Issues 2020: Public School Spending Is at an All-Time High

The Narrative

"Over the past decade, states all over America have made savage cuts to education…. Teachers are paid starvation wages and schools across underserved urban and rural parts of our country are crumbling.”[1] — Bernie Sanders   "We’ve gotta use our federal education laws to help supplement so we can get real money into our public schools K–12. It’s absolutely critical. These are our children."[2] — Elizabeth Warren   "There’s an estimated $23 billion annual funding gap between white and non-white school districts today, and gaps persist between high- and low-income districts as well."[3] — Joe Biden

Reality

Over the past half-century, America’s per-pupil spending on K–12 education has nearly tripled, and, despite a dip from decreased tax revenues during the Great Recession, it now stands at an all-time high in most states. The U.S. spends more money per pupil on primary and secondary schools than any other major developed nation, and American teachers earn substantially more than their peers in the private sector. Although local school spending relies heavily on property-tax revenue, state and federal spending ensure that a state’s per-pupil spending is comparable across race and socioeconomic status. Spending varies widely between states, but that variation shows little correlation with academic achievement. The challenge for American K–12 education is to provide students with equal opportunity despite significant inequalities of circumstance. Achievement gaps by race, class, and zip code still persist, but inadequate and inequitable school spending are not among the causes.

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1. Thanks to decades of increases, America spends more per student than any other major developed nation.

• U.S. per-pupil expenditures have nearly tripled over the past half-century, from $4,720 in 1966 to $13,847 in 2016 (2018 dollars).
• America spends more per pupil than any other major developed nation—10% more than the United Kingdom and 28% more than France; in the OECD, only Norway, Switzerland, and Luxembourg spend more.

2. Fewer than one in 20 American schools is in “poor” condition; and a move into teaching typically leads to higher earnings.

•  Schools have become substantially more spacious in recent decades and federal data now report that only 3% of schools overall—and only 4% of high-poverty schools—are in “poor” condition.
• The typical private-sector worker experiences an 8% compensation increase when transitioning into education, while the typical teacher experiences a 3% salary decrease when transitioning into the private sector. 
• Rising spending has not boosted teacher pay because the explosion in nonteaching staff has absorbed it instead; if the ratio of nonteaching staff to student enrollment had remained at its 1992 level, the money saved could have provided teachers with an additional $11,000 in compensation.

3. Increases in federal and state funding have largely leveled out property-tax-based local funding within states.

• Court-ordered changes to state funding formulas and federal Title I spending have effectively equalized per-pupil spending within states by race and socioeconomic status.
• Substantial interstate variation in spending exists but is not correlated with academic achievement.

On the Record “Misleading rhetoric has left Americans believing that we spend far less on education than we actually do. Contrary to the dark picture painted by politicians, America ranks among the world’s leaders in education spending. Our schoolhouses are well maintained, our teachers are well paid, and our students are equitably funded. It’s surely a politician’s prerogative to argue for more spending, but an honest debate should begin with an acknowledgment of America’s already abundant expenditures, not with a false story of fiscal scarcity.” — Max Eden, Senior Fellow

Most Americans believe that the U.S. spends too little money on K–12 education. But most also dramatically underestimate what we spend. Nearly one-third of Americans believe that we spend less than $4,000 per pupil[4], and parents on average believe that their school district spends about half as much on their child as it actually does.[5]

These misconceptions are undoubtedly rooted in the disconnect between political rhetoric and fiscal reality. Bernie Sanders, for instance, laments that public education has seen “savage” cuts, our teachers are being paid “starvation wages,” and our schools are “crumbling.” By contrast, as a candidate, Donald Trump declared that the U.S. spends “more per student than almost any major country in the world,” a statement that Politifact rated “true.”[6]

The U.S. spends 35% more per pupil than the average among countries in the Organisation for Economic Co-operation and Development (OECD).[7]  Among those countries, the U.S. falls behind only Denmark, Norway, and Luxembourg.[8]  In 2015, the latest year for which OECD data are available, combined primary and secondary spending in the U.S. reached $12,800, significantly higher than other major European nations such as the United Kingdom ($11,400), Germany ($11,100), France ($10,000), Italy ($9,100), and Spain ($8,300).

School spending advocates argue that American schools have seen massive budget cuts in recent years. Their claim has been dramatically overstated. For example, in 2017 the Center on Budget and Policy Priorities issued a report noting that “twenty-nine states provided less overall state funding per student in the 2015 school year (the most recent year available) than in the 2008 school year, before the recession took hold.”[9]  But focusing predominantly on state spending, which accounts for only about 45% of total dollars spent, was misleading. Thanks in part to increased federal spending, national per-pupil expenditures fell by only $631 from the 2008–09 school year to the 2012–13 school year,[10]  and have increased every year since, surpassing prerecession levels to reach an all-time high in 2017, the latest year for which national data are available (2018 dollars).[11]

Over the longer run, the increase in U.S. K–12 education spending has been explosive. Per-pupil expenditures for elementary and secondary school students have nearly tripled over the past half-century, from $4,720 in 1966 to $13,847 in 2016 (2018 dollars). 

Stories about schools suffering significant structural deficiencies frequently make headline news. Last winter, for example, one-third of the schools in Baltimore were plagued by heating problems, and several had to close for days until the issues could be fixed.[13]  In June, a Johns Hopkins University investigation into schools in Providence, Rhode Island, found leaking sewer pipes and brown water flowing from drinking fountains.[14]

The problems in these districts are not due to low public investment. Both spend substantially more per pupil than the national average (Baltimore, $15,168;[15]  Providence, $17,192).[16]  Nor are they indicative of a national crisis. The most recent federal report on school facilities found that only 3% of school buildings were in poor condition, with that figure rising to only 4% in poorer districts.[17]  Likewise for complaints about “overcrowding”: data from School Planning & Management show that between 1995 and 2014, space increased by 30 square feet per high school student (a 20% increase), 45 square feet per middle school student (35%), and 80 square feet per elementary school student (74%).[18] 

Arguably the biggest story in American education in recent years has been teachers striking for higher pay in states such as Oklahoma, Arizona, and West Virginia. Teachers in those states had ample cause to be discontent with their salaries, but they are the nation’s outliers, not the norm. Although the Economic Policy Institute has claimed that teachers earn 21.4% less than similarly skilled and educated professionals,[19]  Jason Richwine and Andrew Biggs have shown that the same methodology would find aerospace engineers “overpaid” by 38% and telemarketers “underpaid” by 26%.[20]  A simpler way to assess teacher pay, they argue, is to see whether individuals gain or lose money when switching careers into or out of teaching. They find that transferring from the private sector into teaching is associated with an 8% salary increase, while leaving teaching for the private sector is associated with a 3% salary decrease.[21]

Teachers do have a legitimate grievance that they have not seen the rising level of public spending reflected in their paychecks. Benjamin Scafidi, a professor of economics at Kennesaw State University in Georgia, has calculated that even as per-pupil spending increased by 27% during 1992–2014, teacher salaries decreased by 2%.[22]  Scafidi faults an increase in nonteaching personnel for teacher wage stagnation. During the period he studied, student enrollment increased by 19%, the number of teachers increased by 28%, and the number of nonteaching staff increased by 45%. If growth in nonteaching staff had matched growth in student enrollment, the money saved could have provided every American teacher with an additional $11,128 in compensation.

Presidential candidate Joe Biden has called for a threefold increase in federal Title I spending,[23]  which totaled $15.9 billion in FY2019.[24]  Biden’s campaign[25]  cites a report by EdBuild, an education advocacy nonprofit, that “estimated [a] $23 billion annual gap between white and non-white school districts today.”[26]  That report conspicuously omits the nearly $60 billion in federal funding (from Title I, the National School Lunch Program, the Individuals with Disabilities Education Act, and a host of smaller programs) that is largely directed to schools and districts with high shares of low-income schools, which serve a disproportionally nonwhite student population.[27] 

The EdBuild report justifies the exclusion of federal funds because its purpose is to highlight the local property-tax-based system of school funding. This is not a novel issue and has already been broadly remedied within states by a combination of state legislative changes, court-ordered reforms, and increased federal spending. Note that, even if Biden’s proposed tripling of Title I became law—which he justifies on the basis of EdBuild’s claim—EdBuild would continue reporting the same inequity.

A 2008 study by the Tax Policy Center (a joint venture of the Brookings Institution and the Urban Institute) examined changes in per-pupil spending by student race since 1972 and found that “spending differences have largely disappeared. Spending levels across districts have converged; most remaining differences in spending are between rather than within states.” As of 2002, average per-pupil expenditure for nonwhite students was greater than or equal to expenditures for white students in 47 states.[28]  A 2017 Urban Institute study aimed to discern whether students in poverty received equitable funding by calculating district-level spending, weighted by the number of students in poverty. After factoring in state and federal funding, the authors concluded that “poor students in most states attend school districts that are about as well funded as the districts nonpoor students attend in their state.”[29] 

Tremendous differences in spending between states do remain. For example, New York spends over $22,000 per pupil, while Utah spends under $7,000.[30]  But after adjusting for cost of living, these state-level differences show no statistically significant correlation with academic achievement,[31]  and increases in state-level funding are only weakly correlated with improved achievement.[32]  

The conclusion to draw is not that money does not matter at all. For decades, the weight of the research literature showed little evidence that increased spending would yield academic dividends.[33]  But a 2015 paper substantively improved on previous methodologies and found significant gains for students in poorer school districts in the wake of court-ordered state funding increases.[34]  Still, the authors note diminishing marginal returns and caution that how money is spent may matter more than how much is spent.[35] 

A substantive argument could be made for increased school spending. But politicians owe it to the American people to make that argument in honest terms. They could argue that school spending should be more “progressive” but should not argue that it is regressive. They could argue that teachers should be paid more but should not claim that they’re underpaid. They could argue that we should spend more but should acknowledge how much we already spend. Because when given the actual data, more than half of Americans say that we spend enough already or should spend less.[36]

1. Bernie Sanders, A Thurgood Marshall Plan for Education.
2. Elizabeth Warren, Twitter, Mar. 20, 2019.
3. Joe Biden, Education: Joe’s Plan for Educators, Students, and Our Future.
4. Paul DiPerna and Michael Shaw, “2018 Schooling in America: Public Opinion on K–12 Education, Parent and Teacher Experiences, Accountability, and School Choice,” EdChoice, December 2018.
5. Albert Cheng et al., “Public Support Climbs for Teacher Pay, School Expenditures, Charter Schools, and Universal Vouchers: Results from the 2018 EdNextPoll,” Education Next 19, no. 1 (Winter 2019): 9–26.
6. Nadia Pflaum, “Trump: U.S. Spends More than ‘Almost Any Other Major Country’ on Education,” Politifact, Sept. 21, 2016.
7. National Center for Education Statistics (NCES), Education Expenditures by Country, May 2019.
8. OECD Data, Education Spending, 2019.
9. Michael Leachman, Kathleen Masterson, and Eric Figueroa, “A Punishing Decade for School Funding,” Center on Budget and Policy Priorities, Nov. 29, 2017 (emphasis in original).
10. NCES, Public School Expenditures, May 2019.
11. U.S. Census, “U.S. School Spending per Pupil Increased for Fifth Consecutive Year,” May 21, 2019.
12. NCES, Revenues for Public Elementary and Secondary Schools, by Source of Funds, October 2018.
13. Christine Hauser, “Baltimore City Schools Are Without Heat, Prompting Protests from Teachers and Parents,” New York Times, Jan. 4, 2018.
14. Valerie Strauss, “These Details of the Mess in Providence, R.I. Public Schools Are Sickening. Read Them Anyway,” Washington Post, June 27, 2019.
15. Holden Wilen, “Five Maryland School Districts Rank Among Top 10 in U.S. for Per Student Spending,” Baltimore Business Journal, May 22, 2018.
16. Rhode Island Department of Education, FY2017 Per Pupil Expenditures.
17. NCES, “Condition of America’s Public School Facilities,” March 2014.
18. “20th Annual School Construction Report,” School Planning & Management, Feb. 1, 2015.
19. Sylvia Allegretto and Lawrence Mishel, “The Teacher Weekly Wage Penalty Hit 21.4% in 2018, a Record High,” Economic Policy Institute, Apr. 24, 2019.
20. Jason Richwine and Andrew G. Biggs, “The Underpaid Teachers’ Myth,” Wall Street Journal, May 22, 2019.
21. Jason Richwine et al., “The Compensation Question,” Education Next 12, no. 4 (Fall 2012).
22. Benjamin Scafidi, “Back to the Staffing Surge: The Great Teacher Salary Stagnation and the Decades-Long Employment Growth in American Public Schools,” EdChoice, May 2017.
23. Biden, “Education.”
24. Andrew Ujifusa, “What Each State Will Get in Federal Title I Grants for Disadvantaged Kids Next Year,” Education Week, Apr. 22, 2019.
25. Biden, “Education.”
26. EdBuild, “23 Billion,” February 2019.
27. U.S. Department of Education, FY 2018 Budget.
28. Sheila Murray and Kim S. Rueben, “Racial Disparities in Education Finance: Going Beyond Equal Revenues,” Tax Policy Center, Nov. 3, 2008.
29. Matthew M. Chingos and Kristin Blagg, “Do Poor Kids Get Their Fair Share of School Funding?” Urban Institute, May 2017.
30. “Education Spending per Student by State,” Governing.com, June 1, 2018.
31. David Dorsey, “Census Data Confirms No Correlation Between School Spending and Achievement,” Kansas Policy Institute, June 17, 2016.
32. Eric A. Hanushek, Paul E. Peterson, and Ludger Woessmann, “Is the U.S. Catching Up?” Education Next 12, no. 4 (Fall 2012).
33. Eric A. Hanushek, “The Impact of Differential Expenditures on School Performance,” Educational Researcher 18, no. 4 (May 1989): 45–51.
34. C. Kirabo Jackson, Rucker C. Johnson, and Claudia Persico, “The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms,” National Bureau of Economic Research, Working Paper 20847, January 2015.
35. C. Kirabo Jackson, Rucker C. Johnson, and Claudia Persico, “Money Does Matter After All,” Education Next, July 17, 2015.
36. Cheng et al., “Public Support Climbs.”