Symbols Matter

March 11, 2009

wingdings

(Guest post by Greg Forster)

Jay points out that the president’s speech on education yesterday doesn’t resemble his legislative agenda. But it’s worse than that. There are things Obama could do to promose these good reform ideas even without legislation or budget changes, but won’t.

He calls on states to lift their charter caps. But what does he plan to do about charter caps? Even without extending federal authority over the states on charter policy, there’s plenty he could do, as Jay Matthews points out:

Will the Obama Education Department prepare and publicize a list of all the charter school cap laws in the country? Will Duncan call the governors, and legislators and school boards responsible for them and ask them to remove those restrictions on new charters, and find a way to get rid of bad charters?

Is the pope Muslim?

So on pretty much all fronts, the president’s “plan” for education is just symbolism.

But you know what? Symbols matter! The president is using his position in the spotlight to endorse choice and competition (as he did during the campaign) and rewards for performance, the two indispensable principles of sound educational reform. Even if he’s only doing it because Democratic constituencies other than the education unions expect it, it matters that the president has chosen to align himself with those constituencies rather than the unions. He could easily have taken the old line and kowtowed to the unions. But he didn’t, and that counts for something. So let’s give the president his due.

Now if only he had stopped his pals in Congress (who look an awful lot like his bosses these days) from kowtowing to the unions on vouchers.

Leave a Comment » | charter schools, politics, teacher pay, teacher union, vouchers | Tagged: , | Permalink
Posted by Greg Forster

Pay No Attention To My Legislative Agenda

March 11, 2009

President Obama gave a great speech yesterday in which he strongly endorsed charter schools and merit pay.  He also emphasized the need to remove ineffective teachers from classrooms and to expand access to pre-school.

The problem is that these words bear almost no resemblance to the education priorities contained in Obama’s legislative agenda.  This is really strange.  I’m accustomed to presidents exaggerating the attractiveness of their proposed policies.  But Obama is the first president that I can think of who pushes the attractiveness of policies that he is hardly pursuing in legislation while concealing the bulk of his actual efforts.

I’ve previously written about how the bulk of Obama’s increased education spending goes to status quo programs, such as Title I, special ed, Pell Grants, school construction, and generally holding localities harmless against losses in tax revenue.  Almost no money has been devoted to charter schools, merit pay, efforts to remove ineffective teachers, and even pre-school (which received only $4 billion of the $800 billion stimulus package, and most of that was for propping up status quo Head Start programs).  All of the great (and not so great) education policies that Obama talks about are almost completely absent in legislation that he has backed.  And he hardly says a peep about all of the education policies that he does throw money at. 

Obama just distracts us from his actual efforts with pretty words about things that he is hardly doing.  Of course, the most obvious thing he was distracting us from with his speech yesterday was the Senate vote to begin the execution of the DC voucher program.  He didn’t say a word about yesterday’s actions, knowing that all of the headlines would be about the reforms he did endorse (but has done almost nothing to actually enact).

3 Comments | charter schools, teacher pay, vouchers | Tagged: , , , , , | Permalink
Posted by Jay P. Greene

The Chart That Launched a Conference

February 24, 2009

 

The Quick and the Ed has additional comment on the teacher pension conference I discussed yesterday.  Rather than focusing on the financial sustainability of teacher pensions, Chad Aldeman at QATE focuses on how the odd accrual of pension wealth distorts teacher labor market decisions.  This is also an incredibly important issue.

In particular, he focuses on the work done by my colleagues Bob Costrell and Mike Podgusrky that finds that the convoluted design teacher pensions encourages some teachers to continue working to receive a large increase in the value of their pensions at a particular age, while it pushes other teachers out the door because they would lose an enormous amount of pension wealth if they continued working.

These “peaks and valleys” in pension wealth can have profound effects on teacher quality, by possibly keeping some teachers in the profession too long and by cutting the careers of others too short.  The chart above should give you a feeling for how convoluted teacher pension designs are.  Aldeman calls it “the chart that launched a conference” because the publication of these findings in Education Next sparked a flurry of new research on teacher pensions, much of which was presented last week.

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Posted by Jay P. Greene

Discounting Teacher Pensions

February 23, 2009

 end-wall-st-bull-collapsed-slide

 I just returned from a great conference co-sponsored by Vanderbilt, U. of Missouri, and my department at the University of Arkansas on teacher pensions.  One of the major issues discussed at the conference was the financial sustainability of those pension systems.  And at the heart of that discussion was a debate over the appropriate discount rate to apply to pension liabilities.  Essentially, the debate was over what we should assume to be the return on pension investments in the future.

This may seem like an arcane and dry issue, but let me tell you that it is incredibly important.  If you don’t care about it now, you will care if those pensions fall short of their assumed rate of return on investments over a long period of time.  If teacher pension plans run out of money, taxpayers are on the hook to make up the difference to the tune of tens of billions of dollars.  I know that in the era of trillion dollar bailouts tens of billions don’t seem like a big deal, but after a few of these trillion dollar bailouts there may not be much left for the teacher pensions if they go kablooey (that’s the technical term).

Public pensions are generally considered well-funded when they have assets that are roughly 80% of liabilities.  Don’t ask me why it is considered OK to know that you are short 20% of what you owe, but most folks who work on these issues just don’t think it’s realistic to have 100%.  Besides, when plans get close to 100% funding of their liabilities they tend to increase the generosity of their benefits to bring that ratio down. 

About 40% of the major teacher pension plans failed to meet the 80% standard for being adequately funded as of 2007 — before the current market meltdown.  But the 60% that did meet this standard did so assuming that they would return 8% on their investments going forward.  Is 8% the right rate to assume?

Remember that teacher pensions are promising to pay teachers a certain amount of money 20, 30, or 40 years from now.  They also expect to receive a certain amount in contributions from the teachers, from their employers (the state or school districts), and from investment returns on those funds.  Whether you have enough money to make the promised payments to teachers is extremely sensitive to the assumed rate of return on investments.

Some folks, often public finance economists, argue that assuming an 8% return is irresponsible.  They say that the market tells us what rate we should use and it is the risk-free rate of long-term US treasury bonds, currently earning a little less than 4%.  To get a significantly higher return one has to take-on significantly more risk, with the distinct possibility that one will earn far less than 8% and even less than 4%. 

If one assumes a 4% return rather than an 8% return, a teacher pension that would have been 70% funded assuming 8% would drop to 44% funded assuming a 4% return.  Just how under-funded teacher pensions are hinges heavily on whether we assume a 4% or 8% return.

Other folks, often pension plan actuaries, argue that the 8% assumption is reasonable.  They point to the historic rate of return on pension assets to support 8% as a reasonable figure.  They also say that risk is different for the government since it is a perpetual entity.  They can endure losses for a long time and eventually make up for them in a way that a private organization cannot.

I find it hard to support the 8% assumption.  Historic rates of return are hardly reassuring.  We may have received an average return of 8% over the last century, but who knows whether the next century will resemble the last one?  And who knows if we might be like Japan, where stock indices are still less than half of the peak they obtained three decades ago.  There is a good reason why investments ads say past returns are no guarantee of future returns.

And being a perpetual entity provides no protection if future rates turn out to be less than 8%.  Being perpetual only means that one can endure a very long period of under-performance.  That assumes that eventually the mean return will revert to being 8%.  But why should that be?  What if the mean return over the next infinite period is only 4%?  No matter how long we wait, we would never get 8%.

If it were really true that the government could be assured an 8% return while private entities can only be assured a 4% return, then it would make no sense to have a private financial industry.  The government could borrow at 4% to buy up the entire private sector and guarantee everyone an 8% perpetual return.  People should give all of their money to the government to invest so that they could be assured the 8% return with no risk.  If they invest it privately they can only be assured a 4% return with no risk. 

But defenders of using an 8% discount rate respond saying that if you assume a 4% rate and end up making 8%, the plans will be grossly over-funded.  That would essentially involve the transfer of wealth from this generation to a future generation, which would be grossly unfair.

Of course, the only way that the pensions could get more than 4% would be if they took on additional risk by investing in equities, real estate, hedge funds, etc…  If you lent me money at 4% and I took it to Vegas and put it all on black, I might also come back with a lot more than the 4% I would owe you.  I just can’t be guaranteed to come back with extra money.  Similarly, the teacher pension plans cannot be guaranteed the 8% return and should not assume extra risk in the attempt to get it.  If pensions switch to a 4% discount rate they should probably be restricted in their investments to mostly risk-free investments, like government bonds.

Switching to a 4% discount rate is going to be painful, especially with already under-funded teacher pension plans and with the recent market meltdown.  But if we don’t do it, eventually we may well face a future financial crisis brought on by pensions rather than by housing.  Let’s spot the bubbles before they burst.

In addition to reading the papers listed at the conference web site, you may also want to check out this new piece by my colleagues Bob Costrell and Mike Podgursky in the current issue of Education Next.

9 Comments | teacher pay | Permalink
Posted by Jay P. Greene

The No Stats All Star

February 19, 2009

(Guest Post by Matthew Ladner)

Michael Lewis strikes again with a must read article about Shane Battier, the greatest professional basketball player you’ve never heard of because all he does is help his team win games.  The article is Moneyball for the NBA, but with several twists- most prominently some very nasty individual versus team dynamics. In short, in baseball, you essentially can’t aggrandize yourself as a player without also helping your team. If you are getting on base, you are padding your stats and helping your team win.

Not so in basketball, where you can get paid millions for padding your individual stats whether or not you help your team win games. An example raised in the article: NBA players don’t like to heave the ball at the end of the half or game because it lowers their percentage. In short, basketball is fraught with perverse incentives, making it much more like most of real life than baseball. The would be sabremetricians of the NBA have only begun to sort through this quandry.

Battier provides Lewis the perfect lense into this world, as a player that simultaneously has statistics that stink and is one of the most valuable players in the league.

Is there an education angle here? Yes indeed. Battier is what business guys call a “white space” employee. The term refers to the space between boxes on an organizational chart. A white space employee is someone who does whatever it takes to achieve organizational goals and makes the organization work much better as a whole.

As we move into the era of value-added analysis for teacher merit pay, this article provides much food for thought. School leaders must consider carefully what they will reward, and give some consideration to how white space behavior is rewarded. Rewards should not just be based on individual learning gains- reaching school wide goals should also be strongly rewarded. Otherwise my incentive as a math teacher will be to assign six hours of math homework a night- and to hell with everyone else (see Iverson, Allen).

Schools are more complex social organizations than basketball teams, so education sabrematicians have a great of work ahead of them. The good news however is that it can’t be hard to improve a system that generally only rewards teachers for length of service and often meaningless certifications and degrees.

There’s no reward for being a white space player OR a superstar in the current system of teacher compensation-just an old player. Imagine a system of compensation for the NBA in which Larry Bird was still riding the pine on NBA squads and getting paid more money than LeBron, Kobe or Battier. Hall of Fame = National Board Certified, but you no longer want Bird in the game if you want to win.

You wouldn’t need to be Bill James to figure out how to make such a system much more effective. Figuring out the right way to reward all the little invisible things that someone like Shane Battier does to make his team win, well, that’s trickier.  Overall we have nowhere to go but up, however. Remember both LeBron and Battier are multi-millionaires, while their equivalents in the teaching world have all too often left the profession in frustration or gone into administration.

23 Comments | school accountability, teacher pay | Tagged: , , | Permalink
Posted by matthewladner

Get Alfie Kohn on the Phone!

February 13, 2009

According to research published last week in the New England Journal of Medicine, smokers who were offered financial incentives to quit smoking were more likely to do so.  As the Wall Street Journal describes it:

“For the new study, researchers, led by a team from the University of Pennsylvania, tracked 878 General Electric Co. employees from around the country for a year and a half in 2005 and 2006. Participants, who smoked an average of one pack of cigarettes a day, were divided into two groups of roughly equal size. All received information about smoking-cessation programs.

Members of one group also got as much as $750 in cash, with the payments spread out over time to encourage longer-term abstinence. Those participants got $100 for completing a smoking-cessation program, $250 if they stopped smoking within six months after enrolling in the study, and $400 for continuing to abstain from smoking for an additional six months.

All participants were contacted three months after they enrolled in the study and periodically after that. Those who said they had stopped smoking at any point during the study were asked to submit saliva or urine samples for testing so that their claims could be verified.

About 14.7% of the group offered financial incentives said they had stopped smoking within the first year of the study, compared with 5% of the other group. At the time of their last interview for the 18-month study, 9.4% of the paid group was still abstaining compared with 3.6% of those who got no money.”

Wait a minute!  If I’ve learned one thing from Alfie Kohn it is that extrinsic rewards undermine intrinsic motivation.  The smokers paid to stop should have had the internal motivation to quit undermined and should have been less successful than those who quit for the pure joy of it.

I’ve got an idea.  Let’s stop paying people for their work because it only undermines their internal motivation to work.  And to avoid undermining Alfie Kohn’s motivation, I’m sure he’d understand if people stopped paying him for his lectures and books.

3 Comments | instructional reform, teacher pay | Tagged: , , | Permalink
Posted by Jay P. Greene

Son of Super Chart!

January 22, 2009

The only good bug is a DEAD bug!

(Guest Post by Matthew Ladner)

Readers will recall Super Chart! showing that teacher quality makes a huge difference in student outcomes, while certification status does not. Drawn from the same Brookings study comes Son of Super Chart, showing that you can pretty much tell who your bad teachers are after a couple of years based on student learning gains.

This isn’t rocket science: invite ineffective teachers to do something else with their professional careers other than damaging the prospects of children. Give highly effective teachers more students and more money.

Now that we’ve sorted out this whole education crisis thing, I’ll look forward to reading Jay’s take on the season premiere of Lost.

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1 Comment | class size myth, teacher pay, teacher quality | Tagged: , , , , | Permalink
Posted by matthewladner

Randi Weingarten Can’t Get No Respect

January 5, 2009

In what the AFT web site described as “her first major speech since being elected AFT president in July,” Randi Weingarten “decried the widespread scapegoating of teachers and teachers unions for public education’s shortcomings.”  Her comments have generated numerous reactions, including from NYT columnist Bob Herbert, Andy Rotherham, Joanne Jacobs, and our own Greg Forster.  They all raised interesting points, but none addressed one of the most curious aspects of Weingarten’s speech:  Why do teachers, perhaps more than other professionals, seek praise for their work (or are particularly sensitive to blame)? 

I don’t think other occupations have produced bumper-stickers that are the equivalent of “If you can read this thank a teacher.”  I can’t imagine plumbers distributing bumper-stickers that said: “If you flushed your toilet thank a plumber.”  Nor can I imagine: “If you still have your teeth thank a dentist.” 

Teachers particularly demand respect — and of course they deserve respect.  But why do they give speeches, print bumper-stickers, write letters, hold rallies, etc… decrying their social status when I am hard pressed to think of other occupations that do the same?

Of course, one important factor is that almost all teachers are public employees.  The demand for respect can be understood as part of the demand for resources.  My plumber doesn’t have to demand my respect to get my resources.  He just has to do a good job to get me to continue paying him for his services. 

But the resources devoted to education are largely unrelated to how well teachers serve their students.  Political popularity largely determines the level of resources available for teachers, so not surprisingly, teachers actively lobby the public to enhance their image.

The problem is that it is hard to sustain political popularity and community respect as results continue to disappoint despite huge increases in resources.  Teachers interpret this disappointment as a lack of respect, when it is really just frustration at being forced to pay for services that are chronically inadequate.  If people could hire teachers like they hire plumbers or dentists, teachers wouldn’t need to demand respect to get resources.  They would earn respect and resources by serving their voluntary customers well.

9 Comments | teacher pay, teacher union | Tagged: , , , , , | Permalink
Posted by Jay P. Greene

AFT and UAW – More Alike Than You’d Think

December 30, 2008

aft uaw1

(Guest post by Greg Forster)

Lots of people are picking up on the temper tantrum about alleged “demonizing of teachers” begun by a Randi Weingarten speech and continued in Bob Herbert’s column on the speech.

Even that notorious right-winger Eduwonk points out that Weingarten and Herbert are hitting a straw man. I think the real problem is not that school reformers demonize teachers but that defenders of the government school monopoly angelize them. When we reformers insist that teachers should be treated as, you know, human beings, who respond to incentives and all that, rather than as some sort of perfect angelic beings who would never ever allow things like absolute job protection to affect their performance, it drives people like Weingarten and Herbert nuts.

guardian-angel

A typical teacher, as seen by Randi Weingarten

But what I’d like to pick up on is the question of whether the troubles of the government school system are comparable to the troubles of the auto industry.

Of the alleged demonizing of teachers, Herbert had written:

It reminded me of the way autoworkers have been vilified and blamed by so many for the problems plaguing the Big Three automakers.

Eduwonk points out Herbert’s hypocrisy (though he delicately avoids using that word) on this point, because elsewhere in the column, Herbert praises Weingarten for expressing a willingness to make concessions on issues like tenure and pay scales. Union recalcitrance on these types of reform, Eduwonk points out, is precisely why the auto industry is in so much trouble, and Weingarten has been driven to make noises in favor of reform because a similar dynamic has been at work in the government school system.

On the other hand, Joanne Jacobs thinks the comparison between the AFT and the UAW is inapt:

 I don’t think skilled teachers and unskilled auto workers have much in common.  Auto unions pushed up costs, especially for retirees, making U.S. cars uncompetitive.  In education, the problem isn’t excessive pay, it’s the fact that salaries aren’t linked to teacher effectiveness, the difficulty of their jobs or the market demand for their skills.

But teachers’ unions have pushed up costs – dramatically. In the past 40 years, the cost of the government school system per student has much more than doubled (even after inflation) while outcomes are flat across the board. And this has mainly been caused by a dramatic increase in the number of teachers hired per student – a policy that benefits only the unions.

It’s true that high salaries aren’t the main issue in schools, although teacher salaries are in fact surprisingly high. The disconnect between teacher pay and teacher performance is much more important. But the UAW has the same problem! Their pay scales don’t reward performance, either.

The source of Jacobs’ confusion is her mistaken view that auto workers are “unskilled.” Farm workers are unskilled, but not auto workers. The distinction she’s reaching for is the one between white-collar or “professional” work and blue-collar work. But some blue-collar work is skilled and some is unskilled, and auto workers are in the former category. This matters because with skilled blue-collar workers, as with white-collar workers, there’s a dramatic increase in the importance of incentives as compared with unskilled labor.

In fact, a lot of smart people have been arguing (scroll down to the Dec. 26 post) that exorbitant salaries and benefits aren’t nearly as much of a problem in the auto industry as union work rules – including poor performance due to absolute job protection, pay scales that don’t reward performance, and rigid job descriptions that make process modernization impossible.

Sound familiar?

(Edited)

4 Comments | economics, teacher pay, teacher quality, teacher union | Tagged: , , , , , , , , | Permalink
Posted by Greg Forster

Why JPGB Beats Edwize

December 11, 2008

 

  Edwize is a blog by Leo Casey that is sponsored by the United Federation of Teachers (UFT), the New York affiliate of the American Federation of Teachers.  The UFT has tens of millions of dollars at its disposal and thousands upon thousands of members.  Jay P. Greene’s Blog (JPGB) by contrast has a $25 registration fee for the domain name and a couple of laptops. 

Despite this huge disparity in resources, JPGB has a significantly larger audience than does Edwize.  According to Technorati JPGB has an authority rating of 95 while Edwize has a rating of 74.  An authority rating measures how many other blogs link to a given blog during the last 180 days, which is meant to capture how much influence a blog has in the blogoshpere.  In addition, each post on JPGB generates about 4 or 5 comments, on average, while posts on Edwize generate about 1 or 2 comments, on average.  Fewer comments suggest fewer readers and/or material on which people do not care to comment. 

None of these measures is perfect, but it is clear that JPGB beats Edwize.  Why?

The primary challenge for Edwize is that it has to tout teacher union views on education issues.  And those views are mostly junky.  So, Edwize suffers because it takes significantly more resources to interest people in crappy ideas than in sensible ones. 

In case you doubt that the unions have to push junky ideas, ask yourself whether it is sensible to have a system of education in which students are mostly assigned to schools based on where they live; where teachers are almost never fired, no matter how incompetent they are; where teachers are paid almost entirely based on how many years they’ve been around rather than on how well they do their job; where teachers are required to be certified even though there is little to no evidence that certification is associated with quality; and where all teachers are paid the same regardless of subject, even though we know that the skills required for expertise on certain subjects have much greater value in the market than other subjects.

The mental gymnastics required to sustain the union world view has a much greater “degree of difficulty” than the views that are regularly expressed on JPGB.  And the resources required to generate support for these union views are enormous.  You need millions of people financially benefiting from these policies to volunteer as campaign workers.  You need millions of dollars in union dues for campaign contributions.  You need a large team of paid staff in every state and in Washington, DC.  It takes an army and a fortune for the unions to hold their ground.

This not only helps explain why JPGB beats Edwize, but also why reformers are able to beat the unions in the policy arena.  It’s true that the unions win most of the time.  But given their enormous advantage in resources, it is amazing that the unions ever lose.  The reason that the unions lose as often as they do is that their policy positions are much more difficult to defend intellectually.

So, we should feel sorry for Leo Casey and his union comrades.  They may have a lot more money and a lot more people, but they constantly have to defend obviously dumb ideas.

(edited for clarity and to add photo)

3 Comments | blogging, politics, teacher pay | Tagged: , , , , | Permalink
Posted by Jay P. Greene

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