FUNDAMENTAL CHANGE

How the U.S. Education System Can Become

More Efficient, and Why It Must

By Zac Zeitlin

Plan II Honors Program

The University of Texas at Austin

May 9, 1997

____________________

Jeff Sandefer

Department of Management

Supervising Professor

___________________________

Alfred L. Norman

Department of Economics

Second Reader

TABLE OF CONTENTS

I. INTRODUCTION

II. K-12 EDUCATION IN THE U.S.: A FAILING SYSTEM

Reading Performance

Mathematics and History

International Comparisons

The Scholastic Aptitude Test

Textbooks: Both a Symptom and a Problem

A Low Level of Common Knowledge

Costs of a Failing System

Appendix II-A: Public Opinion on Education

Appendix II-B: NAEP Reading and Math Scores by State

Appendix II-C: Mean U.S. SAT Score, 1960-1994

III. EVIDENCE OF SYSTEM-WIDE INEFFICIENCY

Two Paths to Reform

Spending Growth and Performance Decline

International Comparisons

Domestic Examples of Education Delivered for Less

Private Managers of Public Schools

Hope for an Inefficient System?

Appendix III-A: Total U.S. Spending (in billions) on K-12 Education

Appendix III-B: Elementary, Secondary and Average Per-Pupil

Expenditures in World School Systems

Appendix III-C: Per-Pupil Expenses and Achievement Ratings by State

IV. SOURCES OF INEFFICIENCY IN LOCAL

SCHOOL DISTRICTS

The Growth of Non-Instructional Spending

Need for a More Complete Explanation

Case Study of the Waco Independent School District: Introduction

Recommendations:

(1) Introduce incentives for cost savings into the budgeting process

(2) Commit to a well-defined and coherent K-12 curriculum plan

(3) Consolidate curriculum development responsibilities

(4) Eliminate other duplicative operations and excessive expenditures

(5) Target low student-teacher ratios only where they have an impact

(6) Redesign the district bonus pay system

(7) Create competition between schools

(8) Promote school-level decision-making

TABLE OF CONTENTS, PAGE TWO

Recommendations (continued):

(9) Help minimize the variety of school responsibilities

(10) Streamline academic subject offerings

Summary

Appendix IV-A: Sample Financial Analysis Model Reports on Waco

Appendix IV-B: Waco TAAS and SAT Scores

Appendix IV-C: Comprehensive Waco Budget (FAM)

Appendix IV-D: Waco Central Office Costs and Staffing Levels

Appendix IV-E: Sample Standard Financial Report from Waco

Appendix IV-F: Waco Property Tax Rate History

Appendix IV-G: Sample What Works Pages

Appendix IV-H: Waco I.S.D. School Budgets and Staffing Levels

Appendix IV-I: Waco Enrollment vs. Attendance Comparison

V. STATE AND FEDERAL LEVEL INEFFICIENCY

The Texas Education Agency

The Department of Education

Title I

Special Education

Summary

Appendix V-A: Waco Special Education Department

Appendix V-B: New York City Special Education vs. Regular Education

Spending Comparison

VI. CONCLUSION

BIBLIOGRAPHY

I. INTRODUCTION

To many Americans, the condition of the nation's elementary and secondary education system is a matter of great concern. As schools appear increasingly ineffective, disorderly, and dangerous, people are losing faith in public education. Parents fear that the system no longer enables their children to develop critical skills for college and the job market. U.S. leaders, on the other hand, worry about the long-term ramifications of a school system that fails to produce students who can perform at the level of their peers in other nations. Recent political discourse has concentrated heavily on education, with participants calling for national standards, charter schools, better reading instruction, and school vouchers as reforms capable of improving the system.

As a means of injecting an even greater sense of urgency into the education debate, this paper begins by presenting numerous indicators that show U.S. schools to be failing. With this case for action built, the second section proceeds to question the efficiency of public education. The system's efficiency is, fundamentally, a question of the degree to which it allocates resources in ways that maximize student achievement. As years of performance data suggest, however, American education has been plagued by great inefficiency. While spending has grown substantially, performance has stagnated or declined, a victim of a system that pays little attention to the costs or benefits of the financial commitments it makes.

After showing evidence of the system-wide efficiency problem, the paper seeks to identify flaws at all three layers of educational governance, the local, state, and federal levels, in order to understand more specifically the sources of inefficiency. The third and largest section of the paper addresses local school districts. Through a case study of the Waco Independent School District, it suggests several steps that Waco and districts like it can take in order to reduce costs and improve student performance.  Finally, the paper concludes by examining the operations of state and federal education agencies, pointing out inefficient practices at the Texas Education Agency and various programs sponsored by the U.S. Department of Education.

The overall goal of this thesis is to show that significant reform of the U.S. K-12 education system can be realized through strict attention to the efficiency of its component institutions. Providing evidence that, at present, these institutions are not spending money in the best possible ways, this paper calls on them to reverse the trend. Schools, districts, and federal and state agencies must initiate a deliberate search for funds that are not being spent effectively. With savings from prudent cuts, significant sums of money can be diverted to areas that are more likely to enhance the educational performance of students. This process is one promising way in which the struggling U.S. education system can start moving, as it must, on a path toward excellence.

II. K-12 EDUCATION IN THE U.S.:

A FAILING SYSTEM

While participants in the debate over how to reform American education, including teachers, parents, researchers and politicians, represent a wide range of views and interests, there is one idea that almost all agree on: our schools have to get better. The traditionally most ardent advocates of public schools, teachers and their unions, now have trouble defending them. While teachers are more familiar with public schools than any other group, they are reluctant to enroll their own children. In urban districts, for example, teachers are two to three times as likely as the general public to send their children to private schools.[1] Keith Geiger, President of the nation's largest teachers' union, the National Education Association (NEA), allows no one to mistake his opinion of inner-city public schools: "They are absolutely terrible - they ought to be blown up."[2] The NEA now is so eager to improve public education that the union has moved to sponsor and study charter schools.

In addition to receiving negative feedback from educators, public schools are being criticized by a more vital constituency, their customers. At no other time since Gallup began conducting polls has education been such a prominent concern of Americans, with 26 percent - the largest group - ranking it as the nation's most important challenge. At the same time that they are concerned, however, they are dissatisfied, as only 18 percent of Americans rate K-12 schools as above average, and 28 percent call them below average (Appendix II-A).[3]

This public view, along with the view of educators, results from the fact that the American education system, in several areas and by several measures, is not delivering results sufficient to meet the demands of society.

Reading Performance

Political leaders such as President Bill Clinton and Texas Governor George Bush have both made commitments to improving the reading skills of American pupils. They have promised to ensure that every student will be reading proficiently by the third grade.[4] Like many educational objectives endorsed by politicians, however, this one should be viewed with skepticism, for recent data from reading achievement tests indicate that American students are far from any commendable level of performance. One illustrative measurement of this fact is the federally-sponsored National Assessment of Academic Progress (NAEP) examination. The only ongoing survey of student achievement in the U.S., the NAEP test is considered by educators to be the "nation's report card." Exams given to students in grades 4, 8 and 12 and include multiple choice, short answer and essay questions. Standards for grading the exams and determining minimum scores for the four skill-level classifications (advanced, proficient, basic, and below basic) are determined by The National Assessment Governing Board, a "broadly representative panel of teachers and others."[5]

On the 1994 examination, only 28 percent of fourth grade students displayed grade level proficiency on the reading exam.[6] Forty percent fell into the below basic category.[7] While Maine is due praise because its students scored better than those in any other state, just 41 percent of its students could read at the proficiency level. The variation in performance throughout the nation was significant, as Louisiana finished last among the states with only 15 percent of students meeting the proficiency standard (See Appendix II-B for a summary of state-by-state NAEP performance).[8]

Louisiana, however, is ahead of several low-performing urban districts around the nation. In Philadelphia, for example, Superintendent David Hornbeck recently seized control of the city's schools and will attempt to transfer three-fourths of the faculty as a result of their failure to raise student achievement. At one of these schools, Audenreid High, less than 3 percent read at basic grade level. The Philadelphia Federation of Teachers is currently in court challenging the superintendent's move to produce change at the schools.[9]

Mathematics and History

Though reading is the area where American students are weakest, performance in other core subjects - often due to the failure to instill fundamental reading skills in the early grades - adds further cause for disappointment. In mathematics, the NAEP ranks North Dakota as the state with the best eighth grade students, yet only 30 percent of them demonstrated grade level proficiency in 1994. Louisiana comes in last in math as well, with only 7 percent achieving proficiency. The national average on the NAEP math exam indicates that only one of five eighth graders has the math skills that a consensus of prominent educators believes they should.[10]

Students also show little ability in history. In their annual Report Card on American Education, Chester Finn and Diane Ravitch, Co-Chairs of the Educational Excellence Network, give the U.S. an "F" for history achievement, in a section acerbically titled, "Don't Know Much About History."[11] Citing NAEP data showing that six of seven eighth graders do not have an adequate command of American history and that 57 percent of high school seniors show below basic knowledge in the subject, the authors had no choice but to give a failing grade.[12]

International Comparisons

While the U.S. educational system performs poorly on its own evaluations, it might appear even worse when compared to the systems of other countries. In a Gallup survey of geographical knowledge, the average U.S. high school student could identify seven of fifteen countries or oceans on a blank map, placing the U.S. last in a contest among six nations.[13] A more far-reaching 1996 study from the Organization for Economic Cooperation and Development (OECD) provides further evidence of Americans trailing their peers. The nation's eighth grade students ranked twenty-first out of twenty-four nations in math, statistically better than only one participant in the survey, and they placed thirteenth in science.[14] The effectiveness of each year of instruction in a U.S. school, moreover, appears to be quite low. Compared to their peers in twenty-four other nations, U.S. students recorded the smallest increase in mean achievement between the seventh and eighth grades on both math and science tests.[15]

The Scholastic Aptitude Test (SAT)

As American pupils advance in grade level, the effects of their substandard education become more apparent, particularly in their performance on the SAT. Probably the student performance indicator with which the public is most familiar, the SAT is the nation's leading college entrance examination. Unfortunately, over the past several decades, the public has witnessed a gradual decline. Between 1966-67 and 1990-91, the average SAT score fell 62 points (Appendix II-C).[16] Confronted with this statistic, apologists for the education system answer that the drop is a product of more students taking the examination.

This explanation, however, is inadequate from both factual and philosophical standpoints. On the factual front, more careful analysis of the data indicates that there is more at work than simply a growing number of test takers. Between 1951 and 1963, the test-taking population grew dramatically, from 81,000 to over 1 million, yet test scores increased during the period.[17] Moreover, while the average SAT score has fallen, the total number of outstanding scores has dropped as well. From 1972 to 1994, for example, the number of students exceeding 600 on the verbal section fell from 116,630 to 79,606.[18] Neither of these phenomena are consistent with the common rationalization of the fall in SAT scores.

Even if one accepts that rationalization, however, one should still be dissatisfied with the trend, and this is where the explanation is also philosophically inadequate. Most segments of society cannot accept poor performance simply because they are confronted with a changing environment; instead, they must adapt. If a manufacturing company, for example, has to increase production in response to growing demand, it cannot at the same time start producing a higher proportion of defective products - that is, if it wants to stay in business. In practice, successful companies are able to replicate a successful manufacturing process over a growing number of units. U.S. schools should be able to do the same, applying instructional principles that work for the benefit of every student in the system, and maintaining consistently high performance regardless of changes in population.

This was not the view of the College Board when it recently "re-centered" SAT scores. A growing test-taking population and, in particular, more female and minority students, the College Board argued, necessitated lowering the standards of the exam. In an editorial in Forbes, Diane Ravitch voices strong objection to this reasoning. She argues that it is a tacit statement that women and minorities are not as smart as white males, an attitude that, in effect, makes The Bell Curve "the prevailing ideology in much of the educational world." Furthermore, Ravitch contends that success in education results from, "good teaching, individual student effort and a rigorous curriculum…whether the students are male or female, black or white, Asian or Hispanic."[19] This simple but true precept underscores the fact that the SAT problem does not result from more students taking the exam. It results instead from more students receiving an inferior education.

Textbooks: Both a Symptom and a Problem

As for her explanation of falling scores, Ravitch refers to a study by Donald P. Hayes of Cornell University. Its findings are further symptomatic of the disturbing state of American education. The study reviewed 800 textbooks used in primary and secondary schools between 1919 and 1991, and discovered that books became easier and easier after World War II. Texts for grades four through eight were deemed "at their lowest level in American history" in terms of language. The average literature textbook currently used in grade twelve was found to be simpler than eighth grade books used around the time of World War II.[20] Since the substantial majority of the decline in SAT scores is attributable to the verbal section, the simplification of the nation's textbooks is another plausible reason for the decline in SAT scores.

A Low Level of Common Knowledge

As American students are reading simpler textbooks and performing poorly on standardized tests, it is also evident that many of them are growing up unaware of basic facts about politics, society, and culture. A recent survey revealed that 58 percent of Americans thought that more money goes to foreign aid than to Medicare expenses; actually, foreign aid is less than 1 percent of the Medicare budget. And while 50 percent could identify the Speaker of the House, 64 percent recognized Lance Ito.[21] Another survey tested college seniors for knowledge that education researcher and standards advocate E.D. Hirsch argues every fifth grader should know. American students - college seniors - performed woefully. Fewer than half knew the number of members in the U.S. Senate; one in four could identify Germany's allies in World War II; and one in five could name the author of The Republic.²²

Costs of a Failing System

As public concern and dissatisfaction with the failure of American education suggests, the poor performance of the U.S. educational system has ramifications far beyond the embarrassing statistics - it has real human costs. First, it is leaving young people unprepared for endeavors after high school. Among those fortunate enough to advance to college, over twenty percent of them must take remedial reading or math courses during their first year.[23] Corporations are similarly thrust into the awkward task of remedial education. In 1994, 20 percent of all businesses were providing remedial programs for employees. The basic skills lessons provided by these programs, however, are hardly representative of the skills that are becoming increasingly necessary for individuals to find employment. Employers are demanding better academic records, along with problem-solving, communication and teamwork skills. Corporations are expressing frustration at the difficulty of finding employees with sufficient abilities in these areas. NYNEX, for example, recently had to test 60,000 applicants to fill only 3,000 newly-opened company positions.[24]

In failing to instill vital skills, schools are hindering students from pursuing opportunities they might have under a more effective system. Moreover, an inadequate education significantly lowers earning potential, as numerous studies confirm a direct link between education and income. A recent analysis by Frank Murnane shows that an average thirty-year-old high school graduate in 1979 earned $27,700, but, in 1993, that salary had fallen to $20,000. The author thus concludes, "If you don't have a reasonable education, the chance of earning a decent salary today is very, very small."[25] The macro-economic impact is great as well, as some studies suggest that the insufficient skills of American workers reduce Gross Domestic Product by billions of dollars per year.[26] Finally, the future of our nation may depend on the education of our citizens. In Preparing for the Twenty-First Century, Paul Kennedy argues that "skilled and inventive personnel" and education systems that promote training, particularly outside the college framework, will be critical to every developed nation's ability to withstand potential disasters from global overpopulation, immigration, and environmental damage.[27]

The value of an education, of course, also consists of non-material considerations. It is a vital part of the character of every individual, providing, among other benefits, the ability to reason and a sense of historical background. Moreover, education is vital to the function and preservation of American society. It is our schools that, to a significant degree, perpetuate awareness of the nation's democratic heritage and instill the capacity to make rational decisions that is so critical in a democracy.[28]

The stakes in the national effort to improve the quality of primary and secondary education in the U.S. are enormous, profoundly affecting the lives of millions of American citizens. This knowledge, combined with statistics showing U.S. schools to be failing by national and international standards, should compel educators, citizens, and politicians to actively seek out measures that can improve the present system. The next section will begin this process by examining the efficiency of the American education system.

CHAPTER 2: ENDNOTES

[1] Daniel McGroarty, Break These Chains: The Battle for School Choice (Rocklin: Prima, 1996) 28.

[2] McGroarty 14.

[3] Ellen Graham, "We're Tough on Public Schools, But We Blame Our Families For Many of the Problems," Wall Street Journal 14 March 1997: R1.

[4] "Improving Education." www.cg96.org/new/br/issue/educ.html; The Honorable George W. Bush, speech before the Texas Education Agency, 29 January 1997.

[5] "Student Achievement," Education Week 22 January 1997: 27.

[6] "Assessing Quality," Education Week 22 January 1997: 24.

[7] Diane Ravitch, "Town Meeting," Education Week on the Web 15 April 1997.

[8] "Assessing Quality" 24.

[9] "When to Blame the Teachers," New York Times 27 March 1997: A22.

[10] "Assessing Quality" 24.

[11] Chester E. Finn, Jr. and Diane Ravitch, Education Reform 1995-96 (Indianapolis: Hudson Institute, 1996) 7.

[12] Finn and Ravitch 7.

[13] McGroarty 18.

[14] Organization for Economic Cooperation and Development, Centre for Educational Research and Innovation, Indicators of Education Systems, Education at a Glance: OECD Indicators (Paris: OECD, 1996) 212-13.

[15] OECD 200-01.

[16] McGroarty 17.

[17] McGroarty 17.

[18] David Boaz and R. Morris Barrett, "What Would a School Voucher Buy? The Real Cost of Private Schools," Cato Institute Briefing Paper 26 March 1996.

[19] Diane Ravitch, "Dumb Students? Or Dumb Textbooks?" Forbes 16 December 1996: 118.

[20] Ravitch, "Dumb Students" 118.

[21] Walter LaFeber, America, Russia and the Cold War, 1945-1996, 8^th ed. (New York: McGraw-Hill, 1997) 369.

²² Finn and Ravitch 11.

[23] Boaz.

[24] Finn and Ravitch 6.

[25] Peter Applebome, "Better Schools, Uncertain Returns," The New York Times 16 March 1997: E5.

[26] Kenneth G. Wilson and Bennett Daviss, Redesigning Education (New York: Henry Holt, 1994) 1.

[27] Paul Kennedy, Preparing for the Twenty-First Century (New York: Random House, 1993) 329-349.

[28] Tom Luce, Now or Never: How We Can Save Our Public Schools (Dallas: Taylor, 1995) 30-31. III. EVIDENCE OF SYSTEM-WIDE INEFFICIENCY

Two Paths to Reform

Given the level of popular concern about education and the great potential for improving the system, it is not surprising that politicians are rushing to develop plans for reform. One set of ideas, embodied in the proposals of President Clinton, stresses increases in education funding, for existing programs as well as a long list of new ones. Among other measures, the President's plan calls for free internet access for schools, anti-truancy grants, and funds for school repairs; its total cost exceeds $50 billion.[1] Most Republicans object to the content and price of this package, but since taking control of Congress in 1994, their party has been unable to propose and marshal support for any alternatives. In fact, they have accepted and even added to the education spending increases requested by the President.[2] Most recently, in the budget agreement just reached by Republican and Democratic leaders, at least $35 billion is available through 2002 to fund the President's education initiatives.[3]

Thus, both parties are either actively or passively endorsing the resource-driven approach. In response, others in the educational policy debate are voicing skepticism over exactly what large funding increases can accomplish. "It's a rare politician who can resist throwing money at a problem," complains Tom Luce, a central figure in education reform efforts in Texas in the 1980s. Luce argues that spending more on education is akin to increasing the production of a factory that makes defective products. ⁴ A like-minded reformer, Eric Hanushek of the Brookings Institution and the Panel of the Economics of Education Reform, advocates that new policies be "budget-neutral," or based on current spending levels.[5]

Spending Growth and Performance Decline

Their stances are based not on stubborn commitments to fiscal conservatism, but rather to a fundamental belief that the U.S. public school system is inefficient. Evidence to support this claim is abundant, starting with the fact that the poor performance of U.S. schools has coincided with substantial, uninterrupted funding increases. Since receiving $15.6 billion in 1960, elementary and secondary schools have benefited from a 202 percent real increase in funding (3.8 percent per year, compounded annually), to $228.9 billion in 1991.[6] Growth has continued at about the same rate in the 1990s, as these schools spent $288 billion in 1996 (Appendix III-A).[7] This rapid increase has occurred despite the fact that the number of students in the 1970s and 80s fell "dramatically."[8] As a result, per-pupil spending has risen even faster than aggregate spending, nearly tripling (in real terms) between 1960 and 1996, from $2,147 to $6,213.[9] While the ominously large increases in health care costs have been the subject of great public concern and political attention, several studies show that education expenditures have grown even faster, though few educational policy debates seem to take notice of the fact.[10] The political cost of calling for cuts in education spending growth appears to be more than most legislators are willing to bear.

International Comparisons

Benefiting from generous funding increases, the U.S. public education system has become one of the richest in the world. In the OECD survey, the U.S. ranks second in primary education funding, third in secondary school funding, and sixth in total education outlays as a percentage of GDP (6.8 percent).[11] Thus, the very study that reveals the poor performance of U.S. students on international standardized tests also suggests that the U.S. is not maximizing the value of its educational investment. Other nations spend significantly less and achieve far more. Japan and Korea, which rank in the top three in both math and science performance, spend approximately $3,000 less per pupil than the U.S. on their primary and secondary school students (Appendix III-B).[12]

Domestic Examples of Education Delivered for Less

Just as models for less expensive schools with excellent achievement records can be found abroad, they can also be found in the U.S., in the form of private and parochial schools. Attempting to determine the value of a typical private school voucher by finding how many private schools charge less than $3,000 tuition, the Cato Institute conducted a survey in Indianapolis, San Francisco, Jersey City, and Atlanta. In those four cities alone, the authors found 158 schools that cost less than $3,000.[13]

In another examination of private school costs, Robert Genetski compared the public and Catholic schools in Chicago. To more accurately capture the costs of a Catholic school, Genetski added to tuition the cost of books and transportation, and doubled teacher salaries to account for typically lower wages paid in Catholic schools. Nevertheless, he showed that the cost of private schools was between 45 and 77 percent that of public schools.[14]

Private school students, moreover, are not suffering from the lower level of resources in their schools. In New York City, for example, 99.5 percent of Catholic high school students graduate in four years, compared to 48.2 percent of students in the public system.[15] Among those graduating and taking the SAT, the Catholic students still prove more successful, as their average score was 815, compared to 642 for their public school peers.[16] In the national pool of students, the advantage of private schools is still evident, NAEP data confirms. In history, geography and reading, achievement is "substantially" higher in private schools, even when comparing children whose parents have the same educational background.[17]

Private Managers of Public Schools

While private schools are showing the ability to educate students for less than public counterparts, corporations are pursuing the business opportunity of managing public schools. In return for the regular public funding for the students they agree to educate, companies will run the schools, hopefully spending less than the public appropriation and retaining the balance as profit. Baron Schools, Inc., for example, began managing the Romulus-Baron School of Choice near Detroit in September 1996. The private company plans to collect $5,300 per year in state aid and spend only $4,240 for each student enrolled.[18]

Two larger and higher-profile firms are also making progress in the field. Education Alternatives, Inc., a public company based in Minneapolis, recently obtained a charter to operate up to twelve public schools in Arizona, a contract potentially worth $24 million per year.[19] The Edison Project, the other high-profile experiment in for-profit school management, also appears to be gaining in revenues and reputation. Managing twelve schools for $1 million each in the current year, Edison is making excellent impressions. Peter Applebome, education writer for the New York Times, reports that Edison is viewed by both educators and investors as a "remarkable success" thus far. Edison's first year was a "tantalizing indication that perhaps a private company can make a profit by operating some schools better, cheaper and smarter than public school districts."[20]

Hope for an Inefficient System?

The unfortunate reality is that American public schools have been spending more and achieving less. This suggests the common question: does money make a difference in the attempt to increase student performance? Even when comparing U.S. schools to one another, the answer appears to be no. A correlation between state education funding and mean test scores is almost nonexistent, as a regression equation yields an r² of 0.0014, suggesting only 0.014 percent of the variance among state test scores is attributable to funding (Appendix III-C).[21] While this finding further suggests that money is irrelevant to performance, however, one should not accept the general conclusion as an incontrovertible fact. The discouraging data merely shows that the U.S. education system has spent a great deal of its funds in an inefficient manner, investing its resources in ways that do not improve educational outcomes.

It is both a logical conclusion and the opinion of numerous researchers that when money is spent in the right way, however, it can have an marked impact on student achievement. The turnaround of Zavala Elementary School in Austin, Texas, provides an excellent example. In 1989, Zavala, along with fifteen other schools, was designated one of Austin's "priority schools" and appropriated payments of $300,000 per year for five years. Unfortunately, fourteen of the sixteen schools ended up confirming the pessimistic view of what money can accomplish, as their attendance and test scores remained very low. Zavala, however, charted a different course. Starting with a confrontational meeting between parents and school staff, where the school's disappointing test scores were read aloud, Zavala committed itself to raising student achievement. It hired new teachers to reduce class size and set clear student performance goals for the school to target. From attending the meeting with parents, the teachers had been made sensitive to the urgency of the need to improve. The school also implemented the gifted and talented curricula for reading and math in all classes, invested in faculty development programs, and concentrated on making parents more involved in their children's schooling. By 1994, the results were clear, as attendance rates were among the city's highest and the once extremely low test scores reached the city average. ²²

The experience of Zavala shows in an inspiring way that when an increase in funding is coupled with well-conceived plans for improving the way a school operates, student performance can be raised. With this possibility in mind, it should be a central objective of U.S. K-12 institutions to find and eliminate sources of inefficiency and to devote the savings to programs with a record of success. Thus, budget-neutral reform that raises the poor achievement levels of American students can be accomplished. The following section will examine the operations of a local school district in order to put forth specific proposals for how such entities can make themselves more efficient.

CHAPTER 3: ENDNOTES

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&& &&&&&&&&&&&&&&&&&&&&&&&& &&&&&&&&&&&&&&&&&&&&&&&&[1] Peter Applebome, "Clinton's Plan to Focus on Schools Hits Home," New York Times 8 February 1997: Y9.

[2] Bruno V. Manno, "Educational Excellence Takes More Than Money," Foresight: Hudson Institute Insights on the Issues of the Day. February 1997: 1.

[3] "Interview with Senator Phil Gramm," This Week 4 May 1997.

⁴ Luce 100.

[5] Eric Hanushek, Making Schools Work: Improving Performance and Controlling Costs (Washington, D.C.: Brookings, 1994) 9.

[6] McGroarty 16.

[7] Jackie Calmes, "On Education, Uncle Sam Still Is No Big Spender," Wall Street Journal 14 March 1997: R2.

[8] Hanushek xix.

[9] McGroarty 16; Calmes R2.

[10] Hanushek 26.

[11] OECD 59, 71.

[12] OECD 71.

[13] Boaz.

[14] McGroarty 20.

[15] Lisa W. Foderaro, "In Catholic School, Shared Values Include Rigor and Decorum," New York Times 26 September 1997: A12.

[16] Sol Stern, "Why the Catholic School Model is Taboo," Wall Street Journal 17 July 1997: A16.

[17] Finn and Ravitch 8.

[18] Keith Bradsher, "A New For-Profit Sets Off a Turf Battle in Detroit," New York Times 27 September 1997: A6.

[19] Mark Walsh, "EAI Gets Charter to Run Up to 12 Schools in Arizona," Education Week on the Web 22 January 1997.

[20] Peter Applebome, "Grading For-Profit Schools: So Far, So Good," New York Times 26 June 1996: A1.

[21] Douglas Munro, "How to Find Out Where the Money Goes in the Public Schools," Heritage Foundation State Backgrounder 10 August 1993.

²² Richard Murnane and Frank Levy, "Why Money Matters Sometimes," Education Week on the Web 11 September 1996.

--------------------------------------------------------------- IV. SOURCES OF INEFFICIENCY IN

LOCAL SCHOOL DISTRICTS

The Growth of Non-Instructional Spending

Attempting to pinpoint the source of inefficiency in public schools, many observers blame the dwindling share of total expenditures devoted to in-class instruction. Former Secretary of Education William Bennett, for example, articulates this argument in writing,

Too much money has been diverted from the classroom; a smaller share of the

school dollar is now being spent on classroom instruction than at any time in

recent history. It should be the basic goal of the education reform movement to

reverse this trend toward administrative bloat and to reduce the scale of the

bureaucratic "blob" draining our school resources.[1]

Bennett's contention that bureaucratic spending is growing at the expense of instructional spending is indisputable. Nationwide, the non-teaching bureaucracy grew 500 percent between 1960 and 1984, while the number of teachers rose only 57 percent.[2] In addition, numerous analyses of educational spending in the 1990s confirm that throughout the U.S., public schools spend a disturbingly a small percentage of their funds on classroom teaching. Five such studies, covering New York City, Milwaukee, Indianapolis, and the states of Wisconsin and Indiana, find that an average of 33 percent of total K-12 budgets actually make it into the classroom.[3]

Many of the districts drawing scrutiny appear to have exceedingly large administrative structures. A 1987 review of Chicago public schools, for instance, revealed that 3,300 people are employed by central administration departments. At the same time, the Catholic Archdiocese in the city employed only 36, though it served a student population 40 percent the size. A similar situation exists in New York City, where 6,000 administrators work for the public schools, while only 25 can be found in Catholic system, which is patronized by one-fourth the number of students.[4] The large group of public school administrators, moreover, also appears to be well compensated in comparison to their counterparts in other fields. Employees such as secretaries, food service personnel and janitors typically earn much higher - by 50 to 100 percent - salaries than employees in similar private sector positions.[5]

Need for a More Complete Explanation

Though such facts serve to generate concern about how educational funds are spent, appreciating them is only a first step in addressing the broader problem of inefficiency (the fact that expenditures have risen, but performance has not) in the public school system. While administrative growth to the detriment of the classroom has been harmful, it does not appear that this trend has been the main source of overall cost growth. Major components of the fast-growing "non-instructional" category do, on closer examination, relate to instruction. Examples of this are support staff, materials, and fixed charges, such as staff retirement and health benefit costs. When costs strictly attributable to central administration are isolated, from 1960 to 1980, they remained a constant 5 percent of total costs.[6] Factors other than administrative costs, thus, must have even more to do with total education cost growth. Consequently, when attempting to discover the roots of school inefficiency, it is critical to look at a number of factors in addition to administrative expansion.

In order to get a complete picture of the how schools can become more efficient, one needs to examine not simply budget summaries revealing the proportion of spending in each category, but complete school district budgets. Such a full picture enables one to go beyond arguments over the appropriateness of the amounts of money spent inside and outside the classroom. One can assess the prudence of all expenditures, bureaucratic or otherwise, and attempt to determine the extent to which they improve the educational outcomes of students. With this framework it will also be possible to make specific recommendations to local school districts for measures they can implement to increase efficiency.

Case Study of the Waco Independent School District: Introduction

It is with these aims that this report will analyze the operations of the Waco Independent School District (Waco) in Waco, Texas. Although it is hard to generalize findings from one school district to another, the lessons learned in Waco will often apply to districts around the nation. Moreover, Waco is a good sample district to examine for a number of reasons. It has recently implemented the Coopers & Lybrand Financial Analysis Model (FAM) software, which classifies district expenses in a standard set of categories and presents financial information in a more business-like format than districts generally produce (Appendix IV-A). The program also creates hundreds of different reports, on figures such as spending by educational program (i.e., vocational, bilingual, etc.) or the budgets of individual schools. In addition, with 16,111 pupils, Waco is an average-sized district, and with a $5,823 per pupil expenditure, it spends close to the national mean on its students. Finally, located in the center of the city, Waco is an urban school district with a diverse student population. However, while allowing insight into many of the problems confronted by urban districts, Waco is still not as large and complex as districts like New York City or Chicago.

The performance of Waco's students indicates that the district needs to take steps to increase the effectiveness of its educational program (Appendix IV-B). Only 39 percent of students passed all three sections of the Texas Assessment of Academic Skills (TAAS), a state-administered examination that sets minimum reading, writing, and math competency levels for Texas students, in the 1996-97 academic year. The state's overall passage rate in the previous year was 67 percent. (Waco must be commended, however, for improving this statistic by ten percentage points in the past four years.) Just 35 percent of Waco's students took the SAT, scoring an average of 935; 29% of them exceeded the state's goal of 1000.[7]

A glance at Waco's budget reveals that the district has the same problem as many others in the U.S., for only half of its $93 million budget is devoted to instruction, with 43 percent going to teachers, 3 percent to teachers' aides, and 4 percent going to materials (Appendix IV-C). Another 12 percent goes to instructional support, including counseling and curriculum development. The remainder of the budget is consumed by operations, debt service, and school and district management. With almost 200 employees, or approximately 80 for every student, the central administration appears to be fairly large (Appendix IV-D).

That only half of the Waco budget is goes to instruction is cause for concern. While excessive bureaucracy is indeed a problem in Waco, however, it is joined with a set of other fundamental operating procedures that should be altered in order to increase the efficiency of the district. Before discussing each recommendation, they are summarized below:

(1) Introduce incentives for cost savings into the budgeting process

(2) Commit to a well-defined and coherent K-12 curriculum plan

(3) Consolidate curriculum development responsibilities

(4) Eliminate other duplicative operations and excessive expenditures

(5) Target low student-teacher ratios only where they have an impact

(6) Redesign the district bonus pay system

(7) Create competition between schools

(8) Promote school-level decision-making

(9) Help minimize the variety of school responsibilities

(10) Streamline academic subject offerings

(1) Introduce incentives for cost savings into the budgeting process

Before examining Waco's budget, it is first useful to understand the process by which it is developed. The budget is formed over a year-long period during which campuses set strategic plans and make formal funding requests. Upon receipt of the proposals, district level officials determine how much is allocated to each campus and administrative unit. A crucial step never taken during this process, however, is an attempt by district officials to objectively determine appropriate levels of spending, for individual schools or for the district as a whole.

In fact, when asked the question, "How much does it take to educate a student in your district?" Carter Scherff, Associate Superintendent for Business and Support Services for Waco, replied that the question does not have an answer. The amount available from state and local sources, and other minor grants, he said, determines how much can be spent.[8] The content of this response is significant because it reveals that budgeting in the district is a resource-driven practice. The district will fund the schools and its central office to the greatest extent possible, subject only to the amount of money available.

This approach to budgeting is by no means limited to Waco. At a presentation to school administrators at the Texas Education Agency`s (TEA) Midwinter Conference on Education, two finance officials from school districts near San Antonio outlined the procedure by which budgets are customarily created in Texas. One presenter stated that when reviewing funding proposals from schools, he wants to "fund everything," but that the sum of incoming revenues often makes this impossible.[9] Conspicuously absent from the presentation was any mention of fiscal discipline, for the sake of taxpayers or for the sake of maximizing the educational outcomes of the dollars spent. Little effort, it seems, is made to analyze the campus funding proposals on their merits alone. Only occasionally do the district financial planners mention concerns over community resistance to property taxes. When they do, their attitude is more aptly characterized as abstract fear rather than intent to reduce costs to a specific target.

Not surprisingly, a lack of fiscal discipline appears to be a systemic flaw in primary and secondary school system throughout the nation. "Today school reforms are often sold on the basis of prospective benefits alone," argues Eric Hanushek, "Costs are not considered, nor are costs or benefits systematically measured after the programs are put in place."[10] One piece of evidence of that supports his contention is what happened to the size of school bureaucracies during the 1970s. Despite the fact that the school-age population "dropped significantly," administrative staff remained essentially the same.[11] The size of the system tends to be as big as big as tax revenues will allow.

The only mechanism in Waco and other school districts for controlling costs is the political process. As promulgated by the Texas Education Code, school district budgets are subject to public hearing. The school board officials who vote on the budget and the property tax rate, moreover, are elected officials. For several reasons, though, this system is ill-suited for the role of encouraging fiscal conservatism. First, school board meetings and local elections gain the interest of few citizens and are attended by even fewer. Part of the reason for this phenomenon is also the second drawback of the political process; that is, the issues considered by the school board are typically ones that the education community, with years of experience in the classroom and a background in educational research, is best equipped to deal with. It is they who should, at the very least, take the lead in making difficult decisions about how a fixed amount of resources can be most effectively spent.

The final reason for the implausibility of effective public involvement in the budgeting process is that school district budgets, as many studying them will attest, are difficult to interpret and understand (Appendix IV-E). Approximately five hundred pages long, the Waco budget is broken down by function (such as instruction) and program (such as bilingual education), but one must have an accompanying guide from the TEA in order to interpret the numeric codes for each classification. The individual budgets for schools and administrative departments resemble transaction journals more closely than budgets, and what is meant by certain expense categories is often hard to comprehend. One of the most common expenditures is for Supplies and Furniture, but this entry could apply to items as diverse as new desks for teachers or reading materials for students. Occasionally an entry for Capital Outlay appears, but no elaboration accompanies it. Waco's implementation of the FAM software does significantly improve the presentation of the budget, making it read more like a corporate financial statement, and this fact will eventually serve to better facilitate public review.

Although Waco and other districts are putting forth effort to make public oversight more powerful, it is nonetheless the case that school systems offer "virtually no rewards for those who do things more efficiently." Any pressures school districts feel to cut costs are usually more than outweighed by calls from the political left to spend more on education.[12] Only when the budgeting process is reformed, so that expenses are scrutinized in attempt to reduce spending to the minimum level necessary for a given level of performance, will public schools begin to see a better return on investment.

Alternatives for introducing such reforms are numerous. Property tax limits can be lowered in order to force districts to keep per pupil expenditures down. In Waco, property taxes rose to $1.42 from $1.30 in 1992, and have stayed at that level ever since (Appendix IV-F).[13] Absent some external pressure, it appears likely that it would be difficult to motivate Waco and districts like it to reduce property taxes. In addition, measures could be adopted that would limit staffing levels in both schools and district administrations. Perhaps the best idea of all is to adopt market-based incentives, such as voucher plans, that allow parents to choose among a group of public and private schools. Such a measure would force public schools to compete for students, the retention of whom would be critical for two reasons. First, in order to continue qualifying for the same levels of state funding, schools would have to keep their enrollments constant. Furthermore, they would need to justify the level of local property taxes to the taxpayers with the fact that they, as opposed to a private school or a school in another district, are educating their children. It seems inevitable that at the core of the public school effort to retain students in an environment of school choice, especially as their revenues might start declining immediately, would be to make themselves more efficient, ensuring that every dollar spent goes toward the best available educational resource.

(2) Make a Long-Term Commitment to a K-12 Curriculum Plan

Closely related to the topic of budgeting is the process by which curriculum programs are evaluated. Programs are the particular strategies schools adopt to pursue academic goals, such as the Success-for-All program for reading instruction. When learning about budgeting in public schools, one is surprised to learn about the prominence of programming issues. Throughout each academic year, school and district officials conduct research that leads them to select certain programs for use in the next year. Almost always, these programs involve new costs, for items such as materials and staff training. It is ultimately up to the district to decide which programs receive funding and are allowed to go forward.

The reason one - especially someone unfamiliar with the education profession - might be surprised at the significance of the programming decisions is that one typically conceives of K-12 curriculum, particularly reading and math, to be a fairly simple matter, with the key ingredients to student success being dedicated teachers and diligent students. The emphasis on choosing and switching between programs might appear misguided and unfocused, as compared with a strategy of selecting and staying with one program that has a history of success.

Indeed, frequent shifting between programs often presents problems. Deborah Rosenfield of Coopers & Lybrand, who works with school districts on consulting projects and on implementation of FAM software, affirms that many districts suffer from "programitis," the continual stacking of new programs on top of others with which schools have become unsatisfied. It is an affliction that is both financially burdensome to the district and an indication of schools not exhibiting a coherent instructional strategy. Eric Hanushek further argues that the programitis phenomenon is widespread, as

benefits of new plans are often assumed rather than systematically measured, and little effort is made to compare the potential net benefits of programs competing for limited resources. Bad programs are allowed to continue, siphoning off resources that could be productively employed to improve student performance.[14]

A similar attitude led Kalman Hettleman, a former Baltimore school board member, to recommend to Baltimore's city schools that they stop piling up innovations and adopt "a coherent core curriculum with detailed lesson plans and stick to it."[15] In Waco, Dr. Rudy Lopez, Principal of University High School, shared his frustration with program changes. He expressed hope that the district could form a comprehensive K-12 plan that promotes smooth transitions for students going from grade to grade, and, he also emphasized, that it be maintained by the district.[16]

While Dr. Lopez wishes for such a shift and while Waco does test, pilot, and adopt a large number of different programs, the district is improving the process by which it evaluates new initiatives, in attempt to spend curriculum development resources in the most effective way. Through its School Improvement Services division, Waco employs a group of analysts whose sole job is to study and evaluate different academic programs. The group publishes a compendium entitled What Works that recommends a large number of effective programs. Each evaluation specifies the evidence that the program promotes academic success as well as the costs of adoption (Appendix IV-G).

The mission of What Works is spelled out in the introduction, and it is directly in line with what school districts need to be doing: "improving system efficiency - becoming more clinical or precise in the investment of resources to ensure the maximum benefit of student achievement." With What Works, Waco school officials are able to choose from many options different strategies for improving the performance of students, with the knowledge that the programs have been successful elsewhere in the district.

In addition to spotlighting successful programs (that schools can use if they are able to include it in their budgets), the School Improvement division also works as an effective screening tool for new program ideas. If a principal wants to experiment with a new technique, he or she must submit an application to for a pilot project. This can be approved for no more than three years, with continuation during that period contingent upon annual evaluations. If evidence shows at the end of the three years a record of achieving the desired outcomes, the program can be included in What Works, and other campuses can begin to replicate it.

School districts should benchmark Waco's attempt to share information on successful programs in order to maximize the effectiveness of their curricula. It is vital that they exhibit a healthy balance of committing, on the one hand, to a curriculum plan that is endorsed by a consensus of the schools and that promotes smooth transitions between grade levels and schools. On the other hand, districts should remain flexible, open to experimenting with new programs that show evidence of improving student learning.

(3) Redefine and Consolidate Curriculum Development Responsibilities

While evaluation systems are critical, it is important to note that their benefits do not come without significant costs. In Waco, for example, the Office of the Associate Superintendent for School Improvement has a proposed 1996-97 budget of $222,600, including $160,000 for salaries, $20,000 for consultants, $15,000 for unspecified fees and dues, and $6,500 for travel.[17] While the What Works manual is certainly a valuable, necessary resource, one is right to question whether it is worth a sum of money that could pay for five or six additional teachers, or a hundred new computers - every year. Effective information sharing must occur, but at a reasonable cost.

One might further question the cost of program evaluation after realizing the expense tied to other district departments who are purportedly engaged in curriculum development at the same time. Along with School Improvement is the Director of Curriculum's office, which adds another $148,300 to the bill. Moreover, several academic departments have a director or coordinator's office, including Special Ed/Special Programs, Bilingual Ed, Fine Arts, School and Community Relations, Elementary Operations, Career and Technology, Alternative Programs, Math and Gifted and Talented. While these entities have numerous managerial responsibilities, it is fair to conclude that at least one of them should be to evaluate the educational programs offered in their areas.

In addition to overlap within the district administration, it also appears that schools do a significant amount of curriculum development on their own. When asked if the curriculum strategies being pursued at University High resulted from district curriculum development, Dr. Lopez replied that they did not. Instead, he relies on his own ideas, which he generates by reading educational research and collaborating with faculty. He said that if he were to wait for the district to produce research, opportunities for progress on his campus would be lost. Thus, while the duplication of efforts within the district administration suggests some amount of inefficiency, the fact that at least one campus prefers to do its own curriculum development suggests that the central apparatus itself is even less effective. The total cost of central program and curriculum development is over $2.8 million, more than the total expenditures of 22 of the 26 schools in the district. That total includes much of the total payments to educational consultants, working for both the district and individual schools, which exceeded $1.4 million in 1996.

The questionable efficiency of the curriculum development operations in Waco suggests the broader question of why, when school districts face very similar challenges in educating students, is information not readily shared between them, particularly with the help of state and federal agencies. If every district in Texas spent the same amount per pupil as Waco on curriculum development ($174), Texas, with 3.7 million students, would spend $643 million per year. This sounds like a staggering amount (it is actually only 2.9% of the $22 billion Texas spends each year for K-12 schools), especially for a service that, to many, might not seem like an indispensable part of an education system. However, if every district did indeed possess the personnel and infrastructure to conduct curriculum development, it would not be surprising if that much cost is incurred every year.

If assessment could be done more centrally, with one large What Works manual being produced in the state of Texas, for example, enormous cost savings could result. The department publishing such a document might not need to be much larger than the one in Waco, since approximately the same sets of programs would be considered by both. It would simply have to field more requests for information and compile larger sets of data. Costs could range from several million to perhaps over ten million, but they would never approach $643 million. Moreover, the recommendations of this more central department would be more reliable, as data on performance in response to programs would thus be taken from a larger sample, and a more complete evaluation of programs would be permitted. Consistent with this logic, one of Eric Hanushek's primary recommendations for reforming K-12 education is that state governments should assume a role where they "promote and encourage local experimentation…and help produce and disseminate information about new programs and their results."[18]

The federal government could also fill a role in this area. In Redesigning Schools, Kenneth Wilson and Bennett Daviss criticize the poor job done by the Department of Education in disseminating information about educational research. Though it already conducts program evaluations and is in the optimal position to serve as a repository for data on best practices, its sole mechanism for sharing findings is the National Diffusion Network, a $15 million agency that can afford only one staff member per state to work with school districts on program evaluation and adoption. Instead of $15 million, the authors contend that the school system should spend closer to $1.6 billion on simply disseminating information on good programs, further arguing that the cost will be "easily" be exceeded by savings on remedial instruction that would not have to be provided with a more reliable set of programs.[19]

Thus, the federal and state governments should start to play a more prominent role in curriculum development, an area where the broader scope of the institutions could prove to be a real advantage. Schools in districts like Waco would benefit as the entire education system became more efficient. Ignoring for a moment the potential for system-wide consolidation of efforts, however, Waco should take steps now to reduce the size of its curriculum development system by allowing schools and academic departments to take on primary responsibilities.

(4) Eliminate Other Repetitive Operations and Excessive Expenditures

Curriculum development is not the only area where duplication of efforts is occurring in the district. A parental involvement program in the central office, for instance, consumes over $250,000 per year, including $175,000 for salary and benefits, $17,000 for supplies, and $6,000 for travel. Another $102,000 of the budget is allocated to the Coordinator of School and Community Relations Office. At the same time, it is clear that campuses undertake their own parent- and community-driven initiatives. University High has a position created exclusively for these purposes. Moreover, it is quite logical that the most effective center of parent involvement is the campus, where the parents' children go to school, as opposed to the district, with which the family has little or no contact.

In addition to the overlapping functions, it is also possible to point to other areas where the size of the central office could be reduced. Expenditures in certain categories appear to be unnecessarily high. Travel, already seen to be a component of other administrative departments, turns out to be associated with nearly every cost center in the budget. In total, it consumes $685,000 per year in the district, allocated to two separate categories, Employee Travel and Travel Allowance, though the difference between the two is not explained in the budget.

Another questionable outlay is for copier rental. An expense in many departments and schools, copier rental costs the district $450,000 each year. If teachers instead made copies at Kinko's for 3 cents each, they could make over 900 copies per student per year, certainly more than K-12 students commonly receive, with the same amount of funding. The implication is that the district has too many copiers on hand, and that they are used too little. The district also spends $110,000 per year on Fees and Dues.

All three of these dubious items exceed other, more education-related areas. Library books and media, for example, account for only $94,000 of the budget. $1.4 million is spent on technology costing over $500 (such as computers), an amount just slightly higher than the sum of travel and copier rental expenses, and about as much as total payments to educational consultants. Misappropriation of funds appears to be a frustrating problem throughout the nation's school system. Ceil Jensen, a high school teacher at Rochester Adams High in Rochester, MI, who has designed several renowned technology-driven courses, had the following to say: "I have seen too many dollars spent buying cell phones and laptops, etc., setting up `office' for mid-level administrators in temporary federal/state programs." She concludes that districts and schools could benefit themselves greatly by spending more conservatively and sending a maximum of available funds to the classroom.[20] It further stands to reason that as part of a budgeting process that focuses on maximizing efficiency, Waco and other school districts should strive to shrink non-academic expenditures to the lowest possible levels. They should also avoid funding areas that duplicate the efforts of other departments or individual schools.

(5) Target Low Student-Teacher Ratios Only Where They Have an Impact

While one can imagine large sums of money being saved from leaner curriculum development and administration, the amount the education system spends on those areas - and even on central system as a whole, for that matter - pales in comparison to what it spends on teachers. Waco spends $40.7 million of its $93 million budget on salaries and benefits for teachers each year; the next largest line item is facilities maintenance, on which $10 million is spent. With such a large amount of district funds going to teachers, it thus stands to reason that of the extraordinary increase in educational spending over the last several decades, a significant portion must be a result of higher spending on teachers.

This is exactly what has occurred. Though people often speculate that the decline in student performance has been a result of inadequate attention from teachers, it turns that their claim is hard to substantiate. Between 1960 and 1991, the nation's pupil-teacher ratio has dropped from 25.8:1 to 17.3:1. Despite the common perception, urban schools are not much more crowded - they have an average of 17.9 teachers for every student. In addition, another source of the higher spending on teachers is due to compensation growth. Teacher salaries have increased, after adjusting for inflation, from $24,339 to $35,243 over the past three decades, an increase of 45.5 percent.[21]

The contemporaneous growth in spending on teachers and decline in student performance suggests that decreasing the student teacher ratio is not an effective technique, and educational research lends further support to this idea. Eric Hanushek argues that "substantial evidence" shows that variation in student-teacher ratios does not strongly affect student performance.[22] Consequently, he argues that the practice of hiring more and more teachers is a prime example of inefficiency in the education system and serves to "directly lower the return on any educational investment."[23] Observation of school environments often confirms this. Stanley Litow, who oversees IBM's International Foundation and its new "Reinventing Education" program, recently acted as principal for a day at an elementary school in New York City. Though it is a small school with an average class size of 15, he observed, the school has the city's worst discipline record, and only 17 percent of the students read at grade level. These facts led Litow, who used to wholeheartedly believed in the need to reduce student-teacher ratios, to conclude instead that, "It isn't the size of the school or the size of the classes that makes for quality instruction."[24]

Finally, it is evident that many public school teachers do not maximize the effectiveness of the time they spend with students. A famous television exposé about Milwaukee public schools captured teachers on videotape reading newspapers during whole class periods (an offense for which, incidentally, teachers were able to avoid termination due to union intervention).[25] Evidence is more than just anecdotal, however. In an analysis of education systems in six nations, Ina Mullis found that 78 percent of U.S. math teachers allow their students to begin homework in class, a practice that is not followed elsewhere. Mullis argues, as many would agree, that getting an early start on homework is not the best use of instructional time. With teachers indicating through this practice that they have significant amounts of downtime during the day (in which they could be engaging in small group instruction), it is even more likely that adding staff to decrease student-teacher ratios will have little educational impact.

Officials in Waco tend to agree, holding the position that unless the ratio can be brought below 12:1, no impact will be made on student performance. Nevertheless, what has occurred on the national level appears to be occurring in Waco, as student-teacher ratios are lower at almost every school than the early 1990s national average. The mean student-teacher ratio in elementary and middle schools is 13.9:1, while the high school ratio is 16.5:1 (Appendix IV-H). These numbers are calculated using enrollment statistics, which in Waco significantly overstate the number of students actually in school on the average day (Appendix IV-I). In addition, one can appreciate an even greater adult presence in the schools by considering the size of the overall staff. The average elementary school has 8.8 staff members for each student, while elementary and high schools have 9.2 and 11.2, respectively.

Waco currently employs almost 1,100 teachers. If it attempted to increase its overall student-teacher ratio to 18:1 (about equal to the average of urban schools in the U.S.) from its current 14.7, the size of the faculty would shrink to 895. Since the average teacher earns approximately $40,000 per year in salary and benefits, this step could save the district $8.2 million per year. And decreasing the number of teachers is not the only possibility for decreasing the instructional staffing budget. Waco spends $3.1 million per year on instructional paraprofessionals, or teachers' aides, $1.7 million of which is devoted to elementary schools. However, the effectiveness of such personnel is a matter of considerable debate. When discussing reading instruction, which takes place primarily in the elementary schools, at least one educator criticizes the role of paraprofessionals. Cynthia G. Brown, Director of the Resource Center on Educational Equity, says paraprofessionals cause "expenditures that research indicates comforts teachers but doesn't result in improved student performance."[26]

If the district were able to make significant staff cuts in both areas, it would have a variety of options as to how it could apply the savings. First, it could simply decrease the size of its overall budget, saving taxpayers millions of dollars. By spending almost 10% less to achieve what should, evidence suggests, produce equivalent performance, the district would accomplish the praiseworthy task of making itself more efficient. Alternatively, the newly available funds could be applied to educational initiatives that are more likely to improve student outcomes. Schools could invest in technology and teacher training programs. They could also manage staffing more as it is handled in Japan. Japanese schools have roughly the same student-teacher ratio as their American counterparts, but the typical class is up to twice as large as those in the U.S.. The additional staffing exists for smaller classes in subjects that are more likely to benefit from small size.[27] Following this example, a Waco high school might increase the size of pre-Algebra classes that can accommodate more students without harming the students' learning experiences. Savings could be used to hire an engineer or university professor, on a part-time basis, to teach advanced science to a small number of students, who would, in this setting, truly benefit from closer interaction with a teacher.[28] On the whole, it appears that Waco has considerable potential to increase student-teacher ratios in order to free funds to devote to other purposes.

(6) Redesign the District Bonus Pay System

Though not apparent in Waco, another element of staffing strategy that school districts commonly embrace is encouraging teachers to obtain advanced degrees. "Virtually every teacher" in the U.S. is offered financial rewards for attending graduate school and higher salaries once they possess graduate degrees. Despite the appeal of the idea that more educated professionals make better teachers, data once again show school districts to be paying for something that, in general, does not affect the educational experience of students.[29] This appears to be true for two reasons. First, graduate programs, knowing that teachers are enrolled almost solely for the purpose of obtaining a degree - as opposed to wanting to develop a particular skill - are motivated to make curriculum easier. Moreover, the quality of the graduate program, and thus the degree to which it benefits a teacher's ability, almost never factors into future compensation or promotion decisions. The possession of the degree is the lone consideration.[30]

Just as the education system pays a premium for advanced degrees, they also reward experience in the classroom. Teachers in Waco are paid according to the minimum salary schedule of the TEA, which raises salaries for every year of service. The starting salary for teachers is $1,995 per month, and this sum increases 2 to 3 percent annually, up to $3,551 for a teacher with 20 years of experience.[31] Bonus pay, along with market forces that encourage districts to raise salaries above these levels, serve to make total salaries higher. The average compensation package in Waco, for example, is $40,000 per year.

While it is also an appealing notion that teachers be rewarded for years of service, it is not clear that the experience of a teacher has an impact on student learning. Many studies do confirm that the first few years of experience are very valuable for the teacher's effectiveness. However, studies focusing on subsequent years have yielded inconclusive results. Some of them actually show a decline in performance with more years of experience, due perhaps, as one researcher speculates, to a gradual loss of enthusiasm by the teacher.[32] To the extent that educational officials want to encourage teachers to improve their instructional abilities and the performance of students, they should offer alternative compensation systems that emphasize factors other than experience. A report from the National Commission on Teaching and America's future, issued in late 1996, included this change in its set of recommendations, proposing "pay plans that reward knowledge and skills," along with "high, mandatory standards."[33] Following this idea, Waco and other districts should attempt to tie compensation more to the developments and achievements of individual teachers.

Officials in Waco have been aware of the traditional ineffectiveness of incentives in teacher compensation and attempted to alleviate the problem by adopting a bonus pay plan in 1993. Accounting for nearly $2 million of the 1996-97 budget, the plan is a significant component of the district's payments to employees. Bonuses are based on the achievement of a large set of potential student and employee outcomes; the more outcomes achieved, the greater the bonus awarded. Payments range from 1.2 to 10 percent of the employee's salary, and they are awarded to entire campuses, or to the central office, in a uniform fashion. For example, one of the student outcomes is to have 90 percent of students passing the TAAS Reading test. If the students at University High can achieve this success rate, then all employees of this school are credited with one outcome. The more outcomes the school can achieve, the greater the bonus percentage for the school's employees. Other student outcomes include success in connection with TAAS writing and math, student attendance, and dropout rates.

One problem with this system is that it gives inadequate recognition to the performance of individual teachers. If one reading teacher does an outstanding job with his students, but two others prove to be less than satisfactory, making it impossible to reach the 90 percent TAAS passage rate, the first teacher would not be rewarded and could conceivably lose motivation to continue doing a good job. Furthermore, the fact that the system rewards all campus employees uniformly allows some employees to benefit even if they make insignificant contributions. Suppose, for instance, that reading, writing and math faculty do an excellent job and qualify the school for a 4 percent bonus. It could feasibly be, however, that an assistant principal at that school is doing a poor job. Not only would he benefit from the efforts of the faculty, but he would receive a greater total cash payment because his salary is higher. The final drawback of the campus incentive system is that for teachers to get a top-tier bonus (which would really make extra effort worthwhile), a lot of events have to occur. These include good performance in several subjects by the students, high attendance, and a low dropout rate. Employees also have individual commitments they must fulfill. Thus, the ultimate reward a teacher receives seems to be attributable less to his individual instructional skill than to a broad set of developments at the school over which, for the most part, he has little control. The district administration can qualify for bonus pay in much the same way as school employees. For TAAS scores to count as an outcome, 90 percent of all students in the district must pass, and attendance and dropout figures are similarly computed on a district-wide basis. However, the ability of these employees to influence final results is even smaller than that of school employees. Given the overall TAAS passage rates in Waco, moreover, the 90 percent goal must appear quite daunting.

Employee behavior is also a focal point of the bonus plan, and the means by which employees achieve outcomes seems to be fraught with problems as well. First, of the $2 million bonus pool in the budget, almost $500,000 is already allocated to attendance incentives for the employees of specific departments. While employee attendance is definitely an important component of successfully managing a school district, it seems to be more appropriate that the district disincentivize absence more than it incentivize attendance. The other way employees can achieve outcomes is through staff development or service. Not only carrying the same problems as the student-driven incentives (e.g., rewarding the collective effort over which the individual has little influence), these measures also seem to be rewarding behavior that is indirectly related to student outcomes. For example, personnel can attend workshops on subjects such as telephone skills, "Managing Chance," or multicultural sensitivity.

One way Waco could make its incentive system more effective (and the $2 million more efficiently spent) would be to remove from staff development options such programs as these. In their place, the district could substitute programs focusing on curriculum development. Workshops, for example, could be held to present the most current research on the different programs offered in major subjects and to allow faculty to engage in strategic discussions. Thus, Waco would not only be focusing the efforts of faculty and staff on making instruction more effective, it could also potentially reduce the size of its curriculum development operations. Another way to improve the bonus system would be to eliminate employee attendance as an outcome and make it instead a minimum expectation. Finally, the plan should focus more on rewarding individual effort, so that employees can feel confident that hard work will be recognized with additional compensation, as opposed to making the bonus subject to an array of seemingly impossible-to-influence goals. The reviews of principals and fellow faculty members could be a major source of information on teacher performance.

It should not appear that effective bonus-based incentive programs are easy for schools to design. A recent survey of schools in Kentucky, which boasts the largest pay-for-performance system in K-12 education, revealed several factors that motivated administrators and teachers. Chief among them was fear of negative publicity about their school's performance, fear of termination, loss of autonomy, and personal pride. Conspicuously absent from this list is the actual cash bonus.[34] Waco could take this information as encouragement to add additional forms of recognition, such as offering more outstanding teacher awards. Most importantly, though, it can increase the efficacy of the current cash-based system by better aligning its incentives with specific educational goals.

(7) Create Competition Between the Schools

From Dr. Lopez at University High, it is clear that he and the rest of the school's employees are highly motivated, a fact which appears unrelated to the district bonus plan. Personally, Dr. Lopez feels great pressure and a sense of duty to ensure that his students receive the best education possible. His planning for the school is very deliberate. In explaining the budget, it is clear that every decision is tied logically to the three main goals of his school, improvements in math and reading, staff development, and parent involvement. He has taken the initiative to create writing and math labs stocked with computers and to wire library computers to the internet. He has done exhaustive research on the Texas economy and forged partnerships with businesses to increase the employment prospects of University's students. Finally, Dr. Lopez has taken it upon himself to view his school as in competition with others in the area, as he reports with pride that the net transfers into his school have risen from five to eighty during his tenure at the school.

The dedication of Dr. Lopez is visible to the other members of the staff. They are friendly and eager to explain their most recent efforts in fulfilling the school's goal of continuous improvement. It is clear that they are happy to be doing their jobs and driven to give their best to the school. However, it is also clear that their incentives are internally generated, from personal drive and the influence of the principal. While this system appears to work well for University High, it is difficult to replicate in other environments. Indeed, one gets the impression that if all principals were as rigorous and devoted as Dr. Lopez, the U.S. educational system would be in far better condition. Absent a guarantee of such internally generated incentives, however, it follows that incentives need to be generated in other ways, such as the market mechanisms of school choice. Such a system would in no way conflict with well-performing schools like University - Dr. Lopez says he would welcome such a system - but it would have the effect of more quickly forcing schools to improve themselves. Otherwise, it would be left to the slow-moving local political process to generate public demands for reform. Waco and other local school districts can to do little to create a voucher system (aside from facilitating intra-district transfers and supporting the movement politically). However, it is interesting to note that by observing the mechanics of schools and school districts (in addition to the budgeting process) one can be further convinced of the potential benefits of school choice programs.

(8) Promote School-Level Decision Making

While the fate of voucher plans will largely be decided by state and federal lawmakers, outside the control of Waco officials, the district does appear to be promoting efficiency in another way, by allowing principals to control decisions at the school level. Outside Waco, it is a common stance of district administrators to issue detailed regulations on the nature of instruction and school personnel, but they are almost always wasteful or destructive.[35] Such regulations cause inefficiencies in two ways, by requiring large time commitments on the part of district administrators, and by mandating choices that by virtue of their sheer generality are probably not in the best interests of many schools.

In the case of staffing, Waco sets only the number of positions each campus can establish. Positions can be allocated to faculty, staff or administration, with each category weighed differently according to the associated salary. In the case of faculty, personnel can be assigned to different subjects at the discretion of the school. This latitude has proved to be very effective for University High. With over 60 percent of its student body in the low socio-economic status classification and many students enrolled in special programs, it is vital to University to have the flexibility to assign its teaching staff in accordance with its unique priorities.

As one of the goals established by a consensus of University's staff is to increase parent involvement, the school has devoted one of its staff positions to a parent-community liaison. This individual runs an adopt-a-school program, which solicits corporate involvement, and directs a parental volunteer effort. Since educational research frequently points to the critical role of parent involvement, it is likely that this position will help to improve the educational performance of many students.

University also runs a dropout prevention program that allows "credit-deficient" students to take courses on an accelerated basis, at their own pace and in a setting that promotes the use of technology. It is an ideal program for older students who have had problems in the school system but now want to earn a degree and acquire skills that will help them compete in the labor market. Aware of the presence of such a group of students, and with the ability to assign staff to support a program that serves it, University is fulfilling a real academic need of Waco students. Other districts should work to promote similar flexibility and autonomy on the part of school-level decision makers.

(9) Minimize the Diversity of School Programs and Encourage Charter Schools

While having designed these programs makes University a more effective school than it would otherwise be, the very fact that the school has to fulfill so many roles - both social and educational - cannot help but decrease its efficiency. It is very difficult to demand of a few top-level school officials like Dr. Lopez to be able to make good decisions in areas so diverse as calculus curriculum and education programs for teen parents. Not only are the school's leaders less than ideally suited for some of the roles, but additional staff also must be hired, often to work with a small number of students.

Providing direct evidence of the inefficiency of the special programs is difficult, partially because of the data available. Even with the FAM software, which can break down costs by program, Waco budget data does not include per-pupil expenditures on special programs like Career and Technology and Bilingual Education. Lacking this information makes it difficult to evaluate the performance of the programs and to conclude whether costs are justified by benefits.

Nonetheless, it is possible to observe practices of questionable efficiency in the way Waco addresses difficult-to-educate segments of its student body. Just as University High has had to develop numerous special programs, such as dropout prevention, parental education for teens, and in-school G.E.D., so too have other schools in the district. This consumes the time and effort of administrators and faculty. Moreover, as one might expect, central administration grows as a result. The Director of Special Education spends $1.4 million per year, while the Coordinator of Career and Technology education adds $76,000. Though it is difficult to reliably characterize the efficiency of these operations, one can envision ways that the associated educational goals might be accomplished at a smaller expense. For example, it seems that it would be effective if certain schools specialized in a set of remedial programs and had principals with backgrounds in running such schools. The existence of these schools would allow the district to be free of additional staff for curriculum design and enable other high school principals to focus on more narrowly-defined programs in their schools.

The rise of charter schools is permitting such efficiencies to be gained, for these schools are able to create their own educational mission and address the needs of specific groups of students. In Houston, the Raul Yzaguirre and George I. Sanchez charter schools serve middle and high school students, respectively, who have failed in previous years are labeled as "at-risk" of quitting school. Founded by leaders with years of experience with such students and who saw charter schools as a means of more successfully working with them, these schools are a testament to what student-oriented schools can accomplish. Students are instructed toward high school graduation, receive character development training, and have the opportunity to gain work experience with local businesses. Once habitually absent from school, students now attend at a 90 percent rate. Waco itself has just launched its first charter school, Waco Charter, at which all pupils are considered at-risk. This school could effectively help larger ones like University play fewer roles, allowing all schools to better fulfill student needs. Waco Charter school should serve as a model for future charter schools, each with their own unique mission, to emerge in the district.[36]

(10) Streamline Academic Subject Offerings

Just as many public schools find themselves playing a myriad of social roles, in the realm of academic instruction they typically offer a wide variety of subjects. At Johnston High School in Austin, for example, one can observe a student spending valuable school time in a photography class, while he is at the same time struggling to pass an algebra class he is retaking.[37] In Waco, curriculum is admittedly very "broad," with numerous subjects outside the core disciplines of reading and math available. Chicago schools, currently embarking upon a major reform effort, diagnose one of their core problems as "watered-down academic courses and electives" as opposed to "more rigorous requirements in English, mathematics, science, social studies and foreign languages."[38] Throughout the nation, in fact, the pattern is consistent. Fifty-nine percent of a student's school day is available for elective subjects, meaning that U.S. students spend about half as much time on core courses as those in Germany, France and Japan.[39]

Catholic schools, by contrast, have had great success in maintaining a very simple, focused curriculum. Such a strategy has had two positive effects. First, it has contributed to the demonstrably superior performance of Catholic school students on reading and mathematics exams. Second, it has been a significant reason why Catholic schools have been able to spend consistently less money than their public counterparts.[40] Since each school in a public district must hire additional teachers in order to offer their auxiliary subjects, it is not surprising that public school instruction is almost always more costly. Asked why Waco offers the peripheral subjects, Mr. Scherff replies that they provide an incentive for students to attend school. While schools obviously want to encourage regular attendance, this method seems to be costly and fit for subordination to other academic goals. The additional, more amusing classes should be offered only after it is clear that the school can provide outstanding instruction in the most critical areas. It should be the effort of Waco and other school districts to follow the private school model and concentrate their efforts on the most fundamental subjects.

Summary

The foregoing recommendations are ways that local school districts, and Waco in particular, can increase their efficiency. First, with more clearly-defined relationships between schools, the district administration, and the state education agency, local school districts can become more effective institutions. They achieve the same goal by also creating incentives that encourage teachers to put forth maximum effort and that motivate administrators to spend conservatively. Finally, by cutting out costs that do not serve to optimize student performance, they can move funds into areas where they are needed most. Through consistent attention to their efficiency, school districts can contribute significantly to the improvement of the U.S. education system as a whole. Federal and state governments can also play apart, as the next section will discuss.

<CHAPTER 4: ENDNOTES

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&& p>

[1] Hanushek 36-37.

[2] Boaz.

[3] Munro 2.

[4] Boaz.

[5] Lewis D. Solomon, "The Role of For-Profit Corporations in Revitalizing Public Education," University of Toledo Law Review Summer 1993: 916.

[6] Hanushek 37.

[7] Waco Independent School District, internal performance report, 1996-97 academic year.

[8] Carter Scherff, personal interview, December 17, 1997.

[9] James Terry and Jimmy Young, presentation at Midwinter Conference of the Texas Education Agency, 29 January 1997.

[10] Hanushek xxi.

[11] Hanushek 37.

[12] Hanushek 62.

[13] Waco Public Schools, Preliminary Budget Report, 1996-97 (Waco, 1996).

[14] Hanushek xvi.

[15] Kalman R. Hattleman, "But Then What?" Education Week on the Web 12 March 1997.

[16] Dr. Rudy Lopez, personal interview, 8 April 1997.

[17] Waco Public Schools, Preliminary Budget Report, 1996-97 (Waco, 1996). All financial information on Waco reported below comes from this document.

[18] Hanushek xxiv.

[19] Wilson and Davis 97.

[20] Ceil Jensen, "Town Meeting," Education Week on the Web 15 April 1997.

[21] McGroarty 18.

[22] Hanushek 37.

[23] Hanushek 37.

[24] Hanushek 37.

[25] Damon Darlin, "To Whom Do Our Schools Belong?" Forbes 23 September 1996: 70.

[26] Cynthia Brown, "Town Meeting," Education Week on the Web 14 April 1997.

[27] Hanushek 69.

[28] Hanushek 82.

[29] Hanushek 67.

[30] Hanushek 68.

[31] Texas Education Agency, Minimum Salary Schedule for Classroom Teachers and Full-Time Librarians," ice.tea.state.tx.us:70/0/school.finance/salary.html.

[32] Hanushek 68.

[33] Peter Applebome, "Report on Training of Teachers Gives the Nation a Dismal Grade," The New York Times 13 September 1996: A1.

[34] Steven Drummond, "Bonuses Weren't Prime Reason Schools Worked to Improve, Study in Ky. Says," Education Week on the Web 2 April 1997.

[35] Hanushek 87.

[36] Texas Education Agency, "Texas Open-Enrollment Charter Schools Chart," January 1997.

[37] Patrick Washington, personal interviews, Winter 1996.

[38] Caroline Hendrie, "Chicago Board to Consider Plan to Overhaul High Schools," Education Week on the Web 5 March 1997.

[39] Center on National Educational Policy, The Good - and the Not-So-Good - News about American Schools (Washington, D.C., 1996) 7-8.

[40] Stern, "Miracle," A16.

_______________________________________________________________________________ V. STATE AND FEDERAL LEVEL

INEFFICIENCY

The Texas Education Agency (TEA)

Inefficiency is not only apparent in local school districts, but also at the state and federal levels of educational administration. The TEA, the administrative authority overseeing Waco and the other districts in Texas, sometimes adds to the duplication of efforts that is seen within Waco itself, between schools and the central office. Despite the fact that both the schools and the district spend time and money on curriculum development, the TEA devotes substantial sums of money to the same end. $3.6 million goes to the Curriculum category, whose objective is described as to "Derive, promote and implement measurable learning results which define students/learners as independent and productive citizens."[1] Another category, far larger at $1.2 billion, is called Leadership and Support, but its mission sounds more like curriculum development: to "provide leadership and support needed by campuses to implement practices that will fundamentally revise the way we approach learning for all students."[2] Though it could certainly be valuable for the TEA to take a leading role in designing curriculum, the present sharing of responsibilities between it, school districts, and schools does not appear to be effective. If the agency is going to devote substantial resources to curriculum development, it should do so in a way that ensures its work becomes an important part of school operations.

Further evidence of overlap with local responsibilities can be found in the budget of the TEA. Professional development consumes $21 million dollars of the agency's budget, though this too is a major responsibility of districts, including Waco, where the central office spends $1,000,000 per year, as well as individual schools. Technology ($19.4 million) and accountability ($9 million) are further examples of items that appear to be best left to local entities. Finally, the cost of maintaining the TEA itself is rather high, as the agency spends $11 million of its budget on administrative expenses.[3]

In addition to inefficiencies at the TEA, other ways to conserve educational resources in Texas have been identified. John Sharp, Comptroller of Public Accounts and Director of the Texas Performance Review, estimates that by making sensible, conservative changes in the state's educational system, Texas could save $89.7 million per year.[4] Though a significant portion of these savings come from reducing higher education expenses and better managing idle school funds, Sharp proposes a few interesting reform proposals for K-12 as well. Some of his ideas include using the internet to obtain textbook updates, purchasing insurance in cooperative pools, and cutting out an $80,000 per year report from the State Auditor that school districts have widely decried as useless.[5]

The Department of Education

At the federal level, evidence of dollars spent unwisely give cause for further charges of the inefficiency in the nation's education system. In their report card on American education, Chester Finn and Diane Ravitch gave the category "Reforming the Federal Role" an "F." Their grievances begin at the Department of Education, of which, as former officials at the department, they say, "The organization bears no relationship to the cause of school reform."[6] Sharing this view, Republicans aimed to eliminate the department upon obtaining the Congressional majority in 1994. In its place, they sought to send block grants to states, eliminating all federal discretion over the funds. Governors would distribute the moneys as they saw fit, provided they took into account the poverty levels of school districts in the allocation process. Former duties of the department would become duties of others arguably more suited for them, including Health and Human Services, Labor, and Defense.[7]

While Republicans were unable to go forward with this and other ambitious government-shrinking initiatives, they fueled new public skepticism about the effectiveness of the Department of Education. One recent analysis explained much of the basis for Republican objections to the department. For every dollar of the department's budget earmarked for K-12 programs, the study found, only $0.85 makes its way to local school districts, and even less gets into the classroom.[8] The balance of the department's K-12 funds, $2 billion, goes to national and state programs and administration.

One-third goes to national programs, which include several initiatives of questionable merit. One is Women's Educational Equity, a program intended to promote equity in education for K-12 female students. In practice, however, only 17 percent of the program's funds go to state and local school districts. More importantly, the program has produced, according to the General Accounting Office, "little evidence of effectiveness in eliminating sex bias in education." Another program is Media and Captioning Services, which close-captions television shows for the hearing impaired and costs $19 million per year. Among the shows captioned, however, are "Baywatch" and "The Young and the Restless." The most incriminating indication of inefficiency among all the national programs is the fact that they are not subject to systematic evaluation. Thus, determining the efficiency with which they use federal resources is very difficult.[9]

Another third of the $2 billion is at the discretion of state governments, and, instead of local school districts, it can be allocated to programs ranging from "university research in the area of elementary and secondary drug curriculum to awards for private organizations for the purpose of operating community activities."[10] Once again, these funds are supposedly appropriated for the purpose of K-12 education. Given the number of problems in this critical area, such as low reading achievement, the department's current use of funds is hardly what one would envision.

The final third of the money goes to administrative costs, for both the department and the entities managing the programs. The Department itself spends about $130 million, with state and local governments spending the balance, as they often retain a significant percentage of funds received for administrative purposes.[11] Asked to identify the greatest barrier to having a more efficient central administration, Mr. Scherff of Waco replied that it was the burden of complying with federal regulations concerning programs like Title 1 and special education.

A review of educational administration in Ohio shows how the federal programs create such great administrative demands. The study found that participation in federal programs required the completion of 170 forms over 700 pages in length. These forms represented one half of the district's total compliance requirements, despite the fact that federal sources provided only 5 percent of state's education revenues.[12] Thus, it is clear, federal programs carry with them significant administrative requirements that lessen the total value of services available to students. In the words of Herbert Walberg, education professor from the University of Illinois, the Department of Education exhibits a "vast power to reduce efficiency."[13]

Title I

One can also discern questionable spending practices in the federal government's Title 1 program. Title 1 provides funds to elementary and high school students with economically disadvantaged backgrounds. Recently in the news is the program's legally mandated inefficiency in the way it delivers services to poor students who attend private schools, who are also entitled to Title 1 benefits. In the 1985 decision in Aguilar v. Felton, the Supreme Court ruled that federally paid employees could not teach in private schools, for that would constitute a violation of church-state separation. As a result, Title 1 instructors are forced to teach next to the property of a private school, usually in leased vans or trailers. New York City, which has the most private school students receiving Title 1 services, spends over $10 million per year to provide auxiliary facilities. ¹⁴ This inconvenience has costs apart from money. It takes instructional time away from the students, as walks to and from school buildings can take up to ten minutes. It even upsets some younger students by making them intimidated to ask to use the bathroom, for that requires a usually reluctant teacher to accompany him all the way back to the school.[15] Aguilar is currently being reconsidered by the Court, and five of the Justices have stated in other cases that they are opposed to the 1985 ruling.[16] A formal decision is expected in the summer of 1997.

While only the Supreme Court can rectify this situation, Title 1 program directors can address inefficiencies in other areas. First, the program is responsible for significant staff growth in state and local districts. States, for example, are allowed to keep one percent of funds they receive for Title 1 for the purpose of administration.[17] Local districts, Waco included, almost always employ at least one Title 1 administrator in order to ensure that they are in compliance with the detailed requirements for receiving Title 1 aid.

The presence of such administrators represents an clear example of inefficiency in the system, as the practice of Edison Project schools confirms. Because of the length of Edison's school year (25 more days per year compared to the average U.S. school) along with the content of its curriculum, the company is able to receive Title 1 money for its students without the need for additional administrators. Thus, if more planning were conducted by the Title 1 program as well as state and local entities, they could almost certainly find ways to deliver the same benefits to students without adding to the size of district administrative units. Even if only one position could be routinely eliminated in districts throughout the nation, the fact that the nation has over fifteen thousand school districts makes the potential savings tremendous.

In addition to its administrative demands, Title I also suffers from a lack of incentives or requirements to follow programs with proven results. Recipients of grant money are able to use whatever strategies they desire. Thus, the program has the same problem as ordinary curriculum development in the U.S., for thousands of schools experiment with different plans, lessen overall effectiveness, and increase total system costs. Moreover, another harmful reality is that Title 1 funds tend to find their way to schools that do not need the money, argues Representative John Porter, who works on Title I reform efforts in the House of Representatives.[18]

With several factors mitigating its foreseeable impact, Title I has produced disappointing results. In a five-year study of 27,000 Title 1 students, the program, which costs $7.2 billion annually and has spent over $100 billion since 1965, had failed meet its objective of narrowing the performance gap between low-performing students and their peers.[19] Other indicators, such as the expansion of remedial courses in universities and poor scores on the 1993 National Adult Literacy survey, add further doubts about the value of the program.[20]

Special Education

Perhaps no federal endeavor, however, has been the subject of as much criticism as special education. Born in the mid-1970s as a means to ensure a "free and appropriate public education" for handicapped children, the federal special education law has grown significantly in size and scope. In large part, its growth is due to the evolution of the definition of "disabled" and the process by which the classifications are made. Learning disabled students make up half of all special education students, up from one-fifth in the late 1970s.[21] In order to qualify for special services, a student's parent needs simply to request an evaluation. The school district must perform that test within a two-month period, and if the parent is unsatisfied with the outcome, he can pursue a second hearing and legal proceedings, all of which cost the district significant sums of money.[22] Moreover, all students who qualify for special education must be given annual individual evaluations that, unfortunately, focus more on "clinical assessments" than instructional needs, and special education teachers widely agree that they are useless.[23]

The students who successfully meet the standard of needing special services often arouse the disbelief of observers. One California student who cursed at teachers and threatened to murder classmates was enrolled at a $20,000-per-year private school at the school district's expense. What's worse, the district had to pay legal fees for both sides during the evaluation dispute, bringing the total cost of this student to $500,000. Four years later, the student had been convicted of six crimes ranging from petty theft to assault with a deadly weapon, for which he was sentenced to two years in prison.[24]

Once a student is classified as needing special education, he can never be expelled from the system. Thus, one reads with incredulity accounts of legal battles over whether a school has the right to suspend students for weapons possession or other ordinarily intolerable offenses. One student who attempted to blow up his school by lighting a gas stove in the cafeteria was classified as needing special education as a result. After spending $20,000 on legal fees, the school district had to let the student return to school.[25] Such stories sound like extreme examples, but widespread abuse of the special education law has become all too common in K-12 education.

The expense of maintaining the special education system has become extraordinary. Costing only $1 billion in 1975, the program has grown to $3.25 billion at the federal level and to nearly $50 billion at the state and local levels. Waco, for instance, spends over $1.4 million on administration alone for special programs (Exhibit V-A). The system is a classic example of an unfunded mandate from Washington. States can decline to participate in special education, but doing so causes them to forego all federal money. Moreover, due to court decisions using the equal protection clause to justify additional services for the disabled (learning or otherwise), it is hardly surprising that virtually no school district selects this option.[26]

The impact of special education is greater than the cost in dollars, for the program has had the impact of taking money away from the education of other students. While regular education spending in the U.S. was 80 percent of the total in 1967, it had dropped to 59 percent by 1991.[27] New York City public schools provide a shocking example of this phenomenon. The per-pupil expenditure for full-time special education students is $23,598, almost three times the $7,918 city average (Exhibit V-B).[28] Thus, 7.3 percent of the district's students consume 21.7 percent of the education budget. The one positive comment that can be made is that at least New York reports and definitely realizes how much it spends per-pupil on special education. In many districts including Waco, the per-pupil spending on special education is not as apparent.

One can make two overarching criticisms of the nation's special education system. First, to the extent that there is waste in the system, such as paying the legal fees of violent, undisciplined students, that waste needs to be eliminated. Second, and more fundamentally, the public, with a greater understanding of how much it is spending on special education, must decide if it wants to continue with the current trend. Or, as Chester Finn asks, "whether the next million dollars are better spent on more services for a few handicapped youngsters or on physics and math for a larger number of kids who are apt in the future to be mainstays of the country's economic strength."[29] It is indeed difficult, finally, to hold the public school system as accountable for the poor performance of regular education students when it is being forced to devote proportionally greater resources to special education students.

Such an argument gains more force when one examines the results of special education. Through the "sporadic" evaluations it does conduct, the Department of Education can conclude, "Achievement for students with disabilities remains less than satisfactory… results for students with learning disabilities and emotional disabilities are particularly poor."[30] New York has had similar outcomes. While the stated purpose of special education here and in other states is to bring students into the "mainstream," only 20 percent of New York's special education students return to regular classes.[31] This lack of success, combined with high costs, has led to widespread calls for reform, including capping spending levels in the states, limiting parental claims to legal fee reimbursement, permitting expulsions, and drawing a clearer line between what constitutes disabled and what does not.[32] While these changes are long overdue and should be implemented as soon as possible, they are likely to be a long way away. Even in their program-cutting zeal embodied in proposals to eliminate the Department of Education, Republicans were unwilling to "touch" special education.[33] State officials can, in the meanwhile, attempt to place caps on the money allocated to special education services, as Richard Mills, Commissioner of Education in New York, is currently trying to accomplish.[34]

Summary

While the search for inefficient practices should begin at the local level, it is apparent from examining the TEA, Department of Education, Title I program, and special education law that additional and significant sums of money are not being spent in the best ways possible at the state and federal levels. These funds would best serve the public if they were redistributed to local districts, as the promising Republican idea for block grants would have initiated. State and federal education agencies also need to become more self-critical and eliminate waste in the same fashion as local districts. As suggested in the previous section, moreover, they need to find roles that they can fulfill successfully, such as spearheading curriculum development and defining achievement standards. State and federal involvement in the areas they primarily address today appears, in large measure, to be expensive and ineffective.

CHAPTER 5: ENDNOTES

[1] Texas Education Agency, 1996 Comprehensive Biennial Report on Texas Public Schools (Austin, 1996) 82.

[2] Texas Education Agency 81.

[3] Texas Education Agency 85.

[4] John Sharp, Disturbing the Peace: The Challenge of Change in Texas Government (Texas Performance Review: Austin, 1996) 4.

[5] Sharp, 27.

[6] Finn and Ravitch 60.

[7] Mark Pitsch, "House Republicans Unveil Bill to Ax E.D., Create Block Grants," Education Week on the Web 31 May 1995.

[8] Christine L. Olson, "U.S. Department of Education Financing of Elementary and Secondary Education: Where the Money Goes," Heritage Foundation FYI No. 126 30 December 1996.

[9] Olson.

[10] Olson.

[11] Olson.

[12] Olson.

[13] Finn and Ravitch 57.

¹⁴ Linda Greenhouse, "Justices Look Anew at a Landmark Church-State School Case," New York Times 16 April 1997: A16.

[15] "Supreme Court Review," The Newshour with Jim Lehrer 14 April 1997.

[16] Greenhouse A12.

[17] Olson.

[18] David J. Hoff, "Chapter 1 Aid Failed to Close Learning Gap," Education Week on the Web 2 April 1997.

[19] Hoff.

[20] Hoff.

[21] Chester E. Finn, Jr., "How Special Is Special Education?" Educational Excellence Network: Issues and Places February 1996.

[22] Lisa Gubernick and Michelle Conlin, "The Special Education Scandal," Forbes 10 February 1997: 69.

[23] Brent Staples, "The End of Special Education: Private Schools at Public Expense," New York Times A16.

[24] Gubernick and Conlin 66.

[25] Gubernick and Conlin 66.

[26] Finn, "Special."

[27] Karen Hawley Miles and Richard Rothstein, "Where Has the Money Gone?" Education Week on the Web 22 November 1995.

[28] Coopers & Lybrand L.L.P., Resource Allocations in the New York City Public Schools (New York, 1994) 18.

[29] Finn, "Special."

[30] Finn, "Special."

[31] Staples A16.

[32] Gubernick and Conlin 70.

[33] Finn, "Special."

[34] Lynn Schnaiberg, "States Rethink How to Pay for Special Ed.," Education Week on the Web 27 November 1996.

________________________________________________________________________________ The current state of American education is satisfying to very few citizens. Consequently, many of them view education reform as the most important challenge that the nation faces. While it is not realistic to believe that improving education will solve all of the nation's problems, doing so will undoubtedly be critical to the future prosperity and harmony of the country.

There are many alternatives that promise to deliver meaningful reform. One appealing option is outlined in this paper, and it consists of careful scrutiny of spending habits in local, state, and federal education institutions, with the goal of finding inefficiently used resources that can be redirected into areas more likely to raise student achievement.

It is clear that the U.S. system as a whole fails to spend resources efficiently, as rapid funding increases over the past several decades have been accompanied by level or declining performance. Moreover, it is apparent from the examination of Waco, along with parts of the state and federal education agencies, that specific examples of inefficiency can be identified. Thus, it is with some confidence that educators can begin a serious effort to improve student performance without the need for additional education funding.

What appears to be missing are adequate incentives and the will to make change happen. The failure of the U.S. education system, however, is leading citizens to demand that these obstacles no longer stand in the way. Parents, politicians, and educators must act immediately to see to it that the nation's children start receiving an education of the highest quality.

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