Study: School Spending Cuts Do Matter

By Claire Caulfield
Published: Friday, January 19, 2018 - 5:05am
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A new study published by the National Bureau of Economic Research found that cuts to school budgets during the Great Recession had a detrimental effect on student success.

The study “Do School Spending Cuts Matter? Evidence from the Great Recession,” looked at national test scores and graduation rates to determine that just a 10 percent reduction in school spending reduced test scores by about 7.8 percent.

“And for an individual who was exposed to a 10 percent reduction in school spending across all four of their high school years, they were about 2.6 percentage points less likely to graduate from high school,” said Kirabo Jackson, the lead researcher on the paper.

Some of Jackson’s past research has looked at the effects of increased funding on student success.

“But in the wake of the Great Recession, a lot of school districts were hard-hit,” Jackson said. “We found major decreases in both NEAP scores, that's the nation's report card, and graduation rates.”

“To put it in perspective it’s like taking a school that has all average teachers and replacing them with teachers all in the 90th percentile,” he said. “So it’s a pretty big impact from a policy perspective.”

Not all spending cuts are created equal. Jackson pointed to districts that have switched to four day school weeks or hired less-expensive teachers and didn’t see a decrease in test scores.

“So there’s evidence that there are some cost-cutting measures that can be implemented but what we find is that when you’re basically faced with a large five or ten percent cut in your budget, outcomes are worse.” Jackson said. “So there just doesn’t appear to be enough of these saving measures out there to offset the ill effects of these budgetary cuts.”

During the Recession, most of the budget cuts came from construction projects, said Jackson.

“And we expected the effect on student test scores or graduation rates to be pretty small. So when we found that the effects were not small, we were somewhat surprised by that,” Jackson said.

The study shows that even if school spending levels return to their pre-recession levels, the legacy of those cuts doesn’t go away.

“Those that had to go through school during those years when school spending was lower, they’re sort of permanently affected” Jackson said. “Their test scores are lower but we also see lower employment and possibly lower wages as well.” 

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