Fwd: Money and the Market for High Quality Schools

[Monty Neill <monty@fairtest.org>]

This article is by Bruce Baker.


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   Money and the Market for High Quality Schools
   <http://schoolfinance101.wordpress.com/2010/10/16/money-and-the-market-for-high-quality-schools/>

via School Finance 101 <http://schoolfinance101.wordpress.com> by 
schoolfinance101 on 10/16/10

This post is a revised version of my previous post â /If money doesnât 
matterâ/ 
<http://schoolfinance101.wordpress.com/2010/09/20/if-money-doesnt-matter/>

Here is a draft set of slides to accompany this post: Resource 
Heterogeneity across Sectors 
<http://schoolfinance101.files.wordpress.com/2010/10/resource-heterogeneity-across-sectors.pdf>

The theme du jour is that reform (very narrowly defined reform), not 
money will fix our schools. Weâre already spending a lot, the pundits 
say. Too much in fact, for what weâre getting. We need more charter 
schools â which obviously do more with less â we need to treat teachers 
like workers in the private sector (?) by publicly ranking them based on 
their studentsâ test scores â and in general, we need to adopt âmarketâ 
oriented strategies. Butâ

*If money doesnât matter t*hen why do private independent schools 
(market driven schools?) spend, on average, so much more per child than 
nearby public schools?**

First off, I am a supporter of private independent schools and former 
teacher in a private independent school in New York City â An 
exceptional school where tuition is now about $35,000 per child (where 
tuition covers only a portion of expense) in a city where the public 
system is being chastised by politicians and the popular media for 
spending about $20,000 per child. This despite the fact that the city 
school system must serve a more diverse and complex student population 
than the very selective private school where I taught.

About a year ago, I published a study on the private school marketplace 
in which I compiled the IRS financial filings of about 1,600 private 
schools around the country. And what did I find in this study? Among 
many other things, I found that private independent schools, a 
relatively large diverse sector of schools which includes many elite 
schools, and also some pretty average ones, spent on average 196% of 
public school average on same labor market (excluding boarding schools).

I also found that the pupil to teacher ratios in private independent day 
schools are about 8.8/1 (consistently from 2000 to 2008) compared to 
those of public schools at about 16.7/1 over the same period.

That is, private independent schools â ON AVERAGE â not just the elite 
of the elite â spend nearly double what public schools in the same area 
spend, and private independent schools leverage that money to purchase 
nearly double the teachers per child, offering much smaller class sizes, 
deeper and broader elective options, music, arts and other âfrillsâ many 
public schools have seen evaporate with recent budget cuts.

I am by no means criticizing the choice to provide oneâs own child with 
a more expensive education. That is a rational choice, when more 
expensive is coupled with substantive, observable differences in what a 
school offers. I am criticizing the outright hypocritical argument that 
money wouldnât/couldnât possibly help public schools provide 
opportunities (breadth of high school course offerings, smaller class 
sizes) more similar to those of elite private independent day schools, 
/when this argument is made by individuals who prefer private schools 
that spend double what nearby public schools spend./

/Private School Spending Study: 
http://nepc.colorado.edu/publication/private-schooling-US/

* **If money doesnât matter t*hen why do venture philanthropists 
continue to throw money at charter schools while throwing stones at 
traditional public schools? **

The standard rhetoric, touted in the media these days is that charter 
schools are not only doing better than traditional public schools, but 
that they are doing so with far fewer financial resources. The reality 
is that charter schools have widely varied resources, from state to 
state and even from block to block within New York City. Letâs focus on 
New York City charters for a moment, because New York City charter 
schools have received so much media attention.

A New York City Independent Budget Office report suggested that charter 
schools housed in public school facilities have comparable public 
subsidy to traditional NYC public schools, but charter schools not 
housed in public school facilities have to make up about $2,500 (per 
pupil) in difference. In forthcoming report, I explain how the much 
lower need populations served by NYC charter schools, compared to nearby 
NYC traditional public schools, more than offsets this difference.  That 
is, from the start, NYC charter schools are on relatively level 
financial playing field with the traditional public schools against 
which they supposedly compete. In fact, charters provided with physical 
space have a head start, and serve fewer low income children, few or no 
ELL children and fewer children with disabilities.

And then thereâs the philanthropy. Kim Gittleson of Gotham Schools 
points out that in 2008-09, NYC Charter schools raised an average of 
$1,654 per pupil through philanthropy. 
<http://gothamschools.org/2010/01/11/charter-school-philanthropy-2009/>In 2009, 
Venture Philanthropists granted over $30 million to 77 NYC charter 
schools, excluding major gifts to management organizations associated 
with many of the NYC charter schools.

Some NYC charter schools raised more than $8,000 per pupil, and 
depending on how you calculate it, Harlem Childrenâs Zone comes in as 
high as $60,000 per pupil. As a result, some charters â those most 
favored by venture philanthropists â spend on a per pupil basis much 
more than traditional NYC public schools.

One might argue that the Venture Philanthropists are trying to /spend 
their way to success â /To outspend the public schools in order to beat 
them!

In fact, a recent study funded by the New Schools Venture Fund indicated 
âThe average CMO relies on philanthropy for approximately 13 percent of 
its total operating revenues, but many CMO central offices could not 
exist today without philanthropy.â That is, they need this level of 
infusion just to stay afloat, running each year in the red, with no sign 
of break even years in the near future.

But hereâs the disconnect â These same Venture Philanthropists â who are 
committed to spending whatever it takes on charters in order to prove 
they can succeed, can be frequently heard arguing that public schools a) 
donât need and b) could never use effectively any more money. They are 
trying to argue that charters are doing more with less, when some are 
doing more with more, others less with less, and some may be doing more 
with less, and others are actually doing less with more. Shouldnât 
traditional public schools be given similar opportunity to do more with 
more? Blasphemy! Eh? And donât give me that â âweâve already tried that 
and it didnât workâ claim. Iâll gladly provide the evidence to refute 
that one!

*If money doesnât matter t*hen why do affluent â and/or low poverty â 
suburban school districts continue in many parts of the country to 
dramatically outspend their poorer urban neighbors? **

Last but not least, why do affluent suburban school districts in many 
states continue to far outspend poor urban ones? If there is no utility 
to the additional dollar spent and/or no effect produced by that 
additional dollar then why spend it?

In a recent article, co-author Kevin Welner and I point out that many 
pundits have prematurely argued that states have done away with â erased 
â differences in resources across wealthy and poor districts (article 
here: http://epaa.asu.edu/ojs/article/view/718) Really, anyone with a 
grain of information on this topic knows this assumption to be patently 
false. See also www.schoolfundingfairness.org 
<http://www.schoolfundingfairness.org/>.

Among other things Kevin Welner and I point out that nationally, there 
remains a positive relationship between school district spending per 
pupil and median household income but some progress was made through the 
early 1990s. It leveled off since. More importantly, that progress 
varies widely by state, with some states like New Jersey and 
Massachusetts providing more support in higher poverty settings, but 
many like Illinois or New York maintaining systems where affluent, 
predominantly white school districts continue to far outspend poor urban 
and urban fringe districts.

For example, in the New York Metropolitan area including only New York 
State districts (2007-08), lower poverty districts (those with fewer 
than 10% children below the poverty line) had state and local revenues 
per pupil ON AVERAGE, at about $23,000 to $24,000 per pupil, compared to 
those with over 20% poverty (census poverty rate) at just over $18,000 
per pupil in state and local revenues in that same year. Yet pundits 
pick the $18,000 per pupil number out of context, call it too high, and 
argue they should get no more! No more I tell you! The waste is 
egregious! Kevin Welner and I identify 9 downstate suburban districts 
that spent more than $10,000 more per pupil than New York City in 2007-08.

If the waste in New York City, or in Newark, New Jersey is so gosh darn 
egregious â if weâre spending way beyond reasonable levels in poor urban 
districts, what about those districts spending so much more on kids who 
would do just fine on so much less? Isnât that just a massive freakinâ 
waste? The people in these communities donât seem to think so.

*In conclusionâ
*

* *

Hereâs the thing â I donât believe that private independent schools or 
affluent local public school districts are just throwing money away. I 
believe they are trying to provide a high quality product to consumers 
who demand such a product and who expect such a product, be it through a 
system of local public financing or through a private market based system.

Thatâs the interesting twist in all of this. The âreformersâ who are 
choosing expensive private schools for their own children and throwing 
money at charters are invoking the language of âmarket based reformsâ 
for traditional public schools â market based reforms as a substitute 
for more money â because market based reforms will ALWAYS drive down per 
pupil spending. Thatâs what competition does, right?

Well, the one set of schools in this mix that are arguably most 
responsive to âmarket pressuresâ are the private independent schools. 
The schools most responsive to market pressures are the ones that a) 
spend the most, b) have the smallest class sizes and seem to use small 
class size in particular as a primary selling point, and c) I would 
venture to guess are least likely to be moving down the road of 
evaluating all of their teachers on the basis of test scores alone (most 
actually have relatively traditional experience driven step-scales). 
Yeahâ yeahâ but those are the luxury market products? Are small class 
sizes and diverse high school curriculum luxuries that should be 
reserved for only the few? I find this argument most offensive.

Really good education is expensive â and far more expensive than 
âreformersâ are willing to admit or understand. If the âreform movementâ 
is really about mimicking successful business models, these 
entrepreneurs should be paying close attention to the money being spent 
producing a high quality product â benchmarking against the âbestâ 
public and private schools, and then realizing that achieving comparable 
outcomes with more needy student populations will cost more â a lot more 
â not less <http://www-cpr.maxwell.syr.edu/cprwps/pdf/wp60.pdf>. For 
some reason, in this case, theyâve ignored that conversation entirely!

/
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