Bad schools are not always underfunded

A viral TikTok video from Carmel High School outside Indianapolis, Indiana, has sparked a revealing conversation about school funding and school performance. The video, which had more than 34 million views on TikTok and Twitter as of Wednesday morning, shows a group of students touring their vast and well-kept suburban campus. The public school’s facilities include a massive glittering auditorium, a car shop and a planetarium.

Critics were quick to argue that Carmel schools must be better funded than Indianapolis’ lower-performing city schools. “[W]when you see this and then look at the other ‘publicly funded’ high schools in Indianapolis, you realize how blatantly racist Indiana is,” wrote one Twitter user in a post with over 9 million views.

“Many of us know very well what it’s like to go to high schools that are mostly made up of trailers, and we know that the ones in the affluent neighborhoods had top-notch facilities,” another user posted.

However, Carmel High School spends significantly less per student than Indianapolis public high schools. According to the Indiana Department of Education, Carmel High School spent between $3,500 and $6,000 less per student in 2020 compared to four public high schools in Indianapolis.

Even with this huge gap in consumption, there are significant differences in performance. At Carmel High School, 71 percent of students are proficient in math and 89 percent are proficient in reading; in Indianapolis city schools, only 6 and 26 percent are proficient in math and reading, respectively. Indianapolis’ public high schools are failing — but it’s not for lack of money.

As it turned out, the correlation between funding and the quality of schools is extremely weak. According to a 2012 report by Harvard and Stanford researchers, “On average, an additional $1,000 in spending per student is associated with an annual achievement gain of one-tenth of 1 percent of a standard deviation. But that trivial amount is not statistically or materially significant.”

Furthermore, one analysis of the 2019 National Assessment of Educational Progress test results found that “six of the top 10 states that improved their average NAEP test scores the most were among the 11 states with the smallest growth in funding. In contrast, New York made the same progress as Michigan, while revenues increased by nearly $10,000 a year a student, a 76 percent increase in raw dollars. Michigan’s unadjusted funding growth over that period was 26 percent.”

The comparison is even sharper when looking at country-by-country examples. In 2019, Utah spent the least on education in the U.S. — at just $7,811 per student, according to the data US News and World Report. Neighboring Wyoming spent nearly $10,000 more per student — spending an average of $17,018 per student. Despite this gap, the two states have remarkably similar student achievement. Forty-four percent of Wyoming 4th graders are proficient or better in math, compared to 42 percent of Utah 4th graders. In reading, 38 percent of Wyoming 4th graders are proficient or better, while 37 percent of Utah 4th graders are. It’s not clear what the thousands of dollars in additional funding is doing in Wyoming public schools — but it doesn’t appear to be helping students learn better.

Why doesn’t more money always help improve schools? Basically, the answer is that failing but well-funded schools often just don’t spend their money wisely.

“More money can help schools succeed, but not if they spend that extra money in unproductive ways,” said Jay Greene, senior research fellow at the Heritage Foundation. Reason. “There is no one formula for spending money properly in schools. But there are many common ways schools spend resources. Wasteful schools tend to employ more non-teaching staff, while increasing the cost of salaries and benefits for all staff regardless of their contribution to student outcomes. If you completely separate compensation from performance, you can increase wages and benefits endlessly without anyone learning more.”

While making good spending decisions can help close the gap between affluent and underprivileged schools, it’s worth noting that student poverty has a large effect on school performance. At Carmel High School, for example, only 10 percent of students qualify for free or reduced-price lunch. At George Washington Community High School in Indianapolis, 66 percent of students meet the requirements.

It is often difficult for schools to meet these challenges, as low-income children often face disadvantage long before they start school. For example, one Brookings Institute report found that nearly half of low-income children are not ready to start school at age five. So it’s unlikely that two schools with very different student populations can end up with the same results—no matter how much money is spent.

That said, a high concentration of low-income students doesn’t necessarily mean a school is bad. Many charter schools outperform local public schools even with much lower per-pupil spending—and, in many cases, higher numbers of low-income students. The difference is that charter schools are encouraged to make good fiscal decisions because parents can leave if they feel their child’s needs are not being met.

“Because charter schools are more accountable to parents for results, they tend to use their resources more effectively in ways that achieve the results parents are looking for,” Greene added.

As long as parents—especially low-income parents who don’t have the option of moving to another school district—only have the option of sending their child to a local public school, it’s hard to imagine that irresponsible spending habits will change anytime soon.

“Unfortunately, existing public school systems have practices and policies that tend to divert additional money to things that do not improve student outcomes,” Green says. “Some schools, especially in the private and charter sectors where they are more accountable to parents for results, have adopted better practices and policies that get more bang for the buck for education, which is why we can see some very successful schools that spend relatively little.”

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