School Finance

As Bianca noted yesterday, legislators in Ohio are pushing major changes to the collective bargaining rights of public sector unions in the state, among them teacher unions. Many of the proposed changes, like eliminating step-and-lane salary increases, would be very positive.

One change struck me as odd among the proposals: a ban on districts paying more than 80% of teachers' health care costs. I get where the proposal is coming from ? when state and local tax coffers are full, politicians (school board members among them) love to win points with unions through huge giveaways to teachers. It's not a response to demands in the labor market, but blatant vote mongering. We see the fruits of these popular but irresponsible moves when tax revenues dry up.

If onerous state mandates like step-and-lane are removed, one hopes some Ohio districts will step up to develop better, more effective human capital policies that drive student achievement and attract high performing teachers. What if the part of the labor market those districts target demands benefits covering 85% of health care costs in exchange for smarter accountability and better instruction? Why tie districts down in new ways while cutting old mandates?

Perhaps the bill's sponsors feel like this is the best tool they have at the state level for reining in exploding benefits costs. I can appreciate that. But in the end, local control in the US needs to be re-examined and re-invented. If school boards exhibit dysfunctional behavior...

Last year at this time I was unveiling my Share the Pain plan (I liked the coincidence that STP is a famous fuel additive, ?with the racer's edge"), which included a staff salary freeze and cutting out busing for anyone who lived within a half mile of school.? Those two items alone would have saved nearly a million dollars and the jobs of a couple dozen teachers.? Alas, unlike the racer's edge, my STP went nowhere and a lot of teachers and other staff went looking for work.

This year, I'm mainly watching as the crowd gathers at the cliff's edge.? I did, however, pass on Stretching the School Dollar to my board colleagues and do also share suggestions that come my way, including this wonderful stream-of-conscious Blackberry email from a veteran elementary school teacher: ?

Ok, well, here are some thoughts.?

Co-integrated classrooms are not working.? We need more self-contained special education classes.? Instead of having two teachers in a classroom.? Have one.? Extra Content classes in [the school] are horrible and a waste of time and not working.??Have one special area teacher to one class for even one period a day- it would be better.? Give us more time in the class!? More teaching time....?? As for our building... we have four counselors that really don't do a hell of a lot.? Cut them, and make the ones work.? Or, have them?act as behavior person.. one period a day.. so we don't need to spend the


New York hates to be behind its Hudson River rival ? New Jersey ? but new Empire State Governor Andrew Cuomo is doing a nice job keeping up with his Garden State comrade-in-chief Chris Christie with education blasts.?

This morning, Cuomo makes an appearance on the front page of the New York Times,?uttering?unsympathetic comments about ?the salaries of some of ?New York's school superintendents; most notably, one Long Island schools chief, who makes $386,868 (over $500,000 with?benefits!) overseeing just 6,687 students and a budget of just over $176 million; that's?more than double the governor's?salary but a bit less than the $133 billion that the Governor oversees.? Said the Times:


Said Cuomo:

I understand that they sometimes have to manage budgets, and sometimes the budgets are difficult.? But why they get paid more than the governor of the state I really don't understand.

In fact, according to the Times, Cuomo,? who will be making $179,000 to run New York State, is earning less than?more than 40 percent of the state's 700+ school superintendents.? (Christie is proposing a $175,000 cap on most of New Jersey superintendents, thank you very much.)

Whether this "alternative villain" is enough to convince New Yorkers that a 7% cut in state aid to education might just be warranted is anyone's guess. Number 1 in spending,?the state's?8th-graders?rank in middle of the pack in NAEP math tests -- so its citizens may not understand the numbers here.

?--Peter Meyer, Bernard Lee...

Selective public high schools in DC, educating mostly affluent students, receive more dollars per pupil than open enrollment neighborhood schools. That's the (not very surprising) finding of a new analysis by the Senior High Alliance of Parents, Principals and Educators, a local advocacy group.

DC, like many large urban districts, has an ongoing discussion about how appropriate these kinds of magnet programs are. As detailed in the report, they're usually expensive. Some in DC think this is money well spent to keep high-earning professional families in the city; others contend that the money should be spent where it would have the highest impact on student achievement, usually in high-poverty schools.

The more surprising part of the news is that this kind of data is available and transparent to district leadership in DC at all, much less to the general public. Too many systems apply average salaries to school budgets districtwide, giving them very little visibility into how spending in a given school matches up with the community's priorities. Marguerite Roza's recent book, Educational Economics: Where Do School Funds Go? describes this problem in some detail.

No matter where a community comes down on magnet schools and other spending priorities, it can't have any confidence that the money follows those priorities without accurate, school-level spending data. It's a boring subject for most, but it's critical....

New York's new governor, Andrew Cuomo, unveiled his proposed state budget yesterday and, as expected, it's not pretty. True to his no new taxes promise, to close the Empire State's $10 billion deficit, Cuomo proposed cutting ?the state's $135+ billion budget by almost 3 percent, with, as the Wall Street Journal said, ?the most dramatic cuts [falling] on education.?

If Cuomo has his way, aid to K?12 public schools would drop by $1.5 billion, a cut of some 7 percent (see here, here, and here). ?New York City schools, the largest district in the state ? and the nation ? with over a million students, would receive some $600 million less from the state than last year.? Some 60% of the state's public school revenues come from the state aid fund; most of the rest is raised locally, from property taxes.

There is some hope that the budget crisis will lead to systemic changes ? to the teacher tenure and seniority system, for example ? but?most districts?will no doubt be?lopping off the heads of the last-hired teachers.

?Mandate relief? is one of those proposed changes. Said the governor,

State Aid reductions are coupled with a mandate relief effort, undertaken by Executive Order, which will lower the system-wide cost of providing education services, thus mitigating the impact of decreases in aid.

Cuomo is also proposing ?competitive funding pools,? a la Race to the Top, that will distribute some...

As Peter noted earlier, we're witnessing something rare in New York right now ? a Democratic governor cutting budgets, pushing for property tax caps, even targeting education spending for aggressive reductions. With a $10 billion budget deficit and all its Federal stimulus funding squandered, this may be just what the state needs.

What is perhaps most laudable in Andrew Cuomo's proposed budget is that he seems to be taking the crisis as a chance to bend the cost curve in government for good, taking on basic funding formulas in addition to proposing temporary cuts.?What's not clear, however, is that he, the legislature, public-sector unions, or other players in the state are thinking creatively enough about how to re-envision how government works.

On Monday, Lou Gerstner, former CEO of IBM, had an op-ed in the Wall Street Journal arguing for just this kind of restructuring, and one of his fundamental tenets is, ?Focus on programs, not costs.? In a previous life, when I was a management consultant, this was my dogma. If tasked with cutting 5% of a business unit's budget for a client, my first step was to think about how I would fulfill that unit's mission if I had to start from scratch. If I could succeed in reinventing a process or two more cost-effectively, I could usually make cuts while improving operations ? not making things worse.

At least when it comes to schools, the powers that be in...

When Congress starts to debate education funding in coming weeks and months, keep the following headlines in mind. All of them refer to federal dollars that flowed from the $100 billion education stimulus.

At Avondale Elementary, 90 new iPads help students ?app'ly themselves

Florida Schools giving away $350,000 worth of ipods?using stimulus money

Detroit Public Schools: 40,000 kids to get laptops from stimulus funds

Senators criticize using stimulus money on iPods

Rather than get snarky, let me admit: These purchases probably did stimulate the economy.

-Mike Petrilli

Reuters is reporting that Mayor Michael Bloomberg is set to lay off 15,000 teachers in New York City in anticipation of State deficit crunches.

Fifteen thousand teachers!? That is probably more teachers than employed in some of our states.

Granted, this is?only two twenty percent* of the 75,000 teacher workforce in Gotham's one-million student system, but the raw numbers are awe-inspiring. Fifteen thousand teachers laid off!? That's a whole city's worth of unemployed teachers.? I can see the tents now. ?Teachervilles?

The number came from a local?radio interview the Mayor gave.

The scuttlebutt is ? I don't know if it's true or not ? is that the education budget will be cut statewide and New York City's share of that would be a $1 billion cut.

One billion dollars. That's another awe-inspiring number. ?More than some country's GDP, I'm sure.

Much of this, of course, is posturing, with the Mayor painting as unrosy a picture as possible in order to win sympathy for schools in advance of the state's budget negotiations.

Okay, go for it Mayor Mike.? But still, 15,000 teachers? ?Does 10,000 sound better?? Five?

Is the Coney Island rollercoaster still working?

?Peter Meyer, Bernard Lee Schwartz Policy Fellow


*Thanks to an astute reader, I have corrected my decimal point error!...