Debates about how to improve public Education in America often
focus on whether government should spend more on education. Federal
and state policymakers proposing new Education programs often
base their arguments on the need to provide more resources to
schools to improve opportunities for students.
Many Americans seem to share this view. Polling data show that
many people believe that government allocates insufficient
resources to schools. A poll conducted annually from 2004 through
2007 found that American adults list insufficient funding and
resources as a top problem facing public schools in their
While this view may be commonly held, policymakers and
citizens should question whether historical evidence and
academic research actually support it. This paper addresses two
- How much does the United States spend on public Education?
- What does the evidence show about the relationship between
public Education spending and students' academic
The answers to these questions should inform federal and
state policy debates about how best to improve education.
Twenty-nine states and the District of Columbia face budget
shortfalls totaling approximately $48 billion for fiscal year
2009. Even more states could face
shortfalls in the near future. At the federal level, long-term
budgets face a challenging fiscal climate. Projected growth of
entitlement programs is expected to place an ever-increasing burden
on the federal budget, limiting the resources available for other
purposes, including education.
Simply increasing government spending on education may no
longer be a viable option for federal and state policymakers.
Furthermore, as this paper demonstrates, simply increasing
Education spending does not appear to improve American
students' academic achievement. To improve learning
opportunities for American children, policymakers should
refocus on allocating resources more efficiently and
U.S. Spending on Public Education
Answering whether spending more on public Education improves
academic achievement begins with establishing how much the United
States spends on public education. The National Center for
Education Statistics in the U.S. Department of Education publishes
extensive data on Education in its annual Digest of Education
Statistics, including the following important facts:
- Total spending on K-12 public education. The United
States spent $553 billion on public elementary and secondary
Education in 2006-2007, which is 4.2 percent of gross
- Average per-student spending in public school. In
2004-2005 (the most recent school year for which data are
available), an average of $9,266 was spent per pupil in American
public schools. This means that a student entering
first grade in 2004 could expect approximately $111,000 to be spent
on his or her elementary and secondary Education if the student
completes high school.
- Spending by level of government. Public education
revenue is drawn from three sources of government: federal, state,
and local. In 2004- 2005, state government provided the largest
share of public education revenues: 46.9 percent. Local
governments provided 44.0 percent, and the federal government
provided 9.2 percent.
- Federal spending on education. In 2007, the federal
government spent $71.7 billion on elementary and secondary
Education programs. These funds were spent by 13 federal
departments and multiple agencies. The Department of Education
spent $39.2 billion on K-12 education. The largest programs in the
Department of Education's elementary and secondary budget were
"Education for the disadvantaged" ($14.8 billion) and "Special
Education" ($11.5 billion).
Historical Trends in Public Education
Many people believe that lack of funding is a problem in public
education, but historical trends show that
American spending on public education is at an all-time high.
Between 1994 and 2004, average per-pupil expenditures in American
public schools have increased by 23.5 percent (adjusted for
inflation). Between 1984 and 2004, real expenditures per pupil
increased by 49 percent. These increases follow the
historical trend of ever-increasing real per-student expenditures
in the nation's public schools. In fact, the per-pupil
expenditures in 1970-1971 ($4,060) were less than half of
per-pupil expenditures in 2005-2006 ($9,266) after adjusting for
Appendix A presents the growth of per-pupil expenditures by
state compared to the national average. Over the past decade, real
expenditures per pupil have increased in all 50 states and the
District of Columbia, increasing the most in Vermont (47.5 percent)
and the least in Alaska(5.9 percent).
Federal spending on Education has also increased dramatically,
as shown in Chart 2. Combined federal support and estimated
federal tax expenditures for elementary and secondary
education has increased by 138 percent (adjusted for
inflation) since 1985. On a per-pupil basis, real federal
spending on K-12 education has also increased significantly over
time. (See Chart 3.) In 2005, the federal government spent $971 per
pupil, more than three times its level of spending in 1970 ($311)
after adjusting for inflation.
Education Spending and Academic
Given the significant increase in resources allocated to
public Education, policymakers should consider whether government
spending increases have led to improved student outcomes. This will
help to determine whether future increases in education
spending can be expected to yield tangible improvements for
A basic comparison of long-term spending trends with long-term
measures of student academic achievement challenges the belief that
spending is correlated with achievement. Chart 4 compares real
per-pupil expenditures with American students test scores on the
long-term National Assessment of Educational Progress (NAEP)
reading examination from 1970 to 2004. While spending per pupil has
more than doubled, reading scores have remained relatively
High school graduation rates provide another historical
barometer of American educational performance. According to
the National Center for Education Statistics, the average freshman
graduation rate for American public schools has remained
relatively flat over time. In 1990-1991, the average graduation
rate was 73.7 percent. By 2004-2005, the rate had increased
modestly to 74.7. However, the most recent
estimate for the 2005-2006 school year shows that the national
freshman graduation rate has dipped to 73.4 percent.
A key focus of Education reform efforts in recent decades has
been to improve opportunities for disadvantaged students and
to reduce the achievement gap between white students and ethnic
minority children. Appendix B presents long-term NAEP 4th, 8th, and
12th grade reading and math scores of specific student groups,
including white, black, and Hispanic children from the 1970s
through 2004. Black and Hispanic students have improved test scores
in both subjects across all student levels. However, the
achievement gap persists, with black and Hispanic children still
lagging behind their white peers despite decades of federal aid
targeted at equalizing opportunities for all students. Similarly, in 2005-2006, the
national high school graduation rate for white students (80.6
percent) remained significantly higher than the graduation rates of
black students (59.1 percent) and Hispanic students (61.4
Academic Literature on Education
Spending and Achievement
Academic researchers have sought to answer the question of
whether Education expenditures are correlated with student
performance. However, there is a lack of consistent evidence on
whether Education expenditures are related to academic achievement.
Eric Hanushek has studied the effect of per-pupil expenditures on
academic outcomes, finding either no relationship or a relationship
that is either weak or inconsistent. However,
researchers Larry V. Hedges and Rob Greenwald analyzed the
same data used by Hanushek and concluded that increasing per-pupil
expenditures has a significant positive impact on student
Despite the lack of consistent findings, leading researchers in
the area acknowledge that any effect of per-pupil expenditures on
academic outcomes depends on how the money is spent, not on how
much money is spent. According to Hanushek:
Few people…would recommend just dumping extra
resources into existing schools. America has…followed that
program for several decades, with no sign that student
performance has improved.…
…The issue is getting productive uses from current and
added spending. The existing evidence simply indicates that the
typical school system today does not use resources well (at least
if promoting student achievement is their purpose).
Hedges and Greenwald note that:
[T]he results do not provide detailed information on the
educationally or economically efficient means to allocate existing
and new dollars.… [D]iscussions of school reform…
should instead incorporate an assessment of the current relation
between inputs and outcomes and determine how to best allocate
resources in specific contexts.
What is clear from these competing findings is that policymakers
should seriously consider improving how to allocate educational
resources more effectively.
The evidence about Education spending and achievement leads to
the following important lessons:
- American spending on public K-12 education is at an all-time
high and is still rising. Polls show that many people believe
that a lack of resources is a primary problem facing public
schools. Yet spending on American K-12 public Education is at an
all-time high. Approximately $9,300 is spent per pupil. Real
spending per student has increased by 23.5 percent over the
past decade and by 49 percent over the past 20 years.
- Continuous spending increases have not corresponded
with equal improvement in American educational
performance. Long-term measures of American students' academic
achievement, such as long-term NAEP reading scale scores and high
school graduation rates, show that the performance of American
students has not improved dramatically in recent decades, despite
substantial spending increases. The lack of a correlation between
long-term Education spending and performance does not suggest that
resources are not a factor in academic performance, but it
does suggest that simply increasing spending is unlikely to
improve educational performance.
- Increasing federal funding on Education has not been
followed by similar gains in student achievement. Federal
spending on elementary and secondary Education has also increased
significantly in recent decades. Since 1985, real federal
spending on K-12 education has increased by 138 percent. On a
per-student basis, federal spending on K-12 education has tripled
since 1970. Yet, long-term measures of American students'
academic achievement have not seen similar increases. Long-term
test scores among specific student populations, including ethnic
minorities that have been a main focus of federal Education policy,
have improved some. However, the achievement gaps among white,
black, and Hispanic students persist in test scores and graduation
- Education reform efforts should focus on improving resource
allocation. Instead of simply increasing funding, efforts
to improve education should focus on improving resource
allocation. Chart 5 compares high graduation rates and per-student
expenditures in the nation's 50 largest cities. In many cities,
spending per student exceeds $10,000 per year, yet graduation
rates are below 50 percent. For example, in Detroit, per-student
spending is approximately $11,100 per year, yet only 25 percent of
Detroit's students are graduating from high school according
to a recent estimate. In these communities and across the
country, policymakers should focus on reforming policies and
resource allocation to improve student achievement.
The high and increasing percentage of funding that is allocated
to non-classroom expenditures is evidence of the need to improve
resource allocation in the nation's public schools. According to
the National Center for Education Statistics, only 52 percent of
public Education expenditures are spent on instruction. This percentage has been slowly
decreasing over recent decades.
One promising way to improve resource allocation is to give
parents the ability to use their children's share of public
Education funding to choose the right school for their children.
Children benefiting from school choice programs have higher
test scores than their peers who do not benefit from school
choice. Moreover, public schools affected
by school choice policies improve their performance in
response to competition created by parents' ability to choose
alternative schools for their children.
What Federal and State Policymakers
Federal and state policymakers should resist proposals to
increase funding for public education. Historical trends and other
evidence suggest that simply increasing funding for public
elementary and secondary Education has not led to
corresponding improvement in academic achievement. Instead of
simply increasing funding for Education, policymakers and
school leaders should implement education reforms that improve
Members of Congress and federal policymakers should embrace
reforms that reduce bureaucracy, streamline regulations, and
transfer greater authority over funding to the state and local
State policymakers should implement systemic Education reforms
that improve resource allocation and encourage effective school
leadership, such as expanding school choice options for families
and attracting and retaining effective schoolteachers.
Taxpayers have invested considerable resources in the nation's
public schools. However, ever-increasing funding of Education has
not led to similarly improved student performance. Instead of
simply increasing funding for public Education, federal and state
policymakers should implement Education reforms designed to improve
resource allocation and boost student performance.
Dan Lips is Senior Policy
Analyst in Education in the Domestic Policy Studies Department, Shanea J. Watkins, Ph.D.,
is Policy Analyst in Empirical Studies in the Center for Data
Analysis, and John Fleming is Senior Data Graphics Editor at The
Historical Per-Pupil Expenditures on K-12 Public Education, U.S. Average
Historical Per-Pupil Expenditures on K-12 Public Education,
District of Columbia (DC)
New Hampshire (NH)
New Jersey (NJ)
New Mexico (NM)
New York (NY)
North Carolina (NC)
North Dakota (ND)
Rhode Island (RI)
South Carolina (SC)
South Dakota (SD)
West Virginia (WV)
 Author's calculations. The nation's gross
domestic product was $13.2 trillion in 2006. Ibid., Table
 Ibid., Table 171. This estimate is
based on "current expenditures" in 2006-2007 dollars.
 Author's calculations, assuming that the
child is enrolled in public school for 12 years. This is likely an
overly conservative estimate because real per-student spending has
increased over time.
 U.S. Department of Education, Digest
of Education Statistics, Table 162. Percentages total more than
100 percent because of rounding.
 Rose and Gallup, "Phi Delta
 Author's calculations. Average
per-pupil expenditures were $7,504 in 1994-1995 and $6,219 in
1984-1985 in constant 2006-2007 dollars. U.S. Department of
Education, Digest of Education Statistics, Table 171.
 U.S. Department of Education, "Public
School Graduates and Dropouts from the Common Core of Data."
 Eric A. Hanushek, "School Resources and
Student Performance," in Gary Burtless, ed., Does Money Matter?
The Effect of School Resources on Student Achievement and Adult
Success (Washington, D.C.: Brookings Institution Press, 1996), pp.
 Larry V. Hedges and Rob Greenwald,
"Have Times Changed? The Relation Between School Resources and
Student Performance," in Burtless, Does Money Matter?
 Hanushek, "School Resources and Student
Performance," p. 69.
 Hedges and Greenwald, "Have Times
Changed?" p. 90.
 Christopher B. Swanson, "Cities in
Crisis: A Special Analytic Report on High School Graduation,"
Editorial Projects in Education Research Center, April 1, 2008, at
(August 19, 2008), and U.S. Department of Education, National
Center for Education Statistics, Common Core of Data, District
Information, at http://nces.ed.gov/ccd/districtsearch
(August 19, 2008).
 U.S. Department of Education, Digest
of Education Statistics 2007, Table 165. Instruction is defined
as "encompass[ing] all activities dealing directly with the
interaction between teachers and students. Teaching may be provided
for students in a school classroom, in another location such as a
home or hospital, and in other learning situations such as those
involving co-curricular activities. Instruction may be provided
through some other approved medium, such as television, radio,
telephone, and correspondence. Instruction expenditures include:
salaries, employee benefits, purchased services, supplies, and
tuition to private schools." Ibid., Appendix B.