Monday, May 01, 2006

Utah's #51 and Getting Worse

Much has been made in education circles about the Utah Foundation’s report (see PDF version) criticizing Utah’s funding of public education. It is interesting to note that the report lists the foundation’s “major supporters” as some of the state’s biggest businesses. It is reasonable to assume that they have an interest in a well educated public.

Rather than measuring funding on a per-pupil basis alone (making us 51st in the nation), the report uses the measure of education tax revenues (for K-12) per $1000 of personal income. By that measure we ranked 5th in the nation in 1995, but slipped to 27th place by 2004. The report lays the blame for this slide chiefly on several changes in budget and tax policy. It strangely says four, but then lists five.
  • 1985 Truth in Taxation Act.

  • 1996 increase in residential property tax exemption.

  • 1996 reduction in the state mandated property tax levy rate for schools.

  • Annual floating (instead of every 3 or 4 years) of levy rate beginning in 1996.

  • 1996 constitutional amendment allowing higher education to compete for income tax revenues.
In other words, the report is highly critical of taxpayer friendly policies implemented in the 80s and 90s, and of using income taxes to fund higher education. Ironically, this implies (particularly with regard to Truth in Taxation law) that it’s better for the education establishment to have uninformed taxpayers.

The report discusses the fact that K-12 education funding has increased in both Utah and the U.S. at large. From 2000 to 2004, K-12 funding increased 21.4% in the U.S., but only 15.6% in Utah. The report also expresses concern that Utah is only investing about the national average in education infrastructure, while its projected needs are far above average. The report concludes that it would require a $600 million tax increase to return Utah to its 1995 funding position, a move it says would be unwise. (Duh.)

As with all measures of this nature, the Utah Foundation report has some deficiencies and problems. For starters, it is based on the conventional wisdom that it is better to pay more for education. Yes folks, more money is the answer. Spend more and it will get better. That always works for government monopolies, right? Studies repeatedly show a poor correlation between cost and quality of education. The report also chastises us for not keeping up with the Joneses, as it were. We increased our funding, but many other states increased theirs more. We’re not running apace with the moving target.

The report also fails to consider that Utah still spends more of its budget on education than any other state. The report fails to consider that our schools are turning out lower quality graduates than 45 years ago despite the fact that we are spending over 400% more per student in inflation adjusted dollars. Our students still rank well when compared with other states, so this problem is nationwide.

The report also works under the assumption that a dollar carries the same value everywhere in the U.S. Admittedly, it adds a lot of complexity to control for cost of living in a study, but that’s no excuse for painting a skewed picture. The report tries to partially compensate for this by comparing rates of growth in personal income. While this is helpful, it assumes that all education funding comes from personal income and that inflation is equal everywhere. The foundation's funding businesses might have some conflict of interest in regard to the former.

Yet another problem is the fact that the reporting period ends in 2004, prior to this year’s legislative session that awarded the largest education spending increase in the history of the state. (My personal gripe is that this occurred without requiring any real education reform.) It also assumes that personal income growth would have been the same had the 1985 and 1996 tax reforms not passed. The report concludes that we would be spending $1200 more per student today had those initiatives failed. But given the fact that the passage of those initiatives fueled a multitude of dynamic economic and cultural changes, it is simply ridiculous to argue that all other financial markers would have remained the same without the initiatives. In other words, this is an unsupported conclusion.

In the early and mid 90s there was a great deal of concern about Utah’s institutions of higher education. How could our children be trained for the work world of tomorrow? How could our public universities and colleges compete? How could they be world-class institutions? (Incidentally, that cry is being repeated today at USU – see here.) The universities “needed” access to your income tax dollars. K-12 education advocates warned that it would harm primary and secondary education, but we went ahead and voted for the constitutional amendment anyway. The report suggests that this amendment did not substantially help higher education, but has seriously hurt K-12 education funding.

Where does this leave us? I’m afraid that Utah will perpetually be the whipping boy for the crowd that believes that education is only good if you pay more for it. I seriously don’t understand this attitude. Unless you can afford to shop on Rodeo Drive, you’re probably one of those normal people that crow about getting a bargain on something. Why is the proud-to-spend-more attitude in vogue when it comes to education? Perhaps we can chalk it up to the nothing’s-too-good-for-my-Johnnie attitude. At the current rate Utah will never catch up to, let alone keep up with the moving target. Nor is it clear that this game of chase carries education-improving value.

There’s no quick and easy answer. Our educational industrial complex needs a makeover along the lines of what I suggested here.

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