Federal Spending on Education to Double, and Do Little Good

Part of the “stimulus” (read: earmark-ridden, pork-barrel) package making its way through Washington D.C. these days involves federal aid to education. Lisa Snell, of the Reason Foundation, takes a look at the money and finds little good.

• The stimulus package will spend more than double the current total federal education budget, bringing federal funding of education to well over $200 billion.
• According to the OECD’s 2008 Education at a Glance, the United States [already] ranks number one in all education spending and well above the Organisation for Economic Co-operation and Development (OECD) average for K-12 education. Yet, outcomes for students at the end of their public education career have not kept pace with these large-scale investments.
• School districts have also continued to hire more teachers as enrollments have declined. The National Center for Education Statistics puts the current average teacher-student ratio at 1 to 15. There is little evidence that class-size is correlated with student outcomes, yet districts continue to favor small class size as school reform. This stimulus plan would also prolong the practice of generous defined-benefit retirement plans, which guarantee teachers specific retirement payments despite school districts ever-increasing unfunded pension liabilities.
• These stimulus plans contain no incentives for schools to cut costs or reform the school construction bureaucracy by using innovative practices such as public-private partnerships to more efficiently build new schools.
• The House stimulus package contains $1 billion for technology programs and $6 billion to bring broadband access to underserved communities that may include schools. …. [But] [t]he 2007 report “Internet Access in U.S. Public Schools and Classrooms: 1994-2005″ that in the fall of 2005 nearly 100 percent of public schools in the United States had access to the Internet.
• It’s also important to note that 70 percent of 4-year-olds are already enrolled in preschool. States with government-run universal preschool programs also enroll about 70 percent of students, so it is not clear how many more kids the stimulus will result in enrolling.
• It’s also important to note that 70 percent of 4-year-olds are already enrolled in preschool. States with government-run universal preschool programs also enroll about 70 percent of students, so it is not clear how many more kids the stimulus will result in enrolling.

How’s the state spending your education money?

If you’re interested in government in Kansas, take a look at KanView, a site run by the Kansas Secretary of Education.

Drill down through an agency and you can see how it is spending your money. Take, for example, the Department of Education. It spent $79.94 last year on a subscription to Education Week, the newspaper of record for the education industry, and $65 for a subscription to the Chronicle of Higher Education.  Add up the payments to the Lawrence Journal-World and other publications, and you can see how much it spent on advertising.

You can also use it to find disbursements to school districts and others.  It does not appear that the budgets of actual school districts are included on the site.

Sharing services can help school districts

Today the Flint Hills Center for Public Policy released (and several news outlets will publish) the following op-ed about the savings that school districts can achieve by sharing administrative services.

Given the constraints of op-eds written for newspapers, there are many interesting points that could have gone into the op-ed but did not. First of all, districts can also save money by sharing instructional services. That is, they can team up with each other to hire a single teacher rather than each district hire its own.  Distance learning, now morphed into virtual classes, is another example.

A second point that did not make it into the op-ed is that there are, of course, many other ways for schools to save money. But they are often hampered by federal and state regulations as well as tradition.

Finally, the difference between the political world of public education and the public marketplace of American enterprise is clearly seen in this issue. Politicians may seek to impose their ideas of what works best, and their ideas may work. But even the best politically derived arrangements tend to outlive their usefulness, and even failed government programs have a long half-life.

On the other hand, commercial enterprises don’t need a legislative committee to tell them to save money.  Think, for example, of Wal-Mart, which is famous for its efficient logistics system. When your survival depends not on political support but on the willingness of people to continue to buy what you’re selling, you find a way to reduce costs.

If we ever get to the day when schools must more actively compete against each other for student funding (say, through a voucher system), they will have plenty of incentives to be efficient–and won’t need prodding from legislators.

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When School Districts Join Forces, Taxpayers Win

Speaker Mike O’Neal (R-Hutchinson) has called for the Kansas Legislature to study whether it’s possible to consolidate the number of school district administrators. He cited the budget shortfall as a reason for looking at doing things “fundamentally differently.”

Four scholars with the Reason Foundation, a California-based think tank that focuses on making governments more efficient, suggest that school districts can save money by cooperating with each other in buying services and supplies.

School districts might be able to share a large number of non-instructional services. Here’s a partial list: administrative computing and information technology systems; payroll and auditing; legal services; grant management; and staff training and development.

A district that shares services with other units of government (or even, in some cases, a private company) can get many benefits.

Instead of having one person on staff who tries to wear three hats, a district can draw on an outside organization that has a full-time specialist.

Also, it can purchase more or fewer services (as financing allows and student enrollment requires) without going to the trouble of hiring or laying off workers.

It can enjoy economies of scale from making bulk purchases, stretching its dollars so that more of them are used in the classroom.

There are several way to share services. A district can contract out to another for a specific task. Several districts can jointly enter into a contract with an outside vendor that specializes in, say, payroll management.

How much money could the joint purchase of administrative services and supplies save? The Reason Foundation suggests that school districts could conservatively save 20 percent of their non-instructional costs.

How important are these savings in the big picture? According to the National Center for Education Statistics (NCES), only 55 percent of Kansas’s school expenditures during the 2005‑06 school year were “instruction expenditures,” meaning that 45 percent were not. There’s some room to debate what should and should not be included in which category, but if we take the NCES data at face value, districts in Kansas could shave 9 percent off their overall spending. In 2005‑06, that came out to some $393 million. By contrast, the Kansas Association of School Boards has suggested that districts respond to the state’s budget deficit by preparing for cuts of 5 percent.

So in the abstract, there’s room for Kansas public schools to pitch in and help address the state’s budget situation. As the saying goes, the devil’s in the details. At least two districts (USD 371 Montezuma and USD 476 Copeland) already share a superintendent, and the state is dotted with organizations, called “educational service centers,” which districts use to jointly purchase some of their services. Legislators may wish to investigate just how widely the state’s local education authorities already share administrative functions.

An across-the-board reduction in state aid would certainly stimulate school districts to investigate shared services. It would, though, have the unfortunate effect of punishing those districts that are more lean than others, while letting less efficient districts off the hook.

For that reason, legislators might wish to consider an additional option: Enlist the state’s 2.7 million residents as budgetary watchdogs by requiring each district to put its check registry online. “Google government,” as this idea is sometimes called, is based on the idea that the best government is open government. It’s hard to tell what sorts of savings a keen-eyed observer outside the school system could find. Google government won’t be an immediate money saver, but it could promote the state’s long-term health.

Does a 1.6% reduction cut “to the bone?”

Nobody likes to do with less, including school administrators. But Bob Weeks, the voice behind Voice for Liberty for Wichita, says that it’s important to keep things in perspective. While a state representative and former member of the USD 259 school board say that one budget-balancing measure would be “cutting into the bone” of the district’s budget, Weeks points out that the proposal would a total of 1.6%.

He asks “Could the Wichita school district survive on 1.6% less?”

New Resource on Charter Schools

We’ve created a new page–charter school law.  It has the most relevant Kansas statutes relating to charter schools. Charter schools exist in Kansas, but in name only.

Save money through school choice

In light of the Kansas budget situation, officials ought to consider an option that will save the money over the long run: make it easier for students to attend private schools through enacting a voucher or tax credit program.

“What does that have to do with anything?,” you may ask. A lot. Yes, some private schools charge more in tuition each year than a local school district will spend. But those are the exceptions. Private schools as a rule spend less.

One tax credit program in effect is in Florida, where companies get a tax credit for education-related donations. Give money to a non-profit organization that gives scholarships to help students attend a private school, and get a tax credit. Students get another option for education, and taxpayer benefit: One official report in Florida says: “We estimate that in Fiscal Year 2007-08, taxpayers saved $1.49 in state education funding for every dollar loss in corporate income tax revenue due to credits for scholarship contributions.”

Adam Schaeffer has more.

Would such a program work in Kansas? The actual amount of the cost savings depends on a variety of factors, but the idea is certainly worth exploring.

Does Consolidation Save Money?

We’ve warned before about the perils of district consolidation.  Now comes come information from Rhode Island and Minnesota on the subject of consolidation and state-mandated purchasing pools, respectively.

From Rhode Island:

“Using a business model, consolidation of services makes sense.  But when government mandates such actions and higher levels of governance are created, accountability suffers and costs rise.”

And from Minnesota:

“While sharing services is a no-brainer, adding another mandate makes no sense.  Neither does creating a state-run purchasing pool complete with “preferred” state vendors.  To create real efficiencies, let us urge a much broader upsetting of the apple-cart.”

In other words, there’s room to be saved from jointly procured services.  But state leaders ought to have a light hand when it comes to bringing that about. Reducing financial support and letting school officials respond is better than state officials getting too far into the details.

What do you know about school finance?

Here’s a project that citizens interested in school performance should consider: Evaluate the quality of school district websites. My friends in Pennsylvania discuss the question here.

Check out the Kansas page at the Sunshine review, by the way.

Improve education without raising taxes

Kenneth E. Hartman, a school board member in Cherry Hill, New Jersey, has suggested several ways to improve education without raising taxes. He offered these ideas last fall in Education Week, the bible of the education industry. Since the link may not work for non-subscribers, here’s a short version of his commentary:

• Control benefit and pension costs
• Enact pay to play (that is, activity fees)
• Use corporate and university partnerships (for example, use college work-study students as tutors)
• Create a K-11 graduation option (save a year of schooling, save thousands of dollars)
• Stop reinventing the (curriculum) wheel
• Use the technology we bought

Why you should consider running for school board

It’s been said that success in life goes to those who show up. If so, people who are concerned about the wise use of public dollars in the name of education should consider running for the local school board.

For example, did you know that the budget of USD 259 Wichita is bigger the budget of either the City of Wichita or Sedgwick County? The blog “Voice for Liberty in Wichita” has the details.

Is 65 Percent the Solution?

The Speaker’s call for administrative savings in Kansas schools may make you wonder about the “65 percent solution,” a proposal that had some currency a while ago to make 65 percent of school spending to be devoted to “instructional” purposes.

Good idea or bad?

Frederick M. Hess of the Brookings Institution offers some perspective:

• The 65 percent figure (or indeed, any figure) is arbitrary.
• It has no demonstrated relationship to efficiency in spending.
• The proposition “ focuses attention on dubious input measures.”
• Creative forms of problem-solving, such as new forms of tutoring. may be inhibited.
• Education reform should give teachers and administrators flexibility and hold them accountable for results. The 65 percent solution focuses on inputs.
• There is still some discretion as to how school districts classify a given expenditure, and this requirement could mean yet more money spent on accounting to ensure compliance.

Then there’s this interesting piece:

“In fact, reformers might wind up wishing that schools would cook the books. After all, the easiest ways to fulfill the mandate is to give teachers an across-the-board raise or go on a teacher hiring binge. Experience offers little reason to believe that such expenditures are an efficient use of funds. In fact, easy money has allowed teachers unions to avoid tougher teacher evaluation methods, performance-based pay and other efforts to modernize the profession. While the unions have been skeptical of the measure, no one should be surprised if they ultimately turn out to be its biggest winners.”

Meanwhile, Jeanne Allen, of the Center for Education Reform, had this to say in the center’s newsletter of February 7, 2006:

65 PERCENT SHELL GAME. It is an enticing proposal: 65 percent of all money in the public school system must be spent on what is classified as “direct classroom expenditures.” Governor Sonny Purdue of Georgia is just one of the governors pushing the legislation, which on its face would assure that money go directly to students’ education and not get lost in bureaucracy. However, the term “direct classroom expenditures” leaves a great deal of wiggle room. Bureaucracies love wiggle room. One argument, offered by Tom Crawford in the Atlanta Journal Constitution, notes that ‘direct classroom expenditures’ include activities such as field trips, athletics, music and arts, but not building maintenance, transportation, media centers, teacher training and guidance counselors. Under the 65 percent solution, “this means that uniforms for the football team would by law be a higher priority for school spending than nurses to treat ailing students, buses to bring students to school.” A deeper problem is that mandating any amount of money in the classroom doesn’t address the single biggest challenge the US faces – low student achievement. CER president Jeanne Allen calls it the politician’s equivalent of a chicken in every pot: sounds great, but has little impact on the real problem. But with the very successful entrepreneur and founder of Overstock.Com, Patrick Byrne, behind the initiative, it is a natural elixir for any politician.

Fair enough.

Our friend at the Independence Institute, Ben DeGrow, offered a warning about administrators working around any requirement:

Yet little could stop most school districts from merely hiring another bureaucrat to reconfigure the chart of accounts or rename job titles to meet the mandate.

A reader who browses through the Colorado Department of Education’s thick chart of accounts can get an idea of how easily school budgets can be manipulated.

Of course, it is possible that some school boards actually would eliminate some administrative staff positions (many of which were created to comply with federal regulations) in order to hire more teachers. They also might offer salary bonuses to their existing faculty or buy more textbooks and classroom computers. Maybe they would cut non-instructional costs through competitive contracting for services like maintenance or trash removal.

Regardless of what a school board might do in response, no connection has been found between the percentage spent on “classroom instruction” and the resulting student achievement.

DeGrow also calls the idea a symbol rather than a solution.

Should schools spend less on administration and more on classrooms? Ideally, yes. But the 65 percent solution is an arbitrary response to a real problem–rising costs and stagnant performance–baked into today’s political approach to education. Efficiency in any enterprise (think of Wal-Mart’s legendary logistics) best comes through the discipline of customers who can take their dollars anywhere, not a government fiat.

It’s better, at this point, to step back and consider how we cut costs in other areas of life. In the last decade, businesses across industries have worked hard to cut costs. Banks have replaced tellers and bricks-and-mortar branches with ATMs and online banking. Gas stations have gone self-service, except in two states where it’s illegal. Wal-Mart has become so good at wringing out costs through its exceptionally smart and powerful logistics system that some economists credit that single company with being a substantial reason why inflation has been kept in check lately.

In each of these cases, the organizations have saved money because it’s in their financial interest to do so. These and other innovations have not come about because a government agency convened a panel and said to the business “save money or else.” No, companies have become more efficient because it’s good for their business: It makes their products and services cheaper and thus more attractive, increasing the top line of revenue as well as the bottom line of profit. In short, the market has been at work.

But what about government? Can we expect a government organization to use the power of the market? In fact, some already do, though imperfectly. The food stamp program isn’t flawless, certainly–fraud is always a concern–but it is a good example of how markets can help governments save money. Think about how it uses the market versus how it might use politics.

If we used a political approach to hunger, legislatures would establish government-run grocery stores in each county. Each store would have a director and various assistants. Before long, you might hear someone call for a study commission to look at reducing the number of people who direct government-owned grocery stores.

Thankfully, we don’t have to deal with that situation. That’s because we give money directly to the poor, and they spend the money in the same grocery stores that the rest of us use–stores that, due to competitive pressures, are always on the lookout for cost-saving measures. Let parents control how education dollars are spent, and that change will do much more to drive down overhead than any legislatively-imposed accounting standard.

Will School Districts Take a Haircut?

With the state of Kansas facing a budget deficit, it’s inevitable that state aid for K-12 spending is one item considered for trimming.

From the Topeka Capital-Journal:

Under the governor’s proposal, schools would lose $17.7 million this year — a reduction of $22 in the base state aid per pupil, as well as $350 per special education teacher. Next year, school districts would see an additional reduction of $66 per pupil. However, overall school spending would hold steady as more state funding goes to bonds, capital outlay expenses and the state’s retirement fund.

This might be a good opportunity for school districts to discover new ways of managing themselves. USD 501 Topeka, for example, is trying to get some administrators to retire early.

One troubling aspect of news reports (such as this one) dealing with the budget situation is the use of the word “slash” to describe reductions in spending. Granted, nobody likes to see their income go down, but the 5 percent pullback–OK, we’ll call it a cut–is something that any organization should be able to handle. “Slash,” on the other hand, brings up images of Friday the 13th movies and death and dismemberment.

Statewide, [state education chief Alexa] Posny said schools likely will begin cutting back on supply and book purchases for this school year and might cut back on field trips. Some jobs will be held open, and professional development might be canceled.

These are examples of some cuts that could be made. Now consider this: Do you pay for any of your own professional development?

New Evidence that Charter Schools Boost Achievement

Jay P. Greene has assembled some evidence that charter schools improve student performance.

1.5 Million Children in Home Schooling

The U.S. Department of Education came out with a report last month on the state of home schooling. In 2007, there were 1.5 million children in a home school. That’s a sizable number of families who can’t get satisfaction from their local school system.

Follow the Kansas Legislature on Education

If you’re interested in education policy in Kansas, here’s a site that you should add to your bookmarks: Kansas Votes. The site. It describes every piece of legislation under consideration. It’s searchable, meaning that you can find legislation of interest by author, legislator, and subject.

For example, here’s a a bill from last session:

2008 Senate Bill 531 (Increase K-12 education spending)[History, Amendments & Comments] [Text and Analysis] [Add to Watch List]

• Introduced in the Senate on February 1, 2008, to increase funding for K-12 education by increasing the state finance formula’s Base State Aid Per Pupil (BSAPP) from the current $4,433 up to $4,492 for the 2009-2010 school year at an additional cost of $37.2 million. Increasing BSAPP has ripple effects that require funding increases for other parts of the finance formula, amounting to at least another $3.7 million, but this bill does not account for those effects. The Kansas Supreme Court in 2006 forced a three-year $466 million K-12 funding enhancement and this bill effectively adds a fourth year to that program. The latest data current through the 2006-07 school year show that total K-12 funding from federal, state, and local tax sources averages $11,558 per pupil..
• Passed in the Senate (37 to 2) on February 21, 2008, to increase funding for K-12 education by increasing the state finance formula’s BSAPP from the current $4,433 up to $4,492 for the 2009-2010 school year at an additional cost of at least $37.2 million. [Vote Details and Comments]
• Received in the House on February 22, 2008.
• Passed in the House (96 to 29) on April 1, 2008, to increase funding for K-12 education by increasing the state finance formula’s BSAPP from the current $4,433 up to $4,492 for the 2009-2010 school year at an additional cost of at least $37.2 million; and, to increase state K-12 funding by $23 million to replace reductions in federal tax support and make changes to school consolidation law . [Vote Details and Comments]
• Received in the Senate on April 1, 2008.
• Motion by Rep. Deena Horst (R) on May 2, 2008, to adopt a compromise version of the bill reported by a House-Senate conference committee. The report recommends passage of the House-passed version of the bill with the following changes: make the state funding that replaces lost federal funds effective immediately, but limit it to $9 million; and, create a Special Education Funding Task Force that would make recommendations to the Legislature each year.
• The motion passed in the House (101 to 19) on May 2, 2008, to adopt the conference committee report: to increase funding for K-12 education by increasing the state finance formula’s BSAPP from the current $4,433 up to $4,492 for the 2009-2010 school year at an additional cost of at least $37.2 million; to increase state K-12 funding by $9 million to replace some of the reduction in federal tax support; and, to make changes to school consolidation law. [Vote Details and Comments]
• Motion by Sen. Jean Schodorf (R) on May 2, 2008, to adopt the conference committee report that was earlier approved by the House.
• The motion passed in the Senate (36 to 3) on May 2, 2008, adopting the conference committee report that was already approved by the House: to increase funding for K-12 education by increasing the state finance formula’s BSAPP from the current $4,433 up to $4,492 for the 2009-2010 school year at an additional cost of at least $37.2 million; to increase state K-12 funding by $9 million to replace some of the reduction in federal tax support; and, to make changes to school consolidation. Passage thereby forwards the bill to the governor for her consideration. [Vote Details and Comments]
• Signed by Gov. Kathleen Sebelius on May 18, 2008.