There is a problem with your lovely chart.

The expenditure number represents the TOTAL spent for ALL children. The reading score represents the AVERAGE score for EACH child.

Your comparing apples to oranges.

Divide the expenditure by the number of children in the system and then post that alongside the reading scores. Then maybe you might have a good starting point for a discussion.

Not my chart. Belongs to the Department of Education.

"Your [sic] comparing apples to oranges."

Given the context, this statement is RIPE for picking.

(Sorry, I just couldn't help myself.)

Apples to Oranges? You have to explain your analogy here. Just because you are comparing an average score does not make the graph invalid.
If we were to compare the monies spent per child on the average to the average score the graph would be proportional to what you are seeing in the current graph.
Just in the State of CA they are spending 53 billion dollars for education. There are a little over 8,700 schools in the state of CA with a little over 6 million students. Therefore they are spending on the average $8,700/student. Now if you compare this to what they spent in the 70's the spending has increased on the AVERAGE proportional to the graph you are already looking at; however, the reading skills of all students across the state of CA has remained constant.
There is a total disconnect here in the amount of spending on Education VS the benefits our children are seeing. WHY? Because we have too many CHEIFS and NOT ENOUGH INDIANS! What do I mean by this? Well, did you know that a typical Superintendent for a School district has on AVERAGE at least 8 assistants all of which have other assistants/secretary’s. None of which you can ever get in touch with to discuss issues with your local schools, and all of which never have had and never will have anything that is VALUE ADDED to contribute. What is the typical AVERAGE Salary for these folks that are non-value added? Many are making more than 100K, most are in the 60K's, and the average is around 65K. Far more than any of the Teachers who are doing the actual work! If you want to improve education then we need to focus on what is being done in the Class Rooms and not the ADMINISTRATIVE Side. We need the funds available to go towards the teacher’s salaries so we can hire and retain the best and the brightest. We need more of the funds to go towards Class Room Supplies, so Teachers do not have to use their own salary to provide school supplies and can stop asking parents for extra money. Most of all we need to focus on how a child learns and not try to treat each of them as if they are little robots. We all learn differently -- Kinesthetic, Visual, and Auditory; however, the public schools only focus on one approach...Auditory. How many folks do you know can learn how to do anything through just a lecture? Most of us need the Kinesthetic or Auditory or both in order to really learn and understand. Now I ask you how can a teacher really learn to understand a child and how they learn when their class room is being re-organized every other month by the administrative folks because they are need to balance out the number of kids in each class to 20 or they will not get their state funding for their school?
Why is it a private Montessori school can charge $3.7K less per student, still make a profit, provide a far better learning environment, have average class sizes of 12, retain more teachers with higher education degrees, include Spanish - Music - Art - PE as part of the regular curriculum for K-6, have longer class time hours for the students (8am to 3pm for K-6), and have higher reading scores for all grades than the entire nation? Why? Because they run the school like a business and the children are their customers. You don't re-arrange your customers to satisfy your resources. You re-arrange your resources to satisfy your customers. If I ran our company like they run the Public School System, we would have been broke and out of business long, long ago!
No, I think that this graph is a great example of what is going on in our public systems...and I have direct experience to back it up!