Each year, the United States spends over $800 billion from local, state and federal
taxes to fund our K-12 public education system, making it one of the country's largest investments in a
public program. Year after year, education funding is a top priority for state legislatures and
governors across the country.
But does money matter?
For decades, education researchers have been locked in a heated debate about whether increased school
funding leads to better student outcomes. This argument, often referred to as “does money matter?”, is
contentious and polarizing. Given that education funding is limited, policymakers need more practical
evidence to inform decisions about how to raise and allocate existing resources.
Of course, money matters. But do other questions matter more?
There are many questions related to “for whom, from where, and under what circumstances” that are the
foundations for which good school funding policy can be crafted. Since there are many stakeholders in
the education field, from local taxpayers to the students they support, weak school funding
policies can have substantial effects on social inequality, resource equity, investment efficacy, and
spending efficiency.
This research library is intended to serve as a resource for those who are crafting state-level school
funding policies. It summarizes key studies providing tangible inferences to inform policymaking in each
of the categories where targeted research has been done. As the
field continues to shift toward more actionable research and evidence-based solutions, this library will
grow.
Funding Structures
States create their school funding structures by determining the formula by which they distribute money
to districts, the desired balance of state and local funding, and the ways they count student
populations. The following sections will provide research-based assessments of these areas.
School Funding
Formulas
Throughout the country, states use one of two different types of formulas to calculate how much funding
each district should receive on an annual basis. Research and consensus show that the most effective
formula is a weighted student formula (WSF), which provides a set “base” amount for every student in
each district, then provides additional funds to districts based on the population of students in that
district with certain characteristics. The other model, a resource-based formula (RBF), provides most
funding to districts based on staffing counts by assuming certain student-to-staff ratios for all
positions in a school district and then multiplying by the average salary for each position.
Click the card to see what research says about the effects of school funding formulas.
School Funding
Formulas
States provide funding to districts using either a weighted student formula
or a resource-based formula
Curated by:
Christopher Candelaria, Vanderbilt University
Weighted student funding formulas (WSF), which provide a set “base” amount for every student in each district, then provide additional funds to districts based on the population of students in that district with certain characteristics, allow districts spending flexibility that enables administrators to vary programs and staffing models to meet the needs of those students. Emerging research suggests that this flexibility leads to moderate to large student achievement increases, particularly for low-income students and English language learners.
Policy Notes:
Many states have recently moved from formulas that distribute funds based on staffing models and classroom resources to WSFs that allocate state funds to districts based on the needs of their students.
In the past, the ability to isolate the effects of these formula changes was limited by a lack of detailed school-level enrollment and expenditure data.
Research confirms thus far that WSFs are providing the intended flexibility to empower local administrators.
Additional research is needed on the more detailed effects of new formula changes. EdFund awarded two grants in 2024 to study these effects in Tennessee and Nevada, where WSFs were recently instituted.
Lafortune, J., Herrerra, J., & Gao, N.(2023).
Examining the reach of targeted school funding.
Public Policy Institute of California.
Main takeaway:
California school districts that received funding for high concentrations of low-income and English Language Learner students saw more rapid gains in math and English language arts than those that did not receive this additional funding. In addition, the gap between students who completed college-readiness coursework between these districts and those that did not receive this funding narrowed by nine percentage points.
Methods and limitations:
Academic gains were estimated by comparing districts above and below the threshold for additional funding; estimates therefore represent the impact of relative funding increases in high-need districts rather than the overall impact of funding increases under the formula.
This study notes that academic gains are larger when comparing districts with higher and lower shares of targeted students, with smaller gaps when comparing between targeted and non-targeted student groups statewide. One potential explanation for the discrepancy: this study found incomplete targeting of supplemental dollars to schools and students within districts.
Aldeman, C.(2022, August 2).
State funding methods influence schools’ spending decisions.
Brookings Institution.
Main takeaway:
A comparison of district staffing models between California (a state that uses a WSF) compared to Washington (a state that uses a resource-based formula) found that there is significantly more staffing and salary variation in California districts. This implies that the staffing flexibility offered under WSFs may allow districts to vary their workforce to meet the unique needs of their students and communities.
Methods and limitations:
This study compared Washington to California based on geographic proximity and average per pupil funding. It did not take into consideration other state policies that may play a role in enabling or discouraging flexibility
This study did not compare districts with similar student demographics between the two states to determine whether student distribution may account for some staffing decisions
Candelaria, C. A., Crutchfield, A. N., & McGill, D. G.(2024).
The impact of additional funding on student outcomes: Evidence from an urban district using weighted student funding and site-based budgeting.,
(EdWorkingPaper 24-1006).
Annenberg Institute.
Main takeaway:
Test scores in math and English language arts increased substantially in a school district that moved from a resource-based budgeting approach to weighted student funding. School principals cited the flexibility provided by this funding approach as a key driver in their ability to produce achievement gains.
Methods and limitations:
This study focuses on a single urban district in the southeastern United States. While this limits broad generalizability, the findings still provide valuable evidence about how weighted student funding formulas, combined with budgeting flexibility, can improve student outcomes in large urban districts with diverse student populations.
Due to the implementation and rollout of the weighted student funding system, the analyses were restricted to elementary schools and test scores from only grades 3 and 4. While these early grade impacts are important, we cannot observe whether the funding system affected middle and high school outcomes, which may differ given the distinct needs and resources required at different grade levels.
Counting
Students
Almost all states allocate school funding by using the number of students enrolled in each district as
the formula’s base. However, some states provide funding to districts based on the average daily
attendance of students rather than the number of students enrolled in the district. While this model was
intended to provide incentives for districts to lower absenteeism, it can actually lead to underfunding
for schools with high absence rates. Since many factors outside of a school's control cause absences,
this unfairly penalizes these schools and deprives them of resources that could help improve attendance.
Click the card to see what research says about the effects of funding schools using attendance
rather
than enrollment.
Counting
Students
States provide funding to districts using either attendance- or
enrollment-based student counts
States base funding on student counts, but how they count students is
important: some states use enrollment counts, others attendance counts.
Attendance-based counts effectively penalize districts that serve
higher-need students, who tend to be more frequently absent.
Students are usually absent for reasons largely outside districts’
control, like healthcare access, transportation, and housing, so these
districts have few tools to avoid or reduce these financial penalties.
Policy Notes:
Funding based on average daily attendance rates, rather than the number students enrolled, results in less funding—and therefore fewer resources—for districts that have lower attendance rates.
Most of the factors that lead to higher absenteeism are outside districts’ control. Attendance-based funding policies effectively punish districts with high absenteeism who frequently serve higher-needs students.
These policies allocate less funding to schools where more is usually required to create programs with holistic supports for students in order to boost attendance.
States with attendance-based funding models may disincentivize innovation in instructional delivery, such as competency-based instructional models that do not require students to be in-seat every day.
Childs, J., & Lofton, R.(2021).
Masking attendance: How education policy distracts from the wicked
problem(s) of chronic absenteeism.
Educational Policy,35(2):
213-234.
Main takeaway:
Students are absent for a range of different reasons—like health,
mental health, housing and living arrangements, neighborhood conditions, and
poverty—most of which are outside schools’ control.
Policy notes:
Funding based on average daily attendance rates, rather than the
number students enrolled, results in less funding—and therefore
fewer resources—for districts that have lower attendance rates.
Lower-attendance districts are often serving higher-needs students.
Most of the factors that lead to higher absenteeism are outside
districts’ control. Attendance-based funding policies
effectively punish districts with high absenteeism.
Attendance-based funding policies allocate less funding where more
is usually required for schools to create programs with holistic
supports for students in order to boost attendance.
Methods and limitations:
This is a peer-reviewed article that summarizes existing research on
the root causes of absenteeism.
Hahnel, C., & Baumgardner, C.(2022).
Student count options for school funding: Trade offs and policy
alternatives for California.
Policy Analysis for California Education.
Main takeaway:
There is no clear relationship between states’ use of attendance-based
funding and attendance or chronic absence rates. California’s
attendance-based funding formula financially penalizes districts with high
rates of chronic absenteeism. Districts in California, particularly those
serving historically disadvantaged students, would receive more funding
under an enrollment-based funding formula than under its current
attendance-based funding formula.
Policy notes:
Districts serving the highest needs students (e.g., economically
disadvantaged, English learners) have the highest chronic
absenteeism rates, largely due to structural barriers like
transportation and health inequities that keep these students from
school.
Attendance-based funding systems undermine schools’ ability to
support these students.
Attendance-based funding models may incentivize districts to
disenroll or “push out” students with high absenteeism to avoid
being penalized for absent students.
States with attendance-based funding models may disincentivize
innovation in instructional delivery, such as competency-based
instructional models that do not require students to be in-seat
every day.
Methods and limitations:
This study analyzed the fiscal effects of a proposal for
enrollment-based school funding in California compared to the
current funding allocations and is unable to determine the possible
effect on attendance of switching to an enrollment-based model.
However, other analyses have shown that tying funding to attendance
does not appear to change attendance rates.
The authors compare the current system to an enrollment-based model
using a single count day, so it is not clear how the current system
would compare to a model that used an average membership count or
multiple count days.
Knight, D. S., & Olofson, M.(2018).
Funding school districts based on student attendance: How use of average
daily attendance harms school finance equity in Texas.
Center for Education Research and Policy Studies.
Main takeaway:
After taking into account student background characteristics, attendance
rates are very similar across districts in Texas: The difference between
districts with the highest and lowest attendance rates amounts to less than
one day. This suggests that there are limits to how much districts are able
to improve attendance. Yet, the state’s attendance-based funding
formula penalizes high-poverty districts because of their lower attendance
rates.
Policy notes:
Attendance-based funding formulas can have a significant impact on
district budgets. One high-poverty Texas district, Edgewood, loses
11% of its state funding, or $1,025 per student, because of its
average daily attendance rate. This effective financial penalty
limits the supports and resources Edgewood can put toward improving
attendance.
Financial penalties for districts based on average daily attendance
are not distributed equally, harming districts serving the most
disadvantaged students the most.
Enrollment-based funding models avoid the underfunding that arises
from highest-need districts.
Methods and limitations:
The methods used to calculate district funding, variation in
attendance by district, and average daily attendance penalties for
Texas districts, were descriptive.
The authors do not and cannot claim any causal relationship between
funding and attendance.
Targeted Investments
Once a state has settled on its formula type, policymakers must decide where to target additional
funding to best create a system that reflects the needs and makeup of that state. Some of the academic
gains found from moving to WSFs may be the effect of the significant focus that
these formulas place on addressing students that have special needs – namely those that are low-income,
English language learners, have special education plans, or live in rural or sparse districts. The
following sections will illustrate the currently available research supporting spending in each of these
targeted areas.
Low-Income
Students
Almost all states provide additional funding to school districts that serve low-income students. Some states give funding per low-income student, while others give funding based on the percentage of low-income students. While most of the recent school finance literature suggests that across-the-board funding increases can lead to small or moderate increases in achievement for all students, they show academic gains are much more substantial for low-income students in low-wealth areas that are exposed to additional funding. Studies have shown dollars spent on low-income students have a greater effect on testing outcomes, graduation rates, college attendance and other measures of attainment than on their higher income peers and are linked to lower rates of absenteeism and interaction with the criminal justice system, indicating that targeting resources to these students can yield larger positive outcomes.
Click the card to see what research tells us about investing in low-income students.
Low-Income
Students
Targeted investments provide additional funding to schools for each
low-income student that they serve.
Curated by:
David Knight, University of Washington
Sending additional funding to districts to support low-income students. Low-income students have historically been identified by determining their eligibility for the federal Free or Reduced-Price Lunch (FRL) program.
Research Consensus:
While across-the-board funding increases may yield small to moderate academic gains for all students, additional funding targeted toward high-poverty districts yields larger and more consistent educational benefits.
Policy Notes:
Meaningful increases in per-pupil funding lead to test score gains in low-income districts.
While many states provide more funding to low-income students and/or higher-poverty districts, the amount of funding varies dramatically from state to state.
Even within states that fund for low-income students, the actual funding difference between high- and low-poverty districts is often eroded by inequitable local revenue, which makes up a substantial portion of school district funding.
Funding policies that prioritize low-income students and communities yield higher academic gains than across-the-board funding increases for schools, suggesting that states should target additional funding to districts that serve low-income students.
Jackson, C. K., & Mackevicius, C. L.(2024).
What impacts can we expect from school
spending policy? Evidence from evaluations in the United States.
American Economic Journal: Applied Economics,16(1):
412-446.
Main takeaway:
Over the past two decades, numerous studies have found that additional
funding improves student outcomes. Two recent papers, by Jackson &
Mackevicius and Handel & Hanushek, analyze the aggregate results of
these
studies. Both analyses confirm that most studies—across years, states, and
geographies—find positive effects and that benefits are larger for
low-income students.
Policy notes:
While many states provide more funding to higher-poverty districts,
amounts vary dramatically from state to state.
Although most states allocate additional funding for students living
in poverty and high-poverty districts, the actual funding difference
between high- and low-poverty districts is eroded in states without
local revenue caps, where high-wealth communities can raise more
funding locally.
Methods and limitations:
Jackson & Mackevicius and Handel & Hanushek both conduct
meta-analyses, meaning they use statistical methods to synthesize
the results of a large set of high-quality, previously published
studies.
Both of these studies highlight and address challenges in conducting
meta-analyses, such as which studies to include and how to account
for the preference for journals to publish studies that find
statistically significant effects.
While the studies find similar positive effects of funding
increases, the authors interpret these findings differently. Jackson
& Mackevicius focus their discussion on the positive average
effects whereas Handel & Hanushek point to the wide range (from
small to large) of academic benefits found in this large body of
research.
Rauscher, E., & Shen, Y.(2022).
Variation in the relationship between
school spending and achievement: Progressive spending is efficient.
American Journal of Sociology,128(1):
189-223.
Main takeaway:
Increases in state funding in a single school year increase math test scores
in counties with higher child poverty rates, lower infant birth weights, or
lower initial K-12 spending.
Policy notes:
This study finds that increasing education funding in previously
under-resourced communities yields the most consistent benefits.
This refutes concerns that investing in these communities is
inefficient.
This study’s findings show that multiple indicators of
community health can be valuable for determining how to allocate
funds, suggesting that states can consider expanding “at-risk”
definitions for students and communities.
Methods and limitations:
This study uses two different methodologies. The first compares
spending and student outcomes within the same counties over time.
This approach might be biased if, for instance, some counties
experience economic downturns that reduce both spending and
achievement. To address this concern, the authors also use
“exogenous” spending increases that result from a state school
finance reform. The second approach is based on a smaller sample of
just 19 states but still represents a stronger method because it
addresses the potential biases of the first method.
Lafortune, J., Rothstein, J., & Schanzenbach, D. W.(2018).
School finance reform and the distribution of student achievement.
American Economic Journal: Applied Economics,10(2):
1-26.
Main takeaway:
Increasing education funding in low-income districts results in substantial
improvements in test scores that continue long after the initial funding
increase.
Policy notes:
The authors show that large increases in per-pupil funding lead to
large test score gains in low-income districts.
The authors find that districts used their new funding in various
ways, indicating that increased funding and spending flexibility
allows districts to maximize the needs of students.
Methods and limitations:
This study uses data from 26 states over more than 20 years to study
the average effect of large spending increases on student test
scores.
The study looks at education spending increases that result from
court orders. These increases may have been across-the-board from
adequacy lawsuits or focused funding increases for low-wealth
districts from equity lawsuits.
The study notes that, although academic gains were statistically
significant for low-income districts, the achievement gap between
low- and high-income districts did not close. This is likely because
there are just as many students that qualify for free and
reduced-price lunch (the federal measure of income) in middle- and
higher-income quintiles combined compared to the number of
qualifying students in the lowest-income districts.
Special Education
Students
While special education students have federal and state protected rights to the same educational benefits as their peers receive, states vary on how they count, fund, and weigh students with special needs. Because there is some debate over how to balance cost-effectiveness with recognition of the sometimes-expensive supports needed for a range of possible disabilities, we need better research to understand how directing funding towards students with special needs can provide better behavioral and academic outcomes for these students.
Click the card to see what research tells us about investing in special education students.
Coming Soon
Special Education
Students
Targeted investments provide additional funding to schools for each special
education student that they serve.
Because studying special education funding is particularly challenging given the unique student needs, there has been less focus on outcomes related to this targeted funding. EdFund issued a special call for proposals in 2024, funding several studies that will be published on this card when complete in 2025.
English Language
Learners
As with special education students, English language learner (ELL) students often require unique educational supports like enrollment assistance, specialized language instruction, bilingual teachers, and translation and interpretation. Because states vary on how they identify these ELLs, we need better research to understand how to best fund these additional supports in order to improve the speed of language acquisition and allow ELL students to attain greater academic success.
Click the card to see what research tells us about investing in English Language Learners.
Coming Soon
English Language
Learners
Targeted investments provide additional funding to schools for each English
Language Learner that they serve.
There is a limited base of study of the effects of how to best fund the education of English Language Learners. EdFund will be issuing a targeted call for proposals in 2025 to fund a more robust base of evidence.
Rural
Students
School districts that are located in rural, remote, or sparse areas face additional challenges in serving students, and existing student challenges are often exacerbated by geographical ones. Rather than being interchangeable, these districts may have varying, disparate needs based on whether a district is small, sparse, or isolated. Reasons for the higher cost in these districts vary, but are generally related to core and necessary expenses such as increased costs for supplies, transportation, and competitive teacher salaries. Research shows that even modest increased investments help districts meet these costs and have a positive effect on student academic success and educational attainment.
Click the card to see what research tells us about investing in rural students.
Rural
Students
Targeted investments provide additional funding to schools for each rural
student that they serve.
Providing aid to districts located in rural, remote, or sparse areas to offset the additional costs of educating those students. Rurality is generally identified using distance from other districts or urban areas, student density, and/or relative enrollment.
Research Consensus:
The cost to provide an education to “rural” students is higher based on low enrollments (economies of scale) and sparsity (student or population density). While identifying “rural” districts is necessary, it is important to rely on the state context to specifically identify small and sparse districts to target and provide aid.
Policy Notes:
In addition to increased costs associated with geographically rural areas, such as the cost of supplies or necessary transportation, rural and remote districts often have lower enrollments, making overhead costs such as teacher salaries and building costs more expensive per student relative to their urban counterparts.
The majority of states include funding adjustments for small or remote districts, however the additional funding support and the criteria used to determine whether a district is small, sparse, or isolated varies by state. Using these state-specific contextual definitions in research and practice can shed light on the costs and needs of these districts.
Baker, B., & Duncombe, W.(2004).
Balancing district needs and student needs: The role of economies of scale adjustments and pupil need weights in school finance formulas.
Journal of Education Finance,29(3):
195-221.
Main takeaway:
In state aid and formula adjustments, district-need cost factors, such as enrollment (economies of scale) and sparsity (student density), are crucial to consider in addition to student need cost factors that affect a child's effort and ability to master academic subjects.
Methods and limitations:
The authors investigate state aid adjustments across the nation, identifying individual instances where state aid is provided under basic operating aid by district enrollment size and sparsity, and transportation.
The authors suggest that these adjustments for enrollment size should be based on a non-linear relationship between costs and student enrollment and should phase out by the time enrollment reaches 2,000 students.
Kolbe, T., Baker, B. D., Atchison, D., Levin, J., & Harris, P.(2021).
The additional cost of operating rural schools: Evidence from Vermont.
AERA Open,7.
Main takeaway:
School size and sparsity are distinct, rather than interchangeable, factors that contribute to the costs of operating rural schools and should be treated as such in state funding formulas. Schools with fewer students have difficulty achieving economies of scale, and schools in sparsely populated areas can pay higher input prices for specific goods or services due to limited supply or the additional cost of transporting resources to the school.
Methods and limitations:
The authors use the cost function analysis, “education cost modeling,” to evaluate the relationship between educational spending and levels of student outcomes that are informed by state policy, while controlling for identified cost factors at the school level.
The analysis is limited to Vermont where more than half of students attend a small or rural school. However, the authors provide the model needed to achieve the same analysis in other states.
The study notes that estimates from this model rely on historical relationships between education spending and measures of student performance and does not account for future changes in these relationships. Therefore, the estimation should be updated periodically. In addition, the authors note that each state’s student performance measure is typically specific to the state’s achievement tests.
Dhaliwal, T. K., & Bruno, P.(2021).
The rural/nonrural divide? K–12 district spending and implications of equity-based school funding.
AERA Open,7(1):
1-21.
Main takeaway:
Remote rural districts spent more of their additional funding on plant services than other districts, which limited their ability to spend more progressively to address student needs.
Methods and limitations:
This study examines regression-weighted changes in district level spending and spending progressivity by urbanicity after the implementation of California’s equity-minded funding system “Local Control Funding Formula,” a foundation aid formula with pupil-weighted supplemental supports, to increase minimum per-pupil funding for educationally underserved students and provided greater autonomy in allocating resources
This study uses National Center on Education Statistics Census definitions of rurality, which are not necessarily aligned with school/district size and sparsity – factors that distinctly contribute to costs. The authors note that only expenditures, rather than costs, are observed. Moreover, expenditures generally match, and are limited by, district revenues.
The authors find that, post formula change, remote rural districts spend substantially more on capital and facilities and debt service and relatively little on student spending, perhaps because remote districts increase nonstudent spending to a greater degree. The study also finds spending gaps between remote rural districts and other districts have remained generally consistent over time.
Capital
Investments
Community wealth significantly affects how much funding schools can get for building and renovation
projects. Since the vast majority of capital funding to support these projects is raised through
local
property taxes, the low-income communities often struggle to pass the bonds necessary to raise
enough
revenue. States can play a substantial role in changing this dynamic, by providing financial support
to
low-income communities. This investment has a high return, as building repairs and renovations
increase
nearby home values and improve student achievement.
Click the card to learn what the research says about the effects of capital investments.
Capital
Investments
Capital investments are funds for constructing or improving school
buildings.
Research shows that investing in school buildings, facilities, and
equipment—capital
investments—improves student achievement, especially if it targets basic
infrastructure and high-needs school districts.
Policy Notes:
About three fourths of facilities funding for schools comes from local funds, disadvantaging lower-wealth communities that have more difficulty raising taxes.
Many states offer matching grants for local bonds. While these make it possible for some districts to finance larger projects, they tend to be more beneficial for higher-wealth districts that have the means to approve new taxes. Some states take special measures for low-income districts, which makes it easier for lower-wealth districts to access funding.
Twenty-four states that offer a credit enhancement program to help school districts issue bonds. This allows low-income and low-wealth districts to qualify for a higher credit rating, increasing the amount of funding they can borrow at no cost to the state. For more information about these programs, see this summary of the effects of state credit enhancement programs.
Eleven states require supermajority votes to pass school district bonds for facilities construction and repair. Lowering vote thresholds for these measures would make it easier for districts in these states to access resources.
Biasi, B., Lafortune, J., & Schönholzer, D.(2024).
What Works and For Whom?: Effectiveness of Efficiency of School Capital Investments Across the U.S., (Working Paper 32040).
National Bureau of Economic Research.
Main takeaway:
Investing in improving school infrastructure increases both student
achievement and home values. How districts target these investments is
important: spending to improve school infrastructure like classrooms, air
quality, or heating/cooling raises test scores but not home values, while
investments like athletic facilities raise home values but not test scores.
Low-wealth and high-minority districts tend to benefit more from these
investments than affluent, low-minority districts.
Policy notes:
Eleven states require supermajority votes to pass school district
bonds for facilities construction and repair. Lowering vote
thresholds for these measures would make it easier for districts in
these states to access resources.
About three fourths of facilities funding for schools comes from
local funds, disadvantaging lower-wealth communities that have more
difficulty raising taxes.
Many states offer matching grants for local bonds. While these make
it possible for some districts to finance larger projects, they tend
to be more beneficial for higher-wealth districts that have the
means to approve new taxes. Some states take special measures for
low-income districts, which makes it easier for lower-wealth
districts to access funding.
Methods and limitations:
Some may argue that academic gains are based on changing community
demographics in areas where major investments are made. However,
this study tests that hypothetical and determines that only a small
share of the gains in student achievement can be explained by
changes to student demographics.
This study uses data on test scores in grades 3-8, meaning any
potential impact of capital spending on high school students' test
scores is not captured in this analysis. Because athletic facilities
are more prevalent in high schools than in elementary or middle
schools, it’s possible that there are academic benefits to
investing in athletic facilities that are not captured in this
study.
Lafortune, J. & Schönholzer, D.(2022).
The Impact of School Facility Investments on Students and Homeowners: Evidence from Los Angeles.
American Economic Journal: Applied Economics,14(3):
254-89.
Main takeaway:
A large facilities improvement program in Los Angeles caused a substantial
increase in standardized test scores, student attendance, and house prices.
The authors estimate that every dollar invested in the program had a return
on investment of around $1.60, suggesting that facilities construction and
repair was both effective and economically efficient.
Policy notes:
From the outset, the Los Angeles Unified School District emphasized
accountability in tracking capital investments. They employed an
independent, professionally run school
authority
to oversee the
project, which likely helped to ensure that funds were used
efficiently.
The full LAUSD facility investment studied here required several
rounds of voter approval. As the district gained the trust of voters
that funds would be used responsibly, the voters approved additional
bonds. This suggests that a piecemeal funding strategy, while not
entirely free of risk, may allow districts to make larger
improvements to facility conditions.
Methods and limitations:
The authors track individual students over ten years as they switch
from existing school facilities to newly constructed ones. This
eliminates concerns that student achievement gains are driven by
changes in student demographics in newly constructed schools.
Improved teacher (and student) motivation at newer facilities may be
a key driver of the higher student achievement that results from
capital investments. Other policies and incentives may be able to
induce the same level of motivation.
Baron, J., Hyman, J., & Vasquez, B.(2024).
Public School Funding, School Quality, and Adult Crime, (Working Paper 29855).
Review of Economics and Statistics.
Main takeaway:
In Michigan, students in districts that upgraded facilities were 25% less
likely to be chronically absent in middle school and 20% less likely to be
arrested in adulthood. The analysis suggests that reducing absenteeism keeps
at-risk students engaged during pivotal years of development, which means
they are less likely to develop criminal habits.
Policy notes:
Michigan is one of 24 states that offers a credit enhancement
program to help school districts issue bonds. This allows low-income
and low-wealth districts to qualify for a higher credit rating,
increasing the amount of funding they can borrow. For more
information about these programs, see
this summary
of the effects of
state credit enhancement programs.
State credit enhancement programs do not cost the state any
additional funds. States pledge to guarantee district loans and only
pay if districts default on these loans. District defaults are very
rare—across 24 states with credit enhancement programs, there was
only
one instance
of default, and a
separate study
of the most
robust state programs found no school district or charter school
defaults.
Methods and limitations:
The analysis compares the educational outcomes and adult arrest
rates of similar students who attended either better- or
worse-funded schools, determined by whether their school district
narrowly won or lost a bond election to raise capital spending.
The study sample includes districts where bond elections either
narrowly passed or narrowly failed. This creates a valid comparison
between groups of similar districts, but the findings may differ for
districts where bond elections passed or failed by wider margins.