Where Does Alabama Stand in Education Spending?

As Alabama’s legislators consider how to deal with the General Fund budget, some have been eyeing the Education Trust Fund (ETF) to see where funds can be trimmed and moved to the General Fund.

But should Alabama’s lawmakers consider spending less on education? Is Alabama spending enough? In the right areas?

How does Alabama compare to other states? Over time?

While the relationship between spending and achievement has been confusing at best, it appears that recent research, using more specific- and student-level data and more sophisticated statistical methods, is moving toward the conclusion that increased targeted spending does result in increased achievement, while controlling for student family income level and other factors out of schools’ control.

How Does Spending Matter?

Late last week, two publications were released delineating different aspect of school funding.

The first, Cheating our Future: How Decades of Disinvestment by States Jeopardizes Equal Educational Opportunity, profiled four states (Alabama is not one of them) and how systematic under-funding of rural schools and schools with predominantly minority students deprives them of opportunities afforded to more affluent districts.

The second, Is School Funding Fair? A National Report Card, 2015 edition, has an interactive tool that is not kind to Alabama. Be sure to click on the “Effort” tab (at the top) and take the time to understand what “Effort” means.

The Center for American Progress created a measure of school funding that is intriguing: the “Return on Investment” (ROI). ROI is calculated using various performance measures derived by the Center. Here’s information about their methodology.

The most recent version (2014) breaks data down by school district. Here’s Alabama’s page.

What Alabama Is Doing

Twenty years have passed since the Foundation Program was adjusted, and folks at the Alabama State Department of Education are looking at a different way of funding schools.

Two years ago, State Superintendent Dr. Tommy Bice hired a consulting firm from Colorado to analyze how Alabama’s schools and districts spend money and what kinds of student outcomes were achieved.

The goal, according to John Augenblick, one of the founders of the consultant group, is “to figure out what each and every school in this state would need so that we would feel comfortable that they couldn’t use money as an excuse for not being successful”.

While not much has been said about the study, Bice has indicated the study is continuing and he plans to give the state board of education an update this summer.

Here’s what I wrote in 2013 about the work session where the consultants were introduced.

Here’s what I wrote in June 2014 about the update that was shared. Here is the consultant’s presentation.

School finance, and the way schools are funded has been of particular interest to me, mostly because there is so little actual informative data that tells us how schools are spending taxpayer funds. And because there is so little informative data, school officials are vulnerable to general criticism that too much money is spent with too little success.

While we wait to hear what the consultants found, and as solutions for shortfalls in the General Fund budget are being considered, it is worth the time to view where Alabama stands with respect to spending on K-12 education in relation to the rest of our country.

The Numbers

The U.S. Census Bureau recently released Public Education Finances: 2013, an annual report listing many variables of how education money is spent in the states.

This is a look at “current spending”. Current spending does not include capital outlays, interest paid on debt, or intergovernmental transfers. It has not been adjusted for inflation nor cost of living differences. These are current dollars (as opposed to real dollars as shown in this article about Alabama’s level of spending over time).

It is important to note that different school systems have different criteria on what they classify as current expenses, and interpretations must be made with that in mind. Variations are indicated in Appendix B of the Census Bureau’s report.

So here’s a look at per pupil current spending for fiscal years 2004 through 2013. States are divided into quartiles, with quartile “1” representing the lowest spending per pupil and quartile “4” representing the highest quartile. Notice how Alabama moved from quartile 1 to quartile 2 and then back down again.

And here is the percentage change from one year to the next. Alabama is often criticized for having made some of the largest cuts in school spending since 2008. It is important to note that Alabama had one of the highest percentage changes in school spending in the time period immediately preceding 2008.

Another measurement that sticks out is current spending per $1000 of personal income. Using rates (e.g., “per capita”, “per pupil”, “per dollar”) allows a comparison that most of us can understand.

Looking at spending per $1000 of personal income is an indicator that depends on the wealth of a state and spending priorities. For example, if education spending per $1000 of personal income is high, it could indicate one of two things: either personal wealth is low, or education spending is a high priority. The converse is true as well.

According to the report, the data used for state personal income estimates is from the Bureau of Economic Analysis.

Use the captions in the story to click through to the next data visualization. You will see total current spending by state over time (displayed two different ways) and total instruction spending over time (displayed in those same two ways).

The report defines instruction spending as “payments for salaries, employee benefits, supplies, materials, and contractual services. It excludes capital outlay, debt service, and interfund transfers. Instruction covers regular, special, and vocational programs offered in both the regular school year and summer school. It excludes instructional, student, and other support activities, as well as adult education, community services, and student enterprise activities.”

It’s a good idea to know where Alabama is as these budget discussions continue.

Here is Governing magazine’s look at this data.

Further Reading

Google “spending and student achievement” and you’ll find a host of studies and press releases.

Here are a couple of studies to review:

Does Money Matter in Education? Bruce Baker, 2012.

In this report, Baker concludes:

It is certainly reasonable to acknowledge that money, by itself, is not a comprehensive solution for improving school quality. Clearly, money can be spent poorly and have limited influence on school quality. Or, money can be spent well and have substantive positive influence. But money that’s not there can’t do either. The available evidence leaves little doubt: Sufficient financial resources are a necessary underlying condition for providing quality education.

Baker hosts a blog, School Finance 101, which is very helpful for those of us hoping to keep up with what’s happening in the world of school finance nationwide. Baker certainly embraces a particular perspective, but he provides much to help understand school finance.

Does Money Matter in the Long Run? Effects of School Spending on Educational Attainment. Joshua Hyman September 15, 2014.

There are plenty of research studies that support the idea that money doesn’t make a difference in educational outcomes. For whatever reason, that message seems to carry farther than the studies that show there is a relationship. That’s why I’m sharing these particular studies that show there is some sort of relationship.