Document Type

Capstone Project

Publication Date

9-2017

Keywords

Economics, Stevenson Center, Education, Education Funding, Microeconomics, Illinois

Abstract

Literature on the subject of school resources and student outcomes tends to find that there is a positive relationship between both variables. Most literature uses per-pupil spending (PPS) or teacher salaries as a measure of school resources. While I have modeled both in my paper, my focus in this paper is on per-pupil spending. Using data from the Illinois State Board of Education from 2006-2016 and measuring student outcomes through average ACT scores, operational PPS is found to be insignificant, whereas instructional PPS is found to be positive and significant at the 5% level. Estimates suggest that a 1 standard deviation increase in instructional PPS leads to a 0.043 standard deviation increase in ACT scores. Teacher salary, another indicator of school resources, is positive and significant at the 5% level, where estimates indicate that a 1 standard deviation increase in this important variable is associated with a 0.05 standard deviation increase in ACT scores. Though both of these indicators are associated with fairly modest increases in ACT scores, my estimates are consistent with most findings in the relevant literature, i.e. there is a positive relationship between student outcomes and school resources. These results carry important information that policymakers should have to better allocate resources in their quest to increase school quality. I argue that both access to instructional funding and monitoring school efficiency in utilizing funds are key to improvements in school quality.

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