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Does Money Matter? Is School Funding Fair?

By Jack Schneider — December 11, 2014 7 min read
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In this post, Jack and Andy Smarick discuss school funding, examining what role money plays in school performance and whether current funding structures are fair.

Schneider: We ended our last post with a question about school funding. You seem to be more concerned with the issue of accountability than I am. And I appear to be more concerned with equal funding.

So it seems like maybe we have a chicken and egg issue here.

I don’t think you can begin to talk accountability seriously until you have a relatively equal playing field. You seem hesitant to channel funds to organizations that can’t meet accountability targets. Can you talk through your position for me?

Smarick: My position on funding in a nutshell is: I want every school in America to have the money necessary so every child can succeed, but we need to appreciate that more funding won’t necessarily generate better results.

So let’s first put some basic facts on the table.

The U.S. now spends close to $700 billion annually on K-12 education. If our primary and secondary schools were a country, they would have the 20th largest GDP in the world, larger than the economies of Sweden and Poland.

We now spend in the neighborhood of $13,000 per student annually (this includes capital outlays and debt). Even after controlling for inflation, we’ve doubled school spending over the last 30 years.

There was a time when local property taxes made up the lion’s share of school spending. That meant low-income areas with smaller tax bases had less to spend on schools than places of greater affluence. In 1970, for instance, local revenue for K-12 was 30% higher than state revenue. But today, state-level spending (44.1% of total) for K-12 is higher than local spending (43.4%).

This has meant not just more even spending across states but much more money for low-income areas. In fact, today, on average and across the nation, we spend more per student in large urban districts than in any of the other 11 geographic areas identified by the federal government (e.g. large suburban, fringe town, remote rural).

So for example, even when you exclude capital costs and debt, Baltimore City spends, per-pupil, $14,711; Boston $19,169; Detroit $12,801; Milwaukee $14,038; New York City 19,184; and Philadelphia $11,417.

When capital and debt are included, the numbers are substantially larger. For example, in Connecticut the median per-pupil revenue is $16,888, Massachusetts $15,022, and New Jersey $17,846. In these states and others, our lowest-income areas are now typically receiving the highest per-pupil amounts. At the 95th percentile, in Connecticut the spending is $24,447, in Massachusetts $25,655, and in New Jersey $29,120.

Huge increases in funding for disadvantaged areas have typically been the result of successful “equity” and “adequacy” lawsuits. I’m glad that we’ve invested so significantly in the public schools in our lowest-income areas.

But we need to assess the return on these investments. For instance, despite these huge increases in funding, our big urban districts continue to be tragically low performing. Eric Hanushek, one of the nation’s foremost experts on school finance, has two quotes that stick with me. On the general issue of increasing funding: “Measures of school resources do not provide guidance either about the current quality of schools or about the potential for improving matters.” On the equity and adequacy lawsuits: “The simplest summary is that no currently available evidence shows that past judicial actions about school finance—either related to equity or to adequacy—have had a beneficial effect on student performance.”

So I want to spend as much as we need to help all of our kids. But decades of evidence seem to instruct us that spending alone is far from the answer.

Schneider: Let me first put that figure—$700 billion—in context.

We spend that much on the military. We spend that much on Social Security. We spend that much on Medicare and Medicaid. Doesn’t education rank with defense, financial security, and healthcare? I think it does.

Additionally, the U.S. is the third most populous country on earth, with 315 million people. Poland has just over a tenth of our population. Sweden’s population is three times smaller than Poland’s. So yes, we spend more on education than a lot of little countries could ever imagine spending. But we also have far more schools to run.

There are 50 million students in the schools. There are three million teachers to pay. There are lunches for low-income students to serve. There are buses to fill with gas. There are lights to keep on. There are books to buy.

And though costs have gone up over the past several generations, much of that is because we are making up for gross inequities and unconscionable disparities of the past. Our public education system has long purported to serve everyone. But in practice, that wasn’t even remotely the case until relatively recently.

In Mississippi in 1950, average expenditures on white students were three times what they were for black students. Prior to 1975, children with disabilities--who can be extraordinarily expensive to educate—were often excluded from the public schools. Support for English Language Learners, which is still generally inadequate, was once nonexistent.

So, yes, spending has gone up. But much of that is because we are finally beginning to spend what it takes to educate vulnerable populations.

Yet, it’s also important to note that we still aren’t where we need to be. First of all, funding inequities, as Bruce Baker and Sean Corcoran have shown, can be hard to track through per-pupil expenditures. So we shouldn’t assume that such data tell the whole story. Additionally, though urban schools sometimes (but not always) receive larger per-pupil allotments, they can still be underfunded—because their needs are so much greater.

So, no, spending alone is not the answer. But I think it’s important to recognize that increased spending over time is largely the product of an effort to un-do past inequalities in spending. And it is equally important to note that, despite judicial actions on school finance, we still aren’t at a level of adequacy in many schools.

How, then, can you expect results? This question becomes even more pointed when you factor in what Gloria Ladson-Billings calls the “education debt.” Her point, in brief, is that historical inequities will continue to affect outcomes, even after you equalize inputs.

Smarick: High-performing high-poverty schools show that at yesterday’s and today’s spending levels, we can produce outstanding results. Their outcomes—if you believe the research—are the consequence of sky-high expectations, a no-excuses attitude, amazing teachers, and other factors far less reliant on dollars-spent than your argument suggests.

But I have two bigger concerns about “adequacy” and “education debt” arguments. The first is they, by definition, establish a movable, and ultimately unreachable, bar. They demand increased funding, and when those demands are met but academic results don’t improve, the response is, “We must not have reached adequacy or paid back the education debt. So increase spending more.” We end up chasing an elusive dollar figure instead of focusing on student achievement.

Second, these arguments are used to shield failing systems from necessary scrutiny and meaningful change. They advance the pernicious narrative that, “There’s only so much we can expect from poor kids until we increase spending.” That’s stops us from having tough conversations about educator effectiveness, seniority, accountability, parental choice, and more.

I want our schools to be well funded, but I also can’t ignore these facts: The U.S. spends 39% more per student than the OECD average. We’ve dramatically increased spending for low-income schools over 50 years. States now compensate for the lack of local property taxes. Urban districts now routinely far outspend the national average and still produce heartbreaking results. And across the nation, high-performing high-poverty schools are showing today’s budgets are not the problem.

In my opinion, believing spending is our biggest problem requires ignoring lots of evidence.

Schneider: First, I’m not sure many people believe that spending is our biggest problem. I think a far more common position is that poverty is our biggest problem. Why can other OECD nations get away with spending less on education? Because they don’t have the radical income inequality we have. And because, to quote the OECD, “redistribution is considerably lower in the United States than in most other OECD countries.” In other words, they simply don’t face the same challenges as American schools with high concentrations of student poverty.

Should we have “tough conversations” about teacher quality, school leadership, choice, etc.? Absolutely. Funding challenges shouldn’t preclude those. But it’s also important to recognize that funding matters and that it isn’t equal. Can we agree on those two points?

Smarick: Let me rephrase. My concern relates to those who see funding or poverty as dispositive problems—i.e. until those issues are addressed to someone’s satisfaction, they end the discussion. I readily concede that funding and poverty matter a great deal, so we agree there. But I think the stuff of great schools, in important ways, can matter even more.

The opinions expressed in K-12 Schools: Beyond the Rhetoric are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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