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Published in Print: January 21, 2009, as Beyond Bricks and Mortar

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Beyond Bricks and Mortar

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With a worsening U.S. economy, America's schools face tough times ahead. Can new leadership in Washington succeed in linking steps devised to relieve our economic woes with measures to improve education policies—and, in the process, moderate the effects of the recession on our schools?

It would be a terrible mistake to let the schools become a casualty of this downturn. We know from the work of economists such as Theodore Schultz, Henry M. Levin, Martin Carnoy, and others that societal investments in education pay long-term dividends in higher earnings, more-productive economies, increased gross domestic product, and a better way of life. In flush times, it is easy and useful to invest more in schools and the children who attend them. Not so in this terrible economy, with reduced tax receipts and lower allocations to schools at all levels of government. What President Barack Obama advises will be critical.

Of course, public schools, as well as private ones, will have to tighten their belts, eliminate waste, and use money more frugally. They must trim bureaucracies and learn to provide more instruction and support for students with less funding. But they are too valuable to the nation's well-being to be wrecked or weakened. Federal leadership will be essential in this area, not only in reducing the negative impact on schools, directing funding to where it matters most, and eliminating unnecessary and ineffective spending, but also in providing schools with models of best practices and most-effective uses of funds.

As a first step, Mr. Obama has proposed one simple yet elegant solution: Use part of a government-financed stimulus package to hire the growing number of unemployed workers, who can help build new, much-needed facilities and renovate older schools to better foster student learning. The idea, drawn from the Depression-era Works Progress Administration and the Public Works Administration, which built bridges, roads, and public buildings in the 1930s, is a good one. But there are also other ways to meld educational and economic improvement. Here are some suggestions:

• Merit pay, improved outcomes.

Paying teachers consumes about half the budgets of U.S. schools. We need to keep adequate funding for compensation available, and the ranks of teachers strong. But these allocations could be used to do more than simply pay all teachers at a general salary level. They could strategically target funding, providing more to the teachers of low-achieving students, those working in difficult schools, and teachers in understaffed subjects like physics and math and special education. More also could be given to teachers who make outstanding improvements in student learning.

"Merit pay" has always been a scary term to teachers' unions, but President Obama could work to persuade teaching professionals that differentiated pay for differentiated responsibility and better performance in hard-to-staff settings and subjects is not a plot to destroy unions. It is a strategy for making dollars go further to benefit students and their communities.

• With less funding available, more directed to the classroom.

Another, more controversial step would be to reduce total school funding, as the economy requires, while maintaining as much spending in the classroom as possible. In 1988, Robert Sarrel, then the business manager of New York City high schools, Sheree Speakman, an analyst at Coopers & Lybrand, and I devised a system (later called In$ite) that accounted for the proportion of real resources that reached the classroom for face-to-face, direct instruction of children. When Mayor Rudolph W. Giuliani of New York later instituted use of the Finance Analysis Model, only 33 percent of school funds were found to be reaching the children for direct instruction. Today, the level under his successor, Mayor Michael R. Bloomberg, has reached 57 percent for direct teaching and learning (including, for example, teachers' salaries and benefits, textbooks, computers, and other materials), and a full 90 percent has been spent in the schools themselves, rather than the central office, reducing waste, bureaucracy, and overhead.

America can expand and broaden this trend by directing more of the diminished resources for education directly to schools, reducing the central bureaucracy, and by making more of that money available at the classroom level for instruction. This strategy would enable schools to absorb the decline in revenue creatively and to the benefit of students.

• Managing increases in special education students and costs.

The chief new costs in the field are for special education, as nearly 14 percent of children are now classified as eligible, and more than a quarter of all costs at the district level are for serving these students (from special transportation and occupational, speech, and physical therapies, to double time, scribes to write for kids, one-to-one paraprofessionals, interpreters, and nurses). As the numbers and services go up, the expenses rise. It's time to build better programs, ones that are more economical and more local, and that make use of existing facilities and resources.

• "Leveling down" to greater equity.

In better economic times, the states have sought to equalize spending across districts, using concepts of equity and, more recently, of adequacy. Now, with states having much less money at their disposal, equity may mean a "leveling down": Richer districts may find their budgets significantly reduced by a combination of higher real estate taxes and diminished housing values, while poor urban districts could be in slightly better shape. These are times to look at the effects of tax revenues and property values—the key way that local school districts raise money. Equity may change meaning, and the new president should keep a close eye on these changes in school funding across states and between states.

In education, money matters more now than it has since the Great Depression. More children are entering school, and, with preschool and pre-preschool programs growing along with college-going rates, they are staying in school longer. We know that healing the economy will be President Obama's top priority. But schools, which seemed in the long campaign season to have fallen steeply on the nation's priority list, are always important. By thinking through the new finances of schools, we can help build, fix, staff, and improve them, even—perhaps particularly—in tough times like these. History has shown us that today's financial support and operational improvements will pay economic dividends in the future.

Vol. 28, Issue 18, Page 26

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