Tuesday, June 9, 2015

US per Pupil Spending Adjusted for Purchasing Power. A shake up in the rankings!

Dr. Tim Taylor ("The Conversable Economist") has a post regarding "The Variation in US Spending Per Pupil".

The data shown are just the nominal dollar amount a State spends on each student (Total Spending (Local, State and Federal funds) divided by the students served).

Using the US Census Bureaus American Factfinder, I show nominal spending by State for 2013 (latest data) in the chart below. Where a State ranks in terms of spending on each student is shown in the numbers under "Nominal Spending (2013)".

One of my first thoughts when I looked at the figures was not all dollars are the same in terms of purchasing power. The purchasing power of a dollar in New York is not the same as one in Mississippi, for instance.  How would the rankings change if we took this into account?  Glad you asked...

The Bureau of Economic Analysis (BEA) has a handy-dandy spreadsheet that gives us a Price Index for each State. Now we can adjust the purchasing power of each dollar spent into something that allows for a more apt comparison.  You can find it HERE. Click on "Tables Only" on the right.

Using the Price Index for each State, I adjusted the purchasing power of each dollar spent on a student. You will find that under the "Adjusted Using State Price Index" column.

Here is how to read the table.

Gold means the relative position of the State did not change even with the adjustment (although the dollar figures did change).  Green means the State moved UP the rankings. Red means the State moved DOWN in the rankings.  The number in parenthesis is how many spots in the rankings the State moved either up or down.

I found some surprises. Hawaii, California, Washington (State) are States that fell down the list significantly.  Mississippi, Alabama and Arkansas moved up the list in a significant way.

What observations/conclusions, if any, can you come up with looking at this data?  Thanks!

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