Wednesday, August 12, 2009

Do School Districts Provide Appropriate Value?

Do Utah’s 41 school districts provide value commensurate to their cost? Robyn Bagley of Parents for Choice in Education in this provocative article essentially asks for a cost-benefit analysis of the school district model. The questions posed in the article are purposefully pointed and imply a specific conclusion.
Why do over-bloated, mid-level education bureaucracies exist anyway? What I mean is, why do taxpayers subsidize districts? You're now probably thinking, well how else do we run our local schools? We need districts to administer and execute oversight, don't we? Do we? That's the question I'm posing. Do districts produce high-performing schools? Maybe they actually hinder them with their one-size-fits-all big government approach? Fair questions.”
The recent kerfuffle about tax increases by the Jordan School District is used as a backdrop for the article. Bagley appears to assert that much of the taxes consumed by school districts provide little value. The charter school model is cited to bolster this argument.
“This Fall nearly 80 charter schools will be operational here in Utah. These Utah charters are independent schools, [mostly] autonomous from a district, making their own management, governance, and budgetary decisions. Don't panic. They are subject to legislative and USOE rules and regulations and have general oversight by a State Charter Board. Each charter is governed by a volunteer board and those board members serve with no compensation or benefits. The Board hires their Director/Principal who then takes on the role of CEO of the school. They, not union bosses, determine the contracts and salary schedules for teachers and employees. They set the direction of the school and contract out services to the providers of their choosing. They develop the culture and the emphasis.

“… Most importantly, charters are in high demand. While they now serve roughly 30,000 students, thousands more remain on waiting lists hoping to get into the school of their choice through a lottery process. Another way they differ from traditional schools is that charter enrollment and growth is capped (not a good thing, in my opinion), and most new charters exceed their capacity before their doors even open. The buck stops with them. If they can't operate within their budget, their doors close. If there is mismanagement or their students are performing poorly, parents hold them accountable. They compete for students. If the customer isn't satisfied, they can vote with their feet and leave.”
Are charters cheaper?
Since three of my children attended a charter school last year and will attend again this year, I was intrigued by Bagley’s arguments. I was interested in Bagley’s claim that charter schools essentially cost the taxpayer less.
Here's the clincher - charters receive a set amount of funding per-pupil (which is less than district schools by the way-see here). Remember that nasty fight going on in the Jordan District over a property tax hike? Unlike traditional public schools where per-pupil spending varies district by district, there is no inequity in funding. (see our last blog).”
Looking at the link provided to the Utah School District Comparison, you can see that per-pupil spending varies quite a bit among the 40 school districts listed. It is not surprising that sparsely populated districts tend to have much higher per-student costs.

I understand Bagley’s claim that charter schools all receive the exact same funding per pupil, but I’m not so certain about the assertion that charters receive less per-pupil funding than school districts. The state average per-pupil spending among the school districts for 2007-8 was $8,191, while per-pupil spending among the charters was $8,980. To me it looks like charters spent $789 per student more than the school districts did on average.

Am I missing something here? There is nothing in the figures provided, as far as I can tell, that demonstrates that the standard school district model costs more per student than the charter model. In fact, it seems that the opposite is true. I’d appreciate links to verifiable information that bolster’s Bagley’s assertion. It may be possible to make a case that superior educational outcomes more than compensate for additional charter school funding, but that’s another issue.

One thing that is certain is that the property tax rate column of the funding chart lists the average state rate at 0.005877, with the rate for charter schools being “N/A.” Bagley’s linked post explains that among the school districts “29% of the state's overall K-12 budget comes from property tax.” Not so with charters. As explained in this Utah Charter Schools FAQ, “The legislature appropriates funds each year to replace some of the local property tax revenues that are not available to charter schools.”

Should funding follow the student?
Bagley’s linked blog post argues for backpack funding. As far as I understand it, the proposal is to assess property tax for education at the same level statewide. (If that’s not proposed, implementing the plan would at any rate quickly result in a common statewide education property tax rate.) Those funds would go to the state and would be sent out, along with state and federal funds, in equal amounts per student, regardless of where the student attends school. This would follow the charter funding model and would eliminate disparities in tax rates and per-pupil spending.

It is implied that this would lead to more equal educational outcomes, but that is far from certain, since such outcomes are often deeply impacted by cultural, economic, family, and physical factors. Also, no explanation is provided for dealing with students in sparsely populated areas, where some per-student costs are necessarily higher.

Why are charter teachers so much less expensive?
Another figure that jumps out from the funding chart is that the average teacher compensation among the school districts in 2007-8 was $66,397, while it was only $47,016 among the charters. Despite this massive disparity, charter schools claim to produce better educational outcomes.

While I don’t know all of the reasons for this nearly $20,000 difference in teacher compensation, one factor is that when the state provided a raise exclusively to district personnel in actual teaching positions, the school districts reclassified as teachers many whose jobs are mainly administrative so that these (often higher paid staff) could also reap the benefits of the raise.

Another factor is that most charter school teachers are not members of an educator’s union, so they do not participate in union negotiated compensation packages. This allows the charters broad latitude in hiring and compensation decisions. A poorly performing teacher at a charter school that does not improve will likely soon be looking for another job. Just try to do that in a regular school district.

Interestingly, I found that many of the high quality teachers at my children’s school jumped at the chance to have a much freer hand in plying their trade with much less oppressive bureaucracy. Many took pay cuts to come to the school, while their previous schools were sorry to see them go. (I know this because some had previously taught my older children in district schools.)

School districts vs. more autonomy
Bagley notes that “those in the education establishment whose jobs depend on it could give you 1001 reasons why” allowing “all public schools to operate essentially like charters” (i.e. getting rid of school districts) won’t work. I can list a few of those right here:
  • Districts can take advantage of economies of scale that more autonomous schools can’t.
    • OK, but are those economies of scale actually buying us anything of value?
  • Districts can offer more special programs that charters can’t, such as foreign language and sports.
    • How valuable are those programs? Who do they benefit? Does their value exceed the more personally tailored instruction and programs available through charters? Wouldn’t schools pop up that offer such programs for those that want them?
  • Charters work well for students with highly supportive and involved parents. They would be far less successful if they had to deal with all of the problem students that districts have to deal with.
    • How can we be certain that these problem students would not perform better under a more autonomous school atmosphere? (Empirical facts, not anecdotes, please.)
While Bagley’s article is somewhat confrontational, some valid and highly useful questions are raised. Are school districts worth what we pay for them? Would we be better wiping out this entire level of middle management and moving to a more autonomous structure? Those are some serious questions that merit studied and thoughtful answers.


Anonymous said...

The links provided definitely agree with your conclusion. I wonder if per-pupil spending is the same as taxpayer funding per pupil - in other words, does the higher number reflect more money coming into the system than just funds from the state (hypothetically the state could be giving the charters $7500 per student while paying $8100 per student in the districts - if the charters then raise and spend another $1400 per student in tuition or other private funding they would be spending more per student). I'm not saying I know any of this, just suggesting a possible explanation for the blatant discrepancy you found (aside from the obvious option that the claim of costing taxpayers less is simply untrue).

Scott Hinrichs said...

I am also confused about these same things. Bagley linked to the chart suggesting that this validated the argument being made. Either I don't know how to read the chart or else it shows, as you say, spending but not funding. Can anyone out there straighten this out for us?

Scott Hinrichs said...

My wife has spent a few days looking over this information. She's very smart and has actually worked with school funding (as a volunteer) for some time now.

She suggests that Bagley is looking at the "Total M&O Per Student" column. If that is the case, the average cost per student in the districts is $6,142, while it is only $5,173 for the charters. That's an eye-popping savings of nearly $1,000 per student.

The nutrition column is mostly federally funded. In the districts, my wife tells me, interest and construction are mostly funded through (bonding and) property taxes. Since the charters don't benefit from local property taxes, the state makes up some of this for the charters, while some of it comes from a federal grant program (administered through the state). I also know that in the case of my children's charter school, a private donor gave much of the land.

Also, charters are a recent phenomenon in Utah, so that they reflect a heavier construction expense than in the districts right now. That will even out as the charter model reaches saturation point. The districts actually reduce their construction expenses when charters are built, since that removes a number of students the districts would otherwise have to accommodate.

The upshot is that the most accurate comparison of costs is probably total maintenance and operations per student. In that case, Bagley's arguments carry a lot more weight.