Vol. 5, No. 10: March 8, 2000

Last week, the Pacific Research Institute released the California Index of Leading Education Indicators 2000 which lays out the latest data on public education in California, including test results, grade-point averages, dropout and graduation rates, course difficulty, teacher quality, education expenditures, and many other key factors. The recent analysis by the Legislative Analyst’s Office (LAO) of Governor Gray Davis’s proposed 2000–01 budget makes many of the same observations contained in the Index’s section on education spending.

For example, the Index points out that calculating state per-pupil funding by dividing Prop. 98 funding, the sum of state General Fund education dollars and education dollars from local property taxes, by the average daily number of students attending school in the state is misleading. This process neglects to count many education funding sources, such as federal money, school construction dollars, and state lottery funds. The LAO makes a similar point: "Expenditures can be categorized based on whether they are funded from state, local, and/or federal revenues; and clearly per-pupil estimates will vary widely depending on the extent to which these sources are included or excluded."

Counting education funding from all revenue sources, the Index authors conclude that state per-pupil funding in the current 1999–00 fiscal year is $7,937, not the Prop. 98-based figure of $6,025. Confirming the Index’s assertion, the LAO says that with regard to proposed per-pupil funding: "For 2000–01, the Governor proposes Proposition 98 funding of $6,313 per average daily attendance (ADA). A more comprehensive measure of per-pupil spending is total funding from all sources. For the budget year, the Governor proposes total funding from all sources of about $8,200."

More important, spending does not guarantee improved student performance. PRI’s Index, for instance, found per-pupil funding for the Los Angeles Unified School District in 1999–00 to be $9,029, while the Sausalito school district in Northern California will receive $16,555. Both these districts, as well as other highly funded districts, have posted low student test scores. The Index quotes University of Rochester Professor Eric Hanushek, who has reviewed hundreds of academic studies on education spending and student performance, and who concludes that, "there is little systematic relationship between school resources and student performance." Professor Hanushek says that "how money is spent is much more important than how much is spent."

In like fashion, the LAO warns that: "Education spending is an input, not an output. That is, spending is a measurement of what goes into the educational process, not what results from it. …Thus, the state should continue to be concerned more with how its students perform rather than on how state spending compares with other states." The LAO concludes that: "Research and experience suggest that how we spend available resources is at least as important as how much we spend on education."

Before legislators, parents, the media, and the public embrace any of the current proposals to increase per-pupil funding, they would do well to examine the information contained in PRI’s Index and the LAO’s budget analysis. Such examination will prevent a lot of future disappointment. Sound policy must be based on solid information.

–Lance T. Izumi