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Per-student expenditure figures are not always meaningful

Earlier this month, the National Education Association (NEA) released their annual “Rankings and Estimates” report.  In addition to North Carolina’s surge in average teacher pay, NEA researchers estimated that North Carolina is ranked 43rd in average per-student spending for the current school year.  In conjunction with the release of the report, the NEA’s state affiliate, the North Carolina Association of Educators (NCAE), held a press conference calling on lawmakers to increase per-student spending to the national average.

But are per-student expenditure calculations used in the NEA report and elsewhere accurate, appropriate, or meaningful?  Not always.

The NEA report includes two measures of per-student expenditures in their annual report.  The first is “expenditures per student in average daily attendance” and the second is “expenditures per student in fall enrollment.” North Carolina’s per-student expenditure using average daily attendance figures was $9,501, which is 39th in the nation and higher than pesky rivals Georgia and Florida. North Carolina’s per-student expenditure using fall enrollment figures was $8,940, which is 43rd in the nation and, curiously, lower than Georgia and Florida.  Most media reports only acknowledged the latter.

Why is there a discrepancy between the two?  First, the count of the number of students, which constitute one-half of the per-student calculation, are far from straightforward.  Average daily attendance is the total number of students who reported to school divided by the number of instructional days held during a prescribed period.  Enrollment is the total number of students who have registered during the school year without regard for transfers, withdraws, deaths, or early graduation.

Differences in the way that researchers calculate the number of students lead to significantly different totals. According to the NEA, North Carolina public schools enrolled an estimated 1,457,700 this fall but had only 1,371,588 students in average daily attendance.  In general, enrollment is higher than average daily attendance.  As a result, dividing total expenditures by enrollment almost always produces a lower per-student average.

Obviously, each way of counting students have strengths and weaknesses.  Enrollment is a widely-available and standardized figure, so it is useful for comparing student counts across jurisdictions.  On the other hand, it is not adjusted for transfers, withdraws, deaths, and early graduations.  Average daily attendance accounts for change but may be inaccurate due to the inevitable difficulties of documenting daily attendance, variations in the way states define attendance/absence and count instructional days, and different calculations used to produce the figure.

For these reasons, North Carolina uses a third measure, average daily membership (ADM).  State officials note that average daily membership “is a more accurate count of the number of students in school than enrollment.”  Unfortunately, ADM figures are not as widely used as enrollment or average daily attendance, so the NEA does not even include them in their report.  Not only does North Carolina and the NEA not see eye-to-eye on this issue, but there are also state-by-state disagreements about the best student count to use when calculating how much they spend per student.

Statistical issues aside, average expenditures obscure vast differences in spending across schools, districts, and states.  Indeed, the actual amount of money we spend on a student depends on the school they attend, the services they require, and numerous other factors.  While North Carolina reports that the state spent an average of $8,888 per student on operating expenditures last year, the actual range of expenditures was considerable. Hyde County led the pack with a per-student expenditure of $17,802, while Iredell-Statesville Schools was last with $7,975.  On a per-student basis, state funding for schools in Hyde County was double of what Iredell-Statesville received.  Federal and local funding were also considerably higher.

On that last point, few discussions of per-pupil expenditures acknowledge the role of federal and local funding.  In North Carolina, the state government contributes around two-thirds of the total operating funds for public schools.  While the state government can (but shouldn’t) increase taxes to pay for more spending on K-12 schools, racing up the NEA ranking would also require a big lift from local governments and a change in the way federal funds are distributed to states.

Finally, none of these technical issues speak to whether our current level of spending is sufficient.  As I have written in the past, research suggests that $8,000 per student is the “magic number.”  In a 2015 Comparative Education Review article, Emiliana Vegas and Chelsea Coffin concluded that “when education systems spend above $8,000, the association between student learning and per student spending is no longer statistically significant.”  In a subsequent op-ed published by the Brookings Institution, Vegas, who is the Chief of the Education Division at the Inter-American Development Bank, argued that once the $8,000 spending threshold has been met, how the money is spent is more important than how much is spent.

Regardless of how one calculates the figure, North Carolina exceeds the minimum, and, thus, should focus on using taxpayer money as efficiently and effectively as possible.

Dr. Terry Stoops

Dr. Terry Stoops is Director of Research and Education Studies for the John Locke Foundation.