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Much of the funding from public schools comes from state and local sources

Source: Digest of Education of Statistics (2023 edition): �Table 235.10

States currently provide the largest share of total funding

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To affect student outcomes, revenues must reflect investments in human capital: Quantity vs. Quality Tradeoff

Source: How Money Matters for Schools: School Finance Series by Bruce Baker �(https://learningpolicyinstitute.org/product/how-money-matters-brief)

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What are the outcomes that matter and what the inputs that contribute to those outcomes?

Input 1

Input 2

Input N

Output

=f (

)

…

Outcomes:

Test scores
Civically engaged citizens
Others?

Inputs:

Teachers
Counselors
Principals
Others?

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Who are the staff that districts pay to support student outcomes?

Health Services Staff

School counselors
Nurses
Psychologists
Speech therapists

School Aides

ESL/bilingual
Special education
Library
Title I
Other classroom aide

Academic Staff

Teachers
Library specialists
Instructional coordinators

Administrative Staff

Principals
VPs and Aps
Secretaries
Other clerical support staff

Basic Services

Food Service
Custodial / maintenance
Security

Based on NCES Schools and Staffing Survey

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Old Literature: No consistent evidence between resources and student outcomes

Source: Hanushek (2003)

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Old Literature: No consistent evidence between teacher characteristics and student test score gains

Source: Hanushek (2003)

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Problem with the old literature: Correlation does not imply causation

Some reasons for inconsistent results:

Differences in educational need

Economically disadvantaged students, exceptional status students, and English language learners may require more funding to achieve similar outcomes to their counterparts

Socioeconomic status

Irrespective of funding, students with wealthier families may have access to resources that improve outcomes outside of the school environment

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New Literature: Studies that leverage shocks from school finance reforms show money matters for student outcomes

Economic mobility: A $4,500 reduction in gap in per pupil revenues between high- and low-income districts leads to a 4.7 percentile increase in intergenerational mobility of children whose parents are the bottom on the income distribution (Biasi, 2021)�
Across studies: On average, a $1000 increase in per-pupil public school spending for four years increases test scores by 0.032 standard deviations, high-school graduation by 2.0 percentage points, and college-going by 2.8 percentage points.” (Jackson & Mackevicius, 2021)

Test scores for low-SES children ↑ �(Lafortune et al., 2018)

Incidence of Poverty ↓ �(Jackson et al., 2016)

Graduation Rates in High-Poverty Districts ↑ �(Candelaria & Shores, 2019)

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New Literature: When money decreases, student outcomes can decline (Example: Great Recession)

Comparing states with a high vs. low reliance on state revenues during the great recession, Jackson et al. (2021) find that $1,000 decrease in per pupil spending leads to:

0.04 standard deviation decrease in test scores

1.2 percentage point decrease in the college-going rate

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New Literature Summary: Money matters, but still much to learn

National Studies Summary:

Spending increased and was redistributive (Candelaria & Shores, 2019; Sims, 2011)�
Money matters, especially among students in lower-income districts (Candelaria & Shores, 2019; Lafortune, Rothstein, & Schanzenbach, 2018; Jackson, Johnson, & Persico, 2016) �

State-Specific Studies Summary: Mixed results

Moderate spending increase, no evidence of academic improvement

Kansas 1992 School District Finance and Quality Performance Act (Duncombe & Johnston, 2004; Johnston & Duncombe, 1998)
Kentucky 1990 Education Reform Act (Clark, 2003)
Maryland 2002 Bridge to Excellence in Public Schools Act (Chung, 2015)��

Spending increases plus academic improvements

Massachusetts 1993 Education Reform Act (Dee & Levine, 2004; Guryan, 2001)
Vermont 1997 Equal Educational Opportunity Act (Downes, 2004)

What are the mechanisms?

What explains the heterogeneity?

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SFR effects on school spending are variable

Summary of results

Average effect of SFRs: 7% increase in spending among lower income districts
Lots of heterogeneity!

17 of 26 states statistically significant at 10% level
2 (AZ, KS) of these 17 had statistically significant negative effects
Our results match case studies in KS, MD, MA, and VT

Tercile 1: Log Total Expenditures

Effect

sizes for each state

Meta-analytic

average

Explanations for reform heterogeneity:

Funding formula/distribution mechanism
Type of reform: court or legislative
Number of reforms
Union strength

Source: Shores et al. (2021)

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Next steps for research: State-Level

Understand how states can increase funding for education (McNeill & Candelaria, 2024)

Typically done through tax increases
Reforms need not reduce state-level expenditures such as health or welfare

Investigate the funding mechanisms states use distribute funds to districts

Among states that use Weighted Student Funding, provide guidance to policymakers to help them understand the implicit tradeoffs made when setting weights (Candelaria et al., 2024)

Example: A formula may specify that ED students receive $1,700 more than non-ED students, but on average, the realized funding difference is only $299
Reasons: ��(1) ED weights are not mutually exclusive from other weights such as ELL�(2) Economic sorting of students across the state, so district have few ED students

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Additional considerations: District Level

States may distribute funding equitably after a finance reform, but districts need not follow suit

Districts might also consider leveraging equitable funding formulas to schools to improve student outcomes

Such distribution formulas might also consider giving flexibility to principals to make resource allocation decisions

INCLUDE GRAPH TO SHOW HOW WSFF at the DISTRICT LEVEL IMPROVES STUDENT OUTCOMES

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