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Productive Discussions About The Education Dollar

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During the past year, several reports have been issued on education funding. After subjecting the data of an older report that concluded money didn't matter to a more rigorous "meta-analysis," one study concluded that more money was linked to higher student achievement after all. A report from the Consortium for Policy Research in Education found that spending patterns between high- and low-expenditure districts were remarkably similar--that high spenders just bought more of the common basket of education goods than did low spenders. The most recent reports, one by the Consortium on Productivity in the Schools and the other by the Economic Policy Institute, concluded that education funding for the regular-education student hasn't risen that much after all. (See related stories, 9/6/95 and 11/22/95.) Despite a threefold increase in nominal dollars between 1960 and 1990, both reports used a more generous inflation adjustment that reflected the labor intensity of education, thus reducing the level of real-dollar increases. The EPI report also showed that the vast bulk of new money was spent on the small minority of students who were disabled, poor, or otherwise in need of special attention. Further, a leading professional journal sponsored a written debate on the education dollar by adapting the popular media strategy of having authors from the extremes of both sides write positions, so one article claimed that money obviously didn't matter while the other maintained that, of course, it did.

It's time to move beyond these informative, but not so useful debates about the past and get on to the real resource challenge of the future, which is that the education system must figure out how to use its money better--dramatically increase its productivity--or the goals and aspirations of education reform will not be realized.

The goal of current education reform is to teach all but severely disabled students to high academic standards--to mastery over the complex subjects of mathematics, science, language arts, writing, and history. Since only about 10 percent to 20 percent of students today have mastery of these subjects, the goal posits a several-fold increase in the results of the education system.

The stark fiscal reality is that money for schools is unlikely to increase much in the near future. Indeed, although inflation-adjusted per-pupil spending rose between 25 percent and 75 percent every decade in the 20th century between 1900 and 1990, that growth trend stopped in the 1990s. Between 1990 and 1995, inflation-adjusted per-pupil spending has been essentially flat. The scenario for the future will hardly be much better. Federal funds for schools will likely be cut. There is a rising property-tax revolt at the local level. And states are using new resources to provide property-tax relief or cut state income taxes rather than increase education funding. The experience of the post-World War II era up to 1990 was that when the national economy was strong, school funding rose. But during the past few years, when the national economy grew, education funding did not rise, and it is not likely to rise much in the near future. Not only are state policymakers putting more money into prisons and various forms of tax relief, but also they will need to respond to federal cuts in social programs in the next few years. In the process, schools will do well to stay even fiscally.

If the goal of education reform--raising results substantially--is to be accomplished, it will have to be done with the level of money now in the system. That means that the only way the goals of education reform can be accomplished is to dramatically improve the productivity of the American public education system--a very stiff challenge and a challenge that few have been willing to address. Verbal or analytic debates about whether the country's education system has been productive in the past, or whether more money itself improves student performance, are largely irrelevant to the real, current, and urgent productivity challenge.

To be sure, it is good to know, as the recent report of the Economic Policy Institute has shown, that the vast bulk of new education dollars over the past 15 years has not been spent on the 80 percent of children in the "regular" education program. Granted the laudatory policy of funding the needs of special students, one element of the productivity question is whether spending the bulk of new education dollars on areas outside the regular program is the wisest strategy if the goal is to teach nearly all children to high academic standards. The institute's argument for a more generous education inflation adjustment, however, should be challenged. Yes, the education system is labor-intensive. But the Consumer Price Index is the factor used in nearly all other parts of the economy to adjust for inflation, even when the actual basket of goods for any organization is different from that for households. The fact is that tax dollars come from households for whom the Consumer Price Index is the relevant inflation factor. Public organizations should be especially sensitive to that fact--and use the dollars they receive in very productive ways. Further, every organization in America is under pressure to become more productive, and that pressure should also apply to the public schools. In fact, as I have argued, the only feasible way to accomplish the goals of education reform is for the public education system to increase its productivity by several degrees.

It is also helpful to know, as the cpre reports have shown, that there are a set of fiscal regularities in how districts spend more money that parallel in general the program regularities in the education system. It is also sobering to note that neither the fiscal nor program regularities have a good track record of boosting student achievement, and thus must be changed if current education goals are to be reached with no more resources.

It is also informative to realize that the education system needs to employ new and better incentives to spur more productive use of resources, as a recent Brookings Institution report suggested. But the trick is to identify the types of incentives that will work in education and incorporate them into the regular-education budget. Restructured teacher compensation should be part of this new incentive system, but not another round of useless and ineffective individual merit-pay programs. Yes, we can pay educators for performance--individually for what they know and can do through new forms of competency pay, and collectively for what they produce in terms of increases in student learning through school-based performance bonuses. We'll probably need other incentives as well. But we need incentives that work, designed specifically for the education context.

In short, the productive discussion we need about the education dollar is how to improve the effective use of the dollars that the education system has to improve the productivity of American schools--a tough task and a task not many, policymakers or educators, have been willing to step up to. Improving educational productivity by cutting current education funding, a strategy proposed by some, is a poor long-term strategy. By definition, cutting dollars improves productivity in the short run. But in the medium term, results also drop, erasing the short-term productivity blip. The long-term issue is to improve productivity by boosting student-achievement results--and substantially above current levels.

The fact is that we know several of the key initiatives to accomplish this result. First, we need clear, specific goals and standards that focus on student achievement. It's hard for schools to be productive--to marshal resources toward desired results--if goals and standards are absent or unclear.

Second, we know several of the key programmatic elements that produce higher student learning: (1) a high-quality curriculum; (2) teachers equipped with the instructional strategies to teach this curriculum well to all students; (3) professionals to tutor students when they fall below expected levels of performance; (4) mechanisms to ensure that secondary students take a full load of courses with real academic content; (5) more teacher involvement in the management and organization of the schools in which they teach; and (6) a real accountability structure. For students from poverty backgrounds, a good preschool program and full-day kindergarten also produce achievement effects. There likely are other elements, but the above alone produce substantial results.

Further, we know that substantial achievement effects can be produced within one year, as results accomplished by Robert Slavin's Success for All Program and James P. Comer's School Development Program show. And as Mr. Slavin and his colleagues argue, we can produce these achievement results "whenever and wherever" we want.

We also know that many schools have the dollars to finance such strategies and programs, if they would simply reallocate current dollars. Simply by reallocating current staffing for the tutors and outreach specialists, many schoolwide Title I schools can finance the Success for All Program. Karen Miles has shown that Boston could reduce its 30-to-1 pupil-teacher ratio to 15-to-1 by staffing schools and running programs differently.

Finally, we know that the most egregious fiscal inequalities across the country can be eliminated simply by bringing all districts in the bottom half of spending up to the expenditure of the median district, and that the cost would be less than the amount of new dollars most states put into education in any one year.

The money issue is how to nudge the policy and education system to reallocate current dollars to these strategies that we know work, and to target any additional money to the areas that are currently underfunded--preschool, kindergarten, tutors, professional development, and the most rampant fiscal inequalities.

Figuring out how to accomplish this task is the conversation about money that would be productive, not arguing about what we did or did not do or have in the past.

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