More Money Does Not Equal Better Public Schools

Education policy meets Economics 101.


The Virginia Education Association and others have pointed out that state spending per student has fallen in recent years. Adjusted for inflation, it's now at least 16 percent lower than it was in 2008-09. This is presented as grim news—a dark sign that the state's public schools are falling behind, perhaps coming to a breaking point.

If so, then word has yet to reach the Virginia Department of Education. In October, the department boasted that students in the commonwealth are doing better on the SATs: "Virginia 2014 public school graduates achieved significant gains and outperformed their peers nationwide on the SAT, according to results released today by the College Board."

Virginians are ahead of the pack by 23 points in reading, 11 points in math, and 15 points in writing. That announcement came shortly after the VDOE announced that the statewide on-time graduation rate was approaching 90 percent, and that seven public schools had received National Blue Ribbon awards from U.S. Education Secretary Arne Duncan.

Last August, the department sent out a press release celebrating the fact that "Student achievement improved during 2013-14 on challenging mathematics Standards of Learning" — along with another cheering the news that "Virginia students outperformed their peers nationwide by significant margins on the ACT this year as the number of the commonwealth's high school seniors taking the college-admissions examination continued to grow."

Meanwhile, the VEA insists "our public schools are in serious need" because of the "dangerously downward trend in state spending on public schools."

The group isn't quite so quick to point out a big offsetting factor: In Virginia, localities pay 51 cents of every dollar spent on the schools, and the federal government pays another 8 cents. So a 16 percent cut in state funding per pupil does not mean a 16 percent cut in total funding per pupil.

As PolitiFact Virginia noted when it verified the VEA's claim, "Data taking into account all three money sources shows an average total of $11,316 was spent per Virginia student in the 2008-09 school year and that fell to $11,257 in 2012-13, the latest year available. When adjusted for inflation, that's an 8.6 percent drop."

That might be one reason Gov. Terry McAuliffe could announce last year that "Virginia again boasts the nation's third-highest percentage of public high school seniors qualifying for college credit on Advanced Placement examinations." And why, a month before that, the state Board of Education honored "57 schools and two school divisions for raising the academic achievement of economically disadvantaged students." And so on.

None of this should come as a big shock. The correlation between school spending and student achievement is far weaker than commonly thought. A couple of years ago, for instance, researchers studying Philadelphia reported that district "spent approximately $2,000 less per student than its peer districts and yet generated slightly better results on state tests." The Washington Post ran the story under the headline, "Surprising New Research on School Funding."

Why surprising? Since 1970, inflation-adjusted spending per pupil has doubled. Class sizes have shrunk. Yet academic gains haven't come close to keeping pace. If test scores don't soar when spending does, then why should they plunge when spending plunges?

It is not mere coincidence that similar patterns show up in health care, which—like schooling—is heavily dominated by government involvement. And as the push for health care reform gained steam in 2009, supporters took to pointing out seemingly curious data from the Dartmouth Atlas of Health Care. They showed huge variations in Medicare outlays without any corresponding variations in health outcomes. As Atul Gawande wrote in The New Yorker, "The more money Medicare spent per person in a given state, the lower that state's quality ranking tended to be. In fact, the four states with the highest levels of spending — Louisiana, Texas, California, and Florida — were near the bottom of the national rankings on the quality of patient care."

It's much the same with education. New York and New Jersey spend a similarly high sum per pupil: more than $19,000 a year. Forty-three percent of New Jersey eighth-graders are proficient or better in reading; 33 percent of New York's are. Thirty-three is also the same percentage of reading-proficient eighth-graders in Utah, which spends less than $7,300 per pupil. Indiana spends about $8,000 and comes in just behind Utah. Rhode Island, which comes in several points behind both of them, spends more than twice as much as they do: nearly $18,000 per pupil.

One possible rebuttal to all of this might be that Virginia's overall 8 percent cut in per-pupil funding will show up later. Perhaps kids who are in third grade now will perform worse in eighth grade than they otherwise would. Perhaps today's eighth-graders will do worse in 12th grade, and so on. But that's just speculation. So far, performance hasn't suffered from cuts.

Another response would tender the observation that teacher pay is often wretched. Some educators qualify for food stamps. The other day a Chesterfield teacher told county leaders his salary makes his children eligible for free school lunches. Teachers should indeed be paid better—and it's worth asking why they haven't gained more from the big increases in education spending over the past few decades. Surely some of the funds that go to expanding central office bureaucracies should go to the classroom instead.

That's an argument about equity, though—not effectiveness. If you're a teacher struggling to pay the bills every month, the 16 percent drop in state spending on schools is an outrage. But if you're a taxpayer struggling to pay the bills every month, getting the same benefit at a lower cost looks like a pretty good deal.