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Huge Stimulus Plan Won't Change the Education System's Status Quo

Throwing money at failing schools won't boost test scores or graduation rates

Lisa Snell
January 27, 2009

Get ready for the largest transfer of funds from the federal government to local schools in history.

Democrats in Congress are proposing a new infusion of federal cash for public schools through the American Recovery and Reinvestment Act of 2009. In the House version of the stimulus package released on January 15, Democrats suggest allocating $120 billion for K-12 education, almost $22 billion for higher education and close to $5 billion for early education. It includes a $79 billion block grant for states to help stabilize state and local education budgets, $26 billion in new money for existing Title I and special education programs, $1 billion for technology to provide "21st Century Schools," and a new $20 billion school construction program. All this money will be in addition to the approximately $60 billion a year in taxpayer money that the federal government already spends on education in the United States.

The stimulus package will spend more than double the current total federal education budget, bringing federal funding of education to well over $200 billion. Unfortunately, this huge expansion is unlikely to spur improvements in public education and will continue to encourage states and local districts to spend money with little regard to student outcomes.

In the last 30 years, the United States has doubled per-pupil spending in real dollars. We spend more money on education for K-12 than most other industrialized countries. According to the OECD's 2008 Education at a Glance, the United States 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. The average reading and math scores for 17-year-olds on the National Assessment of Education Progress (NAEP), the nation's benchmark for student achievement, are no better today than they were in 1971; SAT verbal scores show a decline (from 530 in 1972 to 504 today); and SAT math scores have been essentially flat (from 509 in 1972 to 515 today). U.S. graduation rates were 78 percent in 1972 and are 74 percent today; and U.S. 15-year-olds score below the international average on science and math literacy when compared with 30 OECD countries - American kids rank behind students from Poland, Hungary, and France to name a few.

The biggest chunk of this new education stimulus will be a block grant to cover operational costs for local school districts. The federal government will direct large amounts of aid to states struggling with huge budget deficits aggravated by the economic downturn. For example, New York Gov. David Paterson is counting on $6.4 billion in help for teacher salaries and other operating expenses over the next two years if the education block grant is part of the final economic stimulus package.

As a House Democratic leadership aide told Politico,"When the recession ends, you are still going to need teachers, firemen, policemen, and the question is do we step in now or pay more to rebuild later."

Public schools suffer from some of the same problems as the auto industry. In Detroit, the financial meltdown is partially caused by union contracts that make promises to employees that are impossible to fulfill and also remain economically viable. In schools, automatic pay raises and teacher tenure mean that school districts have very limited flexibility in hiring and firing and prohibit them from negotiating pay-cuts that reflect the country's current economic conditions.

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.

School Construction

The stimulus package put forth by House Democrats proposes to spend $20 billion on school construction. But there is no indication new school construction cash will do anything to make the process more efficient or cost-effective. School construction projects are notoriously behind schedule, over budget and more expensive than other types of construction projects.

Dr. Jay Greene, an education researcher at the University of Arkansas, has noted that building schools costs much more than other types of construction. According to the 34th Annual Official Education Construction Report, the median new school built in 2007 cost $188 per square foot for elementary schools; $211 per square foot for middle schools; and $175 per square foot for high schools. By comparison, the median cost per square foot to build a three-story factory in 2007 ranged from $83 in Winston-Salem to $136 in New York City, with most major metro areas hovering around $100 per square foot.

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.

Internet Access

President Barack Obama announced in a recent radio address that his administration would seek to expand broadband access in 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. Before moving into the White House, Mr. Obama said, "Here, in the country that invented the Internet, every child should have the chance to get online, and they'll get that chance when I'm president - because that's how we'll strengthen America's competitiveness in the world."

But that's close to being accomplished. The 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. In 2005, 97 percent of public schools had high-speed broadband, with a ratio of 3.8 students per 1 computer with Internet access.

Billions have already been spent through the federal "E-Rate" program to give students Internet access. Like most large-scale government giveaways, the federal E-rate program, which collects $2.5 billion a year in telephone taxes to hook up schools and libraries to the Internet, has produced a huge amount of waste.

Puerto Rico has spent $101 million in federal grants to wire 1,500 public schools for Internet access. Yet the island-wide school district warehoused most of the equipment for more than three years, and only nine schools were actually connected to the Internet. The Chicago public schools have more than $5 million in E-rate computer equipment sitting in a warehouse. In San Francisco, school officials discovered that a $68 million project should have cost less than $18 million.

A huge new federal investment in broadband technology will likely do little to expand broadband access while opening up the potential for even more waste and incompetence. More money for Internet access is a duplicative funding stream to solve a non-problem.

Early Education

The House version of the education stimulus package includes $2.1 billion for Head Start, the federal preschool program for poor children, and $2 billion for additional child care grants. But how will students be helped or what will taxpayers get for the money?

Consider Oklahoma, a state that has spent millions implementing universal preschool. Oklahoma's fourth-grade NAEP reading score in 1998, when it adopted universal preschool, was 219-six points above the national average. Last year, it had dropped to 217-three points below the national average. Similarly, Oklahoma's fourth-grade NAEP math score was on par with the national average in 2000. Last year, it had dropped two points below. Since employing universal preschool, not only is Oklahoma doing worse compared with the nation, but also its own prior performance.

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.

Education Bailout Should Revolutionize Public Schools

The bottom line is that more than $147 billion in federal "education stimulus" will prolong the dysfunctional qualities of the United States education system. It is one of the most expensive and most mediocre K-12 systems in the world. Throwing more money at public schools without addressing the problems inherent in the system - lack of accountability and lack of competition - will simply drive up education costs with little to show for the money.

The best outcome would be to avoid a federal education bailout altogether. However, if an education stimulus is inevitable, it should at least demand some concessions from the education establishment before doling out $120 billion.

Here are a few suggestions:

  1. Only give money to school districts whose labor unions agree to "flat contracts" that offer flexible employee practices such as firing for "just cause" and are willing to suspend seniority and tenure in exchange for merit-pay.
  2. Only give money to school districts that will report transparent budget numbers at the "school level" so parents and taxpayers can see how much money a school spends on education in real dollars and not district averages. It is important to know how much money is siphoned off at district offices and for administrative costs - and how much money actually makes it into the classroom.
  3. Prioritize money for, or give incentives to, districts that attach per-pupil funding to the backs of children, letting parents choose the public school (or dare I say charter or private school) that best suits their child.

If the government is going to give the money away anyway, it might as well empower parents and teachers rather than the status quo, which is failing miserably.


Lisa Snell is Director of Education


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