Impact of Funding on Public Schools

In 1966, the Coleman Report found that there was no connection between per-pupil funding in schools and test performance.[1] Recent research, however, looks beyond standardized test results and finds that increasing school spending does have a positive outcome on students.

Researchers at the Northwestern Institute for Policy Research tracked tax-based school financing systems in 28 states between 1971 and 2010.[2] They found better educational outcomes for students in places that increased spending on K-12 education over time. Those outcomes included increased graduation rates and higher adult income for districts that increased per-pupil spending by 10 percent. Students in low-income areas benefited the most from increased spending. This study showed that it is important where the money is spent, with successful districts focusing spending on instruction and support services. Overall return on investment for student earnings was 1-to-2, supporting the notion that the benefit outweighs the initial cost.

Another study by Jackson, Johnson, and Persico also finds limitations with the Coleman study and finds that school funding does matter for long-term student outcomes especially for low-income students.[3]  The study found that increasing per-pupil spending by 10 percent for all twelve years of school increases the probability of high school graduation by 10 percentage points for children from low-income families and by 2.5 percent for other children. Additionally, that same 10 percent increase in spending for children from low-income families boosts adult hourly wages by 13 percent.

During the recession of 2007-09, many states cut their education budgets, and as of 2014-15, most of those states had not yet increased their spending back to the pre-recession amounts.[4] Thirty states provided less funding per student for the 2014-15 school year than they did before 2007, with 14 of those states having cut funding by more than 10 percent. These statewide funding cuts have serious consequences for school districts that cannot replace losses in state funding with local funding. On a national level, hundreds of thousands of jobs have been cut, hurting state and local economies. Teacher quality is a known factor in student success, and education cuts often lead to a decrease in teacher quality because funding is necessary to recruit, develop, and retain high-quality teachers. Low funding also leads to larger class sizes, which can hurt student achievement especially at the lower grade levels and for lower income students.

Budget cuts also mean schools have to trim extra learning opportunities that help student achievement such as full-day kindergarten.

Because the United States’ education system is highly localized, there is a wide variance in educational opportunities across localities.[5] When looking at international benchmarks such as PISA (Programme for International Student Assessment), the U.S. is an average performer. However, when disaggregated by socioeconomic status, performance outcomes are in line with other countries of similar backgrounds. If we just look at U.S. schools with a poverty rate of less than 10 percent, the U.S. would rank number one on PISA. Because school funding is connected to local taxes, this shows just how important school funding is to student success.


[1] Coleman, James (1966). Equality of educational Opportunity,

[2] Jackson, C. K., R. Johnson, and C. Persico. 2015. The effects of school spending on educational and economic outcomes: Evidence from school finance reforms. The Quarterly Journal of Economics, 131(1): 157–218,

[3] Jackson, C. K., Johnson, R.C., & Persico, C. (2015). Boosting educational attainment and adult earnings. Education Next, 15(4),

[4] Leachman, M., & Mai, C. (2014). Most states still funding schools less than before the recession. Center on Budget and policy Priorities,

[5] American Federation of Teachers (2013). Equity in Education,