Is a financial day of reckoning for schools here yet?

There's a lot to chew over in yesterday's New York Times article by Sam Dillon, "Schools Aided by Stimulus Money Still Facing Cuts," (including the implications for our home state of Ohio). Any reader would feel empathy for the L.A. high school students now facing average class sizes of 42.5 students; the many teachers who have been laid off; the schools that have cut back on sports, arts, and more. I certainly do.

But of course there's another story between the lines here, which is that districts have often been either unable or unwilling to cut costs sensibly. Tim Daly of The New Teacher Project is quoted describing a common problem, that "Districts tend to make their problems worse by laying off good teachers and keeping bad ones," firing based on seniority (as often required by collective bargaining agreements). Yet it's even deeper than that, for education is an industry that has rarely been forced to grapple with spending cuts; nearly every year this century, education spending per-pupil has grown, in good economic times or bad. It has rarely faced much pressure to really reinvent itself in order to contain costs. For example, Marguerite Roza explains that schools have long suffered from something called "Baumal's disease," in which costs rise for lack of innovation. (Whereas firms in other industries become more efficient by replacing labor with technology, for example.)

Dillon's article implies a day of reckoning is at hand. He writes:

Driving the layoffs was a precipitous decline in tax revenues that left states with a cumulative budget shortfall of $165 billion for this fiscal year, according to the Center on Budget and Policy Priorities, a research institute.

But this may be only the tip of the iceberg. When the stimulus funds dry up (presumably); when the full impact of the real estate crash hits state budgets; when baby boomers start retiring in droves, draining state pension coffers; and when our growing welfare state consumes more and more tax revenues, then schools and districts may wish they had seized the opportunity today to re-imagine how they are run, to re-invent themselves as lean, cost-effective organizations. Who was it who said you should never let a good crisis go to waste?

Eric Osberg is a Vice President and Treasurer at the Thomas B. Fordham Institute