NCPA - National Center for Policy Analysis

Better Schools, Fewer Dollars

June 22, 2012

To attain the economic growth that it desperately needs, the United States must improve its schools and train a workforce capable of competing in the global economy.  To this end, superior educational outcomes are a necessity.  The question facing lawmakers, then, is how to improve America's education system when most state governments are strapped for cash, says Marcus A. Winters, a senior fellow at the Manhattan Institute.

Economists tell us that the answer is not to throw more money at schools.  While a common complaint is that public schools are underfunded, research indicates that more per-pupil funding does little to improve outcomes.

  • According to the Department of Education, public schools spent, on average, $12,922 per pupil in 2008, the most recent year for which data are available.
  • Adjusting for inflation, this figure is more than double the $6,402 per student that public schools spent in 1975.
  • Despite that doubling of funds, just about every measure of educational outcomes has remained stagnant since 1975.
  • Scores on the National Assessment of Educational Progress -- the only consistently observed measure over the period -- have remained relatively flat since the mid-1970s.
  • High school graduation rates haven't budged much over the last 40 years, either.

The conclusion to be drawn from this historical data is that schools do not need more funding, but need to learn to be more efficient with the funding they already have.  This entails freeing schools from oppressive regulatory environments and/or transitioning more students to charter schools and voucher programs.

  • Schools themselves have little discretion over how to use their financial resources, confined instead to top-down mandates for spending.
  • Crucially, individual schools have little flexibility in teacher pay (which constitutes 54 percent of expenditures on average); schools are limited to considering factors such as years of experience and number of advanced degrees that are only marginally good predictors of teacher quality.
  • In most districts, public schools aren't even allowed to decide which teachers to employ, since tenure ensures that principals can't remove the least effective teachers.
  • Voucher programs to help students attend private schools and government-run charter schools avoid many of these pitfalls.
  • Furthermore, near-uniform research has found that students participating in these programs achieve the much-sought after educational gains.

Source: Marcus A. Winters, "Better Schools, Fewer Dollars," City Journal, Spring 2012.

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