School reforms revive decades-old debate on impact of money on education outcomes

December 02, 2013

By Louis Freedberg

The dramatic transformation of how California’s schools are funded is raising one of the most complex and challenging questions on the education policy landscape: Will additional money improve student academic outcomes?

The debate has been raging for decades – at least back to the landmark 1966 Coleman Report, a massive study headed by sociologist James Coleman for the U.S. Office of Education, which concluded that external factors such as parental income and education and resources in the home had a far greater impact on student achievement than levels of funding and any number of school programs.

The new funding plan championed by Gov. Jerry Brown and approved by the Legislature last summer will funnel additional money to school districts and charter schools based on the number of low-income students, English learners and foster children they serve. The extra funds are based on the argument that it costs more money to educate children from disadvantaged backgrounds, and with additional support, students will in the long run do better.

However, the school funding plan does not specify where or how districts must spend their funds. In fact, a central feature of the plan is to give school districts unprecedented local control over the money they receive from the state, in the belief that they know better than Sacramento what approaches will work best for their children.

The pressure will now be on those school districts to show that the infusion of funds will contribute to better academic outcomes.

Relieved of numerous state mandates known as “categorical programs,” school districts now have greater freedom to decide how to spend additional state funds they will receive. They will have a choice to spend their funds in any number of ways, such as expanding preschool classes, reducing K-3 class sizes, hiring more counselors or teacher aides, repairing aging buildings, giving cost-of-living increases to teachers, or rehiring staff laid off during the brutal budget cuts they were forced to make over the past five years.

However, research shows there is a complex, and uncertain, relationship between how much money a district, school or state spends and how well their students do on standardized tests. The most comprehensive and well-regarded study of school finance in California, called Getting Down to Facts, headed by Stanford University professor Susanna Loeb, concluded that “the relationship between dollars and student achievement in California is so uncertain that it cannot be used to gauge the potential effect of resources on student outcomes.”

The Getting Down to Facts project furthermore said there was “essentially no relationship” between how much California spent on its students and a school’s Academic Performance Index, which until now has been the main way schools’ effectiveness in improving academic outcomes has been measured. “If additional dollars were inserted in the current system, there would be no reason to expect substantial increases in student outcomes related to state goals,” Loeb and her colleagues concluded in their 2007 paper.