Schools, Dollars, and the Public Trust

New research on school spending and student outcomes

Posted Sep 14, 2014

Publically funded institutions don't always spend their dollars in effective ways. Just consider the fact that more than a hundred districts in Texas spend more than $500 per student on sports. One district spent more than a $1,000 per student on athletics--or about the cost of a MacBook Air--even while their students performed below average on reading and math tests.

These findings come from a report that I put together for the Center for American Progress not long ago, which looked at the education productivity of more than 7,000 school districts in almost 40 states. While our productivity analysis has a variety of limitations, it’s clear that billions of dollars are being lost in low-capacity school systems.

Limited educational productivity is far from the only pressing issue in school finance today, of course. Inequitable funding remains a deep and persistent issue, as Bruce Baker has shown. But what's also clear is that the effective use of school funds is a national problem, and across the country, school districts in almost every state are far less productive than their peers. That means that more than a million students are enrolled in districts which have significantly lower academic achievement relative to their spending, after controlling for factors outside a district’s control.

This is important far beyond education. To rebuild our faith in each other--and our faith in government--we need to make sure that there's accountability. Trustworthiness often matters just as much as trust, as Onora O'Neil has argued. To solve this problem within education, the nation will have to start by addressing a deeply embedded and simplistic view of school spending, where school reformers have long divided themselves into two camps. On one side, there are the advocates who argue for increased fiscal equity. They believe the primary issue concerning school finance is funding fairness and point to an abundance of evidence that shows high-poverty districts with needier students receive far less money than their wealthier counterparts.

On the other side of the debate are those who argue for increased fiscal efficiency. These advocates believe that school districts do not do nearly enough with the dollars they have. There’s a problem inherent to both points of view, though. Fiscal equity and fiscal effectiveness are not mutually exclusive, and this nation needs to do more to improve both the fairness and the productivity of public school dollars.

Plus, more could be gained from school dollars if they were invested in lower-income districts. While this notion might be a sea change, the idea is supported by a number of other recent studies. An analysis by the Boston Consulting Group released earlier this year suggests that school spending has a significant impact on the achievement of lower-income students. Another study released by the National Bureau of Economic Research earlier this summer shows that increases in per-pupil spending boost outcomes for disadvantaged students.

At the same time, our education budgeting system needs to change. Few states collect robust school-level fiscal data or provide reliable information on things like athletic spending, while other regions simply have loose accounting practices.

In Washington State, for instance, school districts are allowed to release two different sets of financial statements. The first set of statements is for the state’s annual financial accounting system. The second set of statements meet a different set of accounting procedures. This makes it difficult for individuals outside of the school system—parents, taxpayers, journalists—to benchmark how school systems are spending their money. It also makes it difficult to find out if school systems are getting their fair share of education dollars.

For schools and districts, the stakes are high, and the nation clearly needs fairer, more effective ways to invest its school dollars. In many areas, education revenues will remain weak for years to come because of shaky real estate markets. At the same time, the advent of the new, more rigorous Common Core standards will demand that far more from educators, including better, tougher exams.

Fiscal reform alone will not solve all of our education issues. We also need to do more to support teachers and school leaders and give them more time and money to do the work that they do. Furthermore, we must keep in mind that schools are not businesses. Districts can’t choose their clients, and as a nation, we need to do more to support effective programs like expanded learning time, which help educators reach all students.

But states and district must also take a harder look at the ways they spend their dollars and the ways they assess the productive and fair use of those monies. The reality is that even the fairest of school funding formulas will continue to leave the most needy students behind without a system in place that encourages better educational productivity.

Portions of the blog may have also appeared before in other work by Ulrich Boser. 

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