School Finance

Teachers rallied at the State Capitol in Albany last night, in a last-ditch effort to get the legislature and governor to restore funds to New York Governor Andrew Cuomo's?deficit slashing budget proposal. It doesn't seem to have worked.? The legislature worked into the night and passed ?the $132.5 billion proposal, closing a $10 billion deficit without raising taxes (the much ridiculed Empire State solons held firm on not imposing a ?millionaires tax?) and cutting state aid to education by a whopping $1.2 billion.

These are certainly tough times, but E.J. McMahon at the Empire Center takes off the gloves with a post this morning that offers a different perspective on the ?It's about the kids? argument made by many of the protesters who crowded into the Capitol. ??Not,? says McMahon in his short post. ?And he takes out after one teacher from a nearby school district who was at the rally and was quoted ?quoted in the Albany Times?as?saying "It's about the kids." ?

Actually, it's about teacher pay increases. It seems that nearly half those threatened jobs in Rotterdam-Mohonasen could be saved if the district's unions would accept a wage freeze recently requested by district officials.

McMahon then uses the considerable database his organization (a subsidiary of the Manhattan Institute) has amassed on public service employee salaries and their union contracts to reveal that the teacher was paid $92,522 in 2010, ?a nice increase from her $85,042 salary the previous year.? The raise...

How does your local school spend its money? If your district received funds from the American Recovery and Reinvestment Act, Arne Duncan knows:

Provided further, That each local educational agency receiving funds available under this paragraph shall be required to file with the State educational agency, no later than December 1, 2009, a school-by-school listing of per-pupil educational expenditures from State and local sources during the 2008?2009 academic year: Provided further, That each State educational agency shall report that information to the Secretary of Education by March 31, 2010. (p. 67 of the ARRA.)

These data came up at the Center for American Progress?American Enterprise Institute event on Title I a few weeks ago. As I recall, Carmel Martin, Assistant Secretary of Education for Planning, Evaluation, and Policy Development, said ED is still sifting through the data, and no decision has been made about whether they will ask for something like this on an ongoing basis from more school districts.

The Department should release these data (which they've had for a year) to the public, and they should strongly consider incentivizing states to require annual public reporting of school-level data. Rhode Island is already doing it, as I mentioned earlier this week. Releasing the data will ensure they get used to improve school spending and efficiency rather than sitting on a shelf somewhere.

? Chris Tessone...

Sometimes the right thing doesn't look great politically. New York City's efforts to future-proof its schools are coming under fire, with Manhattan's borough president pointing out that the city is spending half a billion dollars on technology (mostly network infrastructure) when it may have to fire thousands of teachers. This kind of spending is necessary, however, especially when the long-term sustainability of our present models of schooling is under fire. Never mind the fact that the city couldn't legally use the cash to pad the operating budget anyway ? the investments look smart on the merits.

As the Times article notes, many schools are already finding their infrastructure inadequate to support tools like smartboards, computer labs, and adaptive testing that are or will become standard features of 21st century schools. More importantly, NYC DOE's Innovation Zone schools are developing thoughtful methods for using technology in the classroom effectively, a sharp contrast to the "smartboards and fairy dust" approach to networking classrooms seen in some other districts and charter networks. In order to bend the cost curve so that tailored instruction for all kids is affordable, districts will have to spend more money on technology, not less. A half billion dollar investment may be tough to swallow, even in a huge district like New York City, but it should pay dividends for years to come.

? Chris Tessone...

As state and district education budgets shrink, it becomes doubly important to scrutinize line items, to think through cuts, and to trim fat in ways that won't negatively affect schoolchildren. Moore County, North Carolina seems to have missed that memo. ?The district is set to close one of its smaller elementary schools, Academy Heights.

From today's Wall Street Journal:

Academy Heights Elementary boasts a 98% pass rate on state exams, has an award-winning math program, and is ranked the second-best kindergarten-to-fifth-grade school in North Carolina. Yet it is slated to close at the end of the school year. Moore County Schools Superintendent Susan Purser said shutting down the school and sending its 265 children to nearby campuses was a ?painful last resort? to close an $8.2 million budget gap.

Closing high-achieving Academy Heights?the district's only year-round school?will save Moore County $500,000. Surely not chump change, but far off the $8.2 million in excess spending that needs to be leeched out of the budget lines. And surely not enough to justify shuttering the district's most successful school, possibly losing some of the district's most successful teachers, and almost guaranteeing 265 students an inferior education.

Scaling back budgets is an unenviable task. But before we open up the throttle on the budget-cuts train, let's make sure it's railed on the correct track. Take off the blinders, and actually look at how cuts will affect the kids. There are some smart ideas and how-tos out there.

?Daniela...

It's Christmas in Rhode Island: the state Department of Education has released a comprehensive new set of financial data for district and charter schools throughout the state. This is a welcome development given the Ocean State's $331M budget deficit and the need to do more with less. District budget directors and community members alike now have a powerful tool for finding inefficiencies and pushing for spending that is better-aligned with their most important priorities for K-12 education.

Other states (like New Jersey) have mandated that districts publish financial reports using a Uniform Chart of Accounts, a set of guidelines for classifying school and central office expenses and revenues. However, Rhode Island is the first state I know of that provides the reports and raw data in a format that empowers users to perform their own analysis easily ? in this case, using Microsoft Excel. RI's effort also includes the state's rapidly growing charter sector and benchmarks every district against charters and the rest of the state.

The level of detail is exceptional, with reports on spending in functional areas (face-to-face instruction, classroom materials, professional development), subject areas, even how much a district spends on retirees. (One spends 10% of their budget on retired personnel!) The reports could go further, of course. As far as I can tell, the data are not presented at the school level, which would be helpful for comparing spending within districts. Ensuring districts apply the rules faithfully and don't game...

At last night's school board budget ?workshop? I felt the sinking sensation that passengers on the Titanic must have felt:??it's too late for life boats. The trouble is, I felt that way last year as well.??The big difference between the Titanic and my school district is this: our ship doesn't really sink and we don't change directions.? What happened between last year's iceberg strike and this year's?? Nothing.? We threw a bunch of people overboard and kept on sailing ? and we'll do the same this year.?? No offense to Mike and my Stretching the School Dollar colleagues at Fordham, but out here in the trenches, it's budgeting as usual, which means politics as usual, which means balancing layoffs and tax increases, which means: the education equivalent of fighting over the deck chairs.

Last night, for instance,?with the administration suggesting that we lay off 10% of our teaching staff (but only 3% of the aides and no one from Central Administration), we heard impassioned speeches from two nurses, who knew their positions are not ?mandated? and thus vulnerable.? Individual teachers have lobbied me to save their jobs or their program, but no teachers spoke last night because we are in the middle of contract negotiations -- and I can't talk about that.? (I once suggested these public union contracts?be negotiated in public, an idea that was greeted with as much enthusiasm as if I'd suggested a class field trip to Mars.) Why aren't vocational teaching jobs on the...

Last week I showed that, by one measure at least, teachers in non-collective bargaining districts actually earn more than their union-protected peers?$64,500 on average versus $57,500. These numbers are for teachers with just bachelor's degrees who have reached the last step on the salary schedule.

Matt Di Carlo of the Shanker Institute responded in the comments section with an important analysis of his own:

Mike,

Why are you using the maximum BA salary as a measure of what teachers ?actually earn?? ?It would seem to me that this is the least appropriate choice for two reasons. First, unlike the starting and fifth year salaries available in the TQ3 database, the maximum salary doesn't ?control? for experience?the schedules vary as to how many years it takes to get to the top. Second, and more importantly, most career teachers (i.e., those who might get to the top of their schedules) get a master's degree (and are required to do so in some states), so very few teachers are actually located at the top BA step. It's probably the least appropriate choice as a measure of what the typical teacher earns.

I quickly replicated your analysis. My figures for the maximum BA salary are slightly different from yours, but close enough for the purposes of a comment.

Starting BA -- Non-CB: $41,314; CB: $38,696

BA 5th year -- ?Non-CB: $43,630; CB: $43,640

Maximum BA -- Non-CB: $63,731; CB: 57,628

Starting MA -- Non-CB: $43,960;

...

Young teachers turned around a poorly-performing elementary school in Oakland, and now they're all at risk of being fired in a LIFO (seniority-based) layoff mandated by state law:

Futures, previously known as Lockwood Elementary, was redesigned in 2007 and a particularly young staff was hired to change the school's old reputation as a place that held low expectations for its low-income and minority students.

The state education code holds no provisions for performance, though. Instead, it dictates that layoffs must be made in order of seniority. Most Futures teachers have been in the classroom for fewer than five years.

?What did we do the redesign for?? asked the school's principal, Steven Daubenspeck.

The union president blames the school's principal. She implies that all teachers are interchangeable widgets, so he should have kept the school's low-performing senior teachers instead of trying to turn the school around using new blood:

The president of the Oakland teachers' union, Betty Olson-Jones, said she feels for the teachers of Futures Elementary and that she plans to visit the school. However, she said, small school leaders ? like those at Futures ? that hired young teachers over older ones when they were redesigned are causing part of the problem. ?When [the division into small schools] happened, many of the teachers who were there and who wanted to be there and were veteran teachers were not invited back,? she said. ?And so, from 2001 through 2008, you saw a lot of veteran teachers

...
The Education Gadfly

Educator pension systems are becoming increasingly expensive and, in a number of states, plagued by severe problems of underfunding. Given concerns about cost and long-term sustainability, several states have cut benefits, usually for new teachers, and many more are considering doing so. However, in making these changes, policymakers should carefully consider their labor-market effects. Some of the proposed cuts reproduce?and even exacerbate?undesirable features of current systems.

That's because they violate the paramount principle upon which pension systems should be built: Benefits should be tied to contributions. In other words, benefits paid to any teacher should be tied to the lifetime contributions made by or for that teacher. If $300,000 has been contributed on behalf of a teacher (including accumulated returns) then the cash value of an annuity provided to this teacher should also be $300,000.

This principle is routinely violated in current defined-benefit pension systems. Our analysis, Reforming K-12 Educator Pensions: A Labor Market Perspective, shows that the current systems result in very large implicit transfers from young teachers working short teaching spells to ?long termers? who spend entire careers in the same system. In our view, a teacher who works ten years or thirty years should accrue pension wealth roughly equivalent to total pension contributions (with accumulated returns). [quote]

Illinois is a cautionary example of how not to reform teacher pensions. The Land of Lincoln recently implemented a two-tiered plan, with teachers hired after January 1, 2011 in the second tier. Tier 2 teachers will...

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