Research & Commentary: Education Spending and Student Achievement

Published November 1, 2012

Polls consistently show voters generally think public schools need more money – but they estimate school spending is at most half of what it really is. Education spending has become a matter of much debate, particularly with the housing market crash having reduced the property taxes that largely fund public schools and related economic woes making it difficult for unemployed and underemployed Americans to afford current or higher income and sales taxes.

People who call for still-higher education spending often say it will boost the economy because better-trained workers can earn and contribute more by producing more and better products and services. They also claim schools have cut budgets “to the bone,” eliminating popular electives such as sports, music, and art and implementing austerity measures such as opening windows to see by natural light rather than using electric lights. They show pictures of children using old textbooks and desks inside classrooms where heat functions poorly and of school bathrooms where sewers back up.

People who favor lower taxes and education spending note research demonstrating private schools, though operating on much tighter budgets, have newer and better-functioning facilities and turn out better-educated students. Total U.S. education spending in inflation-adjusted dollars has tripled since 1950, but students, on average, aren’t learning more. Minority and poverty achievement gaps persist. Research actually shows increasing K-12 education spending hurts the economy because public schools lack incentives to manage money wisely and their inefficiency squanders taxpayers’ money.

Public schools generally don’t lose money or go out of business if they perform poorly. School choice realigns financial incentives so everyone benefits as administrators cut costs and spend money directly on improving learning.

The following documents offer more information about U.S. education spending and student achievement.


School Property Tax Reform Must Start with Cost Containment
A central reason school property taxes have become such a burden is that the cost of education has risen rapidly – 53 percent in Pennsylvania over the past decade – while enrollment has stayed the same, concludes the Allegheny Institute for Public Policy. The article recommends several ways to contain education costs and control property taxes. These include not allowing teachers and other school employees to strike; removing the requirement that teachers cannot be laid off during periods of financial difficulty unless enrollment falls or entire programs are cut; and removing the “prevailing wage” requirement for school construction.

The Myth of Education Cuts and Why Money Can’t Buy an A+
Many Arizonans, like many Americans, believe their state “underfunds” education. In fact, writes Jonathan Butcher for the Goldwater Institute, Arizona education spending has mirrored national education spending by rising consistently, in inflation-adjusted dollars, for several decades. When people spend more money on something, they expect higher quality, but in education, state and federal data show nearly a half-century of funding increases has not translated into higher test scores. Lawmakers and taxpayers must confront the evidence: funding has increased, but student achievement has not.

Education Spending Doesn’t Deliver
Though usually spending more means you get something better, Washington spends huge amounts on education but gets almost no improvement in return, explains Neal McCluskey in the Chattanooga Times-Free Press. This is because of a basic truth: If you give people $100 more to buy something, sellers will raise their prices $100. The buyers are no worse off, the sellers are better off, and the only losers are the people who furnished the money. In federal education spending, McCluskey says, we call these losers “taxpayers.”

Achievement Growth: International and U.S. State Trends in Student Performance
Many people believe spending more on education will improve student learning, but “the data offer precious little support for the theory,” conclude Eric Hanushek, Paul Peterson, and Ludger Woessmann in a Harvard University study. They plotted test-score gains against increments in spending in every U.S. state between 1990 and 2009. Just about as many high-spending states showed relatively small gains as showed large ones. Spending and achievement gains have a slight positive relationship, but it is of no statistical or substantive significance.

FACT CHECK: Secretary Arne Duncan on Education Cuts
The Heritage Foundation’s Lindsey Burke counters Education Secretary Arne Duncan’s claims that cuts to the federal education budget would reduce the number of teachers, resources for poor and disabled students, and after-school programs. Even if federal education spending were cut 20 percent, Burke counters, it would only reverse a federal spending binge that has not improved education in any way. “Schools would get far more bang for their bucks with flexibility than by continuing to filter money through 150 bureaucratic federal education programs,” she concludes.

For the Nation’s Sake, Cut Education Spending
The United States spends huge sums on education because having an educated citizenry is crucial to the country’s future, but these sums do nearly nothing to promote that end, writes Neal McCluskey in the Daily Caller. U.S. K-12 education spending has more than doubled in the past 30 years, teacher-student ratios have nearly halved, and federal college subsidies have approximately quadrupled. Even so, students aren’t demonstrating more knowledge. Given that federal education spending tops $120 billion a year and is doing no educational good, lawmakers have “no excuse” for not applying that sum to our astonishing federal debt, he writes.

K-12 Education Subsidies
Neal McCluskey of the Cato Institute describes the history and effects of federal spending and regulation on K-12 education in the United States. For centuries, American families and towns largely governed and commissioned education. The federal government’s involvement amounted to collecting basic education data. The two biggest federal interventions occurred in attempts to improve poor children’s learning and require school districts to put special focus on minority and disabled students. All the reorganization and added bureaucratic layers have done little or nothing to improve student achievement.

The Impact of Federal Involvement in America’s Classrooms
Over the past 50 years, lawmakers have failed to accomplish their two main education goals: improving student achievement and narrowing achievement gaps for poor and minority children, notes Andrew Coulson of the Cato Institute in congressional testimony. The federal government and states have dramatically increased spending, so it costs nearly three times as much to provide essentially the same level of education as in 1970. Rich-poor and minority-white achievement gaps also have not changed despite the increased federal spending. The only thing vast education spending seems to have accomplished, he writes, is to slow the nation’s economic growth by taxing trillions of dollars out of productive sectors of the economy and spending it on ineffective programs. The only federal program that has improved learning while lowering costs is the Washington, DC voucher program.

Education and Economic Growth in the United States
A study comparing K-12 education spending and teacher-pupil ratios in all 50 states from 1988 to 2005 concludes increasing education spending reduces economic growth. Authors Norman Baldwin and Stephen Borrelli did not expect this outcome, but it is consistent with data on U.S. educational productivity over the past two generations. Because other research demonstrates that increasing workers’ skills and knowledge does increase productivity and thus boosts the economy, this study is additional evidence that increasing K-12 spending does not cause students to learn more.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the School Reform News Web site at, The Heartland Institute’s Web site at, and PolicyBot, Heartland’s free online research database, at

If you have any questions about this issue or The Heartland Institute, contact Heartland education policy research fellow Joy Pullmann, at 312/377-4000 or [email protected].