School District Expenditures and Student Achievement

Many studies argue that adding more money to schools has little effect on student achievement. However, there is a growing belief that the allocation of the funds in school districts matters. To test the importance of allocating extra funds to specific spending categories, I use a fractional logit model to estimate the proportions of students who pass the English and Mathematics MCAS exams in Massachusetts school districts. I first use a one-year lag of total in-district expenditures per-pupil as the variable of interest, then I break down the total into lagged teacher and non-teacher expenditures per-pupil. The results of my estimations show no evidence of an effect of total in-district expenditures per-pupil on the passing rate for the English and Mathematics MCAS exams. However, there is a positive and significant effect of teacher expenditures per-pupil on the passing rate of the 10th grade Mathematics MCAS exam. I also use a multinomial fractional logit model to compare three outcomes (passing, needing improvement, and failing) rather than just two and find similar results. By understanding how each expenditure category affects student test scores, school district administrators can increase the benefits from their budgetary allocations