School Finance

Our recent study on trends in the special education population was only able to get at the costs of special ed obliquely. But with some states spending two or three times as much per student as others, it seems clear that districts and states could find savings in this $110 billion-plus slice of overall school spending without negatively impacting kids. Some districts are now turning to private companies to provide services at a lower cost.

The role these businesses can play seems to be twofold. First, they are more flexible than districts at providing services where and when they're needed, reducing the amount of time kids are pulled out from their normal classrooms and getting past rigid staffing formulas. Second, because they are a level removed from the difficult politics of special ed, they may have more power to say no to services that are not effective.

Outsourcing these services is no walk in the park, of course. Shady operators will have every incentive to overcharge and underdeliver. Districts must consider which services they're outsourcing, and to whom. The need for careful oversight is a given.

However, serving a population of students with very diverse needs using a variety of outside providers with narrow specialties and an incentive to help children overcome their challenges for good (if possible) is a worthy approach to try. It could both save money and provide a path to more individualized instruction for all youngsters.

- Chris Tessone...

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New Jersey's Supreme Court ordered Chris Christie to cough up another $500 million in funding for the state's schools in a 3-2 ruling today. Very few people (aside from the three justices in the majority and Mark Zuckerberg) would argue that NJ's worst-performing schools can be fixed with more money, however.

So-called "Abbott districts," which get more money under another NJ Supreme Court ruling that deemed education in those locales inadequate, are among the highest-spending districts in the country. Newark, which is one of them, tops out at $23,000 per student using the state's new accounting method. Education in these districts is indeed inadequate and horribly shortchanges the youngsters who live there, but after 25 years of receiving extra resources, it seems clear that the problem goes deeper than money. Unfortunately, the question of what constitutes an "adequate" education in New Jersey has largely revolved around funding issues rather than processes and outcomes for children.

Nevertheless, I agree with Bruce Baker that the court's rather narrow decision was the correct one. (This may be one for the record books.) Bruce found in a recent analysis that while New Jersey's funding system is fairly progressive, giving more state aid to poorer districts, Gov. Christie's recent cuts hit high-poverty districts the hardest. Today's decision is a perfect example of checks and balances functioning correctly, with the court restoring support to the poorest and most challenged residents of New Jersey.

Hopefully these restored funds will be...

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Amy Fagan

Fordham Institute President Chester Finn, has an interesting op-ed in the NY Daily News today. He writes about the prospect of teacher layoffs in NYC due to budget woes. I'll highlight a few of his points here.

Finn says no one likes to see teachers lose their jobs, since most are ?hardworking, committed, decent individuals who care about kids.? He notes, however, that salaries and benefits constitute at least 70% of every school system budget, and most of those paychecks go to teachers, so it's nearly impossible to attempt serious budget cuts without looking in that direction.

If layoffs do have to happen, much hinges on which teachers are let go, Finn warns. Classroom effectiveness ?should be the main criterion,? he writes.

He also writes that when it comes to the issue of class size, ?there is no persuasive evidence that smaller classes yield higher student achievement. Class size doesn't begin to compare with teacher effectiveness.?

Finn says much more. Get the full picture by reading the piece here....

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Michigan Governor Rick Snyder is a new name in education circles, but not to me. Having lived in the state my whole life, I proudly supported him from the days his popular, ?One Tough Nerd,? ads started popping on TV in early 2010. In the August primaries he pulled a shocking upset and went on to win the general election by a landslide. But since taking office, his efforts to erase deficits through drastic budget cuts have left him a villainous figure to many Michiganders. These are many of the same people you hear decrying his new education plan. By introducing these reforms while trimming the state's K-12 education budget by 4%, Snyder is hoping to do more with less. Personally, I couldn't be more in favor of the breath of fresh air he's blowing into the Michigan education system, but there's a lot more at play.

Snyder's plans, while promising, will take time to enact; schools, on the other hand, must act on his budget restrictions immediately. In Michigan, a state where union membership is mandatory for public school teachers, archaic ?last hired ? first fired? policies are still controlling who gets laid off. By not addressing collective bargaining, Snyder's education cutbacks will end up dealing an unintended blow: the jobs of young teachers. I know this because it could have been me. When I joined Fordham last fall, I passed up an offer to teach civics and history at a public high school...

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Unions are not to blame for the severity of public pension shortfalls, but that doesn't mean that taking a hard look at collective bargaining is a bad idea. Matthew Di Carlo at Shanker Blog called yesterday for pols and commentators to stop blaming the nation's public pension issues on collective bargaining. He has a point, but I can't run with his conclusions here:

I find little evidence that the unionization of public employees has any effect ? whether positive or negative ? on the fiscal soundness of state pension plans. This, along with the fact that we already know why pensions are in trouble, and it has little to do with unions, once again represents strong tentative evidence that the push to eliminate collective bargaining is misguided, and the blame on unions is misplaced. States with little or no union presence are, on average, in no better shape.

Pensions are far from the only issue at hand. The Pew report cited by Matthew shows that, in addition to the $660 billion gap in pension systems, there is a $604 billion shortfall to pay for generous health benefits for public-sector retirees. This gap has little to do with the financial crisis, because states didn't have much savings to lose in the markets to begin with.

The absolute level of health care liability per person ? not the gap, but the dollar amount states will have to shell out eventually ? seems to be related to unionization density....

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Montgomery County, Maryland, one of the wealthiest and highest-performing large school districts in the country, is likely to reduce its level of per-pupil spending, in violation of a state maintenance of effort requirement. This means giving up an estimated $29 million in state aid in 2013:

The county's elected leaders have rescinded a request made last month seeking to be excused from a state formula for funding education.

The decision would allow the county to reduce the amount of money it gives to Montgomery County Public Schools in the next fiscal year ? and potentially every year thereafter.

In a letter Thursday to the Maryland State Board of Education, County Council President Valerie Ervin (D-Dist. 5) of Silver Spring and County Executive Isiah Leggett (D) said they do not plan to seek a waiver from Maryland's maintenance-of-effort law.

The county spends roughly $15,000 per pupil, according to the Maryland Report Card, and found itself unable to cover the increased cost from enrollment gains in recent years.

The most interesting part of the story to me is the battle between the County Council, which sees an unsustainable budget, and the school board, which has been demanding that more county resources to be diverted to the already-flush schools. The Council seems to have tied the hands of the district with this move, committing Montgomery County to lower spending for the foreseeable future....

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We don't often talk about the political risk borne by public-sector workers in traditional pension systems, but that risk is now very real for cops and firefighters in Detroit. The city has twice as many retirees as workers on the job, and that coupled with a decline in population is making it tough for them to pay modest pensions ($28,501 a year for the average retired police officer). The city is looking for ways to reduce those already meager benefits.

Conventional wisdom and the laws and constitutions of many states have long held that the pensions being earned by current government workers are untouchable. But as the fiscal crisis has lingered, officials in strapped states from California to Illinois have begun to take a second look, to see whether there might be loopholes allowing them to cut the pension benefits of current employees. Now the move in Detroit ? made possible, lawyers said, because Michigan's constitutional protections are weaker ? could spur other places to try to follow suit.

?These things do tend to be herd-oriented,? said Sylvester J. Schieber, an economist and consultant who studies pensions.

Governments are simply very prone to mismanaging pension funds, over-promising in good times and underfunding in bad. Latin America learned this the hard way prior to pension reforms in the 1980s and 90s. We are blessed with much...

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