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New Study Finds that Money Matters

A strong correlation exists between state education funding and student success, according to a recent investigation by the Boston Consulting Group. The three researchers who led the study concluded that the level of aid state governments allocate per pupil and how they spend it impacts achievement, especially for low-income students. The group investigated the connection between the way states fund public school education and students’ performance on the National Assessment of Educational Progress exams. Focusing on 4th grade reading and 8th grade math from 2003 to 2011, the authors also examined student results based on different income levels.

BCG’s study concluded that increasing spending per pupil resulted in higher test scores for all students. The investigators found that an increase of $1,000-per-pupil correlated with a .42-point increase in NAEP scores for low-income 4th grade students. Recent decreases in education spending in some states has had a detrimental effect on low-income students. The researchers also observed that states with increased equity ratios (the ratio of per-student funding between high- and low-poverty districts) have had a positive impact on low-income students’ performance in reading and math, and that increased funding equity benefits students at every income level.

Equity in spending is imperative to ensure student success, according to the researchers. Equity does not mean equal funding for different districts, but rather necessitates that each student receives high-quality resources to obtain the same opportunity for school success. Students from low-income neighborhoods need more funding, often because they have a higher concentration of English Language Learners and special needs students. The researchers also found that an increase of 20 percentage points in the state share of spending correlated with a 1-point improvement in the 8th grade math scores of low-income students. They recommend, therefore, that states increase their share of school funding instead of relying heavily on local property taxes which cannot be redirected to higher need students.

March 11, 2014

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