More Than a Spending Debate

Incentives matter more than inputs, according to new paper

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Some readers may have come across the “money matters” debate in K–12 education, where scholars argue over if money, by itself, improves student outcomes. While there is some debate as to that question, there is less disagreement that how money is deployed matters a great deal.

And something that often gets lost in these discussions is that incentives matter, too.

That is what makes Patrick Graff’s new paper worth reading. Graff, Senior Fellow at the American Federation for Children, “compares two approaches in the context of the state of Florida: scaling their private school choice program, which introduces competitive pressure on public schools, versus increasing K-12 education spending directly.” His answer: in this case school choice appears to have been far more cost-effective.

Florida is a sensible place to look. As Graff notes, it has built “the most extensive school choice education system in the country,” growing from a tax-credit scholarship program serving about 15,000 students in school year 2002–03 to a broader choice landscape now serving more than half a million. That makes it one of the best case studies in the country for what happens when choice scales and matures.

Graff’s analysis rests on two major studies. The first is a 2024 paper by Jackson and Mackevicius (JM), a meta-analysis of 31 school-spending studies. That paper reports an average effect of about 0.0079 standard deviations in achievement for each additional $1,000 per pupil per year. That estimate matters because it is cited all over the place by union officials, school finance advocates, legislators, and reporters. To Graff’s credit, he does not brush that literature aside. He takes it as given.

The second anchor is a 2023 paper by Figlio, Hart, and Karbownik (FHK), which examined Florida’s tax-credit scholarship program over its first 15 years. The researchers created a competitive-pressure index based on nearby private school options and found that public school students in above-median competition areas gained 0.166 standard deviations in reading after 15 years, or about 120 days of learning. Notably, they also found lower suspension rates and fewer absences.

Graff then runs a counterfactual cost-effectiveness exercise. He takes the cumulative inflation-adjusted cost of the Florida Tax Credit Scholarship program over that period, about $2.84 billion, and asks what the JM estimate would predict if those same dollars had instead been spent through public school funding. In his preferred comparison, the choice effect comes out 11.2 times larger. He also estimates that producing the same achievement gain through higher spending would have cost about $31.8 billion rather than $2.84 billion.

Now, some caveats. This is not a new causal study built from scratch. It is a synthesis that combines findings from two research literatures. That means the conclusion depends on the strength and comparability of the underlying estimates. And Florida’s exact multiplier should not be treated as a universal constant. Florida has a deep private school sector, a long policy runway, and enough scale for competition to become credible. Other states may not replicate those conditions, at least in near- or mid-term.

Still, Graff makes a fair case that his estimate is conservative. He notes that the analysis excludes equilibrium effects shared across schools, excludes fiscal savings when students switch sectors, and assumes spending effects scale linearly over 15 years even though the evidence for that is thinner. He also notes that Florida’s choice landscape has expanded even more since 2017.

“Taken together, each of these conservative assumptions biases the effectiveness multiplier downward, meaning 11.2x represents a likely floor rather than a ceiling for the true cost-effectiveness advantage of scaling school choice.”

Reasonable people can debate external validity and whether Florida is an unusually favorable case. But Graff has done something valuable here. He has taken one of the strongest versions of the “money matters” argument and put it beside a real, mature, large-scale choice program.

The broader takeaway is that incentives can change the system itself. Florida suggests that when school choice reaches meaningful scale, benefits extend beyond participating families to students who remain in public schools. Those outcomes achieve an impressive ROI that policymakers in other states should take seriously.