“When we get back to a more normal economic cycle in Ohio, this is very doable.” This was Governor Strickland’s response to a question about how he plans to add billions of new state money over the next decade to pay for the state’s evidence-based school funding model.  

Based on education spending over the last two decades, the governor’s comment is reasonable. Chart 1 below shows inflation-adjusted per-pupil revenue for K-12 public education in Ohio, which has risen by 60 percent since 1991. There is no doubt that public education in Ohio – as across the rest of the country – has held a privileged position when it comes to spending. In fact, when controlled for inflation, school spending has been increasing substantially for a century. Why should anyone expect the future to be any different?

Chart 1: Inflation-adjusted Per-pupil Revenue for K-12 Public Education in Ohio, 1991 to 2010

Source: Ohio Department of Education, Bureau of Labor Statistics inflation calculator; 2010 figure represents estimate

In Stretching the School Dollar, a new book published by Harvard Education Press and co-edited by Fordham’s Eric Osberg, there is a chapter ominously titled “A Warning for all Who Would Listen – America’s Public Schools Face a Forthcoming Fiscal Tsunami.” The chapter’s authors, Vanderbilt’s James Guthrie and Arthur Peng, outline the forces that have contributed to public education’s unique status and why it’s been so protected: 

 …its privileged legal status within most state constitutions; schooling’s almost unique decentralized operation and diffuse revenue generation structure; local political dynamics and institutions that generally foster a favorable fiscal environment for public schools; a multitiered responsibility for funding schools with complicated intergovernmental funding incentives; and reliance on inelastic tax sources – property – at the local level.

 They conclude, “Almost no other economic endeavor enjoys such a spectrum of insulating conditions.”

But, despite protectionist attitudes toward public education, our K-12 system has not delivered results commensurate to the resources and hopes invested in it.  In most states, in fact, student achievement has largely been flat for decades, as charts 2 and 3 show below. When it comes to high school graduation rates – a benchmark on which America led the world for much of the 20th century – the US is now 20th. Only three in four Americans graduate from high school while most other advanced nations average 90 percent or higher.

Chart 2: Percent of Ohio 4th and 8th Graders Scoring Proficient or Better in Math on NAEP,
1992 to 2009

Source: National Center for Education Statistics

Chart 3: Percent of Ohio 4th and 8th Graders Scoring Proficient or Better in Reading on NAEP, 2000 to 2009

Source: National Center for Education Statistics

Further, public education has remained stalled over the last few decades while at the same time almost every sector of the America economy has achieved productivity gains. Labor costs in education have steadily increased: from 1980 to 2006, public school enrollment in the United States grew by roughly 18 percent while total school employment grew by 48 percent.

But Ohio can no longer afford unmitigated increases in spending.  As we approach what Marguerite Roza, education economic advisor to the Bill and Melinda Gates Foundation, says is an unavoidable fiscal cliff in 2011-12, we may very well see education lose its privileged position in the public spending food chain. Guthrie and Peng warn:

Public frustration with four decades of stagnant school achievement, the apparent unproductive increasing labor intensity, the slow pace of infusing instructional technology into classrooms, the overall decline in education productivity, frightening financial liabilities associated with current and future retiree pensions and health-care obligations, added political competition from other publicly funded services, increasing centralization of revenue generation, the diminishing number of households with school-age children, and overarching pressures of soaring national debt all warn of a downwardly spiraling dynamic that may be more powerful than any partisan electoral forces. Future presidents, governors, mayors, school board members, and superintendents will likely face a perfect storm of fiscal obligations, revenue restrictions, and resource competition not seen for a hundred years.

Further, demographic realities are conspiring against the public schools. As America grays and families shrink, other interests will be competing against the schools for scarce public dollars. Guthrie and Peng point out that:

In 1963, 57 percent of the nation’s households had children under age 18 at home, marking the high point in the nation’s history. By 2008 this figure had fallen to 46 percent and was still dropping. Moreover, the number of children at home had itself dwindled to an average of 1.8 per female. Finally, only 36 percent of households had enrolled or were intending to enroll their children in public schools.       

If demographics are indeed destiny, then one should take seriously Guthrie and Peng’s conclusion that:       

The competition for resources from other sectors – for example, the aging baby boomers – will assuredly imperil schools’ historic resource privilege.

The evidence is persuasive that we are entering a “new normal” when it comes to school spending. In practice, this begs the question: how can Ohio, and other states, actually bend the cost curve while improving the quality of its schools? This is a difficult question for politicians and educators alike, but one that can no longer be easily ignored or summarily dismissed. For the sake of our children’s education and our state (and national) economic future, we need to figure out how to adapt to the new norm of doing more with less.   

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