When it Comes to Education Spending, It’s Not How Much, But How It’s Spent

A troubling misconception has overwhelmed much of the debate about education policy in America: money does not matter in education.

Of course, there are many outlets that have cast doubt on this notion — not to mention the barrage of online comments that claim student achievement and money are in no way linked.

This myth that “money doesn’t matter” has some sensible roots. Mark Dynarski, president of Pemberton Research, laid out the myth’s origins in a Brookings Institution white paper published last week. It began with a famous 1966 report by James Coleman.

“It is known that socioeconomic factors bear a strong relation to academic achievement,” Coleman concluded more than 50 years ago. “When these factors are statistically controlled, however, it appears that differences between schools account for only a small fraction of differences in pupil achievement.”

In other words: “money doesn’t matter.”

But as Dynarski notes, Coleman’s study did not yield “causal” results but merely looked at a cross-section of districts and schools at one very specific point in time. Outlying factors — such as each individual school community’s average income, culture and environment — were ignored, with erroneous links substituted for actual correlations.

Coleman’s study did not yield “causal” results

The truth, Dynarski says, is much more nuanced. But one conclusion remains concrete: money does matter. But just as important is how the money is spent.

Indeed, if that money is spent in the short term, Brookings found no real improvements. Dynarski notes that School Improvement Grants, or SIG, aimed to assist schools that were just barely missing the cut when it came to federal standards. In much the same way a B+ student and an A- student are practically identical in terms of achievement, SIG operates on the logic that schools just below the federal mark are practically identical to schools just above the mark. With a little influx of cash, so the assumption continues, these lower-performing schools could get that much-needed boost to meet the grade.

The Brookings Institution found that conclusion to be false. Even with extra cash, one study found that the temporary nature of this money leads to scant improvements, as administrators are hesitant to implement real positive changes for fear of the fiscal rug behind pulled out beneath them, so to speak.

Instead, what matters is long-term money.

“Financial reforms are long-lasting,” Dynarski writes, “and low-income districts and schools can invest in improvement knowing that their funding is higher for the foreseeable future.”

“low-income districts and schools can invest in improvement knowing that their funding is higher for the foreseeable future.”

And, as Dynarksi continues, “perhaps expecting short-term money to transform schools is a kind of magical thinking that these issues that plague these schools can be ‘fixed’ by temporary funds.”

What is needed, instead, is durable increases in money spent over time. That way, the money follows the students throughout their schooling, from kindergarten through high school. This conclusion, it should be noted, does not side-step the issues raised by Coleman in the 1960s — that there is no direct link between money spent and education achievement — but rather it addresses why Coleman came to that conclusion. Where and how was that money being spent in Coleman’s era? And how can proper distribution of funds be improved to make a difference?

Money alone cannot fix the U.S. education system. If that were the case, we would have closed the racial academic achievement gap decades ago. What’s required is a smart way to spend education dollars to ensure that we are maximizing the return on investment. It’s also necessary to expand educational choice, particularly among minority and lower-income Americans who remain trapped in failing schools despite billions of dollars in increased aid.

To read the entire Brookings Institution Report, go here.

Evan Smith is a Staff Writer for Opportunity Lives. You can follow him on Twitter @Evansmithreport.

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