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Will cutting school funding lead to 'poor' results?

February 7, 2010 —

By now, regardless of where you live in the United States, there's bound to be some story about education being on the chopping block, as states tighten their belts during the recession.  But is it a wise idea to slash aid to schools?  Or will we get meager outcomes? 

Whenever you read about a teacher getting a furlough, an education program being cut, or schools having to serve more kids with less money, the issue is framed as one of fairness.  Teachers complain that they don't make very much in the first place, while critics argue that teachers don't "work" over the summer.  Programs are debated over whether they allow education to be accessible to all (instead of just to the wealthy), while critics point out how they got by just fine in the old days without these grants. 

States are often compared, but analysts run studies where education spending leads to things like higher graduation rates or better SAT scores, etc.  But unless you have a student in the mix, do you really pay attention very closely? 

Wouldn't it be nice to learn whether education spending actually produces some economic results of benefit to the broader community, and not just teachers, students and parents?  What's in it for the taxpayer with no connection to the school? 

To examine that question, I had my American Experience students gather information on the average education spending in each state, per pupil, in 1997.  Then we collected data on the poverty rate for the year 2000, as well as the year 2007, so we could assess the short-term and long-term effects of education on the poverty rate for each state. 

Here's what we found: Education spending is positively correlated with a state's ranking on keeping folks above the poverty line.  In other words, the more a state spent on education per student in 1997, the better a state's economic situation was in 2000, and 2007.  Those results were significant for the 50 states (and DC).  

Now I know what you're thinking….a dollar goes a lot further in some places than in others.  Boy, don't I know it, having moved from the Washington, DC suburbs to small-town Georgia!  So I decided to take a second look at 14 Southern states: Virginia, North Carolina, South Carolina, Georgia, Alabama, Tennessee, Mississippi, Arkansas, Louisiana, Texas, Florida, Kentucky, Oklahoma and Missouri. 

Here are the findings for the South: A state's education spending, per student, in 1997, led to better state scores for reducing poverty in the short-term (three years afterwards) and long term (a decade later).  And for those who pay attention to this sort of thing, the results were statistically significant at the .05 level in every correlation we ran. 

Of course, a state's poverty rate isn't solely determined by how much of an investment in education a state is willing to make.  But the results are a pretty strong factor, as we learned.  And how many times does a company looking to relocate or expand consider the quality of education in the region?  States, especially those in the South, should be really careful about how much they want to cut education, especially if they want a stronger economy, or something like that, in the future.