How and when money matters in education

We shouldn’t just throw money at the system, says Luke Sibieta; we have to use it smartly.

School funding was a source of much controversy during the recent general election campaign, and the Department for Education changed its spending plans soon afterwards, to enable a freeze in school spending per pupil in England between 2017 and 2019, and softened plans for a national funding formula. However, coming on top of real-terms cuts of just under five per cent between 2015 and 2017, school funding is likely to remain prominent.

People believe that cuts will reduce the quality of the education children receive. Most research to date, however, has not found a strong relationship between school expenditure and pupil outcomes. This is largely because it is quite a hard question to tackle. There are many other reasons why funding and pupil outcomes may be correlated, e.g. funding is often directly targeted at pupils and schools in disadvantaged circumstances.

People believe that cuts will reduce the quality of the education children receive

Recent pieces of research have sought to address such problems and have shown that the context, the timing and the way resources are used all matter enormously.

A recent paper from the US looked at the consequences of court-ordered school finance reforms. Until the 1970s, American schools were almost entirely funded from property taxes levied on houses in the local area, which meant wealthy areas had higher levels of funding. The courts decided this was unfair and ordered states to provide more to less wealthy areas, which ended up having some very positive consequences.

For children from poorer families, the research found that a 10 per cent increase in funding per pupil increased adult earnings by 10 per cent.

The effects for children from richer families were about half as large. A similar pattern emerges in the UK: Recent research has shown that a £400 increase in primary school funding per pupil (just over 10 per cent) can improve key stage 2 test scores by about 10 per cent of a standard deviation, with considerably larger effects for schools serving poorer families. Money matters and it matters more for disadvantaged pupils.

There is now near-universal agreement that early investments in children’s skills are important for cognitive development: children are more receptive at younger ages. Later investments are also likely to be more effective as a result; it is easier to teach a pupil who has already grasped the basics.

Investments in secondary schools are more effective for pupils who have achieved better outcomes at 11

In a recent follow up to their paper on court-ordered school finance reforms, the same authors looked at the interaction between school funding and the roll out of a government childcare scheme for disadvantaged families in the 1960s and 1970s. The results are fascinating: when not preceded by the scheme, 10 per cent more school spending had relatively small effects on adult outcomes.

But when pupils from low income families were exposed to it in full, a 10 per cent increase boosted adult earnings by 15 per cent and – even more dramatically – reduced the chance of incarceration by the same amount.

UK evidence also shows that investments in secondary schools are more effective for pupils who have achieved better outcomes at 11. Investments in the early years and schools are sometimes presented as competing choices. However, to have full effect, we should be doing both. Sustained investment in the early years and schools can help break the link between family income and educational attainment.

A large amount of the UK’s increase in funding in the 2000s was Spent On Hiring Extra Teaching Assistants. Some research, however, has found that TAs are deployed in relatively ineffective ways: the Education Endowment Foundation has built up a wonderful set of materials showing more effective ways they can be deployed.

For example, structured one-to-one catch-up interventions delivered by TAs can boost literacy and numeracy by an additional three to four months of progress.

What should we take from these findings?

First, resources do matter and they matter more for disadvantaged pupils. Targeting more resources at disadvantaged pupils, for example through the pupil premium, is likely to be an effective way to narrow the achievement gap. Second, investing early and sustaining this through school is an effective way to address the attainment gap. Third, these investments will only be effective if they are used in ways that have been proven to increase attainment.

Luke Sibieta is a research fellow at the IFS

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