The correct option is
B by hiring more teachers and increasing funding for textbooks and other supplies, others insist that doing so
The original sentence contains several errors. First, the phrases "hiring more teachers” and "an increase in the amount of funding for books” should be, but are not, parallel. They should be parallel because both phrases play the same role in this sentence: we are told that scores can be raised by "hiring more teachers” and by "an increase in the amount...”. The phrases are not parallel because "hiring more teachers” is a participial phrase, whereas "an increase...” is a noun phrase. Second, "doing this" is incorrect. A verb phrase cannot be replaced by a pronoun such as "this" or "it". Instead, it must be replaced by "so". For example, "I enjoy swimming at night, but doing so is dangerous" is preferable to "I enjoy swimming at night, but doing it is dangerous." Finally, the "amount of funding" is somewhat wordy and could be replaced by the more concise "funding."
(A) This choice is incorrect as it repeats the original sentence.
(B) CORRECT. It contains two parallel participial phrases, "hiring more teachers" and "increasing funding for textbooks and other supplies." Additionally "doing so" correctly replaces "doing this" and the concise "funding" is used in place of "amount of funding".
(C) The phrase "a hiring of more teachers” contains a word with an -ing ending, so it might seem as if "a hiring of more teachers” is a participial phrase like "increasing the amount of funding”. However, appearances are deceptive in this case. Notice that the word "hiring” is preceded by the article "a.” This article is a signal that the word "hiring” is being used as a noun, just as "hanging” is a noun in the sentence "I witnessed a hanging this morning.” So this answer choice fails to create parallelism: the noun phrase "a hiring of more teachers” is not parallel to the participial phrase "increasing the amount of funding for textbooks and other supplies.” Another problem with this answer choice is that "amount of funding” is wordy compared to "funding.”
(D) This choice incorrectly uses "doing this" instead of "doing so" to refer back to the participial phrase "hiring . . ." Additionally, "amount of funding" is wordy.