WILL Report Questions Effectiveness of Additional K-12 Spending

Has Wisconsin hit a wall where an additional dollar in education spending will not bring improvements in student outcomes?  Using econometric analysis, WILL’s latest education policy report indicates that this may be the case.  The full report, “Diminishing Returns,” can be found here.

Although school choice has made significant gains in Milwaukee and Racine, 88% of all Wisconsin students attend traditional public schools.  There is relatively little differences among these schools.  Over the years, policymakers have remained committed to funding public schools at a relatively high level.  In a country that spends more on education than nearly every other economically developed country, Wisconsin spends over $1,000 more than the U.S. average, ranking 16th out of 50 states.

Like the U.S., Wisconsin does not seem to be receiving a good return when measured against global benchmarks.  Using OECD data, “Diminishing Returns” builds the case that the current Wisconsin K-12 system spends too much for too little in results.  Despite spending over $3,000 more per pupil than the average of economically developed countries (OECD), the average Wisconsin student scores better than only 52% of students in the OECD in reading and 47% in math.  These results are worse when Wisconsin school districts are compared to specific high-performing countries.  For example, the average student in Wisconsin scores higher than only 39% of Canadian students in math and 41% in reading.  This is a high price for mediocrity.

In order to improve academic outcomes, the political instinct of many is to call for increased spending.  In order to understand whether this policy decision works, in “Diminishing Returns,” WILL Education Research Director Marty Lueken, Ph.D., used econometric tools with longitudinal data to analyze the impact of school districts’ spending on student outcomes – ACT test scores, graduation rates, college readiness, and WKCE test scores.  After controlling for a number of factors, such as district demographics, we observed that there was:

  1. No consistent relationship between real (i.e. inflation-adjusted) per-pupil spending by districts and student performance on the ACT,
  2. No consistent relationship between real per-pupil spending by districts and the proportion of students in a district who finish high school as college-ready,
  3. No consistent relationship between real per-pupil spending by districts and students’ performance on the WKCE exams, and
  4. No consistent relationship between real per-pupil spending by districts and graduation rates, both for all students as a group and for economically disadvantaged students.

This does not mean that government spending on education is completely meaningless.  Instead, our findings indicate that indiscriminate spending on Wisconsin public schools may have reached a point of “diminishing returns,” i.e. additional dollars do not produce proportional benefits, holding everything else constant.  In other words, a dollar spent in a developing country, such as India, is likely to produce far better student outcomes than in Wisconsin.

Therefore, in order to improve student outcomes, something else will likely need to be tried.  School choice – attending public independent charter schools or using vouchers to attend private schools – may hold the key to reviatlizing the Wisconsin education system.  Despite large funding disparities, charter and choice schools in Milwaukee have produced impressive results on shoe-string budgets.  Well-respected studies, such as the SCDP and CREDO, have confirmed this.

But, can it work outstate?  Our report explains why there is a potential marketplace for it.  The number of children living in poverty in Wisconsin has been growing rapidly – excluding the cities.  There are over 42,000 students outside of Milwaukee and Racine currently stuck in failing schools.  On the supply side, 47% of all private schools in Wisconsin are located in towns and rural districts; in those areas, more than 55,000 children – nearly one out of every three children – live in poverty.

The full report can be found here and is available upon request.

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