Just how bad are Oregon’s public schools? And, if they really are that bad, is more spending the only solution?
The Oregonian has dug deep into data on state spending on schools and student performance. The Oregonian researchers conclude that the state’s schools produce results that rank in the bottom third nationally, partly because Oregon lags far behind the national average in classroom spending.
In an act of total classiness, the Oregonian researchers have made their data easily available as an Excel file for anyone to use.
We at Econ Minute took way more than a minute to dig into the Oregonian’s analysis. We found some things that may radically change what you thought you knew about school spending and performance in Oregon. (And we don’t even talk about PERS.) All the graphs are available for download as PDF.
- Oregon’s spending on education is dampened by the state’s relatively low income;
- Oregon’s performance on reading and math are close to what would be expected for the state’s level of spending;
- Oregon’s failure to graduate students out of high school is a big mystery to just about everyone; and
- More spending provides little bang for the buck—huge increases in spending are associated with relatively modest improvements in performance.
First things first … State rankings can be misleading for two reasons:
- State rankings do not account for size differences among states. With state rankings, a small state like Delaware is given the same weight as a huge state like California. Oregon may be ranked toward the bottom of states in spending per student, but with respect to the number of students enrolled, Oregon is right in the middle.
- Rankings tend to distort small differences between states. For example, Washington spends $345 more per student than Georgia—a difference of only 3.5 percent—but Washington is ranked 7 places higher than Georgia in state spending per student. The difference in spending between Oregon and Washington is tiny, but Washington is ranked four places higher than Oregon.
Let’s adjust this …
The first thing that pops out of the Oregonian’s analysis is that per-student spending is “adjusted” for differences in cost of living across states. The concept of a state level cost of living is a bit odd. Even areas within the Portland metropolitan area have widely different cost of living indexes. The adjustment for state cost of living seems a bit bogus, but that’s a fight for another day. So let’s see what the data say …
The figure below shows the relationship between the state cost of living index and spending per student. There’s a pretty clear trend: A higher cost of living is associated with greater spending per student. Three observations:
- The trend line has a pretty good fit with the data. The R-squared of 0.63 says that variations in cost of living index explain 63 percent of the variation in spending per student. Enjoy that 0.63, you won’t see it again …
- The trend line suggests an elasticity of a little more than 2. In other words, a 10 percent higher cost of living is associated with 20 percent more spending per student, if cost of living was the sole determinant of spending per student. (Note to self: Put this on the econometrics exam on potential specification error.)
- Oregon (the red square) is below the trend line. In other words, Oregon spends less than expected if cost of living was the sole determinant of spending per student. That’s what the Oregonian researchers concluded also.
Oregon is a funny state. Oregon has a higher cost of living: 6.4 percent higher than the U.S. as a whole. But, we also have lower per capita personal income: 11.2 percent lower than the U.S. average.
The figure below shows that Oregon’s cost of living is substantially greater than other states with similar incomes. If per capita personal income was the sole determinant of cost of living, Oregon’s cost of living would be 10 percent lower. More generally, Oregonians earn less and pay more.
On the one hand, Oregon’s higher cost of living would point to more spending per student. But, Oregon’s lower income would point to less spending per student, because the money simply isn’t there. For people who like big words, countervailing factors is the word.
The figure below shows the relationship between state per capita personal income and spending per student. There’s a pretty clear trend: Lower income are associated with less spending per student and higher incomes are associated with more spending. Three observations:
- As with cost of living, the trend line has a pretty good fit with the data. The R-squared of 0.54 says that variations in per capita personal income explain 54 percent of the variation in spending per student.
- The trendline suggests an elasticity of a 1.5 to 1.7. In other words, a 10 percent more in per capita personal income is associated with 15-17 percent more spending per student.
- Oregon (the red square) is right on the trendline. In other words, Oregon spends exactly what would be expected if per capita personal income was the sole determinant of spending per student.
Bottom line: Oregon’s ability to spend on education is limited by its relatively weak incomes.
We said that that fight over cost of living adjustments is a fight for another day. Today’s not that day, so let’s dig into the data using the cost of living adjusted spending that the Oregonian researchers used.
The figure below shows that there is virtually no relationship between current expenditures per student and graduation rates.
Remember when we said to enjoy that R-squared of 0.63. Yeah. Those days are gone. The R-squared on the trend line for the spending-graduation relationship is 0.03. You’d do better trying to throw a dart at the chart.
Even so, Oregon is distinctively bad. That big red box sticks out like a big sore thumb.
Here’s some trivia: The Oregonian data reports that Oregon’s current graduation rate is 72 percent (along with Georgia), or 9 points lower than the U.S. graduation rate of 81 percent. In 1986, Oregon’s graduation rate was 74.1 percent, slightly higher than the U.S. rate of 71.5 percent. Over time, while the national graduation rate improved, Oregon’s rate got worse. Go figure.
The figures below show that there is a slight positive relationship between current expenditures per student and math performance, measured by percent of students who are “proficient” and eighth grade math test scores.
Check out Oregon’s big red box. For both fourth grade and eighth grade, Oregon is right on the trendline. In other words, Oregon is performing almost exactly as expected in math for the state’s level of spending per student.
Also, check out how flat those trendlines are. That means that even huge increases in spending are associated with relatively modest increases in math performance. There’s just not that much bang for the buck on math.
The figures below shows that there’s virtually no relationship between current expenditures per student and fourth grade reading “proficiency,” but a small positive relationship with respect to eighth grade reading test scores.
Check out Oregon’s big red box. In fourth grade, Oregon is performing as expected (or ever-so-slightly better) given the state’s level of spending per student. Eighth grade test scores are noticeably higher than expected.
The scaling in the charts distort how flat the trendlines are. As with math, even huge increases in spending are associated with relatively modest increases in reading performance. Again, there’s just not that much bang for the buck.
The Oregonian researchers have a measure that combines graduation rates, math, and reading into a single number. Then, they calculate that score in to a percent over or under the U.S. average. It’s very clunky and mostly bogus, but that won’t stop us from using it.
The figure below plots relationship between this measure and spending per student as a share of the U.S. average spending per student.
In a perfect would, one would expect a 1-to-1 relationship: Bigger spending, better performance. That is, one could argue a state that spends 20 percent more than the U.S. average should perform 20 percent better than the U.S. average on the combined performance measure.
Not so. The figure shows that the there really is no significant variation. Part of this because of the the way the measure is calculated.
One note on Oregon: The state seems to be dragged down on this measure by its abysmal graduate rate.
We have also run these graphs using spending as a share of state personal income. The qualitative results are roughly the same. All the graphs are available for download as PDF.