T here has been a long-standing debate regarding whether increasing the financial resources available to public schools can improve child outcomes in general and low-income children's outcomes in particular. Shedding light on this issue, in 1966, James Coleman and coauthors conducted the first large-scale U.S. study to link student achievement outcomes to family background and school characteristics. The report used data from a cross section of students in 1965 and examined the cross-sectional relationship (i.e., at a given point in time) between school spending, family background, and test scores. The report concluded that "it is known that socioeconomic factors bear a strong relation to academic achievement. When these factors are statistically controlled, however, it appears that differences between schools account for only a small fraction of differences in pupil achievement" (Coleman et al., 1966, pp. 21-22). Since Coleman et al. (1966), many social scientists have estimated the relationship between school spending and student outcomes in order to better ascertain whether increased financial resources for public schools improve child outcomes.
THE OLD LITERATUREPrior to 1995, all U.S.-based studies relating student outcomes to measures of per-pupil spending were observational (i.e., correlational) in nature. These studies either (a) estimated the relationship between school spending and