Why Has Tripling of Funding to Schools Not Benefited Students?

Diana Furchtgott-Roth and Jared Meyer | January 27, 2016 | 4:50pm EST
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In America, only 80 percent of high school students graduate in four years, a share that declines to 65 percent among African Americans. In many urban areas, barely half of students graduate from high school and fewer than 10 percent of students meet standards of literacy and math for their age. With so few students armed with basic skills, the consequences for students’ future careers and their earnings potential—and for our workforce—are dire. 

Immediately after World War II, the United States had the world’s highest high school graduation rate. How have we fallen so far?

Many believe that systemic poverty and underfunded schools are the cause of students’ poor performance. But over the last half century, school funding has exploded. The annual per-student cost of primary and secondary education in America is more than $13,000. After adjusting for inflation, this amounts to an increase of 239 percent from the level seen 50 years ago. America spends more on education per student than any other country in the world, yet average student achievement is only mediocre.

Contrary to what many education advocates argue, increased spending by itself has not helped and will not do so in the future.

Nor is inequality of school funding the reason for poor performance. Thanks to federal programs such as Title I, school districts with wildly varying amounts of tax revenue still fund their schools in roughly comparable amounts. More than half of public schools receive Title I funding, serving 21 million students. A Department of Education report found that there is only an 8 percent difference between revenues received per student in the highest-poverty districts versus the richest districts. Yet gaps in student achievement persist, despite the best intentions of federal policymakers.

The tripling of funding to schools has not benefited students.  Powerful teachers’ unions have directed this funding into new teaching and administrative hires and pay raises for themselves, as student achievement has stagnated. Since 1970, the public school workforce has almost doubled to 6.2 million, while student enrollment has gone up by less than 10 percent.

Many of these new hires are not teaching students. Throughout the United States, half of all public school staff members now work in nonteaching roles. Their salaries account for one-fourth of educational expenditures. Support staff alone makes up 30 percent of school employees. Since 1993, the number of teachers for 1,000 public school students has increased by 5 percentage points. Over that same time, the number of non-teachers per 1,000 students increased 11 percentage points. This trend is not new. From 1950 to 2010, non-teaching positions in public schools increased by 700 percent while the number of students doubled and teaching positions increased by 250 percent.

Some of the increase in funding has also gone to inflating teachers’ salaries, with little effect on student outcomes. From 1960 to 2012, teacher salaries rose by approximately $18,000 after adjusting for inflation, an increase of 46 percent. The average teacher is now paid around $57,000.

The best teachers are doubtlessly being paid too little, but higher salaries for the worst are unfair to students and a gross waste of taxpayer dollars.

First-class teachers are a school’s best investment. If we rank teachers according to quality, replacing a teacher in the bottom 5 percent with a teacher of average quality will generate an extra $250,000 in lifetime earnings for a 28-person classroom (about $9,000 per student). With 3.3 million public school teachers in the nation, replacing the bottom 5 percent (approximately 165,000 teachers) would increase the lifetime income of America’s students by $41 billion. Improvements in teacher quality have also been associated with increases in college attendance and reductions in teen birth rates.

But in many cities with abysmal school systems, teacher firings, thanks to powerful teachers’ unions, are exceedingly rare. In New York City and Chicago, barely 1 in 1,000 teachers loses his job for poor performance.

In Los Angeles, fewer than 2 percent of teachers are denied tenure—and only 0.25 percent of teachers who received tenure were fired over the course of a decade. Meanwhile, graduation rates are barely above 50 percent.

By contrast, between 1 and 2 percent of lawyers and doctors can expect to lose their license to practice over their lifetime. Unions claim that teachers are not being paid enough, which may be true in some cases. But in America’s highest-paid professions, a high salary comes at the cost of lower job security and is based on quality of work. Before we raise the pay of teachers, we must first do away with tenure and seniority protections.

In addition to keeping poorly-performing teachers in the workforce, tenure laws also discourage younger, better teachers from using their talents in public school systems. Union rules ensure that teacher pay and bonuses are based on seniority and credentials rather than actual performance. Unions also mandate that in times of budgetary strain when layoffs are necessary, teachers must be fired in order of reverse seniority—meaning that the younger teachers must be laid off to preserve the jobs of older ones, regardless of teacher quality.

Supporters of teachers’ unions must defend the status quo in U.S. education. This is an impossible task, as student achievement has plummeted or stagnated across a variety of metrics. The reason for this decline is not a lack of funding—it is teachers’ unions that stand against educational progress and are far too willing to throw students under the bus in service of their other priorities.

Diana Furchtgott-Roth is director of Economics21 at the Manhattan Institute and Jared Meyer is a fellow at the Manhattan Institute. They are the coauthors of "Disinherited: How Washington Is Betraying America's Young," from which this is adapted. Follow Diana on Twitter @FurchtgottRoth and Jared @JaredMeyer10.

Editor’s Note: This piece was originally published by Economics21 at the Manhattan Institute.

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