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Education policy maven Rick Hess of the American Enterprise Institute think tank offers straight talk on matters of policy, politics, research, and reform. Read more from this blog.

Education Funding Opinion

Getting Serious About Bang for the Buck

By Rick Hess — January 25, 2011 4 min read
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I’ve been down in Austin the past two days attending the inaugural convening of Texas’s new center for Improving Productivity in Public Education (IPE). Those who disdain discussions of educational cost-effectiveness will dismiss the whole exercise as school-bashing. Okay... For those of us who live in a world where resources are finite, though, the question of how to get more bang-for-the-buck is a crucial one for the next decade, and beyond. This week’s effort signals that Texas just might be positioning itself to lead on this front in the same way it led on academic accountability two decades ago. The odds of this are dramatically heightened because the effort is being led by Darv Winick and Charles Miller, two of the figures who made Texas a national leader on academic accountability. (Full disclosure: I’m a consultant to IPE.)

The gathering marked a crucial departure. Several veteran reformers in the room noted that this was the first time they’ve been at a high-profile convening of this kind on the subject of educational productivity. It was an impressive gathering, featuring former U.S. Secretaries of Education Rod Paige and Margaret Spellings, Stanford’s Rick Hanushek, University of Washington’s Paul Hill, Texas Ed Commissioner Robert Scott, Texas legislative heavyweight Rob Eissler, and so on. The superintendents in the mix, like Houston’s Terry Grier and Garland’s Curtis Culwell, provoked both laughter and discomfort with tales of bus-driver tenure and food-service shenanigans.

Presenters included the Bush Institute’s Jim Guthrie, Karen Hawley Miles of Education Resource Strategies, Tom Currah of the Texas Comptroller’s Office, and Mike Casserly of the Council of the Great City Schools. They made clear that we’ve failed to consider where dollars go, and how much opportunity new data tools and fiscal pressures create to overhaul operations and rethink how we’re using staff, technology, and resources. Hawley Miles recalled that, twenty years ago, she had trouble convincing anyone that this kind of analysis was useful or necessary. Suddenly, she says, she’s being swamped by interest and that, “This moment of budget pressure can result in some very exciting visions.”

The data was telling. Hawley Miles pointed out that “real” (e.g. inflation-adjusted) spending increased from $3,800 to $8,700 between 1970 to 2005, but that 80% of those dollars went into new staff positions and increased benefits. If teachers are frustrated that vast new spending in recent decades didn’t boost salaries, they need to recognize that this is because those dollars have gone into hiring new staff and into plumping benefits--and not because states and districts have failed to fund schools. Hawley Miles also pointed out that special education spending has risen from 4% to 21% of spending over that period, while general education spending has fallen from 80% to 55%. (One fun anecdote. Hawley Miles noted that at a recent meeting with district personnel, she asked if states are helpful when districts tackle these challenges. When asked whether they would characterize their state as a partner, a nonfactor, or an example of “with friends like these...,” three-quarters of district personnel opted for “with friends like these...”.)

Hawley Miles walked through district analyses pointing out one district where average class size for core 9th grade classes is 27, while it was 18 for 12th grade electives. She flagged a district where a student-teacher ratio of 16:1 is yielding an average class size of 29:1, because of how staff are utilized. In another district, she noted that self-contained special education costs $42,600 per pupil while special education in general classrooms costs $19,900 per pupil. Yet, we’ve bizarrely opted to put in place policies that discourage or even prohibit educators from taking into account the enormous cost of self-contained instruction when deciding how to assign children and allocate scarce dollars.

Jim Guthrie pointed out that in the larger economy, worker productivity-per-hour has increased about 50% in the past 20 to 25 years. Yet, in education, if we look at worker costs relative to our minimal gains in reading and math NAEP scores, he showed that labor productivity appears to have actually declined by a substantial amount. For instance, he reported that, in inflation-adjusted dollars, Texas spent $33 per point of NAEP achievement in 1992 but $40 per point in 2007.

We often hear that Finland is a model for U.S. school reform. In that light, I thought it intriguing to see Guthrie point out that Finland spends about 65% of education dollars on faculty and staff salaries, while the U.S. is a bit over 80%. And Mike Casserly, once again walking through the remarkable analysis of big district spending that the Council of Great City Schools has conducted in recent years, pointed out that a district with 36,000 students can easily save 20-30 million dollars per year by moving from the bottom quartile to the median when it comes to operational efficiency.

Finally, one intriguing point emerged on Race to the Top, echoed by several participants and especially relevant in light of the President’s speech tonight and the forthcoming budget debate. The consensus among those who spoke to the issue is that RTT didn’t do anything to help bend cost curves, even as it’s encouraged states to preserve jobs and to devise new spending plans rather than focus on identifying savings.

The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.