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Finance

Eric A. Hanushek.

States and localities cannot avoid dealing with issues of teacher compensation. Not only is it the largest budget item for most local governments, but it is the place of largest leverage for improving the quality of schools. Fortunately, consistent research evidence directly informs ways to optimize teacher compensation.

This research provides strong motivation for improving teacher compensation. First, it shows that teachers are paid significantly less than they could earn outside of teaching. Second, teacher salaries have been stagnant, largely because personnel budgets have been more directed toward increasing the number of educators and administrators than toward supporting teachers. But simply increasing pay without consideration of teacher effectiveness will not lead to improved student outcomes.

The economic status of both students and the nation as a whole could be dramatically improved with increases in school quality. But with pressures on public budgets—due importantly to the growing costs of public pensions and health benefits—personnel dollars will have to be used more strategically if our students are to compete internationally. Moreover, the nation has a substantial equity problem: achievement gaps have been constant for a half century despite a wide variety of federal, state, and local policies designed to address them.

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Carolyn Abott, Vladimir Kogan, Stéphane Lavertu, Zachary Peskowitz.

We use close tax elections to estimate the impact of school district funding increases on operational spending and student outcomes across seven states. Districts with passing levies directed new revenue toward support services and instructor salaries but did not increase teacher staffing levels. These districts eventually realized gains in student achievement and attainment. Our preferred estimates imply that increasing operational spending by $1,000 per pupil increased test scores by approximately 0.15 of a standard deviation and graduation rates by approximately 9 percentage points. There is some evidence of diminishing returns, as these effects are driven by districts below the median in spending per pupil. Based on research linking academic outcomes to earnings, we conclude that these spending increases were likely cost-effective.

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Linda Darling-Hammond.

Recent research demonstrates that, when more money is spent on education for students from low-income families, achievement and graduation rates improve. So, too, do life outcomes such as employment, wages, and reduced poverty rates. Investments in instruction, especially high-quality teachers, appear to leverage the largest marginal gains in performance. School funding reforms in several states have created the conditions for stronger educational outcomes. These reforms funded schools more equitably and provided access to well-prepared and well-supported teachers; standards, curriculum, and assessments focused on 21st-century learning goals; schools organized productively for student and teacher learning; and supportive early learning environments. This report examines these efforts in four states: Connecticut, Massachusetts, New Jersey, and North Carolina. Their experiences demonstrate that, in the U.S., equity-focused changes can yield results for students but also require steady work.

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John Brittain, Larkin Willis, Peter W. Cookson Jr..

Most racial and ethnic segregation—and most financial inequities—in American public schools occur between, not within, school districts. Solving these problems often requires interdistrict solutions based on cooperation within regions. This report uses three examples (Boston, MA; Hartford, CT; and Omaha, NE) to explore how interdistrict desegregation plans with innovative funding strategies have been designed, financed, and implemented. The report describes programs’ academic and social outcomes and identifies four lessons for policymakers: Secure a metropolitan-wide agreement; establish a clear vision for educational equity; sustain efforts with equitable resources; and create a strong data and evaluation plan.

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Marjorie Wechsler, David Kirp, Titilayo Tinubu Ali, Madelyn Gardner, Anna Maier, Hanna Melnick, Patrick M. Shields.

Although there is considerable research on the elements of high-quality preschool and its many benefits, particularly for low-income children and English learners, little information is available to policymakers about how to convert their visions of good early education into on-the-ground reality. This study fills that gap by describing and analyzing how four states—Michigan, West Virginia, Washington, and North Carolina—have built high-quality early education systems. Among the common elements of their success are strategies that prioritize quality and continuous improvement, invest in training and coaching for program staff, coordinate the administration of birth-through-grade-3 programs, strategically combine multiple funding sources to increase access and improve quality, and create broad-based coalitions and support.

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Anna Maier, Julia Daniel, Jeannie Oakes, Livia Lam.

This report synthesizes the research evidence about the impact of community schools on student and school outcomes. Its aim is to support and inform school, community, district, and state leaders as they consider, propose, or implement community schools as a strategy for providing equitable, high-quality education to all young people. We conclude that well-implemented community schools lead to improvement in student and school outcomes and contribute to meeting the educational needs of low-achieving students in high-poverty schools, and sufficient research exists to meet the Every Student Succeeds Act (ESSA) standard for an evidence-based intervention.

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Beth Meloy, Madelyn Gardner, Linda Darling-Hammond.

Research showing that high-quality preschool benefits children’s early learning and later life outcomes has led to increased state engagement in public preschool. However, mixed results from evaluations of two programs—Tennessee’s Voluntary Pre-K program and Head Start—have left many policymakers unsure about how to ensure productive investments. This report presents the most rigorous evidence on the effects of preschool and clarifies how the findings from Tennessee and Head Start relate to the larger body of research showing that high-quality preschool enhances children’s school readiness by supporting substantial early learning gains in comparison to children who do not experience preschool and can have lasting impacts far into children’s later years of school and life. Therefore, the issue is not whether preschool “works,” but how to design and implement programs that ensure public preschool investments consistently deliver on their promise.

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Robert M. Costrell.

It has long been argued that cash balance (CB) pension plans offer a more equitable distribution of benefits than traditional final-average-salary (FAS) plans for teachers, particularly between short-termers and career teachers.   However, it has also been understood that the impetus for reform would come from fiscal distress, rather than a concern for equity.  In this paper I examine how the nation’s first CB plan for teachers, in Kansas, adopted under such conditions, has played out for system costs, and the level and distribution of individual benefits, compared to the FAS plan it replaced.  My key findings are:  (1) employer-funded benefits were modestly reduced, despite the surface appearance of somewhat generous employer matches; (2) more importantly, the cost of the pension guarantee, which is off-the-books under standard actuarial accounting, was reduced quite substantially.  Thus, although much of the distributional benefit originally put forth did materialize, the primary gain for states considering reform may well be the reduction in the cost of risk-bearing.  Indeed, I argue that these results are intrinsically linked:  it is CB’s near-elimination of back-loading that simultaneously cuts the implicit cost of risk. 

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Corey A. DeAngelis.

I compare per pupil revenues, expenditures, and performance levels in public charter schools to district-run public schools in Texas for the 2017-18 school year. After controlling for several school and student characteristics, I find that public charter schools are funded around $1,700 (15 percent) less, and spend around $3,700 (28 percent) less, per pupil than district-run public schools. Public charter schools demonstrate cost-effectiveness advantages between 8 and 42 percent, depending on the model employed, over district-run public schools in Texas. I also find evidence to suggest per pupil spending is positively related to state testing outcomes for public charter schools, but not for district-run public schools.

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Christopher A. Candelaria, Kenneth A. Shores.

Use of education finance data is ubiquitous. Yet, because the academic calendar circumscribes two calendar years, researchers have linked the Consumer Price Index to three different dates: the Fall, Spring and academic fiscal years. We demonstrate that linking the CPI to these different academic year results in identifying different trends in U.S. educational spending during the Great Recession. Descriptive inferences should not be sensitive to researcher discretion about merge years. We provide an easy-to-use software package to facilitate implementation of NCES guidelines in the hope that future analyses of education finance data will explicitly and consistently apply inflation adjustments.  

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