 2011 is actually lower than in 2008. In some cases, including California, the amounts are over 20 percent lower.

    Only the tiniest slice of Americans believe that we should spend less on education, while a large majority actually supports increased funding. At the same time, however, there’s a concerted effort among some advocates, elected officials and others to convince the public that spending more money on education will not improve outcomes, while huge cuts need not do any harm.

    Often, their evidence comes down to some form of the following graph:

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