** NEW SECOND EDITION
UPDATE (April 2019): Also see our new report and public databaseon state school finance systems in the U.S.
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This report presents acomprehensive review of the high-quality empirical evidence on whether and how money matters in education, written by Rutgers Professor Bruce Baker. This is the second edition of the report originally released in 2012. It has been updated by the author.
Baker concludes that, despite recent rhetoric, “on average, aggregate measures of per-pupil spending are positively associated with improved or higher student outcomes,” while “schooling resources which cost money … are positively associated with student outcomes.” Finally, reviewing the high-quality evidence on the effect of school finance reforms, he asserts: “Sustained improvements to the level and distribution of funding across local public school districts can lead to improvements in the level and distribution of student outcomes.”
The full report is available below. The executive summary is pasted directly below.
Executive Summary
This second edition policy brief revisits the long and storied literature on whether money matters in providing a quality education. It includes research released since the original brief in 2012 and covers a handful of additional topics. Increasingly, political rhetoric adheres to the unfounded certainty that money doesn’t make a difference in education, and that reduced funding is unlikely to harm educational quality. Such proclamations have even been used to justify large cuts to education budgets over the past few years. These positions, however, have little basis in the empirical research on the relationship between funding and school quality.
In the following brief, I discuss major studies on three specific topics: (a) whether how much money schools spend matters; (b) whether specific schooling resources that cost money matter; and (c) whether substantive and sustained state school finance reforms matter. Regarding these three questions, I conclude:
Does money Matter? Yes. On average, aggregate measures of per-pupil spending are positively associated with improved or higher student outcomes. The size of this effect is larger in some studies than in others, and, in some cases, additional funding appears to matter more for some students than for others. Clearly, there are other factors that may moderate the influence of funding on student outcomes, such as how that money is spent. In other words, money must be spent wisely to yield benefits. But, on balance, in direct tests of the relationship between financial resources and student outcomes, money matters.
Do schooling resources that cost money matter? Yes. Schooling resources that cost money, including smaller class sizes, additional supports, early childhood programs and more competitive teacher compensation (permitting schools and districts to recruit and retain a higher-quality teacher workforce), arepositively associated with student outcomes. Again, in some cases, those effects are larger than in others, and there is also variation
by student population and other contextual variables. On the whole, however, the things that cost money benefit students, and there is scarce evidence that there are more cost-effective alternatives.
Do state school financereforms matter?
Yes. Sustained improvements to the level and distribution of funding across local public school districts can lead to improvements in the level and distribution of student outcomes. While money alone may not be the answer, more equitable and adequate allocation of financial inputs to schooling provide a necessary underlying condition for improving the equity and adequacy of outcomes. The available evidence suggests that appropriate combinations of more adequate funding with more accountability for its use may be most promising.
While there may in fact be better and more efficient ways to leverage the education dollar toward improved student outcomes, we do know the following:
- Many of the ways in which schools currently spend money do improve student outcomes.
- When schools have more money, they have greater opportunity to spend productively. When they don’t, they can’t.
- Arguments that across-the-board budget cuts will not hurt outcomes are completely unfounded.
In short, money matters, resources that cost money matter, and a more equitable distribution of school funding can improve outcomes. Policymakers would be well-advised to rely on high-quality research to guide the critical choices they make regarding school finance.
Journalists interested in the report can contact Professor Baker directly – bruce.baker [at] gse.rutgers.edu
FAQs
Yes. On average, aggregate measures of per-pupil spending are positively associated with improved or higher student outcomes. The size of this effect is larger in some studies than in others, and, in some cases, additional funding appears to matter more for some students than for others.
Why is funding important in education? ›
FUNDING ADEQUACY:
Schools also need to be funded adequately so that they can provide necessary resources in classroom supply budgets to meet the individual needs of ALL students.
Why should we spend money on education? ›
Increased spending raises graduation rates and boosts adult income.
What is the relationship between money and education? ›
Households with higher levels of education tend to have more liquid assets to withstand financial storms, diversify their savings (investments), and maintain low levels of debt relative to assets. These financial behaviors are effective strategies for building income into wealth.
Why don t schools teach us about money? ›
It's hard to pinpoint the real reason personal finance isn't taught in schools, but the fact remains: financial education for children is the responsibility of the parents. This is another problem, because if most teachers don't feel qualified to teach finance classes, how do you think parents feel?
How important is money for students? ›
Money is important for students to cover educational expenses and daily needs and to develop good financial habits for the future.
How does lack of funding affect education? ›
Some key points on how funding gaps affect students: Under-resourced schools struggle to attract and retain high-quality teachers, provide electives, advanced courses, extracurriculars, and other enrichment programs. This limits the educational experience for many students.
Why is education important financially? ›
In other words: financial education is the foundation for your entire relationship with money. A good understanding of money can help keep you from overspending, allow you to build wealth, and lower your stress levels overall (nearly 2 in 3 adults say that money is a significant source of stress).
Does funding affect student performance? ›
The analysis finds that a 20 percent increase in per pupil funding for underperforming schools reduced the number of below-average students in mathematics, English, social studies, and science by 19.7 percent, 17.0 percent, 16.1 percent, and 18.1 percent compared with the control-side means.
How does wealth help education? ›
Wealth might provide the needed resources for families to get their children in and through college, or wealthier families may live in areas with better schools and social networks that help them get to college.
Increased demand for a college education, less funding from state governments and increases in administrative and operating costs have contributed to a higher cost. Students can afford college by seeking funding sources such as scholarships, student loans and work-study to help foot the bill.
Why is education worth the money? ›
Workers with four-year college degrees earn higher wages and experience lower levels of unemployment than those with only a high school diploma. Many professions demand a college degree, but some well-paying jobs only require an apprenticeship or vocational training.
Why does money matter in education? ›
Yes. Schooling resources that cost money, including smaller class sizes, additional sup- ports, early childhood programs and more competitive teacher compensation (permit- ting schools and districts to recruit and retain a higher-quality teacher workforce), are positively associated with student outcomes.
Does education still connect to wealth? ›
Enough evidence shows that any community's wealth, productivity, and success are directly linked to education.
What is the importance of money? ›
Money provides a safety net, shielding us from the uncertainties of life. It allows us to cover our basic needs—food, shelter, and healthcare—and grants us peace of mind. Knowing that we have the resources to weather unexpected expenses or emergencies contributes significantly to our overall well-being.
Does money matter in a career? ›
Money matters. However. if you're not worrying about paying the bills anymore and more money isn't going to make you happier, maybe salary shouldn't be the primary determining factor when deciding which is the best job for you. What would better predict your job satisfaction?
Is education worth the debt? ›
Though Americans are questioning the value of college, research shows that people with college degrees typically earn nearly 75 percent more than those without them. Jobs that require a degree also often come with a range of benefits: flexible schedules, paid time off and sick and parental leave.
Why does money matter so much? ›
Why do we need money? Money can't buy happiness, but it can buy security and safety for you and your loved ones. Human beings need money to pay for all the things that make your life possible, such as shelter, food, healthcare bills, and a good education.
