Change the Incentives in Education

Thank you Chairman Armstrong and members of the Appropriations Committee for the opportunity to discuss the impact of Governor Rendell’s education proposals.

You have already heard and are going to continue to hear about the merits and demerits of Gov. Rendell’s laundry list of new and old education programs. But instead of critiquing each and every proposal, I would like to use my time to challenge you to view these programs through a different, wider lens.

I ask you take this alternative approach for one simple yet important reason: Governor Rendell’s education proposals merely tinker at the margins of educational improvement. So instead of merely debating about funding this or funding that program, I encourage you to change the debate to issues of greater substance and impact on educational quality.

Therefore, I encourage you to consider each and every education proposal that is intended to improve educational outcomes with the understanding that every reform that has ever been tried—or will ever be tried—fits into one of three categories: Reforms of Rules, Reforms of Resources, and Reforms of Incentives.

Rule-based reforms seek to change education policies, such as a longer school day, mandated student testing, state-approved curriculum, and so on. Advocates of these types of reforms believe that we just need the “right” rules to improve our schools.

Resource-based reforms seek to provide greater resources, such as more money, smaller class sizes, laptops for students, more teacher training, breakfast programs, tutoring, and so on. Advocates of these types of reforms believe that the lack of money—whether for discretionary or state-mandated use—is what prevents “real” reform from occurring in our schools.

This is not to suggest that reforms of rules and resources are unimportant. They are very important. But what have been our returns on investment? Not very good.

Between the 1994-95 and 2003-04 school years, the average per-pupil expenditure grew by 53% to $9,979 (instructional expenditures grew by 47% to $6,049; support service expenditures grew by 65% to $3,546). We rank among the top ten states in nation in per-pupil spending.

Pennsylvania’s public schools have also dramatically increased the number of employees in the system. Indeed, between 1995-96 to 2004-05 school years, for every new additional student (40,556) more than one additional adult was employed (41,982).

Yet despite the large infusions of taxpayer money over the years, Pennsylvania students continue to perform among the worst in the nation on the SAT college entrance exam (47th in the nation in 2006). Our state test scores also continue to reveal that large cohorts of children are failing to learn even the basics in reading and mathematics (more than 37% of students were not proficient on the PSSA in 2005).

The reality is that all the changes in rules and additional resources over the years have failed to dramatically improve our public schools. The reason, however, is that these methods fail to answer a very basic question: Why do we see a relentless drive for continuous quality improvement in nearly every other sector of our economy except public education?

The answer is incentives—the third, and least utilized, education reform. We don’t see the kinds of improvement we expect because our public schools lack the necessary incentives necessary. What I mean by this is best summarized by the late Al Shanker, former president of the American Federation of Teachers. He said:

“It’s time to admit that public education operates like a planned economy, a bureaucratic system in which everybody’s role is spelled out in advance and there are few incentives for innovation and productivity. It’s no surprise that our school system doesn’t improve: It more resembles the communist economy than our own market economy.”

Shanker understood what Governor Rendell does not. And that is why his proposals will not dramatically improve Pennsylvania’s public schools. It is also why the General Assembly should be discussing more incentive-based reforms rather than more rules and more resources.

Therefore, I encourage you to change the debate. Your discussions should center on expanding the Educational Improvement Tax Credit to allow more students to choose a safer or better school. You should be debating how to improve the quality and increase the quantity of innovative public charter schools. You should be exploring how to give families inter-district and intra-district choice within the public school system. You should be discussing how to empower parents to become more consumer-like in an education marketplace rather than a captive audience.

These are the important kinds of reforms that will truly improve public education. We need a greater devolution of decision-making power to the local level, not a further concentration of it in Harrisburg. We need to encourage schools to innovate and compete, not perpetuate the one-size-fits-all model. And we need to trust parents to make choices in the children’s education, rather than relegate them to bottom of the pecking order.

In sum, we must change the debate because simply changing the rules or adding more resources—as Governor Rendell has been doing for the last four years, and as he proposes in his 2007-08 Budget—will only perpetuate our failure to dramatically improve our public schools. I posit that you could implement every single one of his ideas, but we would not see any marked improvement as a result. Only when you implement the proper incentives will we get the kinds of improvements in education that parents are demanding and our children deserve.

Thank you, and I look forward to your questions.


Matthew J. Brouillette is a president and CEO of the Commonwealth Foundation (, an independent, nonprofit public policy research and educational institute based in Harrisburg.