One of the main issues to be tackled this legislative session is education funding. Gov. Gregoire’s 2013-15 budget proposal calls for a “$1 billion down payment on the $3.4 billion in new K-12 spending the state has committed to over the next six years.” Additionally, the budget proposal would reduce K-2 class sizes in high poverty schools to 20 students. For the biennium, this would cost $169.3 million. Would the outcomes justify the expense?

Back in October the Washington State Institute for Public Policy (WSIPP) looked at studies on education spending and student outcomes and found that

on average, there is a positive relationship between K-12 per-pupil expenditures and student outcomes. Second, the effect appears to be stronger in lower school grades than in upper grades.

But, the annual magnitude of the relationship is small:

A 10 percent increase in per-pupil spending, the paper estimates, “would produce a long-term 3.7% improvement in graduation rates.”

This month, WSIPP looked at a number of studies on the effect of class size reductions on student outcomes. (That is, standardized test scores, high school graduation rates and dropout rates.)

First, the weight of the evidence suggests that, on average, class size is related to student outcomes — smaller class sizes improve outcomes, although the overall effect appears to be small. Second, the positive effect of lowering class size is much stronger in lower school grades and weaker in the upper grades. [Emphasis added]

WSIPP also estimates that reducing class size by one student per kindergarten class would cost $198 per student. Average benefits per student of the reduction are estimated to be $2,302. (The benefits are “the present-valued life-cycle gains in improved labor market performance and overall economic growth, reduced criminality, and lowered health care costs” that come from better academic performance.)

At the other end of the spectrum, reducing class size by one student per 10th grade class would cost $160 per student and the average benefits per student would total $301.

The report notes that

in the earliest K-12 grades reducing class size has a high probability of producing a favorable outcome — that is, where the long-term benefits of reducing class size consistently exceed the costs. In the upper grades, on the other hand, reducing class size poses a substantial risk of an unfavorable outcome — that is, where costs may often exceed benefits.

For another take, see Matt Rosenberg’s post here.