School Finance

As state and district education budgets shrink, it becomes doubly important to scrutinize line items, to think through cuts, and to trim fat in ways that won't negatively affect schoolchildren. Moore County, North Carolina seems to have missed that memo. ?The district is set to close one of its smaller elementary schools, Academy Heights.

From today's Wall Street Journal:

Academy Heights Elementary boasts a 98% pass rate on state exams, has an award-winning math program, and is ranked the second-best kindergarten-to-fifth-grade school in North Carolina. Yet it is slated to close at the end of the school year. Moore County Schools Superintendent Susan Purser said shutting down the school and sending its 265 children to nearby campuses was a ?painful last resort? to close an $8.2 million budget gap.

Closing high-achieving Academy Heights?the district's only year-round school?will save Moore County $500,000. Surely not chump change, but far off the $8.2 million in excess spending that needs to be leeched out of the budget lines. And surely not enough to justify shuttering the district's most successful school, possibly losing some of the district's most successful teachers, and almost guaranteeing 265 students an inferior education.

Scaling back budgets is an unenviable task. But before we open up the throttle on the budget-cuts train, let's make sure it's railed on the correct track. Take off the blinders, and actually look at how cuts will affect the kids. There are some smart ideas and how-tos out there.

?Daniela...

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It's Christmas in Rhode Island: the state Department of Education has released a comprehensive new set of financial data for district and charter schools throughout the state. This is a welcome development given the Ocean State's $331M budget deficit and the need to do more with less. District budget directors and community members alike now have a powerful tool for finding inefficiencies and pushing for spending that is better-aligned with their most important priorities for K-12 education.

Other states (like New Jersey) have mandated that districts publish financial reports using a Uniform Chart of Accounts, a set of guidelines for classifying school and central office expenses and revenues. However, Rhode Island is the first state I know of that provides the reports and raw data in a format that empowers users to perform their own analysis easily ? in this case, using Microsoft Excel. RI's effort also includes the state's rapidly growing charter sector and benchmarks every district against charters and the rest of the state.

The level of detail is exceptional, with reports on spending in functional areas (face-to-face instruction, classroom materials, professional development), subject areas, even how much a district spends on retirees. (One spends 10% of their budget on retired personnel!) The reports could go further, of course. As far as I can tell, the data are not presented at the school level, which would be helpful for comparing spending within districts. Ensuring districts apply the rules faithfully and don't game...

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At last night's school board budget ?workshop? I felt the sinking sensation that passengers on the Titanic must have felt:??it's too late for life boats. The trouble is, I felt that way last year as well.??The big difference between the Titanic and my school district is this: our ship doesn't really sink and we don't change directions.? What happened between last year's iceberg strike and this year's?? Nothing.? We threw a bunch of people overboard and kept on sailing ? and we'll do the same this year.?? No offense to Mike and my Stretching the School Dollar colleagues at Fordham, but out here in the trenches, it's budgeting as usual, which means politics as usual, which means balancing layoffs and tax increases, which means: the education equivalent of fighting over the deck chairs.

Last night, for instance,?with the administration suggesting that we lay off 10% of our teaching staff (but only 3% of the aides and no one from Central Administration), we heard impassioned speeches from two nurses, who knew their positions are not ?mandated? and thus vulnerable.? Individual teachers have lobbied me to save their jobs or their program, but no teachers spoke last night because we are in the middle of contract negotiations -- and I can't talk about that.? (I once suggested these public union contracts?be negotiated in public, an idea that was greeted with as much enthusiasm as if I'd suggested a class field trip to Mars.) Why aren't vocational teaching jobs on the...

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Last week I showed that, by one measure at least, teachers in non-collective bargaining districts actually earn more than their union-protected peers?$64,500 on average versus $57,500. These numbers are for teachers with just bachelor's degrees who have reached the last step on the salary schedule.

Matt Di Carlo of the Shanker Institute responded in the comments section with an important analysis of his own:

Mike,

Why are you using the maximum BA salary as a measure of what teachers ?actually earn?? ?It would seem to me that this is the least appropriate choice for two reasons. First, unlike the starting and fifth year salaries available in the TQ3 database, the maximum salary doesn't ?control? for experience?the schedules vary as to how many years it takes to get to the top. Second, and more importantly, most career teachers (i.e., those who might get to the top of their schedules) get a master's degree (and are required to do so in some states), so very few teachers are actually located at the top BA step. It's probably the least appropriate choice as a measure of what the typical teacher earns.

I quickly replicated your analysis. My figures for the maximum BA salary are slightly different from yours, but close enough for the purposes of a comment.

Starting BA -- Non-CB: $41,314; CB: $38,696

BA 5th year -- ?Non-CB: $43,630; CB: $43,640

Maximum BA -- Non-CB: $63,731; CB: 57,628

Starting MA -- Non-CB: $43,960;

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The Education Gadfly

Educator pension systems are becoming increasingly expensive and, in a number of states, plagued by severe problems of underfunding. Given concerns about cost and long-term sustainability, several states have cut benefits, usually for new teachers, and many more are considering doing so. However, in making these changes, policymakers should carefully consider their labor-market effects. Some of the proposed cuts reproduce?and even exacerbate?undesirable features of current systems.

That's because they violate the paramount principle upon which pension systems should be built: Benefits should be tied to contributions. In other words, benefits paid to any teacher should be tied to the lifetime contributions made by or for that teacher. If $300,000 has been contributed on behalf of a teacher (including accumulated returns) then the cash value of an annuity provided to this teacher should also be $300,000.

This principle is routinely violated in current defined-benefit pension systems. Our analysis, Reforming K-12 Educator Pensions: A Labor Market Perspective, shows that the current systems result in very large implicit transfers from young teachers working short teaching spells to ?long termers? who spend entire careers in the same system. In our view, a teacher who works ten years or thirty years should accrue pension wealth roughly equivalent to total pension contributions (with accumulated returns). [quote]

Illinois is a cautionary example of how not to reform teacher pensions. The Land of Lincoln recently implemented a two-tiered plan, with teachers hired after January 1, 2011 in the second tier. Tier 2 teachers will...

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Young teachers turned around a poorly-performing elementary school in Oakland, and now they're all at risk of being fired in a LIFO (seniority-based) layoff mandated by state law:

Futures, previously known as Lockwood Elementary, was redesigned in 2007 and a particularly young staff was hired to change the school's old reputation as a place that held low expectations for its low-income and minority students.

The state education code holds no provisions for performance, though. Instead, it dictates that layoffs must be made in order of seniority. Most Futures teachers have been in the classroom for fewer than five years.

?What did we do the redesign for?? asked the school's principal, Steven Daubenspeck.

The union president blames the school's principal. She implies that all teachers are interchangeable widgets, so he should have kept the school's low-performing senior teachers instead of trying to turn the school around using new blood:

The president of the Oakland teachers' union, Betty Olson-Jones, said she feels for the teachers of Futures Elementary and that she plans to visit the school. However, she said, small school leaders ? like those at Futures ? that hired young teachers over older ones when they were redesigned are causing part of the problem. ?When [the division into small schools] happened, many of the teachers who were there and who wanted to be there and were veteran teachers were not invited back,? she said. ?And so, from 2001 through 2008, you saw a lot of veteran teachers

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Ohio Education Gadfly Biweekly

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One of the most striking arguments made against Republican governors' efforts to curtail the bargaining rights of teachers is that it's an "attack on the middle class." I'm more sympathetic to that line of reasoning than you might think; for all their evils, unions have been successful in giving millions of people a path to prosperity. And, as I was reminded at my grandmother's (a.k.a. "Nonnie's") funeral this past weekend, many of my second and third-generation Italian-American family members benefited from employment in public-sector, union-protected jobs. [quote]

But is it true, for teachers at least, that unions are necessary to ensure good wages? That when collective bargaining is disallowed, teacher pay plummets? I was curious, so I dug into data collected by the National Council on Teacher Quality. The group collects information on teacher pay, benefits, and much more in its tr3 database for more than 100 of the largest districts from each of the 50 states. I broke out the districts in non-collective bargaining states (those where the practice is illegal--namely, Georgia, North Carolina, South Carolina, Texas, and Virginia)--and compared them to the rest. And I looked at the maximum salary a teacher with a bachelor's degree could earn. (See the data here.)

The surprising finding? Teachers in non-collective bargaining districts actually earn more than their union-protected peers--$64,500 on average versus $57,500. (See the chart below.)

Click to view larger

To be...

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Ohio Education Gadfly Biweekly

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Much ink has been spilled in the past week over what the pay for performance experiment in New York City's public school system means. Roland Fryer's finding that the NYC pay scheme didn't improve student achievement does not imply that differentiated pay for teachers doesn't work, however. In fact, I'm inclined to borrow a phrase from Chesterton: merit pay has not been tried and found wanting; it has been found difficult and not tried at all.

Merit pay trials in the US have mostly followed a familiar pattern: they're structured as one-time bonuses and are tied to some kind of objective measure like test scores or teacher value-added. This may look superficially similar to professionals' compensation on Wall Street and in the nation's top law firms, but crucial components are missing that make up true merit pay in the professional working world.

Permanent raises based on merit provide a more meaningful incentive than annual bonuses, though the latter are a helpful supplement. Performance-based raises tell professionals that they're hitting milestones on the way to full professional effectiveness (or not), and they communicate the worker's long-term value to an organization. One-time bonuses that sit on top of a never-changing salary schedule that undervalues newer employees' growth are bound to be ineffective by comparison.

Management needs discretion to use both objective and subjective measures of effectiveness to evaluate merit. This is a scary idea for many teachers, but it's a pro-teacher idea at its core. Every teacher...

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