The Impact of Non-instructional Spending on Overall Educational Performance: An Analysis of the Maryland State Education System.

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Christina Gossweiler Abstract The most recent Trends in International Mathematics and Science study (TIMSS) confirms alterations to U.S. education policies have resulted in gradual improvements in both mathematics and science test scores. Unfortunately, no matter how revolutionary education policy changes may seem, the U.S. continues to trail behind industrialized Asian countries in overall educational performance. Though steady progress is recognized and commended, reasons for the discrepancy between the accelerated educational performance of industrialized Asian nations, and the more gradual increase among U.S. test scores, remains unknown. Emphasis has been put on the reformation of several educational inputs in order to achieve a higher performance standard. In this analysis we examine the impact of non-instructional spending on overall educational performance.

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Section I: Introduction Economic expansion depends on a societys ability to produce and compete in a global market. Students entering the workforce with the intention to contribute a skill or service must be equipped to contend with exceeding competitors from other industrialized nations. The foundation for success begins with the solidity and strength of the K-12 education system. Without a solid foundation in the K-12 years, students entering the workforce out of high school or going on to pursue higher education find themselves struggling to compete with international contenders. What's more, according to the US Senate Committee on Health Education, Labor, and Pensions, nearly half of all college students must take remedial courses after graduating from high school before they can take college level coursework. This lack of preparation means that our college students spend more time and money in tuition just to catch up... (Orfield). The consequences that result from a weak K-12 education system affect not only the individual success of the student but also the overall educational standing of the country as well as its ability to expand economically. It is universally known and accepted that the attainment of higher education is positively correlated with monetary success. Since the early 1980s, the structure of wages has reflected that a pursuit of higher education will yield a substantially higher wage differential for those in the labor force (Bound and Johnson). As a result, over the past few decades improving and perfecting education systems and policies has been a global pursuit. Industrialized nations have spent immeasurable amounts on the construction of educational policies in an attempt to achieve the most efficient and effective systems worldwide. As one of the most industrialized nations in

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the world, it is not surprising that the United States is no stranger to the competition. With an increase in educational pursuit comes an increase in spending. Technological advancements and the availability of resources have given way to the twentieth/twenty-firstCentury spending tendencies. From 1890-1990, real expenditure per student has increased annually at a real rate of 3.5%. The breakdown shows student enrollment, student-teacher ratio, price of instructional staff, and non-instructional spending can account for the majority of this increase. Remarkably, much of this growth has persisted under the radar until very recently (Hanushek and Rivkin). With competing industrialized nations maintaining a growing academic performance rate far superior to that of the United States, policymakers have started asking questions. Education policy is a frequently debated topic constantly undergoing scrutiny and reform. Unfortunately, though several seemingly effective policies have been put into place, the return on educational attainment is still not at an optimal level. One such possibility for this disconnect has to do with the amount of non-instructional spending in United States schools systems. The United States is one of the only countries in the world where extracurricular activities and academics go hand in hand. Nowadays, students passed off as mediocre academically can instead focus their attention and plan their future around sports or other noninstructional activities provided via the school system. Though these activities may be beneficial to cognitive growth and social development, they could potentially have their drawbacks on academic progress. For the second year in a row, the Maryland State Department of Education has received recognition for the performance of their students on Advancement Placements exams as well as

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the percentage of academically demanding high schools in the state. The chart below shows Maryland spending for the year 2008:

The distribution of spending above shows the above average level at which the Maryland school system focuses its revenue. The stability and historical success of the Maryland State Department of Education makes it a worthy data candidate for an overall analysis of the impact of non-instructional spending on test test scores (MSDE). Section II: Literature Review Pinpointing an area of focus for educational improvement has been a controversial topic of discussion on the U.S. agenda for decades. Modern efforts to reform education focus on breakdowns of the system into different sectors. As is true with any economic situation, we want to exhaust our resources while simultaneously achieving maximum efficiency. Unfortunately,

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determining what areas of the education system need modification is no easy feat; education reform is merely a balancing act with a glut of variables to control for. As a starting point, we recognize that the education system can be broken down into different focal points including: costs, standards, teacher qualifications, teaching styles, student-teacher ratios, appropriate levels of progress, benefit of inputs, and so on. Historically, educational policies show emphasis has been placed not specifically on one of these concentrations, but instead on each individually. The United States is failing to educate at an optimal level. There is not a significant difference between the availability and access to resources, yet international score comparisons show the U.S. is recurrently trailing competing industrialized nations and the reasons for these shortcomings are unknown. Scholars agree that building a strong educational foundation is necessary for the continued growth and success of any industrialized nation so it is understood why education is of critical concern. What is not understood, however, is the most efficient way to go about generating that desired insuperable system in the U.S. Be sure not to insinuate from these talks of shortcomings that educational reform has made no impact. As mentioned before, the Trends in International Mathematics and Science study (TIMSS) confirms the United States has made progress in recent years and is maintaining comparably high scores across the board. Attention should instead be diverted to the focus, that is, to determine what actions cause educational progress to increase at a speedier rate. Asian industrialized nations in particular prove to be excelling at an ever-increasing rate. Since 2003 when the last TIMSS was released, the United States government has passed several reforms intended to improve the quality of education in hopes that scores will surpass current leading nations. One such idea suggests student performance is most effectively enhanced by the implementation of input policies. Input policies are focused around the manipulation of input

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variables, for example, income, class size, and teacher credentials. Unfortunately, research suggests not only have these reforms produced few results but also, in some cases, have actually hindered progress. Experts recognize a correlation between such variables and test scores, but often these variables are either hard to manipulate or the impacts of manipulating these variables do not yield the drastic results for which we are searching (Ramirez). A less investigated possibility is the change of incentives, or, promotion of policies that alter incentives within the system as opposed to manipulating input variables. This idea suggests that focusing on the quantity of education taught in school systems is more vital than the quality of the school systems; improved quality being the intent of input policies. Research in support of quantity of education is less abundant because it is a relatively new idea; however, the research done thus far has shown fascinating results. Section III: Data Using various statistical methods accompanied by an econometric model specified to accommodate panel data, I have obtained data with the ability to explicate the impact of noninstructional spending on test scores. Statistical data for this analysis was collected from several different databases including the National Center for Statistics-Common Core of Data and the Maryland State Department of Education. A balanced panel of the 23 Maryland districts from 2005-2010 was constructed and used in the choice regression model. The following independent variables have been incorporated into the data analysis: total student population from PK-12, number of American Indian, Alaskan Native, Asian Pacific Islander, African American, Hispanic and Caucasian students, percentage of English language learners, total general revenue, total instructional expenditures, total non-instructional expenditures, pupil-teacher ratio, and wealth per pupil. The use of these variables may vary for two key reasons: (1) If not all years are

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accounted for in each district they will automatically fall out of the regression, (2) Certain variables may be omitted to measure the extent of the impacts on the dependent variable of others. Independent variables are subject to change throughout manipulation of the regression model. The dependent variable used in this experiment is a standardized test specific to the Maryland State Department of Education, the Maryland School Assessment, and data for this test is taken from each of the 23 Maryland districts for students in the 5th grade. It is important to note that, because the majority of other states administer assessments very similar to that of Maryland, our results can be considered substantive and unbiased. To test the impact of noninstructional spending on test scores, I used the results of this standardized test because its completion is required by all students at the elementary and middle levels. Using this specific test controls for another bias that may result from sampling a non-random population; for example, the impact would be different for SAT scores because not all students are required to take them. Again, the dependent variable is the Maryland School Assessment (MSA). The MSA is broken down into subject categories but for the purpose of my experiment I have pulled test scores from the mathematics portion. Furthermore, as mentioned before, the test score results are only from students in grade 5. Upon completion of the MSA, students are scored and then placed into a proficiency category based on their performance. The three categories include: basic, proficient, and advanced. For my regression, I will examine the impacts of the independent variables on these proficiency levels separately. For example, I will run a regression specific to the students that fell within the basic level to see how much greater or smaller the impact of variables is in comparison to the other levels. The table below was taken from the Maryland State Department of Education and provides a visual layout of how scores are

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dispersed; this table shows the results of students in the Frederick district for the year 2010 (MSDE).

Because of the use of panel data in this analysis, a regression that can evaluate multiple cases (districts) over multiple time periods (years) is needed. Furthermore, it is recognized that we need to control for omitted variables that differ between cases but are not constant over time (Princeton). By definition this means we need to use a fixed effects regression model. This essentially means that I will control for any bias or impact that could potentially result from any time period or district in my examination. Representing district i at time t, I created the following regression:
K = + + X h k it it it k =1

As stated before, I ran the regression three times for each level of proficiency. Once the independent variables had been controlled for, and the regressions completed, I could interpret the results.

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Section IV: Results and Data Analysis Table I Summary Statistics Variable MSAADV-Students that achieved scores in the advanced range of testing (dependent variable) TOTSTUD-Total number of PK-12 students NONINSTRUC-Percentage spent on Noninstructional inputs PTR-Pupil-teacher ratio PER_BLK-Percentage of students that are African American PER_HISPANIC- Percentage of students that are Hispanic PER_OTHER-Percentage of students that fall into other race categories Coefficient --Standard Error --T-statistic ---

(-.001) (-.702) (-2.073) (25.002) (242.131) (640.659)

(.001) (-.328) (.777) (45.190) (87.854) (196.727)

(-1.59) (-2.14) (-2.67) (0.55) (2.76) (3.26)

Table I shows the results after the following regression was run using STATA: xtreg msaadv totstud noninstructional ptr per_blk per_hispanic per_other, fe i(distid) For this first regression, the effects of the following independent variables are measured: total students, non-instructional spending, pupil-teacher ratio, and percentage of African American, Hispanic, and all other students. This particular regression measures the impact of the stated independent variables on the dependent variable, advanced MSA scores. This regression

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yields several significant results. The first variable, totstud, or total number of students, shows that a 1 student increase yields a -.0012145 decrease in student test scores. Likewise, with every one pupil increase in student teacher ratio, test scores decrease by -2.073. On the reverse, the regression shows with every 1 percentage point increase in the percentage of Hispanic or students classified as other, test scores increase by 25.002, 242.131, and 640.659 respectfully. Most importantly, however, we see that with every 10 million dollar increase in non-instructional spending, test scores decrease by -.702. This is consistent with my hypothesis that noninstructional spending is negatively correlated with test scores. The results of the second regression are shown in Table II below: Variable MSAPROF-Students that achieved scores in the proficient range of testing (dependent variable) TOTSTUD-Total number of PK-12 students NONINSTRUC-Percentage spent on Noninstructional inputs PTR-Pupil-teacher ratio PER_BLK-Percentage of students that are African American PER_HISPANIC- Percentage of students that are Hispanic PER_OTHER-Percentage of students that fall into other race categories Coefficient --Standard Error --T-statistic ---

(-.004) (.154) (-1.231) (29.291) (81.961) (-485.289)

(.001) (.292) (.693) (40.319) (78.386) (175.524)

(-0.55) (0.53) (-1.78) (0.73) (1.05) (-2.76)

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The second regression is much like the first aside from a change in the dependent variable. For this regression the dependent variable is now the percentage of students that fall into the proficient MSA score category. The results of this regression are much like those of the first, but the impacts are a little less significant and there is one minor change. Total students and pupil-teacher ratio are still negatively correlated with test scores, and the percentage of African American and Hispanic students is still positively correlated with test scores, but this time the percentage of all other students is negatively correlated. Every 1 percentage point increase in other students impacts proficient test scores by -485.2896. In addition, the impact of non-instructional spending is opposite. Every 1 percentage point increase in non-instructional spending actually increases test scores by .154. Though this result does not necessarily support my hypothesis, a change in the mid-level testing category is not as significant to my proposed hypothesis as a change in the basic or advanced levels would be. It is important to keep in mind the increase in mid-level proficiency could be considered an increase as a result of the decrease in advanced scores. The third regression was entered into STATA using the following code: xtreg msabas totstud noninstructional ptr per_blk per_hispanic per_other, fe i(distid) The results are shown in Table III below: Variable MSABAS-Students that achieved scores in the advanced range of testing (dependent variable) TOTSTUD-Total number of PK-12 Coefficient --Standard Error --T-statistic ---

(.002)

(.001)

(2.22)

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students NONINSTRUC-Percentage spent on Noninstructional inputs PTR-Pupil-teacher ratio PER_BLK-Percentage of students that are African American PER_HISPANIC- Percentage of students that are Hispanic PER_OTHER-Percentage of students that fall into other race categories (.551) (3.308) (-53.354) (-323.636) (-157.147) (.309) (.732) (42.581) (82.782) (185.367) (1.79) (4.52) (-1.25) (-3.91) (-0.85)

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The results of the third regression are dissimilar to both the first and second regressions. The results of this regression show that a 10 million dollar increase in non-instructional spending and a 1 percentage point increase in both total student population and pupil-teacher ratio are positively correlated with test scores by .551, .002, and 3.308 respectively. These results are actually consistent with my hypothesis. Basic proficiency is the lowest level of proficiency. Therefore, assuming a 1 percentage point increase in non-instructional spending increases test scores in this category by .551, we are saying non-instructional spending increases the amount of students that score and place into the lowest category of achievement. Section V: Conclusion

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An assessment of the data confirms the initial hypothesis as well as fascinating information concerning student teacher ratios. We conclude from the data that student teacher ratio is negatively correlated with test scores; the greater the student-teacher ratio, the lower the test scores become. More importantly, in defense of our hypothesis we conclude from an analysis of the data that non-instructional spending decreases educational performance. The percentage of students performing at the advanced level decreases as the amount spent on noninstructional spending increases; ergo, more students fall into the basic and proficient levels. The more students that fall into the basic and proficient levels, the less of a worthy competitor we become to other industrialized nations. The less intelligent we are as a nation, the less advancement we see in technology and the farther we fall behind both academically and economically. As previously mentioned, economic expansion depends on a societys ability to produce and compete in a global market. A countrys ability to compete begins with the education system; a population of intellectually below average individuals is not likely to yield pleasing results .

Education reform is by no means an easy challenge to conquer. The amount of time it would take to refocus attention and spending on academic instructional spending, alone, is unforeseeable. However, with the data evidence available, hopefully academics will start paying more attention to the impacts of non-instructional spending on test scores. Data analyses such as this are the first step to not only changing the way education systems are set up, but also changing the direction of reform. A progressive change in the way we approach reform is perhaps the most efficient way to achieve our desired level of educational standing; unfortunately, until that mindset is achieved, we can expect to see more disappointing results.

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Works Cited

Bound, John, and George Johnson. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations." American Economic Association. The American Economic Journal, June 1992. Web. 27 Nov. 2010. <http://www.jstor.org/pss/2117311>. Hanushek, Eric A., and Steven G. Rivkin. "Understanding the 20th Century Growth in U.S. School Spending." The Journal of Human Resources. University of Wisconsin Press, 1997. Web. 27 Nov. 2010. <http://ideas.repec.org/p/nbr/nberwo/5547.html>. Hanushek, Eric A. "The Failure of Input-based Schooling Policies*." The Economic Journal 113.485 (2003): F64-98. Print. Maryland State Department of Education. Web. 27 Nov. 2010. <http://www.marylandpublicschools.org/msde>. Orfield, Craig. "US Senate Committee on Health, Education, Labor, & Pensions: Hearings Hearing." US Senate Committee on Health, Education, Labor, & Pensions: Home. Committee on Health, Education, Labor and Pensions, 9 Mar. 2010. Web. 27 Nov. 2010. <http://help.senate.gov/hearings/hearing/?id=201fe113-5056-9502-5d36207b90e58b96>.

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Ramirez, Eddy. "Study: U.S. Trails Asian Countries in Math and Science - On Education (usnews.com)." US News & World Report | News & Rankings | Best Colleges, Best Hospitals, and More. Web. 27 Nov. 2010. <http://www.usnews.com/blogs/oneducation/2008/12/09/study-us-trails-asian-countries-in-math-and-science.html>.