Guess Who Wants A Bailout

November 25, 2008

A major industry has gotten in line to receive a bailout.  It directly employs more than 6 million people.  That’s a lot of people considering that there are a total of 300 million men, women, and children in the US of whom 137 million are currently employed (excluding farmers).  So the workers in this industry constitute about 4% of all workers in the US.

Those 6 million workers directly serve almost 50 million customers.  While recent figures are not available, the industry had revenue of about $536 billion as of 2006 when total US GDP was $13.13 trillion.  So this industry constitutes about 4% of total US GDP.

Despite its size and importance, this industry has a notorious track record of performance.  It fails to complete more than a quarter of the products it starts.  Even among those it does finish, almost 40% fail to meet basic standards for quality.  Quality has not improved a smidge in over three decades despite more than doubling the average cost of production.  And foreign competitors are cleaning our clocks.  In a comparison of 21 industrialized countries, US quality exceeded only that of South Africa and Cyprus.

And this industry has huge and understated pension liabilities that, failing a miraculous improvement in the returns on investments, will inevitably have to be paid by taxpayers.  These “legacy” costs are consuming an increasing share of resources and distorting labor markets, hindering an industry turnaround.  But the unionized workforce continues to press for increased pay and benefits while opposing restructurings that might address quality-control problems.

Despite an unwillingness to correct its structural weaknesses, either controlling costs or improving quality, captains of this industry are appealing to politicians for a bailout.  As one recently said, “‘The most commonly heard solution out of Washington these days is a bailout where the federal government intervenes to safeguard key industries and in the process, the quality of American life.  If that’s the rationale, than I cannot think of a more strategic investment than safeguarding the quality of [our industry].”

Are we talking about the US auto industry?  It sounds like we could be, but I’m sure most of you have guessed that the industry described here is the US K-12 public education industry. 

And who is it that is requesting the bailout on behalf of K-12 public education?  None other than Alberto Carvalho, the superintendent of Miami-Dade schools.  This is the same Alberto Carvalho who manipulated a romantic relationship with a Miami Herald reporter to advance his career.  I guess when he’s not busy with naughty text messaging, he’s making the case for an education bailout: ”The question in my mind is this: At a time when we’re continuing the bailout of key industries, at what point do we have a bailout of public education?”

Watching folks scramble for bailout funds is like watching pigs at the trough.  It’s only a matter of time until Starbucks gets in line.  After all, the US economy needs liquidity.

(edited to note that it is K-12 public education)

9 Comments | economics, money myth, school funding | Tagged: , , | Permalink
Posted by Jay P. Greene

Burn Baby Burn!

November 19, 2008

(Guest Post by Matthew Ladner)

The University of Texas system has emphasized transparency in recent years. The following table comes from a UT Austin report, comparing UT finances to peer institutions.

State Appropriations plus Tuition & Fees per Full Time Equivalent Student, Fiscal Year 2006
University of Texas at Austin $13,560
UC Berkeley $23,470
UCLA $25,210
University of Illinois Urbana $16,060
University of Indiana Bloomington $16,710
University of Michigan Ann Arbor $23,830
Michigan State University $17,370
University of Minnesota Twin Cities $23,200
University of North Carolina Chapel Hill $26,220
Ohio State University $19,850
University of Washington Seattle $18,270
University of Wisconsin Madison $16,580
DCPS $24,600

Ok, so this isn’t precisely the table- something has been added. While most of these are first rate public universities, one of them is one of the nation’s most dysfunctional school districts-the District of Columbia Public Schools (DCPS). The number for DCPS is a spending per pupil figure computed by Cato Institute scholar Andrew Coulson.

So don’t hurry off to the comment section to complain that universities have other sources of revenue-granted they do- research grants, private gifts, etc. But I think any fair minded person would have to concede however that modern American universities spend money in ways that would make a drunk sailor blush. Paragons of frugality they are not. Universities are also engaged in an activity inherently more expensive teaching K-12 skills- no school district needs to hire legions of people holding Doctorate degrees in order to be successful. The total spending per pupil are much higher for these universities, but much of that spending has next to nothing to do with student education.

Notice however that the money spent per pupil in DCPS would cover all the tuition, fees and state appropriations to send expenses for all of these institutions other than UCLA and UNC Chapel Hill, where it comes very close.

Take the least expensive option on the list. UT Austin ranked as the 15th best University in the world according to the Times of London in 2004. UT Austin employs 2,300 full time faculty members, 51% who were tenured, including Nobel Prize winners, etc. etc. UT Austin has esoteric departments with few students, and things like atom smashers and a nuclear reactor, seven on campus museums, seventeen libraries with 8 million volumes, a Gutenberg bible and many other obscenely expensive ornaments.

And yet…almost two students can attend UT Austin for spending per pupil in DCPS. I could dwell on just how bad DCPS test scores are, but that would be cruel. As the Joker burned his cash bonfire, he told stunned onlookers “It’s not about money, it’s about sending a message.”

With absurdly high spending and tragically low scores, what message does DCPS send?

4 Comments | money myth | Tagged: , | Permalink
Posted by matthewladner

Looking Abroad for Hope

November 5, 2008

hope

HT despair.com. Looking for a Christmas idea to suit the new reality? Why not a despair.com gift certificate – “For the person who has everything, but still isn’t happy.”

(Guest post by Greg Forster)

Looking around for something to give me hope this morning, I find the best place to turn (for today, at least) is outside the U.S. Specifically, I turn to the recently released study in Education Next by Martin West and Ludger Woessmann finding that around the world, private school enrollment is associated with improved educational outcomes in both public and private schools, as well as lower costs.

Well-informed education wonks will say, “duh.” A large body of empirical research has long since shown, consistently, that competition improves both public school and private school outcomes here in the U.S., while lowering costs. And the U.S. has long been far, far behind the rest of the world in its largely idiosyncratic, and entirely irrational, belief that there’s somthing magical about a government school monopoly.

And private school enrollment is an imperfect proxy for competition. It’s OK to use it when it’s the best you’ve got. I’ve overseen production of some studies at the Friedman Foundation that used it this way, and I wouldn’t have done that if I didn’t think the method were acceptable. However, that said, it should be remembered that some “private schools” are more private than others. In many countries, private school curricula are controlled – sometimes almost totally so – by government. And the barriers to entry for private schools that aren’t part of a government-favored “private” school system can be extraordinary.

That said, this is yet another piece of important evidence pointing to the value of competition in education, recently affirmed (in the context of charter schools, but still) by Barack Obama. Who I understand is about to resign his Senate seat – I guess all those scandals and embarrasing Chicago machine connections the MSM kept refusing to cover finally caught up with him.

Leave a Comment » | competitive effects, methodology, money myth, politics, research reports, vouchers | Tagged: , , , , | Permalink
Posted by Greg Forster

PJM on Candidates’ Education Flip-Flops

November 3, 2008

(Guest post by Greg Forster)

Over the weekend Pajamas Media carried my column on how Obama and Palin have flip-flopped on education:

Suppose I told you Candidate A has supported rigorous academic standards, has stood up to the teachers’ unions — even been booed by them at their convention — and proclaimed the free-market principles that schools should compete for students and better teachers should get higher salaries. On the other hand, Candidate B says that competition hurts schools, that kids should be taught a radical left-wing civics curriculum, that we should throw more money at teachers’ unions — excuse me, at schools — and that rigorous academic standards should be replaced with the unions’ old lower-the-bar favorite, “portfolio assessment.”

Candidate A is Barack Obama. So is Candidate B.

Meanwhile, Candidate C has made an alliance with the teachers’ unions, opposed school choice, thrown money at the unions — excuse me, at schools — and even helped undermine a badly needed reform of bloated union pensions. On the other hand, Candidate D has broken with the teachers’ unions, demanded that schools should have to compete for students, and endorsed the most radical federal education reform agenda ever proposed by a national candidate, including a national school choice program for all disabled students.

Candidate C is Sarah Palin. So is Candidate D.

Important disclaimer:

None of this implies anything about the overall merits of any of these candidates. One can love a candidate overall while hating his or her stand on education, and vice versa.

1 Comment | competitive effects, money myth, politics, school accountability, social promotion, special ed, teacher pay, teacher quality, teacher union, vouchers | Tagged: , , , | Permalink
Posted by Greg Forster

Why Are School Construction Costs So High?

October 27, 2008

I don’t know the answer but I really think this is a topic worth exploring.  And my attention has been focused on the question by a local debate over building a new high school in Fayetteville, AR.

What I do know is that according to the 34th Annual Official Education Construction Report the median new school built in 2007 cost $188 per sq. ft. for elementary schools, $211 per sq. ft. for middle schools, and $175 per sq. ft. for high schools. By comparison, the median cost per square foot to build a three story factory in 2007 ranged from $83 in Winston-Salem to $136 in NY City, with most major metro areas hovering around $100 per square foot.  Schools cost almost double what it costs to build a three-story factory and even more than what it costs to build houses. 

Why does it cost so much?  Part of the answer is that schools are more likely to be mandated to have Project Labor Agreements (PLAs), which require the use of unionized construction workers.  Schools built with PLAs cost about $30 more per square foot according to studies conducted in Connecticut and Massachusetts. 

Some of the higher cost can be attributed to gold-plating in the school building codes.  In Florida, for example, the increase in school building code requirements following Hurricane Andrew added $500,000 to the cost of each elementary school and $2 million for each high school over a decade ago.  Every school was expected to withstand 150 mph winds rather than 121 mph and to double the thickness of the concrete roof to 4 inches.  Of course, it’s always hard to argue against the safety of school buildings, but remember that kids are not in schools when hurricanes hit.  Schools are usually closed a day or two before a hurricane is expected.  It’s true that schools may be used as shelters, but not every school needs to be a shelter.  Requiring that every school meet the highest standard for any building is a way to exploit our concern for kids’ safety to drive school construction costs up.

In addition to the price per square foot, there is also the question of how many square feet we need.  The average new school has between 100 and 158 square feet per student, depending on the grade level.  But state requirements for square footage are increasing based on the argument that “schools need more space than they did 20 years ago.”  That may be, but some states, such as Minnesota, require as many as 200 to 320 sq. ft. per student for small high schools.  The Har-Ber high school that I described in my last post has 198.25 square feet per student.  At about 200 sq. ft. per student we could teach a class of 25 kids in a 5,000 square foot mansion.  And at an average cost of $23,873 per student for new high school construction, we could build that 5,000 square foot mansion for those 25 students for around $600K. 

Not bad.  Now if only we could teach students well-enough so that they could earn their own $600K house.

8 Comments | money myth | Tagged: , , | Permalink
Posted by Jay P. Greene

Buildings Don’t Teach Kids, People Do

October 23, 2008

Matt wrote about black-market private schools in the third world housed in open-air shacks on the same day that newspapers reported that my local school board in Fayetteville, AR wants to re-build the high school so that we have a “21st Century” facility. 

While it is better not to have schools in open-air shacks, I can’t understand why people think we need educational palaces to teach our children.  Buildings don’t teach kids.  People do. 

We should invest much more in ensuring that we attract, retain, and motivate the best people as teachers rather than in “21st Century” facilities (whatever that blather means).  The systematic evidence overwhelmingly shows that the quality of school facilities in the United States has no relationship to student achievement, while the quality of teachers is very strongly related.  In the Handbook of the Economics of Education, Eric Hanushek reviews all of the research meeting minimal quality standards regarding the relationship between school facilities and student performance.  He identifies 91 analyses on the issue in the U.S. and finds that 86% of them show no statistically significant relationship.  Of the remaining 14% of analyses that did show significant effects, 9% were positive and 5% were negative. 

Research from developing countries told a different story.  Of the 34 analyses he identified on the relationship between school facilities and student performance in developing countries 65% showed significantly positive effects, 9% significantly negative, and 26% not statistically significant.  Clearly there is some level of building quality below which student achievement suffers.  But school buildings in the United States are nowhere near that threshold where the facility makes a significant difference.  The kids in the open-air shacks would probably benefit from an environment that screened out noise and dust more effectively, but almost all kids in the U.S. are in buildings that meet the minimum requirements for student learning even if they are not all luxurious.

But I suspect that is the problem in Fayetteville.  Just up the highway in Springdale, they recently built a Taj Mahal of a high school, called Har-Ber.  The marble-floored interior is pictured above.  Here is the giant-columned exterior: (Web site with photos was taken down, but you can still view pictures of the school here: http://www.wddarchitects.com/ )

Har-Ber was built for about $37 million, or about $93 per square foot.  People in Fayetteville had been talking about building a new school for more than twice that amount.  In our version of keeping up with the Joneses, some folks in town fear that the superior academic reputation of Fayetteville High School could be eclipsed if we don’t top the Har-Ber building.

Yes, Fayetteville High School is half a century old.  Yes, its cafeteria and auditorium are too small.  But there are smarter and less costly ways of addressing those problems than temporarily housing students elsewhere while we spend tens of millions to build a new one.  How about if we just build a new cafeteria and auditorium?  The recently completed appraisal of the facility said that it was in “excellent condition,” so why do we have to tear it all down and build a shinier new one? 

And how about if we take some of the money that we were willing to spend on a shiny new building and invest it intelligently in recruiting, retaining, and motivating the best teachers?

As a separate matter, someone needs to look into why exactly school buildings cost so much.  The average cost for housing construction in the area is $55.10 per square foot compared to $93 at Har-Ber and who knows what at the potential new Fayetteville High School.  My guess is that school construction firms have effective lobbies that insert all sorts of gold-plating and burdensome requirements into school building codes.  Doing so limits possible bidders who could meet all of those requirements while it drives up the construction profit.  And I imagine that most of those requirements have nothing to do with educational necessity or realistic student health and safety.

(edited for typos and pictures currently unavailable from source site but can be viewed here: http://www.wddarchitects.com/)

9 Comments | money myth, teacher quality | Tagged: , , , | Permalink
Posted by Jay P. Greene

Palin’s Palein’ on Education

October 3, 2008

(Guest post by Greg Forster)

I didn’t bother watching the debate, but from the comments around the web it looks like my prediction that there would be nothing really worth watching was accurate.

Cruising through the commentary, though, I came across this from Mickey Kaus:

Palin sounded like she was campaigning in Iowa for the teachers’ union vote when she talked about education. We need to spend more money. Pay teachers more. States need more “flexibility” in No Child Left Behind (“flexibility” to ignore it). I didn’t hear an actual single conservative principle, or even neoliberal principle. Pathetic.

So much for all that talk about how the McCain staff was overcoaching her. It’s remarkable – yet few seem to be remarking upon it, which is also remarkable – that Barack Obama is more of an education reformer than Palin. (At least, on paper he is. In practice they’re probably both about the same, which you can take as a compliment to Obama or as a criticism of Palin according to preference.) At any rate, her approach to education is pretty hard to square with McCain’s.

The lack of attention to this rather glaring contradiction, even by Palin detractors (and McCain/Palin detractors) who presumably have a motive to pay attention to it, shows just how irrelevant education has become as a national issue, at least for this cycle. Remember how big education was in 2000?

Good thing real reforms like school choice are winning big at the state level. The movement was wise not to bother showing up in DC for the big NCLB hulaballoo eight years ago. Now they’re not tied to NCLB or in general to the fortunes of education as a federal issue. I’ve heard some conservatives bash NCLB because it lacks serious choice components. But NCLB was never about choice. It seems clear that the choice components in Bush’s original proposal were only there to be given away as bargaining chips. The important question is, where would the school choice movement be now if it had tied itself to NCLB?

1 Comment | money myth, NCLB, politics, vouchers | Tagged: , , , | Permalink
Posted by Greg Forster

Lessons for Arkansas

September 2, 2008

The national media has a few pieces that speak to issues being debated in Arkansas (and I’m sure elsewhere).

New School Buildings

Arkansas, like many states, believes that it urgently needs to spend an enormous sum (more than $1 billion in Arkansas) to improve school facilities.  I’m sure that there are schools in Arkansas that are desperately in need of repairs and replacement, but the need for new school facilities is greatly exaggerated.  The obsession with shiny, new buildings is greatest in my hometown of Fayetteville, where folks covet the mansion-like schools that have recently been built in nearby Springdale and Bentonville. 

But Jay Mathews had a column in the Washington Post  yesterday that observed: “Great buildings don’t make great schools. It might be better if we spent our money on principals and teachers who inspire, who don’t take lethargy or resentment for an answer. Put educators like that in the rickety buildings we have, and stand back.”  Mathews wrote a book reviewing the best high schools in the US and “was astonished at how bad some of the buildings were.”  In the end he agreed with the teachers in those excellent schools: “It is not the building, but the teaching, that makes a difference.”

Fayetteville would do well to take some of the $92 million it was considering spending on a new high school (and why it costs so much is a topic for another day), and devote it wisely to teacher and principal salaries.  I emphasize wisely because across-the-board pay raises without changing the current structure will almost certainly make no difference.  Teachers are not under or over-paid.  They are just paid incorrectly because the pay does nothing to attract, reward, or retain excellent teaching. 

District Consolidation

The major education reform strategies championed by former governor Mike Huckabee was the consolidation of smaller school districts.  Outgoing Senator Jim Argue has even floated the idea of consolidating down to 75 county-wide school districts. 

Recently I’ve questioned consildation as a productive reform, suggesting that unless we want our schools to imitate county-wide districts in Los Angeles or Miami, consolidation is not the answer. 

Now the Wall Street Journal reports that Los Angeles is taking steps to break-up their giant school district.

(edited to correct number of counties in AR)

4 Comments | money myth, teacher pay | Permalink
Posted by Jay P. Greene

PJM Column by GF on BB (Just AAMOI)

August 22, 2008

(Guest post by Greg Forster)

Pajamas Media carries my take on BB today. I’m not as harsh on BB as Jay and Matt have been. I’m harsher.

Those of you who have been following the unions’ desperate attempt to distract you from the fact that BB doesn’t have the empirical evidence they claim it has by flinging a bunch of calumny at Jay may find this section of particular interest:

The really funny thing is, we’ve tried bringing social services into schools before. Fifty years ago, schools didn’t serve breakfast and provide teams of guidance counselors. Providing these and other social services in schools was originally justified on grounds that the kids needed these services to do well in school. How has that worked out?

Well, after all the empirical research that’s been done on schools, there’s no serious evidence that educational outcomes have improved as a result of these services. When the unions were challenged to come up with some evidence, they responded that “teachers know” these policies work.

But if the real purpose of providing these services in schools was to enlarge the government education blob, mission accomplished.

I wrote the column before the exchange about evidence and “cherry picking” over the last few days, but I see nothing that needs revision. As Jay pointed out, the evidence to which they now appeal is on the same scientific level as that used to prove the healing power of crystals. Their original “teachers know” argument was actually better – at least it didn’t pretend to be scientific.

Leave a Comment » | money myth, myth of helplessness, teacher union | Tagged: , , , | Permalink
Posted by Greg Forster

More Money Myth

April 20, 2008

An article in today’s LA Times illustrates how the money myth is alive and well.  The piece by Seema Mehta focuses on private fund-raising efforts in California that are seeking to off-set proposed budget cuts. 

The article, and the people quoted in it, wish to establish 1) that California spends far too little on education, which is demonstrated by the alleged fact that it spends less per pupil than almost all other states; 2) that private fund-raising is necessary to make a significant difference in remedying those perceived shortfalls; and 3) that inequities in the capacity of different communities to engage in private fund-raising is a significant contributor to inequities in student achievement between those communities. 

All three of these claims are inconsistent with the available evidence. Mehta attempts to establish the first claim that California spends far less than most states by asserting, “The state ranks 46th in the nation in per-pupil spending.”  According to the U.S. Department of Education’s most recent Digest of Education Statistics, total per pupil spending in California ranked 23rd of the 51 states and DC, not 46th.  Total per pupil spending was $9,655, trailing the national average of $10,071, but not by much.  It’s true that the cost of living is higher in California.  Perhaps it would be desirable for California to spend more.  But the claim that California woefully under-spends on education would have to be supported by systematic evidence, none of which is provided in the article — other than the false ranking.

The second claim that private fund-raising is an essential part of overcoming budget shortfalls is also inconsistent with the evidence.  In a chapter I wrote for Rick Hess’s book on education philanthropy, With the Best of Intentions, I found that total private giving to public education is a tiny portion of total spending on schools.  All giving, from the bake sale to the Gates Foundation, makes up less than one-third of 1% of total spending.  It’s basically rounding error.  This is not to say that private giving to public schools can’t do some good.  It’s just completely unrealistic to expect private funding to make-up for or significantly supplement public funding.  The taxing power of the government generates over half a trillion dollars each year for public education, which would entirely consume the net worth of the 12 richest people in the world in a single year. 

But the LA Times article suggests that private giving can (and must) make a big difference.  It cites the example of the Irvine Public Schools, which receives $3 million annually from a community foundation.  it also quotes the head of that foundation saying, “The only way to take good districts and make them great is to do private fund-raising. But it’s even more urgent now with the terrible budget cuts.”  Nowhere does the article mention that this $3 million represents less than 1% of the total spending by the district.  Numerators always feel bigger without denominators.

The third claim that inequities in private fund-raising are exacerbating inequities in student achievement pre-supposes that the private giving makes a big difference in the wealthier districts.  It also pre-supposes, contrary to the bulk of rigorous research, that variation in spending is a significant factor in explaining variation in achievement.  It’s not.  So, if private giving is a tiny portion of total spending — even in the wealthy districts — and per pupil spending does not significantly account for achievement, it’s not clear why the article would fret that inequities in giving were a problem for the achievement gap.  But the article does, quoting state Supt. of Public Instruction Jack O’Connell, “Parents in well-to-do communities can raise significant sums of money to augment their local schools’ budgets, while schools in low-income neighborhoods fall further behind. This is part of the reason that we have an achievement gap in California. We have an economic and moral imperative to close this gap.”

The only way the money myth will fade is if reporters and newspapers are held accountable for repeating it. 

5 Comments | journalism, money myth | Tagged: , , , | Permalink
Posted by Jay P. Greene

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