A Fact Sheet published by the prestigious US Learning Policy Institute shows that money matters in school education. The following is an abridged version of the Fact Sheet. The full version can be found here.
A large and growing body of evidence shows that money, when spent equitably and effectively on key school resources, improves student outcomes and closes achievement and opportunity gaps. Research consistently shows that when more money is spent on education, especially for students from low-income families, achievement and graduation rates improve, along with life outcomes such as employment and wages.
What does research on education funding reveal?
Decreases in education funding
Research shows that student outcomes are adversely impacted when education funding is cut. Funding cuts during the Great Recession were detrimental to educational achievement, including:
- Students in states with significant education budget cuts experienced lower test scores and decreased college enrolment rates.
- On average, a $1,000 reduction in per-student spending widened the achievement gap between Black and White students by 6 percentage points.
- A key factor behind these negative effects was the loss of teachers—the most influential in-school factor affecting student learning. The teacher workforce shrank by more than 100,000 during the recession, and as of the 2021–22 school year, it had yet to return to pre-recession levels.
Increases in education funding
Well-allocated increases in education funding improve student outcomes. Research shows:
Federal pandemic relief funding had positive effects on student achievement. The positive effects of the funds between 2022 and 2024 included:
- Greater academic improvements in math and reading in high-need districts that received larger federal allocations than similar districts that received less funding.
- Greater achievement gains in districts that allocated more federal funds to academic interventions, such as tutoring and summer school programs.
- A narrowing of the achievement gap between high- and low-poverty districts by about a month of learning, which is about the same as the gap expansion that occurred between 2019 and 2022.
Federal Title I funding has had long-term positive effects on student achievement.
The Title 1 program provides additional funding to school districts for children from low-income families
- Over a period of years, research has shown increased educational attainment, higher high school graduation rates, and improved earnings and work hours in adulthood as a result of funding from the federal Title I program. Title I funding also correlated with lower rates of grade repetition, school suspensions, incarceration, and poverty. In all cases, the positive effects on educational outcomes were particularly significant for children from low-income backgrounds.
Investments in more adequate and equitable state funding have shown long-term benefits for students
- A multi-state study of states undergoing school finance reforms found that a 20% increase in per-pupil spending for low-income children over 12 years increased educational attainment by a full year, while a 10% increase of the same duration resulted in a 7% rise in high school graduation rates and nearly a 10% increase in adult wages.
- California experienced improvements in math and reading performance by one grade level, reduced grade repetition, and increased college readiness after 5 years of investments in its updated Local Control Funding Formula that directed more resources to high-need students.