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In April 2018, Education Secretary Betsy DeVos made the argument that more money isn’t the way to improve public schools. A chart, which she shared on Twitter, showed how school spending had skyrocketed over the last 30 years while student test scores have barely budged. Lackluster academic achievement “is not something we’re going to spend our way out of,” DeVos tweeted.  

More than a dozen academic studies have rebutted the claim that money doesn’t matter in education but it’s more complicated to explain why the simple, easy-to-grasp DeVos logic can be misguided. I’m going to give it another try in light of the coronavirus pandemic. 

A few weeks ago, in July 2020, education finance experts explained to journalists how schools across the country are going to be hit with big funding cuts this year. With business down or downright closed, tax collections will soon dwindle. States have already announced an average cut of 15 percent to their overall budgets, according to the Education Commission of the States, a nonprofit policy group based in Denver. Since education is the top expenditure in almost every state, the announced cuts are now trickling down to schools. A second round of deeper cuts is expected in the fall.

Superintendents and principals will have to find ways to trim after they’ve already made their purchases and hired their teachers for the school year at a time when schools need extra money for masks, disinfectants, janitors —  and remote learning technology. “It’s bad with the potential of getting worse,” said Michael Griffith, an analyst at the Education Commission of the States, during a session of the Education Writers Association’s national seminar. 

The last time that schools had to slash spending was after the 2008 recession. Publishing in the summer 2020 issue of Education Next, a team of three economists led by Kirabo Jackson of Northwestern University found student achievement suffered in proportion to how much funding was cut. Specifically, they calculated that a $1,000 reduction in per-pupil spending after the 2008 recession reduced reading and math test scores by about 1.6 percentile points and college going by 2.6 percent. 

Spending fell by less than a $1,000, on average across the nation after the 2008 recession. (The drop was about $860 per student over the course of three years, according to my calculation.) But since education is decentralized among more than 12,000 school districts, some schools were hit with much larger per-pupil cuts than others. Jackson’s team of economists calculated that school systems that rely on state funds, as opposed to local property taxes, were hit with the largest cuts. Students in Washington, Arkansas or Minnesota, for example, tended to see a larger drop in test scores than students in, say, Illinois, Pennsylvania and Connecticut. 

Wealthy communities were more able to offset the state funding cuts by digging into reserves, raising taxes or charging fees. State budget cuts had the effect of increasing achievement gaps for both low-income students and students of color. A $1,000 spending cut increased the gap in tests scores between Black and white students by 6 percent, the economists found. 

In the July briefing to education journalists, school finance experts explained why low-income children were harmed more by the 2008 school funding cuts. Teachers union contracts often specify that layoffs must start with the most recently hired teachers, protecting veteran teachers with more seniority. Poor schools, where the conditions are more challenging, tend to have more junior teachers and fewer veterans so low-income communities bore the brunt of the teacher layoffs.

Layoffs, of course, are a last resort for school leaders. First they cut extra programs such as summer school, after school and supplemental reading. In other words, programs that help low-income kids got cancelled, Griffith said. Transportation was another area targeted for cuts. In wealthier communities, those programs and bus services continued by charging families fees — fees that low-income families couldn’t afford. 

“The great recession impacted all student learning but it particularly impacted low- income and minority student learning,” said Griffith.

Scholars have been debating the importance of money in education for decades. And it’s easy to find examples of waste and mismanagement in school bureaucracies. Of course, money could be spent more efficiently. And it’s certainly possible to find one school district that manages to teach its kids more with less money than a district next door. 

But given current labor contracts and a national preference for small class sizes, more money tends to be correlated with higher achievement. And less money seems to drag achievement down. 

This story about school budget cuts was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our Proof Points newsletter.

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