Education Spending

With the House Education Committee set to consider new legislation on reducing cyber school funding, the discussion has turned again to how much cyber schools "actually" cost and whether they receive too much money.

Cyber schools are public charter schools in Pennsylvania, and their enrollment has grown rapidly over the last decade. There are 16 schools altogether, with four approved last year alone, and they now boast over 32,000 students. Still, in our $25 billion public education system, they account for only $319 million, or 1 percent of total spending. They also receive less per student than traditional public schools, about 81 percent on average.

But surely online, at-home learning costs less than a kid sitting in a regular classroom, right? Not necessarily.

Cyber schools must still pay for administration buildings and smaller classroom space in which teachers conduct lessons by video. Many also offer "blended learning" centers which allow students in-person class time within their online schedules, and extracurricular activities such as mobile science labs and performing arts centers. And all cyber schools have higher technology costs than regular public schools.

Running a cyber program isn't easy. Pittsburgh-based STREAM Academy, a program run by an intermediate unit, recently encountered higher-than-anticipated costs of running a cyber school, and opted to close the academy after failing to attract enough students.

Instructional, administrative, technology and extracurricular costs vary for cyber schools just as they do for their traditional counterparts. In Pennsylvania, cyber schools already effectively educate students for less, and both parents and students love them. Shaving off supposed excess funding in cyber schools would damage their ability to compete and offer families a quality educational alternative—and it's just such competition that keeps costs down and spending effective.

Pennsylvania House Majority Leader Mike Turzai (R-Allegheny) and a trio of legislators today unveiled a package of bills aimed at reducing cyber school growth and limiting the popular schools' funding. Cyber schools, which opened just 10 years ago, have seen skyrocketing growth as families flock to them, and now boast more than 32,000 students and 16 schools across Pennsylvania.

Take Caela Collins of Lake Ariel, who was born premature with underdeveloped lungs. She was so ill between kindergarten and 6th grade, she could no longer risk being exposed to germs at a regular school. Arbitrarily limiting cyber school growth when parental demand is so high will only hurt Pennsylvania families like the Collins'.

Because the proposed changes are aimed almost completely at reducing cyber school funding, they neither preserve the educational choice parents want nor create accountability measures. Instead, they will squeeze cyber schools' ability to grow and function and treat students who choose public cyber schools as less deserving of support as those in district-run schools. 

The legislation will appease certain special interest groups and public school union bosses who have falsely complained that cyber schools "drain" funding from traditional public schools.

The most damaging provision is one that would allowing school districts with in-house cyber programs to deduct 50 percent of that cost from the reimbursement they owe cyber schools. This measure seems solely directed at shrinking cyber school resources so they're unable to compete with school districts.

The ultimate result will be fewer options for parents. To paraphrase Henry Ford, it essentially says, "You can have any cyber school option you want, as long as it's the school district's."

Rather than punitive legislation targetting cyber schools, lawmakers should embrace charter school reform that provides fairness (meaning all students receive equal funding), increases accountability, and expands the choices parents are demanding.  For more on cyber schools, check out The Learning Revolution.

StudentsFirst, a bipartisan education reform group, released report cards for all 50 states evaluating individual state education laws and policies—and the news wasn't good for Pennsylvania, which received a "D+" overall. Although 31 states did worse, and the state scored higher on some measures—such as a "B" in comprehensive evaluation of teachers—Pennsylvania is still lagging on important fronts.

On empowering parents with information, for example, Pennsylvania scored an "F." If parents don't have a simple way to assess the performance of local schools, which Pennsylvania currently lacks, how will they know if they need to seek alternative education options for their children? One reform would be to require that each school receive an annual report, which would provide a letter grade (A-F) based on student achievement.

StudentsFirst further recommends that the state be required to notify parents on teacher effectiveness. Another policy factoring into weak parental empowerment: Pennsylvania lacks a parent trigger law that would allow a majority of parents to turn around failing and poorly managed schools.

Pennsylvania also received a "D" on school choice. Although the state has made progress in this area, there is no comprehensive opportunity scholarship program available to all students to escape failing public schools.

Another problem in providing school choice is how we treat charter schools. Only school districts are permitted to authorize charter schools (which, as we've mentioned, is like asking McDonald's to authorize the opening of a new Wendy's next door). This limits charter school growth because districts are reluctant to give up funds to the newly authorized schools.  The state should also establish clearer rules for closing down failing charter schools and rewarding good ones, and make funding more equitable across all types of public school options.

To grade states, StudentsFirst used three policy pillars—elevating teaching, empowering parents and using resources wisely—with multiple categories under each pillar. As such, the states ranked 1 and 2 respectively, Florida and Louisiana, have done much to reform public education. Explaining the dismal results for most states, StudentsFirst CEO Michelle Rhee wrote:

Our schools are supposed to be America's great equalizers, ensuring every kid a shot at success. We know, given the right tools, that every student can achieve at high levels. Maybe sending our state education systems home with an "F" or a "D" is the strong jolt lawmakers need to remember that student-centered education policies are the foundations on which strong schools are built.

Charter schools are under fire again this month, following renewed criticism from Pennsylvania Auditor General Jack Wagner on how the schools spend and save their funding. Here's a letter I wrote to the News Item rebutting damaging misconceptions about charter schools:

Your Dec. 12 editorial calling for greater charter school accountability repeats common myths about charter school funding that not only hurts the truth, but the children behind them.

The first myth is that charter schools receive more than their "actual cost" to educate students. When a child chooses a public charter school—which includes cyber schools—the education dollars earmarked for the child rightly follow him or her to the charter school. 

How much follows the child is based on the average per-student spending of his resident school district. By law, charter schools cannot be reimbursed for spending categories such as construction and improvement services, community/junior college programs and debt servicing. On average, charter schools' cost per student is about 80 percent of what traditional public schools spend.

Charter schools spend less because they receive less. Auditor General Jack Wagner's flawed report showing that four other states spend less on cyber schools neglected to note that Texas, Ohio, Michigan and Arizona all spend less than Pennsylvania on their traditional public schools, too.

Second, you claim that charter schools have an unfair advantage in "amassing surpluses" because school districts have a cap. However, that cap—which is 12 percent of a district's budgeted expenditures—only applies when a school district raises taxes.  School districts had more than $3 billion in reserves as of 2011. What's more, charter schools must save funds because school districts frequently delay reimbursing charters.

The editorial missed the most important point about charter schools: Pennsylvania families flock to them and children thrive in them. Enrollment is now well over 100,000. Schools of choice, including charters, save taxpayers $4.3 billion each year. Let's not hamstring charter schools when parents clearly want a choice in educating their children.

If you thought the Chicago teacher strike was bad—spawning strikes elsewhere in Illinois—you should take a look at Pennsylvania.

Mother Jones has compiled a fascinating map of teacher strikes across America since 1968. By the magazine's reckoning, of 839 strikes total across the country, a mind-boggling 740—or nearly 90 percent—of teacher strikes occurred in Pennsylvania. What's more, Pennsylvania's 500 school districts account for barely 4 percent of U.S. school districts.

According to the Pennsylvania School Boards Association, teacher strikes in Pennsylvania have declined sharply since the start of the recession (and the PSBA counts even more strikes than Mother Jones). But the drop scarcely dents the state's reputation as the teacher strike capital of America. In the end, allowing teacher strikes and going on hiring sprees harms our students' education—and for their sake, that needs to change.

While Pennsylvania leads the nation in its historic number of teacher strikes, it's following national trends in another way—in the number of employees its public schools are hiring. As the chart below shows, student enrollment is up 5 percent since 1992, while total school personnel increased 32 percent. Given the state's pension crisis, Pennsylvania can ill afford to pay benefits for employees it may not necessarily need.

Since 1950, employment in K-12 education across America has grown astronomically compared to student enrollment, according to a new report from The Friedman Foundation for Educational Choice:

Between fiscal year (FY) 1950 and FY 2009, the number of K-12 public school students in the United States increased by 96 percent while the number of full-time equivalent (FTE) school employees grew 386 percent. Public schools grew staffing at a rate four times faster than the increase in students over that time period. Of those personnel, teachers' numbers increased 252 percent while administrators and other staff experienced growth of 702 percent, more than seven times the increase in students.

Session days in the Pennsylvania legislature are dwindling, but the assembly still has time to pass essential reforms to how charter schools are run. The valuable reforms contained in SB 1115, however, have stirred up some evergreen myths about charter schools. Below are five of the most common ones, and why they are wrong:

1. Charter schools aren't accountable. It's true that charter schools don't have to follow every single regulation that regular public schools do—but that's the point. Charter schools are public schools, but they are independent schools that a group of parents, teachers or other community organizations form. They are designed to meet urgent educational needs without the encumbrance of needless regulation.

Charter schools still have many major regulations to follow, such as submitting to annual state, federal and financial audits, and are accountable to taxpayers and voters through regular review of their charters. Furthermore, charter school administrators are public officials subject to the state's Ethics Act. SB 1115 would add further ethics safeguards and prevent conflicts of interest.

In many ways, charter schools are actually more accountable than public schools. They are accountable first to parents. They don't get a single dime in funding unless parents choose a charter school for their child rather than the assigned local school.

Ultimately, bad charter schools can have their charters revoked and be shut down—something that never happens, but should, with district schools.

2. Charter schools exist simply to line the pockets of for-profit corporations. This is a particularly curious accusation, given that charter school law states that "a charter school must be organized as a public, non-profit corporation. Charters may not be granted to any for-profit entity."  If the accusation stems from schools seeking certain services from outside vendors—for food, transportation or textbooks—then school districts are guilty of profiteering, too.

3. Charter schools don't have to accept all students. To quote Vice President Joe Biden, this is a bunch of malarkey. Existing charter school law states that charter schools "shall not unlawfully discriminate in admissions, hiring or operation," and must be non-sectarian. Charter schools may focus on math, science or art according to the provisions of their charter, but otherwise must accept all students—including those in special education. For the most part, they serve low-income, poorly performing students from failing public schools, which is why they are a popular alternative for parents.

4. Students in charter schools don't take state achievement tests like those in regular public schools. Charter schools are required to participate in the Pennsylvania System of School Assessment (PSSA), administered in Grades 3-8 and 11. Their scores are posted online with every other publicly funded school. In fact, until the latest round of testing, charter schools were held to a higher standard than school districts, though they frequently have the multiple age groups and high enrollments of school districts.

5. Charter schools get too much money, and don't have the same limits on fund balances that public schools do. We've addressed the "too much money" trope before—charter schools are reimbursed with the same formula statewide, at a fraction of what a student in a particular school district receives. But what charter schools get is simply a function of what school districts spend: Each school district is different, so it means charter schools get varied reimbursements per student as well.

School districts also claim charter schools don't have fund balance limits, which are caps on how much funding they can keep in reserve. The 12 percent cap on total expenditures for school district applies only when the school districts raise taxes.  As of June 2011, 117 school districts had fund balances exceeding the cap, and Pennsylvania's 500 school districts had amassed $3.2 billion in total reserves. Moreover, charter schools have found that school districts often delay paying charter schools for the resident students who left their schools, making fund balances essential to keep charter schools running. 

SB 1115 would not only create a funding commission to assess how charter schools are funded, but would allow charter schools to receive the payment they're owed directly from the state if they so choose.

Some 100,000 students now attend charter and cyber schools in Pennsylvania, proving they are a popular form of public school for families. Updates to charter school law are due, and SB 1115 provides them, but we shouldn't accept punitive restrictions on charter schools designed only to protect special interest groups.

Following Matt's appearance on WHYY yesterday morning, we've received questions over our calculation on Philadelphia school district spending per student.

The error was ours.  Based on the latest spending data from annual financial reports collected by the Pennsylvania Department of Education (PDE), for the 2010-11 school year, the Philadelphia School District spent $2.9 billion. But this total includes payments to charter schools, not just for students in district schools.

There was some confusion because of the difficulty in reading PDE data.  On the spending spreadsheet PDE provides, there are two tabs: One with total spending, and one with "per ADM" (average daily membership), which gives the average number of traditional public and charter school students enrolled per day in the  district. 

The tab with totals shows spending by school districts, charter schools, technical schools, and special venture schools, and adds them up to get a "Grand Total."  However, this "Grand Total" includes double counting, as it includes school district payments to charter schools in the school district total and in the charter school total.  

In contrast the "per ADM" tab displays only school districts, yet includes charter and specialty school spending and enrollment in the district total.   The tab shows Philadelphia spent $14,132 per ADM, but this includes charter school spending and enrollment. 

However, charter schools spend and receive significantly less than district schools. Based on expenditure and fall enrollment data, Philadelphia charter schools spent an average of $12,794 in 2010-11. Assuming all Philadelphia charter school funding came from the Philadelphia school district (this is not the case, as charter schools have other revenue sources) and with fall enrollment of more 166,000, Philadelphia spent more than $14,318 per student in district-run schools.

Because of the assumption that all charter funding is included in the district spending, this figure  underestimates the total spending per student in district schools, but it is closer to the true spending figure than the total we used previously.

We regret the error.

Yesterday, I testified before the House Select Committee on Property Tax Reform, presenting on the best tax policy to finance government operations, and on ways to help school districts and local governments reduce spending, and in turn property taxes.

Among the spending areas I addressed were pension reform, school choice, and prevailing wage reform. Two additional solutions bear additional discussion.

First, collective bargaining reforms like those adopted in Wisconsin would help save taxpayers hundreds of millions, if not billions of dollars. I pointed to a recent Wall Street Journal article that notes Milwaukee public schools saved more than $100 million this year alone, just by changing health care benefits for retirees. Prior to the law, health care benefits both for current employees and retirees could be dictated by labor contracts—as can be the case in Pennsylvania. The new law removes this from contract negotiations, and gives school boards and local elected officials the ability to shop for the most affordable health coverage plan for employees.

Second, I discussed shifting state education subsidies from our current model to weighted student funding. Our current basic education funding formula starts with "hold harmless"—meaning every district receives what it got last year. Student enrollment and other factors are only considered in doling out increases. This harms growing districts, while protecting declining districts from making necessary reductions in staff and buildings. Weighted student funding would award state dollars based on student enrollment—with higher payments for low-income and special needs students that cost more to educate.

Today, Capitolwire reports that the Corbett administration is in fact looking at weighted student funding, quoting Budget Office spokesman Jay Pagni:

"WSF is a way to allocate dollars based on the type of students a district is serving and to ensure students coming with more educational challenges have more resources behind them to address those challenges. So step one is to allocate dollars along WSF model."

Indeed, weighted student funding is a better way to fund education, and prioritizes students over staff. It is a particularly important reform if Pennsylvania lawmakers choose to shift funding away from property taxes to other state revenue sources.

To read my full testimony, click here.

Pennsylvania is reeling from the Friday release of student test scores for 2011-12, which show declining student performance in our public schools. Kids did worse on the Pennsylvania System of School Assessments, or PSSAs, the test most widely used to track student progress and measure if the state is meeting goals set by the federal No Child Left Behind law.

The results are disheartening: Overall, 1 in 4 Pennsylvania students are not proficient in math, while nearly 3 in 10 cannot read at grade level. As for the state's 500 school districts, just about 60 percent made "Adequate Yearly Progress" (compared to more than 90 percent last year).

Nor do the results stop at mediocrity—this year, a cheating scandal involving educators marred Pennsylvania's schools.  Some 100 educators are in the dock for tampering with students' test responses, which inflated performance in certain districts. The state Department of Education argues the latest test results show Pennsylvania's real state of learning.

Unsurprisingly, school administrators and teachers' union heads are slathering the blame on their usual scapegoat: supposed funding cuts. One superintendent complained his and other school districts are at "bare bones." Michael Crossey, the president of the Pennsylvania State Education Association, or PSEA, fumed: 

Who really thinks state government can cut nearly $1 billion from the public schools, cut 14,000 educators, and eliminate programs that work for students—without impacting student achievement?

On the contrary, Mr. Crossey believes practicing the same failed policy in education—more money and more time—will suddenly yield schools full of scholars. Here are seven facts on education funding to demonstrate money is not to blame for lower test scores:

• That $1 billion cut was always coming, and school districts knew this, because education spending increases came as a result of temporary federal stimulus funding.

• We've seen mediocre results despite a doubling in overall K-12 education spending in the last 15 years, from 1996 to 2011. Pennsylvania now spends nearly $15,000 per student on average. By contrast, our performance on the National Assessment of Educational Progress (NAEP) test, which is both a harder test than the PSSA, and allows us to compare performance with other states, shows only about 40 percent of 4^th and 8^th-graders are proficient in reading and math with scores unchanged for nearly 10 years.

• Increased spending does not guarantee better academic results. A 2010 study from the 21^st Century Partnership for Science, Technology, Engineering, and Mathematics Education (21PSTEM) looked at 30 Pennsylvania school districts that improved the most on 11^th grade reading and math performance and the 30 districts that declined the most from 2004 to 2010. Schools that declined in performance had higher increases in total per-student spending.

• Pennsylvania's average composite SAT score in reading and math has hovered around 995 for the last 15 years, despite doubling spending.

• School districts have been increasing spending for several years that don't really match student needs. For example, staffing increased by about 35,000 employees over 10 years, while student enrollment declined about the same amount.

• School districts had more than $3 billion in reserve funds as of 2011, which represents a tripling in 14 years. That is, they've been able to save large portions of their allotted education funds, despite increases in spending and claims of education funding cuts.

• Union labor practices and contracts make adjustments during recessions extremely difficult.  Because school districts are contractually obligated to meet a certain level of salaries and benefits, the only way to cope with school district budget deficits is frequently to lay off teachers and other school employees, rather than come up with solutions such as higher employee contributions to health care costs.

In the end, poor test scores, cheating and sloppy spending serve a failed education system instead of children. Kids who never learn to read and do math properly can't get decent jobs. That's the real, and frightening, result of poor PSSAs.