Higher Spending, Lower Results: Why more money doesn’t equal better schools
From local elections to legislative debates to legal challenges, discussion of public education in New Hampshire has been dominated by two persistent myths. The first is that more spending is the primary means of producing better educational outcomes. The second is that our educational outcomes are stunted because funding for K-12 public schools has “been slashed,” as a common talking point asserts.
Because of these myths, instead of focusing on school leadership and proven, outcome-based measures of success, voters and policymakers have too often devoted their efforts toward improving fiscal inputs.
In a new policy brief, the Josiah Bartlett Center for Public Policy reviews the last few decades’ worth of public education spending in New Hampshire, along with student performance measures, to help Granite Staters understand that the relationship between spending and outcomes is not as simple as its proponents claim.
Spending doesn’t equal “investment”
When every dollar spent on K-12 district schools is treated as an “investment,” regardless of how it is spent, it should not be surprising that results do not meet expectations. The data show clearly that New Hampshire, along with the rest of the United States, has made the critical error of equating spending with investment. If the two terms were synonymous, our student performance would look very different. That New Hampshire has made this simple category error for so long is not merely unfortunate. It has had negative consequences for generations of students.
Between 2001-2019, public schools in New Hampshire increased their total expenditures per student on an inflation-adjusted basis by 66.8 percent, from $11,336 in 2001 to $18,905 in 2019. This means that New Hampshire public school students had 66.8 percent more in inflation-adjusted taxpayer funding devoted to their education in 2019 than in 2001.
The trends have not changed since 2019. Today, New Hampshire spends $3.9 billion on K-12 public education, for an average per-pupil cost of $21,545 when counting only operating expenditures, or $26,320 when counting total expenditures (including non-operating expenses such as capital and debt). Enrollment since 2019 has fallen by just shy of 12,000 students.
On top of that, New Hampshire received about $630 million in federal COVID-19 relief money directed toward public education. The Manchester School District alone received $91 million, Nashua 44.4 million.
One would expect large gains from such huge fiscal inputs. But those returns have not materialized.
Our research has shown that New Hampshire public school districts (and local voters) choose to increase spending annually, independent of enrollment, and the new money tends to fund additional staff. One would expect spending to rise as enrollment rises. But spending also rises when enrollment falls. This drives per-pupil spending higher, as districts collect and spend more money on fewer students.
Spending more money on fewer students is exactly what was supposed to lead to higher educational outcomes. Parents have been told for decades that schools could offer higher quality services if only they had the resources to hire more staff and reduce class sizes.
In New Hampshire, those two input goals have been achieved. With rising revenues and declining enrollments, public school districts have hired thousands of additional staff and cut class sizes. The state caps class sizes at 25 students in grades K-2, and 30 students in grades 3-12. Yet schools are not close to those caps, with a state average class size of just 16.9 students. In the 1993-94 school year, New Hampshire averaged 21.8 students per elementary school class and 20.8 students per secondary school class.
The chart below shows that New Hampshire’s K-12 district public schools hired 10 times as many staffers as all other state and local government combined (excluding higher education) from 2001-2019. This hiring spree dwarfed all other state and local government hiring even as K-12 schools lost students and the state population (people served by non-school agencies) grew.
Spending and ROI
Voters are often misled into thinking that additional spending by itself is the best way to improve student outcomes. But that is demonstrably untrue. Higher spending is not an escalator that brings students automatically to higher achievement, as the below chart, republished with permission from the Edunomics Lab at Georgetown University, shows.
Some level of spending on educational services obviously is essential to the provision of a quality public education. Educators can’t do something with nothing. But beyond a certain point, additional spending does not produce better results. The data on K-12 spending and student performance in New Hampshire going back decades strongly suggest that we are past the point of diminishing returns.
Since additional dollars are not producing additional gains (and have instead coincided with performance declines), it’s imperative to reassess our thinking about how to get a better return on investment (ROI) for our education dollar. Spending itself is not an investment.
Consider special education services. The Edunomics Lab reviewed data on special education spending and outcomes, concluding that “states with higher identification rates of learning disabilities do not deliver better reading outcomes for these students. Nor are states with comparatively more staff-intensive special education programming producing higher reading scores.”
Their research and that done by other academics has found that simple small-group reading interventions can produce significantly better outcomes for students with severe reading deficits than more expensive special education services do.
Examples like these show that strong gains can be produced with simpler, less-expensive inputs than many schools currently use. That doesn’t mean that less costly alternatives will work for every student. But that they have been shown to work better for many students illustrates that savings can be found while improving student outcomes.
So how do we find those high-ROI activities in which to invest our limited education dollars? That is the question all Granite Staters interested in public education need to ask. It’s clear that simply writing bigger checks is not a sufficient answer. Yet the search for better answers is hindered by a persistent belief that no search is necessary as long as taxpayers fund large school budget increases every year. Until we overcome that obstacle, we’ll continue to break education spending records without generating the kind of returns our students need.
In the press release announcing the disappointing 2024 Nation’s Report Card results, Beverly Perdue, chairwoman of the National Assessment Governing Board and former Democratic Gov. of North Carolina, made the following statement:
“This is unacceptable especially for our lowest performing students. We need to invest more in the data-informed efforts that have been shown to work so that we lift up our students and accelerate their learning even further.”
That’s right. Americans have spent decades increasing K-12 education spending on the theory that higher fiscal inputs were the missing ingredient in the recipe for student success. That theory has been proven wrong. As Gov. Perdue suggested, it’s time to focus less on the district finance office and more on the classroom.
Download the full policy brief here: JBC Brief Spending & Outcomes.
