July 31, 2025
Money Matters for Student Outcomes: A Brief Research Summary
Every child growing up in Virginia should have the chance to learn and thrive, and that includes help to overcome barriers they may face. We know from the research that increasing funding for schools — having more resources for what matters like great teachers, counselors, safe buildings, and more — helps raise achievement and outcomes for students. This is especially true for students from low-income families who can’t afford to pay for things like expensive academic summer programs.
In recent years, a new generation of research has used differences in the timing of school funding changes to measure the impact of funding increases after accounting for other important factors like family income and education to ensure credible findings.
Here’s some of the research.
More funding matters for student outcomes, particularly for students facing higher barriers
- “A 10% increase in per-pupil spending each year for all twelve years of public school leads to…7.25% higher wages” and fewer students living on incomes below the poverty threshold as adults; “effects are much more pronounced for children from low-income families.”1
- School funding adequacy reforms “lead to sharp, immediate, and sustained increases in spending in low-income school districts…. [These] reforms cause increases in the achievement of students in these [low-income] districts, phasing in gradually over the years following the reform.”2
- An additional $1,000 in per-pupil spending for at least four years leads to better test scores over 91% of the time, and improves educational attainment, such as high school graduation and college enrollment, more than 92% of the time.3
- Title I funding, which is intended to improve educational opportunity for students in low-income communities, reduces school suspension or expulsion, reduces how many students have to repeat a grade, and boosts high school graduation rates, particularly for students from low-income families. And when those children become adults, the greater funding leads to higher earnings and work hours and reductions in poverty.4
- A $1,000 annual increase in funding, which was the equivalent to a 10% increase in spending in those school divisions, resulted in increased reading and math scores, lower dropout rates, and higher college attendance and graduation rates, particularly in districts with more low-income families.5
- Investing in improved learning conditions through HVAC improvements or removing pollutants raises test scores, particularly in economically disadvantaged school districts.6
- Federal pandemic relief funding contributed to academic recovery during the 2022-2023 school year, leading to increases in math and reading scores compared to places that didn’t have as much relief funding (or didn’t spend that funding by the 2022-2023 school year).7
Making school funding fairer boosts student outcomes and intergenerational mobility
- School funding equalization — that is, equity in school funding or making sure funding is based on students’ needs — has a large effect on the ability of low-income students to “move up the ladder.” When that equalization occurs at the elementary level instead of high school, the study found that it’s more effective in offering students more chances to succeed compared to generations before them.8
- Directing more funding to communities facing economic and social challenges, as measured by low birth weights, does more to raise achievement than directing funding to better-off areas. Within particular school divisions, increased funding particularly raises achievement of students from lower-income families.9
Cited Research
- Jackson, C. Kirabo, Rucker C. Johnson, and Claudia Persico, “The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms,” The Quarterly Journal of Economics, vol 131(1), pages 157-218, 2016
- Lafortune, J., Rothstein, J., and Whitmore Schanzenbach, D., “School Finance Reform and the Distribution of Student Achievement.” American Economic Journal: Applied Economics, 10 (2): 1-26, 2018
- Jackson, C. Kirabo and Claire Mackevicius, “The Distribution of School Spending Impact”, National Bureau of Economic Research, Working Paper 28517
- Johnson, R., “Follow the Money: School Spending from Title I to Adult Earnings,” The Russell Sage Foundation Journal of the Social Sciences, Dec 2015
- Kreisman, D. and Steinberg, M., “The effect of increased funding on student achievement: Evidence from Texas’s small district adjustment,” Journal of Public Economics, Volume 176, Pages 118-141, 2019
- Biasi, B., Lafortune, J., and Schönholzer, D., “What Works and For Whom? Effectiveness and Efficiency of School Capital Investments Across the U.S.,” EdWorkingPaper: 24-898, Jan 2024
- Dewey, D., Fahle, E., Kane, J., Reardon, S., and Staiger, D., “Federal Pandemic Relief and Academic Recovery,” Education Recovery Scorecard, June 2024
- Biasi, B., “School Finance Equalization Increases Intergenerational Mobility,” Journal of Labor Economics, 2023
- Rauscher, E., and Shen, Y., “Variation in the Relationship between School Spending and Achievement: Progressive Spending Is Efficient,” American Journal of Sociology, July 2022
Category:
Education
