Does the United States Spend Enough on Public Schools?

In a fascinating new paper, Harvard, Duke, and University of South Florida economists and researchers pose the question: is spending so little (relative to similar economies) on teacher salaries optimal? A deep review of all known causal studies suggests that school spending has a direct impact on improving student outcomes (Jackson& Mackevicius, 2021), four years of increased, consecutive school spending will improve test scores over 90 percent of the time.

However, the importance of this issue is that there is a large political divide between folks who know about the current level of school spending and teacher salaries in their state.

 “Among survey respondents who are informed about the level of school spending and teacher salaries in their state, the partisan gap is 31 percentage points: 62% of Democrats versus 31% of Republicans believe that school spending should be increased (Houston et al., 2022). Likewise, while 70% of informed Democrats believe that teacher salaries should be increased, only 46% of informed Republicans share that view (Houston et al., 2022).”

In an era where the federal and Florida governments have demanded a level of efficiency and accountability previously unheard of, the question can only be answered objectively by figuring out a way of measuring and aggregating the costs and benefits of school spending.

The paper links school spending, local taxes, and housing prices. It argues that if school spending were truly efficient, house prices wouldn’t change because the benefits of better schools would be exactly balanced by the higher taxes needed to fund them. If house prices go up, it means school spending was too low to begin with.

Incredibly, they found that school spending in the U.S. is inefficiently low. The research shows that increasing school funding raises house prices, while higher local taxes push them down. On balance, a 1% tax-funded increase in school spending leads to a 0.33% rise in house prices, indicating that the benefits of additional investment in education outweigh the costs. This points to a clear demand for greater school funding, as communities appear to value improved public education.

Beyond property values, increased school spending can bring broad benefits to the community. Well-funded schools can attract and retain high-quality teachers, improve student outcomes, and create a stronger local workforce. Better schools also contribute to lower crime rates, higher civic engagement, and greater economic mobility for students. By investing in education, communities not only enhance home values but also create long-term social and economic benefits for residents. 

Cited

Bayer, P. J., Blair, P. Q., & Whaley, K. (2025). Does the United States spend enough on public schools? (No. 2025-01).

Jackson, C. K., & Mackevicius, C. (2021). The distribution of school spending impacts (No. w28517). National Bureau of Economic Research.