Variation in the Relationship between School Spending and Achievement: Progressive Spending Is Efficient

Area of Science:

• Education Economics
• Public Finance
• Sociology of Education

Background:

• Theories suggest higher returns to school spending in areas with greater prior investment.
• Equity, not efficiency, typically justifies progressive school funding models.
• Empirical evidence on how returns vary by prior investment remains limited.

Purpose of the Study:

• To estimate the achievement returns to school spending across different levels of prior investment.
• To determine if returns to school spending differ between low and high prior investment counties.
• To investigate the role of initial human capital, child poverty, and previous spending in moderating returns.

Main Methods:

• Utilized county-level panel data from 2009-2018.
• Data sources include the Stanford Education Data Archive, Census Finance Survey, and National Vital Statistics.
• Estimated achievement returns to school spending, analyzing variations by initial human capital, child poverty, and prior spending.

Main Results:

• School spending returns are higher in counties with low previous investment.
• These lower-investment counties also tend to have a higher percentage of Black students.
• Diminishing returns to school spending were observed based on prior investment levels.

Conclusions:

• Evidence supports diminishing returns to school spending by prior investment.
• This finding provides a new argument for progressive school funding based on efficiency.
• Schools can enhance both equality and efficiency through progressive funding strategies.