Public school economics: It’s the structure, stupid

To use economic terminology, the school reform debate is about a bottom line: student achievement. After years of pouring money into the public schools, public school students have not shown commensurate improvement in academic achievement. Parents, taxpayers, and concerned citizens are still not being given adequate answers as to why this is the case.

The blame lies with the teacher unions and the rest of the education establishment that daily resists the only thing that will bring real change – and that is competition through the empowering of parents through school choice.

Competition can improve the public schools much like Honda, Toyota, and Nissan improved Ford, GM, and Chrysler. When the American auto manufacturers were selling an inferior product during the 1970s, it was competition from Japan that provided all the incentives they needed to get their collective acts together.

In American education, there is no corresponding market force to compel improvements. If citizens and their elected representatives fail to force needed reforms on the public schools, nothing will change and children will continue to lag behind the rest of the world in academic achievement.

The lack of a market force impacts not just academic achievement, but the financial management of the schools as well. Illinois serves as an excellent case study. Combined local, state and federal funding for elementary and secondary education in Illinois continues to soar.

Despite this increase in funding, the Illinois State Board of Education reports that most of the state’s school districts continue in deficit spending, and many are spend years on the state’s financial watch list.

Accounting for this is a mystery until you realize the simple economy of it. Government funded schools have not faced market pressures and thus have engaged in irresponsible spending. Even the simple economics of a family budget reveal that there’s always ways to cut, and that with the right motivations, those cuts and efficiencies can and will be found.

School reform expert George Clowes of the Heartland Institute talks about being told by a government bureaucrat that his agency is “operating at maximum efficiency.” That simple statement actually says a lot about the government’s attitude about how it works. While clichés are tossed around about waste, fraud and abuse in government spending, the leviathan continues to grow unchecked, both in federal, state, and local governments, as well as in the public schools system.

One of the most over-looked aspects of the perennial public school funding crisis is the structural problems that lead to the crisis. David Kirkpatrick, Senior Education Fellow, U.S. Freedom Foundation, gives a good case in point for why public schools continue to devour tax dollars at record rates:

“The Organization for Economic Cooperation and Development (OECD) which includes most western developed nations, including the United States, claims that the U.S. is unique, literally, in having a public school system with more school support staff than teachers. Overall 2.6% of the U.S. work force are teachers while there are 2.9% employed in non-teaching education jobs. More recently, in 1997, Michael Moe and R. Keith Gay said that, other than public schooling, they didn’t know of another service industry in the world where less than 50% of the money is spent where the service is actually being rendered.

You might also try this: go to any local school and ask how much money is being spent to maintain it. They won’t know. At best they may use the average expenditure per pupil in the district and multiply it by the enrollment of that school but that is not an accurate figure since teacher pay in each school varies with where each teacher is on the pay scale; high schools use more and more expensive textbooks than elementary schools; schools with science labs spend more than those without, as do those with extracurricular sports; etc. So taxpayer’s dollars support the system but rarely can anyone tell you (even if they’re willing) how it’s being spent. They just don’t know.

Keep that in mind the next time you hear pleading for more money ‘for the kids.'”

The bottom line for Kirkpatrick is that “it’s easier to raise taxes than change the system.”

Up next: Productivity and oversight matters.


©2008 John Francis Biver