Thomas B Fordham Institute - Advancing Educational Excellence

3 lessons learned on school spending

Chris Tessone / July 26, 2012

On Friday, I'm leaving Fordham to join the See Forever Foundation in D.C., which operates the Maya Angelou Public Charter Schools and an Academy at New Beginnings, D.C.'s secure facility for committed youth. (The Academy was recently profiled on Rock Center.)

Before I go, I'd like to share a few of my takeaways from a year and a half of reporting and opining on the nation's school finance challenges.

1. Policy only takes schools so far

Around the country, reformers have won modest breakthroughs on education policy, especially at the state and local level. Charter schools' access to facilities has improved somewhat, administrators have been given greater spending flexibility, mayors have won control of urban systems and installed reform-minded leadership.

Policy cannot mandate high-quality outcomes.

Policy cannot mandate high-quality outcomes, however. Even with new flexibilities and opportunities, too many schools continue to do the same old, same old. Clearly K-12 education as an industry needs to develop greater leadership capacity in order to use newly-won flexibility to full effect.

Reformers are getting ahead of the curve, however. The emergence of the PIE Network, CEE-Trust, CRPE's portfolio districts, and other efforts illustrate a growing, healthy emphasis on implementation.

2. Teacher pay and benefits are badly broken

The United States is one of the biggest spenders on education in the OECD, yet starting teacher salaries are low. That reflects our primary strategy of the last two decades: When problems crop up, we throw more

» Continued

3 lessons learned on school spending

Cut obstacles to transparency, not Kindergarten

Sean Gill / July 3, 2012

Guest blogger Sean Gill is a fiscal policy analyst with StudentsFirst.

As in many states, school districts in Pennsylvania struggle to balance their budgets. A recent survey found that more than 140 Keystone State school districts anticipate insolvency in coming years and eight districts said they were already unable to pay their bills. In the state capital, the Harrisburg schools narrowly avoided having to cancel Kindergarten altogether.

Pennsylvania lacks the financial rules and policies to ensure we have transparency and fiscal accountability in place in our schools.

Did the difficult economy of the last several years cause these budget woes? Are waste or financial mismanagement to blame? While districts like Harrisburg have received less state money than before the economic downturn due to declining enrollment, the underlying answer to how things got so bad is simple but frustrating: We really don’t know.

Pennsylvania, like many other states, lacks the financial rules and policies to ensure transparency and fiscal accountability in its schools. Without that, the public can’t determine why districts face insolvency or ensure that officials are making wise spending decisions on behalf of schools and children.

Yes, Pennsylvania school districts receive annual financial audits and produce other reports of financial information. Unfortunately, the focus of these reports is limited and they fail to provide clarity on why spending decisions were made or to help parents, school administrators, and others determine which expenditures produced the best results for student achievement. These reports

» Continued

Cut obstacles to transparency, not Kindergarten

Charter schools increasingly tapping bond markets

Chris Tessone / June 13, 2012

Yesterday's Wall Street Journal shared the (mostly) happy story that the market for debt issued by charter schools to finance facilities and other purchases is growing. Institutional investors and banks understand charters—and the risks they have to manage—much better than in past years, and that's translating to lower borrowing costs for schools. (Note in the excerpt below that when bond prices go up, the interest rates paid by borrowers go down—there's an inverse relationship there.)

Prices for charter-school bonds have risen this year, according to trading data. Cosmos Foundation Inc., which operates 36 charter-school campuses in Texas, issued $50 million in bonds in 2010, and prices have increased about 12 percent.

IDEA Public Schools, a network of schools that received its charter from the state of Texas in 2000, is gearing up for its biggest bond deal yet. Chief Financial Officer Wyatt Truscheit said IDEA Public is planning a $70 million offering in August.

This is the first chapter in what should turn out to be a long story. Relatively few investment firms and banks are active in lending to charter schools, and not all lenders understand this market. Because of this, charter schools in areas that are not well-served by sophisticated lenders are probably paying more than they should to borrow money.

The more that authorizers and legislatures focus on quality, the easier it will be for promising schools to finance their facilities.

The quality of the charter law, authorizers, and the schools

» Continued

Charter schools increasingly tapping bond markets

Rewarding great teaching takes smart money

Chris Tessone / June 5, 2012

Teachers have undoubtedly suffered financially in recent years. The pain has largely been borne by early-career teachers in the form of layoffs, pension cuts, and pay freezes. In the D.C. area, where fiscal pressure is starting to ease, raises are coming back—good, but not great news for young teachers.

The good news is that school boards in Montgomery County, Arlington, and other districts are increasing pay instead of cutting class sizes, despite opposition from parents. The cost in Fairfax County was a one-pupil increase in the student-teacher ratio.

Across-the-board raises help experienced teachers much more than others.

Across-the-board raises help experienced teachers much more than others, however. In absolute dollars, a 4 or 5 percent raise on an $85 or 90 thousand salary dwarfs the equivalent increase a first-year teacher sees on $40K. For districts that are among the nation's front-runners in teacher evaluation and the development of meaningful career paths, across the board raises are a disappointing sop to the status quo.

District leaders who are looking for next-generation models to apply in their own schools could do worse than consider Public Impact's recent recommendations. Its recent whitepaper sketches a variety of career paths that would allow star teachers to expand their impact on students—and increase their take-home pay.

Rewarding teachers who sacrificed pay and job stability during the recession makes sense. But K-12 leaders should focus on improving the competitiveness of pay in early years and tie pay to teachers'

» Continued

Rewarding great teaching takes smart money