How does money matter for schools?

Writing for the Fordham Institute, Adam Tyner reviews a new research report by Jackson and Mackevicius that explores how money matters for student outcomes. Excerpts from the piece appear below:

The overall effect of an additional $1,000 of spending per child on test scores, based on 2018 prices and over four years of school, is estimated by Jackson and Mackevicius to be quite small, about 4 percent of a standard deviation. The estimated effects on educational attainment (e.g., preventing dropout or promoting high school graduation or college enrollment), however, are considerably stronger, at a whopping 16 percent of a standard deviation. This translates to a 2 percentage point increase in the high school graduation rate and a 4 percentage point increase in college-going for a $1,000 per pupil increase in school spending.

As other studies of school finance have suggested, the effects of spending are greatest when it supports the neediest students. The difference for graduation rates is particularly important: a $1,000 increase in funding (for four years) is estimated to boost graduation rates for lower-income students by 1.9 percentage points, but just 0.6 percentage points for higher-income students.

As Tyner argued in his chapter of the recent volume Getting the Most Bang for the Education Buck, the education policy world does not need another study showing simply that “money matters.” The case on that question has been settled. But by no means does that suggest that the interesting questions in school finance have been settled. The current study may forge new conventional wisdom about effects for student subgroups or for diminishing returns that future studies can test.

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