When Money Matters: How Educational Expenditures Improve Student Performance and How They Don't
A Forum — December 5, 1997
Dr. Harold Wenglinsky of the Policy Information Center at Educational Testing Service (ETS) tackles this inquiry in his recent study, When Money Matters: How Educational Expenditures Improve Student Performance and How They Don't. This study employs nationally representative data to examine how district dollar and resource allocations relate to the mathematics achievement of 4th grade and 8th grade students across the U.S.
Wenglinsky provides a brief overview of the current policy debate regarding educational expenditures. He explains the debate as a conflict between two approaches: (1) the traditional approach argues that school district spending levels in rich and poor districts need to be equalized by allocating more funds to the less fortunate districts; (2) the productivity approach contests that mere equalization of spending levels across districts has not produced the expected and assumed impact on student achievement levels. Refuting mere equalization as a solution to district discrepancies, productivity proponents suggest reallocating existing funds and earmarking new dollars at specific targets proven to increase student performance.
Wenglinsky connects the policy debate to the relationship between a community's wealth and the school district's funding. Most district school funding is levied through local property taxes making district budgets an inherent function of each community's wealth. The legal debate was thus introduced to equalize disparities among district property tax revenue. Recently, the issue resurfaced and has been winning over advocates by citing a constitutional requirement of an "efficient" education system that many believe demands more of states in order to raise student achievement in poor districts.
This legal contest over school finance reform fueled an academic interest on economic inputs and student achievement. Wenglinsky maps the prior research noting the most influential of these studies as the 1966 Coleman Report, which supported the productivity approach and implied that differences in school resources have minimal impact on achievement. Rather, socioeconomic background was the primary indicator. Studies since have both supported and contradicted these findings. Wenglinsky carefully outlines a number of shortcomings of prior research, such as concentrating on specific school districts and states harming generalizability; not distinguishing among different types of spending; offering questions of validity as some did not use adequate measures of student backgrounds; failing to control for regional cost differences; and not providing sophisticated measures of student achievement.
To account for these methodological shortcomings, Wenglinsky explains how he used school finance information, variations in education costs across states, and accounted for not only student mathematics achievement, but also student characteristics and school climate, to produce charts documenting the flow of dollars and resource allocations to student achievement.
Wenglinsky introduces two very significant findings. First, there were differences in the flow of funds impacting student performance between 4th and 8th graders. In a two step model, only funding allocations reaching teacher-student ratio improvements affect performance in 4th grade math scores. Both school environment and teacher's highest degree do not exhibit a relationship with academic achievement. However, the three-step flow of funding for eighth grade students shows that increased teacher-student ratios do not directly result in achievement gains. Instead, improved teacher-student ratios first affect school environment, which in turn directly raises student performance levels.
For both 4th and 8th graders, the benefit of an increased teacher-student ratio is its ability to promote social cohesion: teachers can be more attentive, have a higher morale, maintain order and discipline and are better able to forge relationships with their students. Fourth graders are less likely to damage property or skip classes, therefore these smaller class size benefits are largely pedagogical. Meanwhile, eighth graders face a considerably higher degree of negative social environmental incidences and therefore the benefit of smaller class sizes translates into preventing problem behaviors. A supporting corollary finding is the apparent relationship between students' socioeconomic status, which at many times relate to the type of school district they reside within, and achievement in eighth, but not fourth grade.
The other major finding Wenglinsky focuses on is that variations in other expenditures and resources were not associated with performance. Spending on facilities and maintenance, school level administration and teacher education levels were found to not be related to student achievement. He addresses the issues of who best makes the financial decisions that improve performance levels and what are these beneficial decisions they make. He found that spending at the district or central administration level was most successful in increasing teacher-student ratios, thus impacting achievement in both grades. School principal office spending is neither associated with increased teacher-student ratios nor any other educational characteristics in the model. No matter who allocates funding and resources, spending on high teacher salaries and recruitment of better educated teachers does not affect achievement. However, district offices were shown to be better funding decision makers for achievement gains.
Wenglinsky provides support for both approaches to school finance reform. Like other productivity research, he showed that some dollars do in fact matter more than others. However, as others contest, traditional methods of allocation, such as central administration decision making and teacher-student ratios, are conducive to academic achievement.