Greater Funding Equity Increases Student Results

New research by the Boston Consulting Group shows that increased funding for low income students increases their reading and mathematics results. It also shows that needs-based funding can improve results for all students, whether from low-income or high-income families. The research contradicts claims that there is no correlation between school expenditure and outcomes.

The study investigated the relationship between the way each of the 50 US states funds K-12 public education and that state’s student outcomes on the National Assessment of Educational Progress (NAEP) tests. It found that how much state governments spend per student and how they spend has a significant correlation with achievement, particularly for the low-income students whose average results are significantly behind that of students from more-advantaged backgrounds.

In an article in the US education newspaper, Education Week, the authors said that the most statistically robust finding in their analysis was the role of increased funding equity in student outcomes.

Equity should require that every student receives sufficient resources to have the same chance to succeed, rather than that every child gets the same level of funding. Unfortunately, many states are far from achieving even the same level of funding for students at different incomes. Many states are in fact quite inequitable in how they allocate education funding, paradoxically investing much more in the richest students than they do in the poorest students, as a result of a combination of complex state spending formulas and a heavy reliance on local funding.

Giving kids in high-poverty areas an equal opportunity to succeed requires spending more money on those students. We have observed that states with increased equity ratios (the ratio of per-student funding between high- and low-poverty districts) have had a positive impact on low-income students’ performance in reading and math. In fact, we have found that increased funding equity benefits students at every income level.”

The analysis suggests that an improvement in funding equity between low and high income students can significantly improve academic performance without any additional spending overall. For example, a 20-point improvement in the equity funding ratio is correlated with nearly 2 point improvement in 4th grade NAEP reading scores for low-income students, equal to a roughly one per cent gain. Overall, the study suggests that states can increase NAEP scores for low-income students by one to two per cent.

That may not sound like a lot, but in some states such a gain would bring as many as a quarter of low-income kids who were formerly not proficient in reading to proficiency. Given the connection between proficiency and college readiness, the odds of low-income students’ completing college would consequently be higher. Hundreds of thousands of kids would have a better chance at academic and career success.

The article concludes with a message that could have come straight from the Gonksi review of school funding.

State governments can create more opportunities by ensuring adequate levels of spending, an appropriate proportion of funding from the state, and greater spending equity. Changes in these areas can maximize the impact of resources spent on education, fostering better student outcomes and changing lives.

It is a message that Australian governments should listen to.

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