Research News And Comment: Educational Expenditures and School Achievement

T he role of educational funding in improving student achievement has been a source of lively debate in scholarly circles for more than 2 decades. Early productivity studies examining the relationship between school inputs and student achievement found inconsistent effects. Some studies showed a significant relationship between inputs, such as teacher quality, class size or per pupil expenditures, and student outcomes, while others did not (see Hanushek, 1986, for a summary review). In part, the often contradictory results can be attributed to the happenstance quality of the data used in some of the studies (Ferguson, 1991; Hanushek, 1986). Regardless of the reasons, the confusion about the relationship between school inputs and school quality has created a lack of faith by the public in the ability to improve educational outcomes by increasing educational expenditures. The development of better data and more sophisticated analyses has, however, revitalized research in this area. Investigators are gathering a body of evidence indicating that expenditures directly related to instructional services do have a significant impact on student outcomes. This recent research has made some important contributions to understanding the relationship between school inputs and student outcomes, among which the work of Ronald Ferguson (1991) stands out (see also Card & Krueger, 1990). In his article "Paying for Public Education: New Evidence on How and Why Money Matters/' published in the Harvard Journal on Legislation, summer 1991, Ferguson presents new evidence on the impact that teacher quality, as measured by literacy skills, class size, and teacher experience, has on students' test performance in elementary and secondary grades. He found that differences in the quality of schooling accounted for between one quarter and one third of the variation in students' standardized reading scores among school districts in Texas. Most of the estimated effects he captured were due to a single measure of teacher quality: teachers' performance on a statewide recertification exam that was required of all Texas teachers in 1986. As a researcher in economics and education policy, I was curious about how Ferguson's findings might help to illuminate current arguments about school reform. In a lengthy conversation, we discussed his research and its implications, which is the basis for the second part of this article. First, however, I will provide an overview of his article and its conclusions. Using a large-scale data base covering almost 900 school districts in Texas, Ferguson was able to link student performance on reading tests in grades 1, 3, 7, 9 and 11 to teacher scores on the TECAT (Texas Examination of Current Teachers and Administrators Test). In regression analysis that examines the differential impact of teacher verbal skills on student reading scores between grades 1 and 3, 5 and 7, and 9 and 11, he found a strong and positive relationship between teachers' and students' test scores, particularly in the elementary grades. Ferguson also looked at class size to determine when and where the teacherstudent ratio either harmed or helped student performance. Again, his results were informative. He found that class size is important for student performance at the primary grade level. Using a measure of class size that was constructed from the number of students per teacher in the district, he found that reducing the number of students per teacher improved student outcomes when the ratio exceeded 18 to 1. (Because of the way the student-teacher ratios were derived, this really translates into a class size of 22 or 23 to 1.) Each additional student over 18 caused average district reading scores to fall by between one tenth and one fifth of a standard deviation in the interdistrict distribution of test scores for grades 1 through 7. The third major category of variables Ferguson analyzed consisted of other measures of teacher quality: district level differences in the amount of postgraduate education and years of experience of teachers. Accounting for the percentage of teachers who held master's degrees explained about 5% of the variation in student scores across districts for the primary grades but had no predictive impact on the reading scores of students above grade 7. The measure of experience was broken into two main groups, those with 5 to 9 years of experience and those with 9 or more years. Using these two measures, Ferguson found that while both were statistically significant in explaining student performance, there were differences in the amount of experience that mattered in elementary versus high school grades. His results suggested that in the primary grades, once teachers had at least 5 years of teaching experience, additional years did not add to their effectiveness in increasing student test scores. At the high school level, however, while both categories of experience were significant in explaining higher scores, teachers with 9 or more years of experience produced better results on student's test scores than did those with 5 to 9 years of experience.