Fighting for Equity in Education

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New Study Shows That More Money Improves Results of Disadvantaged Students

Thursday February 9, 2017

Yet another new study shows that increased funding targeted at disadvantaged students significantly improves secondary school results. It found that increases in school funding significantly increase the probability that low achieving students complete high school. It provides further support for increased funding for disadvantaged students in Australia.

The study published in the latest issue of the Economic Journal says that its results “provide evidence that giving schools additional resources for low-ability pupils can significantly improve pupil achievement “ [p. 178]. It is the 6th study in the last year showing that targeted funding increases improve results for disadvantaged students.

The study analysed the impact of school resources on student achievement by investigating the effect of a policy measure in the Netherlands that gives additional funds to secondary schools for each low-performing student enrolled in the school. It estimated the average causal effect of additional school resources for learning support on student examination results at the end of secondary education. It is one of very few studies that investigate the causal effect of programmes aimed at increasing schooling outcomes for low achievers.

In 1999, the Dutch government implemented a policy measure, called Learning Support, that provides secondary schools that offer pre-vocational secondary education with additional funding for each student with learning or behavioural difficulties. The government spends about €11,100 per year on each eligible student which is €4,000 more than that spent on an average student.

Learning Support is explicitly targeted at students who are lagging behind in reading, spelling and/or arithmetic when they enrol in secondary education. Schools are free to decide how to spend this additional money on learning support for eligible students. It can range from tutoring and homework assistance to providing help to improve studying skills. Students can receive learning support in class but also outside of the classroom. Many schools choose to form small, separate classes with pupils that receive Learning Support so that they can receive more individual attention.

The extra funding for students under the scheme is nearly 60% higher than the average expenditure per student. It is consistent with the findings of several US studies showing that the extra funding needed to make a significant difference in results should be 50-100%, or more, higher than average per student expenditure. This is much greater than the increase in funding for disadvantaged schools under the Gonski funding plan.

Five other studies published in the last year show that increased funding improves results, especially for disadvantaged students. An extensive review of academic studies found there is a positive relationship between school funding and student achievement. It concludes:

The growing political consensus that money doesn’t matter stands in sharp contrast to the substantial body of empirical research that has accumulated over time… [p. 2]
The available evidence leaves little doubt: Sufficient financial resources are a necessary underlying condition for providing quality education. [p. 20]

A study published in the Quarterly Journal of Economics found that a 10% increase in per-student spending each year for all 12 years of public school for low income students extends their schooling by nearly half a year, increases their adult earnings by nearly 10% and family income by 16%, and reduces their annual incidence of adult poverty by six percentage points. The authors concluded that their results:

…. highlight how improved access to school resources can profoundly shape the life outcomes of economically disadvantaged children, and thereby significantly reduce the intergenerational transmission of poverty. [p. 212]

A study published by the US National Bureau of Economic Research found that school finance reforms in the United States that increased funding for low income school districts improved the results of students in those districts. It also found that the increased funding reduced achievement gaps between high and low income school districts. The authors concluded that “marginal increases in school resources in low-income, poorly resourced school districts are cost effective from a social perspective…” [p. 7]. Further, “Our results thus show that money can and does matter in education…” [p. 35]

Another study found that increased spending following court-ordered school finance reforms in the United States increased high school graduation rates in high-poverty districts. High poverty school districts in states that had their finance regimes overthrown by court order experienced an increase in school spending by 4-12% and an increase in high school graduation rates by five to eight percentage points in seven years following reform.

In addition, a study soon to published in the academic journal, Economic Policy, found that increases in school expenditure in Michigan improved the later life outcomes of students. Students who gained a 10% increase in school funding were 7% more likely to enrol in college and 11% more likely to receive a post-secondary degree.

An OECD report on how to improve results for low performing students found that the incidence of low performance in mathematics is lower in countries where educational resources are distributed more equitably between socio-economically disadvantaged and advantaged schools. It concluded:

The evidence presented in this report suggests that all countries and economies can reduce their share of low-performing students, and that a reduction can be accomplished in a relatively short time. The first step for policy makers is to prioritise tackling low performance in their education policy agendas, and translate this priority into additional resources. [p. 190]

These studies show that targeting funding increases to disadvantaged schools and students is fundamental to improving student achievement and reducing achievement gaps between the advantaged and disadvantaged. Future school funding arrangements in Australia must provide targeted funding increases for disadvantaged schools if Australia is to see any improvement in overall school results.

Trevor Cobbold

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