District Expenditures and Student Achievement: a Follow-up Study

The Iowa Department of Education (IDE) completed a follow-up study examining the relationship between test scores and per pupil expenditures. A previous study completed by the IDE revealed an inverse correlation between district per pupil expenditures and average test scores of 11th grade students. A copy of this study can be found at http://intersect.iowa.gov. Unlike the earlier study, this follow-up study found no correlation between average district achievement levels and per pupil expenditures. Introduction—The IDE completed a follow-up study examining the relationship between test scores and per pupil expenditures. A previous study completed by the IDE revealed an inverse correlation between district per pupil expenditures and average test scores of 11th grade students. A copy of this study can be found at http://intersect.iowa.gov. The original study suggests that as district expenditures increased student achievement actually decreased. However, the previous study also found that the percentage of students in a district with an individualized education plan was also negatively correlated with achievement in 11th graders. This indicates that the larger the percentage of students with disabilities in a district, the lower the average achievement of the district. These findings imply that multicollinearity exists between variables and required further analysis in order to tease out the relationship between district expenditures and achievement levels. Background and Methodology—There is much debate on the impact of per pupil expenditures on student achievement (Hedges, Laine and Greenwald, 1994). Researchers have found evidence to indicate that expenditures have a strong impact on achievement while others have found little evidence (Hanushek, 1989). In order to examine this issue more closely, the IDE first had to break out district general education and special education expenditures. As required by Iowa Code, the Certified Annual Financial Report (CAR) is a report of financial and pupil data to be filed annually with the Department of Education by each school district and area education agency and which is due no later than September 15 following the close of the fiscal year. The IDE also completes a CAR collection for all special education expenditures. The combination of both general and special education CAR collections produces the per pupil expenditure amounts for each district in a given fiscal year. Multiple school years (2005-2006 and 2006-2007) were analyzed in order to verify results and ensure findings were not due to variability that could be determined by studying only one year of data. –2– The CAR collection aggregate for the 2005-2006 (fiscal year 2006) and 2006-2007 (fiscal year 2007) school years was first gathered and divided into a special education and general education per pupil amount for each district statewide. Next, the test scores on the Iowa Test of Educational Development for all 11th grade students were separated into two groups: 1) general education and 2) special education students. This was done to examine general education test scores for the average student in a district in the areas of math, reading and science. Iowa has multiple statewide testing periods and each district selects its own date for testing. As a result of multiple testing periods, there are differences in the interpretation of standard scores for each period: fall, midyear and spring. In order to accommodate for the difference in scores and norms, an overall district score was created. An average test result was then computed and converted to a z-score to allow for comparisons across testing periods. This created a district score for 2005-2006 and 2006-2007 for each subject area of math, reading and science for each district. District achievement scores were then used in order to examine the correlation between expenditures and student achievement. A Pearson correlation matrix was utilized in order to analyze this relationship. Results—In 2006-2007, Iowa spent approximately $3.77 billion in education expenditures. The average per pupil expenditure amount was $7,818. During the 2005-2006 school year, about $3.6 billion was spent on education and the average per pupil amount was $7,462. Roughly, 42 percent of Iowa’s state general fund appropriation goes to fund education. This is the largest single allocation in a given budget year suggesting Iowa spends a large portion of its overall budget to fund education for Iowa students. Table 1 shows the range of per pupil expenditures in the 2005-2006 and 2006-2007 school years. This includes general education and special education funding. Table 1—Per Pupil Expenditures 2005-2006 and 2006-2007 Per Pupil Expenditures Minimum Maximum Net Expenditures 2005-2006 $7,462 $5,668 $17,617 $3,591,954,677 2006-2007 $7,818 $6,015 $24,353 $3,771,708,614 Source: Iowa Department of Education, Bureau of Planning, Research, Development and Evaluation Services. Special education expenditures were subtracted from the overall expenditures in order to focus on general education costs. Table 2 provides a breakdown of general education expenditures after special education amounts have been removed. The amount of variability that exists decreases substantially when focusing on general education expenditures alone.