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Does extra school funding actually help students in the long run? New study says yes.

Jan 17, 2017

There have been lots and lots of studies on whether additional funding for schools really leads to better outcomes for kids. And, for a long time, some of the conclusions of those studies were a bit mixed.

But in the past year or so, a few new studies have made the case that money does matter for student outcomes. And one study in particular uses Michigan’s Proposal A as the proof.

To understand why this study is different, it helps to think back to 4th grade science class, and the basics of how to do a science experiment. Remember that you have to do the experiment, but you also have to have a control group – something to measure your experiment against.

Researchers who study education funding can’t really create those circumstances, not on a large scale. That’s why the research in this area has been, at times, a little muddy.

Enter, Michigan’s Prop A.

"This was this great, unexpected school finance reform in 1995 that suddenly and unexpectedly really just sort of dumped a whole bunch of additional funding into the laps of a bunch of school districts in Michigan," says Josh Hyman, a professor at the University of Connecticut, who has a forthcoming study on Proposal A’s effects on Michigan.

Prop A was a big deal. It took away local property taxes as the main source of funding for Michigan schools, so that funding instead would come through the state. The idea was to create a system with fewer funding disparities from district to district.

But the moment it went into effect, it also created a unique experimental setup. All of a sudden, some school districts had a bunch more money. And some had about the same as they had before. So there was an experiment group, and a control group, just like in 4th grade science.

And a few years ago, Hyman was part of a group of doctoral students at the University of Michigan who got a hold of a huge amount of data on the students who lived through Prop A.

And this data was really good. It had all of Michigan’s students, and it tracked them for years.

"It tracks students all the way through, it has their test scores, it has what schools they were in, some basic demographic info, where they went to college," Hyman says. "Yeah, it’s really pretty cool data."

It had more than 746,000 individual students, from 518 school districts. Hyman could track their education for 14 years.

Did the extra money for certain school districts actually pay off?

"Um, yeah," Josh Hyman responds.

Hyman used that data to ask the question: How did the funding changes from Proposal A affect students not just on later test scores, but in college? Did the extra money for certain school districts actually pay off?

"Um, yeah," Hyman responds.

To break it down, Hyman’s study showed that an extra $1,000 in per student funding under Prop A increased the student’s chances of enrolling in college by 7% and the chances of finishing college by 11%.

Those may not sound like huge numbers. But Hyman says it’s a pretty solid return for a public investment.

"Enrolling in college and completing college would sort of boost student earnings and give back to society," Hyman says. "It seems like, at least relative to other education policies out there, it seemed like a pretty good return."

But, there is a catch. Always a catch. Hyman found that the benefits did not go to all students and all school districts equally.

It turned out most of the benefits went to schools that already had above-average test scores. Lower achieving schools in high-poverty areas, including mostly rural schools, saw less of an effect.

Hyman says partly that’s because of how school districts spent their extra money.

Some districts steered that money away from high-poverty, low-performing schools - and instead put it into schools with kids from wealthier families that already had high test scores.

So, his main takeaway from the research:

"It shows that money can matter in schools," he says. "It also shows it’s not a sure thing."

So yes, Money makes a difference for schools. But it also matters how and where it’s spent.