Newsletter: Who Cares About Education Spending?

April 28, 2014

(For the use of the membership only)

FOR ALL the pointed discussions about Indiana public education this past month, there were questions that went unaddressed — obvious questions, some would say. Everybody likes to talk about process, we learn, but nobody likes to talk about efficiency.

What would happen, for example, if Indiana turned down federal money for education? And by the way, how well is that aid being spent now? Would it be missed in the classroom? Does it get to the classroom?

Some of the answers might surprise. Certainly and predictably there would be havoc among school administrators. And, sad to say, insecurity would sweep the Indiana Department of Education. Those left standing would be expected to determine what spending is essential, an exercise that requires budgetary muscles atrophied over the last 40 years. Politically, there might be embarrassment on the discovery that compliance with federal regulations had been costing more than the aid was worth.

And finally any such change would require a higher-information polity, one that could think of education not as an inarguable good but as a public-service expenditure that must submit to cost-benefit analysis and testing.

But those considerations aside, would loss of the federal aid (about 10 percent of Indiana’s education budget) make a difference in that most critical of all determinants — classroom learning?

No, it can be argued, and here comes the surprising part: Federal aid, given current spending levels, is irrelevant. Budgetary adjustments can produce the same academic results; our public education system apparently has more money than it can use effectively.

A recent Cato study finds the correlation nationally between spending and academic performance over the past four decades was a miserable 0.075. That is on a scale from 0 to 1 where 0 represents absolutely no correlation and 1 a perfect correlation.

“The data suggests there is essentially no link between state education spending, which has exploded, and the performance of students at the end of high school, which has generally stagnated or declined,” the authors conclude.

A similar study in 2003 by the Indiana Policy Review Foundation compared per-pupil spending with test performances in 209 Hoosier school districts. It found an even lower correlation.

In the 2001-02 school year, for instance, there was a negative correlation of -0.00321 between spending per pupil to SAT (Scholastic Assessment Test) scores. There was a negative correlation of -0.18474 between spending per pupil to 10th-grade ISTEP (Indiana Statewide Testing for Educational Progress) passing rates. For the next school year, there was a positive correlation of only 0.009338 between spending and SAT scores and a negative correlation of -0.16391 between spending and 10th-grade ISTEP passing rates.

Dr. Cecil Bohanon contrasts the study’s significance with an inexplicable disinterest:

“Both sides have facilitated an ever-increasing flow of resources to K-12 education. No candidate has ever proposed a frank discussion of how resources are supposed to improve educational quality. Both Republicans and Democrats are afraid to even hint at limiting K-12 spending. There has been a deafening silence on an obvious issue.”

Okay, but a decade later, knowing what we know now, isn’t that something the Education Roundtable could take up? The Indiana school board? The governor’s office? The legislature? The Chamber of Commerce? The state superintendent of schools? One or the other of the political parties, or both?

With millions of tax dollars at stake, not to mention the efficacy of a system entrusted with the future of our children, it would be a pity for the deafening silence to continue indefinitely. — Craig Ladwig


Andrew Coulson. “State Education Trends Academic Performance and Spending over the Past 40 Years.” PolicyAnalysis No. 746, March 18, 2014. Cato Institute. March 18, 2014 | No. 746.

Charles M. Freeland. “More Money Won’t Fix Indiana’s Government Schools.” The Indiana Policy Review, pp. 6-18, Summer-Fall 2004.



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