Education constitutes a significant investment at all levels of government, and understanding how funding structures, revenue streams, and spending practices influence student outcomes is important for education researchers and practitioners alike. The pandemic has underscored the significance of education finance, with projected funding shortages making the need for fiscal data and evidence-based spending practices that much more urgent. Although not in direct response to the pandemic, some recently completed and ongoing IES-funded research projects may contribute to a better understanding of education spending and how certain spending models and practices relate to student outcomes.
In 2017, the National Center for Education Research (NCER) awarded a grant to Dr. Marguerite Roza at Georgetown University to explore the weighted student funding (WSF) allocation strategy. Districts using WSF provide a fixed dollar amount to schools for each student, with larger increments going to students identified as having greater needs (including students with limited English proficiency, students with disabilities, and students who come from low-income households). This study examined 19 large, urban districts that use WSF to better understand the diverse ways in which these strategies are implemented and can influence student outcomes. Key findings indicated that, on average, WSF districts spend more on schools with higher concentrations of low-income students. In addition, test scores in English language arts and math were higher for the overall student population in districts that use WSF than in non-WSF districts in the same state. However, there was no evidence that WSF was associated with better test scores for Black or Hispanic students.
In 2020, NCER funded an efficacy study led by Dr. Sean Tanner at WestEd to evaluate the impact of fiscal flexibility in Title I compensatory revenue on student achievement, grade progression, and class completion. Fiscal flexibility refers to the policy that allows schools to spend Title 1 revenue across the school rather than for those services that specifically target at-risk students. Findings from this study could inform decisions around the level of autonomy schools should be given over how to use Title I compensatory funding to boost the success of the lowest performing students.
While the above projects are important contributions to the field, additional research is needed to address limitations in our understanding of how education funds are being spent and how dollars can be maximized to promote positive student outcomes. For example, research on special education spending is sorely needed. National data on special education spending are over 20 years old and pre-date many key changes to the way that students with disabilities are educated, including the rise in inclusive classrooms and multi-tiered systems of support.
Newly funded research and upcoming data collection efforts may offer insights into how schools and districts spend money as well as opportunities for additional research:
- In 2020, NCER awarded Dr. Marguerite Roza another grant to develop an open-access archive of school-level spending data. The project will build off the requirement in the Every Student Succeeds Act (ESSA) for states to publish school-level financial data by making the data available and usable for researchers and policymakers.
- The National Center for Education Statistics (NCES) is planning several revisions to the Annual Survey of School System Finances. Changes will include adding new items on special education spending, such as expenses for instruction, transportation, support services, and instructional staff as well as total special education expenditures.
- NCES also plans to add new revenue and expenditure variables to the National Public Education Financial Survey related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
- The National Center for Education Evaluation’s Study of District and School Uses of Federal Education Funds will examine how funds—and flexibilities—from five major federal education programs are used to support students.
Understanding how resource allocation influences outcomes will only become more important in coming years as education settings grapple with the financial impacts of the pandemic. Through the research that NCER and NCSER fund (analyzing existing data and/or collecting primary data) as well as data collection efforts in NCES, IES hopes to contribute to a better understanding of education finance and inform practical decisions in this area.
This blog was written by Bennett Lunn (Bennett.Lunn@ed.gov), Truman-Albright Fellow, NCER and National Center for Special Education Research (NCSER) and Katie Taylor (Katherine.Taylor@ed.gov) program officer, NCSER.