WalletHub’s “2015’s Cities with the Most & Least Efficient Spending on Education” found that although free for students, public education can cost cities big. In fact, education topped state and local government spending at $869.2 billion in 2012, according to the latest finance data from the U.S. Census Bureau. Even so, the quality of education students receive can vary drastically from city to city, but why?
Traditionally, public school budgets have relied on local taxes, disparities in which potentially spur income inequality among students upon reaching adulthood, a Harvard University and National Bureau of Economic Research study concluded. The authors suggest that school-district quality reflects the amount of tax dollars families can pump into their local economies.
Exacerbating the inequality problem is the fact that state and local governments currently operate on tighter budgets, even though real spending per pupil has increased 90 percent over the past 30 years. More recently, however, capital outlays on education have fallen 7.9 percent, from $91.7 billion in 2007 to $84.5 billion in 2012. A decline in elementary and secondary school spending accounted for much of the overall drop, begging an important question: How efficiently are cities spending taxpayer dollars on public school education?
With taxes being top of mind and schools back in session, WalletHub addressed that question by calculating the return on educational investment for 90 of the most populated U.S. cities. To do so, we divided each city’s aggregated standardized test scores in reading and math for grades 4 and 8 by its total education spending per capita. We then normalized the data by four key socioeconomic factors.
State and local financing is crucial to the well-being of public schools. But even more critical is how cities spend those funds, especially where budgets are more constrained. To expand the discussion, we asked a panel of experts to provide insight on issues related to school financing and effectiveness.
The following are my answers to their “Ask the Experts” section:
What makes some city school systems more effective than others?
Competition is good for education. Large metropolitan areas have more schools than suburbs and rural areas. The more schools and school districts in an area, the more competition. My research shows that competition can be beneficial, increasing the quality of the schools in a city.
What factors influence a city’s ROI on education spending? How can residents know whether their tax dollars are being used wisely by local authorities on K-12 education?
School districts continue to ask states for funds to pour more money into the public schools, hiring more staff and buying more equipment. Adding more money, however, does not appear to increase education quality or graduation rates. Per pupil costs have doubled in 50 years and student achievement has remained flat. School staff has increased from 40 per 1,000 students in 1960 to 125 per 1,000 students. Employee benefits, including pensions and health care, are still the fastest-growing cost in education, increasing at twice the rate of salaries. Employee benefits accounted for 22 cents of every $1 spent on schools in 2009, compared with 17 cents in 2002. Other factors that are adding to this cost are teacher salaries, low performing students, special needs students and support/administration services and staff.
How have city education budgets fared in the recession and economic recovery?
Overall, education spending slowed during the recession. However, no matter how the economy is performing, schools will always demand more money.