Whose money matters in public education: A “public” good that parents purchase

Abstract

Instead of asking whether money matters, this paper questions whose money matters in public education. Previous literature on education funding uses an aggregate expenditure per pupil to measure the relationship between education funding and academic performance. Federalism creates mainly three levels of funding sources: federal, state, and local governments. Examining New York State school districts, most equitably funded across school districts among the 50 states, this paper shows that neither federal nor state funds are positively correlated with graduation rates. Only local revenues for school districts indicate a strong positive impact. Parents’ money matters. This finding contributes to a contentious discourse on education funding policy in the governments, courts, and academia with respect to education funding and inequality in American public schools.