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MONEY MATTERS: Higher Levels of School Spending Can Improve Students’ Long-Term Outcomes, According to Education Next Study

Recent reports have highlighted the widening gap in local and state funding between poor and affluent school districts. Not only do the poorest school districts receive less money, the funding they do receive is insufficient to address the additional educational needs of students from low-income families, many of whom start school academically behind their more affluent peers, according to recent analyses. But does more money actually impact students’ educational outcomes? According to a recent study featured in Education Next, it does.

“[W]hen examined in the right way, it becomes clear that increased school spending is linked to improved outcomes for students, and for low-income students in particular,” according to “Boosting Educational Attainment and Adult Earnings: Does School Spending Matter After All?.”

For the study, researchers examined school districts that received additional funding as a result of school-finance reforms (SFRs) mandated by their states’ supreme courts. “SFRs that began in the early 1970s and accelerated in the 1980s caused some of the most dramatic changes in the structure of K–12 education spending in U.S. history,” the article says. “[And such reforms] were in fact successful at reducing the spending gaps between previously low- and high-spending districts.”

To determine what impact these additional funds had on student outcomes, the researchers first isolated the spending changes they predicted a district would experience from the SFR alone. Then they compared cohorts of students within the same district who attended school before and after the implementation of the SFR to determine what effect, if any, the additional funds had on students’ long-term outcomes, including educational attainment, high school completion, adult wages and family income, and incidence of adult poverty.

The study shows that students exposed to more years of higher district spending (1) completed more schooling, (2) were more likely to graduate from high school, and (3) had higher wages and total family income as adults than students from the same district who attended school for fewer years after the SFR or who attended school before district spending increased.

Furthermore, students from low-income families, those whose annual family income dipped below two times the federal poverty line at any point during their childhood, experienced the greatest positive impacts. Students from low-income families who experienced a 10 percent increase in per-pupil district spending during all twelve school years completed one-half of a year more in schooling than students who did not attend school during the spending increase, the study finds. Similarly, that same 10 percent funding boost increased the probability of high school graduation by 10 percentage points for students from low-income families. The sustained 10 percent funding increase also boosted adult hourly wages for students from low-income families by 13 percent and their total adult family income by 17 percent, the study finds.

The study notes that extra money alone, though, is not enough to ensure these outcomes. How districts spend additional resources matters as well, so the researchers also examined how districts allocated the additional money received from the SFR. The study finds that districts were more likely to spend additional SFR money on instruction and support services, including lengthening the school year and reducing class sizes, which “may help explain the large, positive effects for students from low-income families,” the study says.

“Money alone may not lift educational outcomes to desired levels, but our findings confirm that the provision of adequate funding may be critical,” the article continues. “Importantly, we also find that how the money is spent matters. Therefore, to be most effective, spending increases should be coupled with systems that help ensure spending is allocated toward the most productive uses.”

“Boosting Educational Attainment and Adult Earnings” is available at

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