School Finance

One of the most striking arguments made against Republican governors' efforts to curtail the bargaining rights of teachers is that it's an "attack on the middle class." I'm more sympathetic to that line of reasoning than you might think; for all their evils, unions have been successful in giving millions of people a path to prosperity. And, as I was reminded at my grandmother's (a.k.a. "Nonnie's") funeral this past weekend, many of my second and third-generation Italian-American family members benefited from employment in public-sector, union-protected jobs. [quote]

But is it true, for teachers at least, that unions are necessary to ensure good wages? That when collective bargaining is disallowed, teacher pay plummets? I was curious, so I dug into data collected by the National Council on Teacher Quality. The group collects information on teacher pay, benefits, and much more in its tr3 database for more than 100 of the largest districts from each of the 50 states. I broke out the districts in non-collective bargaining states (those where the practice is illegal--namely, Georgia, North Carolina, South Carolina, Texas, and Virginia)--and compared them to the rest. And I looked at the maximum salary a teacher with a bachelor's degree could earn. (See the data here.)

The surprising finding? Teachers in non-collective bargaining districts actually earn more than their union-protected peers--$64,500 on average versus $57,500. (See the chart below.)

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To be...

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Much ink has been spilled in the past week over what the pay for performance experiment in New York City's public school system means. Roland Fryer's finding that the NYC pay scheme didn't improve student achievement does not imply that differentiated pay for teachers doesn't work, however. In fact, I'm inclined to borrow a phrase from Chesterton: merit pay has not been tried and found wanting; it has been found difficult and not tried at all.

Merit pay trials in the US have mostly followed a familiar pattern: they're structured as one-time bonuses and are tied to some kind of objective measure like test scores or teacher value-added. This may look superficially similar to professionals' compensation on Wall Street and in the nation's top law firms, but crucial components are missing that make up true merit pay in the professional working world.

Permanent raises based on merit provide a more meaningful incentive than annual bonuses, though the latter are a helpful supplement. Performance-based raises tell professionals that they're hitting milestones on the way to full professional effectiveness (or not), and they communicate the worker's long-term value to an organization. One-time bonuses that sit on top of a never-changing salary schedule that undervalues newer employees' growth are bound to be ineffective by comparison.

Management needs discretion to use both objective and subjective measures of effectiveness to evaluate merit. This is a scary idea for many teachers, but it's a pro-teacher idea at its core. Every teacher...

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In a provocative new school funding case, a federal court judge in Kansas City ruled against parents from the suburban Shawnee Mission school district who had wanted to increase property taxes above the state mandated limit. This is a local control debate that is sure to heat up as we stumble through the current financial crisis, with more and more proposals to increase the centralization of school governance and financing.? (See Lou Gerstner's 70 super districts proposal.)

According to an Associated Press report?on the Kansas?decision,? allowing individual jurisdictions to set their own tax ?could bring down the state's entire school financing system.? The parents in Shawnee Mission wanted just the right to ask local voters if they wanted to pay more. The court said No. (Read the 21-page?order here.)

As the pressure to hold down school costs mounts, property tax caps have become a favored option because they remain a favorite form of funding local government agencies, including school districts.??But the objections from wealthier communities, which can afford to pay more, are also mounting. ?Twelve towns in New Jersey have announced plans to have votes on exceeding the Garden State's new property tax cap, a local opt-out option that the new cap law allows.?

Though there is more to learn about this case and its legal implications,??if the press reports are accurate, the Kansas ruling appears to mean that there can be no opting out of the cap, even if local voters...

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This morning, economist and education policy expert Eric Hanushek testified in a joint meeting of the Ohio House and Senate education committees. His testimony ? which focused on the importance of ensuring that all education policies, including school finance policy, create incentives for achievement ? comes less than one week before Gov. Kasich's budget will be introduced.

The most debated education-related policy changes here in Ohio over the last month have been about Senate Bill 5, the Buckeye State's controversial attempt to weaken public sector collective bargaining in the state. (Terry testified in support of the aims of the teacher personnel provisions in the bill, not expressly on rolling back collective bargaining rights.)

Hanushek's presentation today helped reframe the debate in a necessary way: undoing LIFO, or changing teacher salary schedules, or including value-added data in teachers' and principals' evaluations is not about weakening unions but about incentivizing performance, driving student achievement, and ultimately improving the quality of Ohio's future labor force.

Given the highly politicized environment surrounding the capitol lately, it was good to hear an outside expert explain the research and remind lawmakers that the need to move toward achievement-focused policies predates the Midwest's turmoil over collective bargaining and will certainly go on long after. Hanushek explained:

As important as the fiscal issues that motivate current discussions are ? they are actually secondary in my mind to other policy concerns about our schools, although we shall see that there is also overlap.

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I know it's an article of faith in the school-reform community that we should "differentiate" among teachers and pay them "differentially" too. Highly effective teachers should get paid more than mediocre ones; individuals willing to work in poor schools should get bigger paychecks than those serving the well-to-do; those in high-demand fields (like math and science) should get more than their peers. I get all of that, and generally agree.

I also understand that the "single-salary schedule" is seen as the nemesis to smart teacher policy. And that's also true. But what makes the single schedule so pernicious isn't just its uniformity; it's its growth curve. Twenty-five years veterans are paid a lot more than five-year veterans even though, on average, they are equally effective. Changing that curve is at least as important as introducing more differentiation in pay.

This isn't my idea, or a new idea. Two years ago, Duke economist Jacob Vigdor published an excellent article in Education Next, "Scrap the Sacrosanct Salary Schedule." His analysis can be summed up in the graphic below.

In all professions, new hires get paid significantly less at the start. But in fields like medicine and law, pay rises rapidly--as soon as employees boost their effectiveness and productivity from on-the-job experience. In education, on the other hand, pay rises slowly, even though teachers' effectiveness plateaus after as little as two (and no more than five) years...

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Take a look at this graph from Robert Costrell and Mike Podgursky's new report on pensions for the TIAA-CREF Institute:

?Figure 1, Podgursky and Costrell report for TIAA-CREF Institute

The blue line is pension wealth accumulated by a teacher under Missouri's teacher pension plan who begins work at age 25. Note that the teacher earns essentially nothing until their 12th year of service and only five figures past their 20th year of service. Over the five years after that, the teacher's retirement wealth increases five-fold.

Lest you think this insanity is particular to Missouri, take a look at neighboring Illinois, where a new law revamping teacher pensions was just passed:

New teachers in Illinois can only hope to get their money back (at best) until they've been teaching for 26 years.

As I've mentioned before, this system can't help but attract highly risk-averse workers to the detriment of others. It creates a situation where the handful of teachers who never leave the profession or work outside the area covered by a given retirement system take money out of the pockets of everyone else. Unless you're one of those teachers, you'd be far better off with a higher base salary and a defined-contribution plan where your retirement wealth increases steadily as a function of your salary.

The Atlantic's Megan...

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Reading yesterday's New York Times editorial about the Empire State's fiscal crisis, I couldn't ?help but think of the last days of the USSR. I'm sure there were many Soviets scrambling to move the deck chairs around while that?ship was sinking.

The Times does not paint a very pretty picture of New York:

At a time when public school students are being forced into ever more crowded classrooms, and poor families will lose state medical benefits, New York State is paying 10 times more for state employees' pensions than it did just a decade ago. ?.

In all, the salaries and benefits of state employees add up to $18.5 billion, or a fifth of New York's operating budget. Unless those costs are reined in, New York will find itself unable to provide even essential services?.

And the Governor's?mandate relief commission, a politically astute way for Mr. Cuomo to deliver bad news, just reported that:

  • New York has the second highest combined state and local taxes in the nation;
  • New York has the highest local taxes in America as a percentage of personal income - 79 percent above the national average;
  • Median property taxes paid by New Yorkers are 96 percent above the national median;
  • Property tax levies in New York grew by 73 percent from 1998 to 2008 - more than twice the rate of inflation during that period.

Whether you call it Empire State exceptionalism or the canarie in the mineshaft, you have...

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This important survey of Ohio school leaders shows a growing disconnect of opinion between the people who teach in our public schools and those who lead them. While many teachers and other school employees resist changes to collective bargaining laws and education reform measures, superintendents recognize the need for such changes and in fact are hungry for them.

Yearning to Break Free: Ohio Superintendents Speak Out is the result of a statewide survey of Ohio district superintendents and other education leaders on the most critical issues facing K-12 education in the Buckeye State in 2011, including budgets, school effectiveness, and laws that make schools harder to manage.  The survey was conducted by the respected, nonpartisan public opinion research firm, FDR Group, and commissioned and underwritten by the Thomas B. Fordham Institute. The findings come as policy makers struggle to solve the state’s massive budget deficit while ramping up pupil achievement.

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