More Money, Same Problems: Why Education Funding Needs a Rethink

More Funding does NOT mean results. Minnesota spends $16.9K per student but ranks #26 in 4th-grade reading. FL spends $11K, ranks #3. 13 states spend less & outperform MN. Lesson: It’s not about spending more — it’s about spending smarter.

Somewhere along the way, we started believing that spending more on education automatically meant better outcomes for students. Let’s be clear from the start— we are not talking about investments in infrastructure, buildings, or student-facing staff like teachers and counselors. Those are essential and deserve thoughtful funding. What I’m talking about is the broader assumption that bigger budgets in general lead to better student performance.

Take Minnesota, for example. The state spends a hefty $16,900 per student annually—making K-12 education its largest general fund expenditure. Yet, despite the rising costs (31% more per student since 2002 when adjusted for inflation), Minnesota’s student outcomes have been on a steady decline. Fourth-grade reading scores? Tied at a dismal #26 nationally. Math proficiency? Also slipping.

This isn’t a knock on the hardworking teachers and students in Minnesota. The problem lies in how the money is being used—and whether it’s driving actual improvements in learning.

Florida: Doing More With Less

Contrast this with Florida, a state that spends just $11,000 per student—significantly less than Minnesota—and yet ranks #3 in the nation for fourth-grade reading. How does Florida pull this off? It’s not magic; it’s strategy:

1. Early Literacy Focus: Ensuring all students can read by third grade.

2. Progress Monitoring: Using assessments to track growth without high-stakes pressure.

3. School Choice: Building a robust system of options for parents and fostering competition among schools.

Florida proves that it’s not about how much you spend but how wisely you spend it.

The Broader Picture

Minnesota isn’t alone in its struggles. Across the U.S., education spending varies widely, but outcomes don’t always follow the money. Thirteen states—including Utah, South Dakota, and Mississippi—spend less per student than Minnesota and still outperform it in fourth-grade reading. Even Ohio, with nearly identical spending, gets better results.

Meanwhile, there are states like Massachusetts and Wyoming that spend more than Minnesota ($21,200 and $22,200 per student, respectively) but also lead the nation in student performance. The lesson? Money matters, but only if it’s directed toward impactful policies and practices.

Smart Spending Over Big Spending

As education economist Eric Hanushek has long argued, it’s not about the size of the budget but about what you do with it. Building fancy new administrative structures or piling on additional layers of bureaucracy won’t move the needle for students. What will? Strategies that are proven to work—like early literacy initiatives, teacher training, and providing real choice for families.

Source: American Enterprise Institute; Authors’ calculations from National Assessment of Educational Progress, Data Service API, www.nationsreportcard.gov; US Bureau of Economic Analysis, Regional Price Parities by State and
Metro Area, https://www.bea.gov/data/prices-inflation/regional-price-parities-state-and-metroarea; and US Department of Education, National Center for Education Statistics, Common Core of Data, https://www.nces.ed.gov/ccd/files.asp#Fiscal:1,LevelId:2,SchoolYearId:36,Page:1.

What Can Minnesota Learn?

Minnesota has a chance to turn things around by asking some tough but necessary questions:

- Are we funding the programs that directly impact student learning?

- Are we prioritizing early education and literacy initiatives?

- Are we empowering schools, teachers, and families to innovate?

The answer isn’t necessarily cutting spending, but spending smarter. By focusing on policies that deliver real results—like Florida’s early literacy push and robust school choice—Minnesota can ensure that every dollar is working as hard as possible for its students.

Because at the end of the day, it’s not about how much you spend—it’s about what you achieve.

What do you think—does Minnesota need a financial rethink or a policy overhaul?

This article is a synthesized summary based on an American Experiment Article from October 2024