Public school funding has become a serious battleground in North Carolina. Progressives tend to argue that schools need more money in order to be more effective, especially schools that primarily educate low-income students. Conservative lawmakers argue that “failing” schools should be held accountable for poor test scores, and holding them accountable can include cutting their funding. But two recent academic studies indicate that increasing school funding has positive effects, both on test scores and on longer-term metrics; especially for low-income students.

The first working paper, written by U.C. Berkeley and Northwestern University economists, analyzed the effects of adequacy-based school reforms. Adequacy-based finance reforms arose from the 1989 Kentucky Supreme Court finding that every child in the state had a constitutional right to “an adequate education.” Starting with Kentucky in 1990, 27 states have made education reforms, and many of them are in line with adequacy requirements they identified in their own constitutions.

The wealth achievement gap has widened in recent years, which means that wealthy students are pulling farther ahead of their low-income classmates. The authors proposed that one contributing factor was an inequity in school resources. “Schools in the United States are traditionally funded out of local property taxes, and because wealthier families tend to live in richer communities with larger tax bases, their children have tended to attend schools that spend more.”[1] The authors analyzed nationally representative data from the National Assessment of Education Progress (NAEP) and the National Center for Education Statistics (NCES), looking at both absolute and relative measures of funding in economically disadvantaged school districts. They then calculated the average (mean) test scores of students in the bottom and top quintiles of family income, and the resulting gap between those two averages. The gap grew smaller in states that increased their per-pupil spending.[2] 

Increased per-pupil spending can “cause graduate increase in the relative achievement of students in low-income school districts, consistent with the goal of improving educational opportunity for these students.”

The second study, from Oxford University, analyzed the longer-term education and economic outcomes that result from K-12 finance reforms. Their models revealed that “a 10 percent increase in per pupil spending each year for all 12 years of public school leads to 0.31 more completed years of education, over 7 percent higher wages, and a 3.2 percentage point reduction in the annual incidence of adult poverty.”[3] They also found that the “effects are much more pronounced for children from low-income families.”[4]

A 10 percent per pupil funding increase in North Carolina would take spending from $8,363 to $9,199 in one year; 7 percent higher wages would put over $3,000 more in the average North Carolinian’s pocket every year; and a 3.2 percentage point dip in the state poverty rate would bring North Carolina below the national average.

The authors of both studies cautioned that spending increases shouldn’t be the only school reform that state governments use, and that the spending must be efficient in order to do the most good. For example, increases in spending on hiring more teachers, guidance counselors, and social workers and on increasing teacher salary are consistent with larger positive effects. But money definitely seems to help.

North Carolina’s K-12 per-pupil funding is only 46th in the country and the average teacher pay is 42nd, which leaves a lot of room for improvement. The positive results found in these two studies clearly don’t happen overnight, and they don’t come for free. But a stronger economic future for North Carolina is worth investing in.



[1] Lafortune, Julien; Rothstein, Jesse; Schanzenbach, Diane Whitmore. (February 2016). School Finance Reform and the Distribution of Student Achievement. National Bureau of Economic Research.

[2] See note 1.

[3] Jackson, C. Krabo; Johnson, Rucker C., and Persico, Claudia. (October 1, 2015). The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms. The Oxford Quarterly Journal of Economics, Volume 131, Issue 1. Available at http://qje.oxfordjournals.org/content/131/1/157.abstract

[4] See note 3.