Studies Show that Money Does Matter

A recent review of research studies in the UK on the relationship between school funding and student achievement adds to the weight of evidence that the Gonski school funding model is on the right track. The review found evidence that increasing school resources in England improves results and that more targeted spending benefits students from disadvantaged backgrounds.

…..this research suggests that increasing school expenditure improves attainment and that it is more beneficial for disadvantaged groups (at least on average). It suggests that targeting resources on disadvantaged groups might be beneficial for helping to reduce inequality in educational outcomes. [Machin, McNally & Wyness 2013: 157]

The finding counters criticisms that the Gonski approach is a waste of taxpayer funds because more spending on schools does not increase student results.

The study is published in the latest issue of the academic journal Education Research. It is a comparative review of research on education reforms in England, Wales, Scotland and Northern Ireland, including analysis of differences in school funding and achievement in the regions. It reviews several studies.

Two studies have evaluated the relationship between expenditure and student attainment in secondary school based on outcomes at age 14 and 16 [Levăcić et al. 2005; Jenkins, Levăcić, and Vignoles 2006]. They looked at outcomes at age 14 and 16. Both studies find a positive effect of increased expenditure on student performance.

Another study examined the Excellence in Cities programme for English secondary schools in the early 2000s [Machin, McNally & Meghir 2004, 2010]. In this programme, schools in disadvantaged, mainly urban, areas of England were given extra resources to try to improve standards. The study found evidence of small average effects of additional resources on mathematics results but not for English.

There have been two recent papers about the effects of school expenditure in primary schools. One covered the years 2002 to 2007 when there was a large increase in school expenditure in England and found evidence of a consistently positive effect of expenditure across subjects [Holmlund, McNally & Viarengo 2010]. The effect was bigger than that found for secondary schools.

The other study examined schools in urban areas where there are more disadvantaged children than the national average [Gibbons, McNally & Viarengo 2011]. The analysis makes use of the fact that closely neighbouring schools with similar characteristics can receive very different levels of core funding if they are in different education authorities. The study shows that the expenditure difference between schools on either side of local authority boundaries leads to a large differential in pupil achievement at the end of primary school. For example, for an extra £1000 of spending, the effect is equivalent to moving 19 per cent of students currently achieving the target grade in maths to the top grade and moving 31 per cent of students currently below the target grade to the target grade.

All the studies except one found that the effects of increased expenditure are substantially higher for economically disadvantaged students. The studies looking at resource effects for primary schools found that the effects are substantially higher for economically disadvantaged students. Two of the three secondary school studies also found that resource effects are higher for disadvantaged students. On the basis of these results, the review concludes that:

These findings are encouraging for policy because they suggest that mechanisms have been in place to ensure that disadvantaged students benefit disproportionately from increasing school resources. [p.157]

These studies give weight to the Gonski focus on increasing funding for under-resourced schools and for disadvantaged students. While the size of the actual effect on school outcomes will depend on how well the increased funding is spent, there is little prospect of significantly improving the results for low income and Indigenous students without a substantial lift in funding.

The research findings demonstrate that state governments who refuse to sign on to the Gillard funding plan are doing a major disservice to disadvantaged students. These students will benefit most from the new funding approach. Coalition governments are putting politics ahead of the education and future of these students by refusing to sign up.

Trevor Cobbold

Gibbons, S., S. McNally and M. Viarengo 2011. Does Additional Spending Help Urban Schools? An Evaluation Using Boundary Discontinuities? CEE Discussion Paper No. 128, London School of Economics, London.

Holmlund, H.; S. McNally and M. Viarengo 2010. Does Money Matter for Schools? Economics of Education Review, 29 (6): 1154–64.

Jenkins, A.; R. Levačić and A. Vignoles 2006. Estimating the Relationship Between School Resources and Pupil Attainment at GCSE, Research Report RR727, Department for Education and Skills, London.

Levačić, R.; A. Jenkins; A. Vignoles; F. Steele and R. Allen 2005. Estimating the Relationship Between School Resources and Pupil Attainment at Key Stage 3, Research Report RR679, Department for Education and Skills.

Machin, S.; S. McNally and C. Meghir 2010. Resources and Standards in Urban Schools, Journal of Human Capital, 4 (4): 365–393.

Machin, S.; S. McNally and C. Meghir 2004. Improving Pupil Performance in English Secondary Schools: Excellence in Cities. Journal of the European Economics Association, 2 (2-3): 396–405.

Machin, S.; S. McNally and G. Wyness 2013. Educational Attainment across the UK Nations: Performance, Inequality and Evidence, Educational Research, 55 (2): 139-164.

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