The Ripon Forum

Volume 51, No. 1

February 2017

Stretching the School Dollar

By on February 13, 2017

Seven ideas to give taxpayers a better return on their education investment

by FREDERICK M. HESS

Hess_Headshot (3)In his Inaugural Address, President Trump bemoaned, “An education system flush with cash but which leaves our young and beautiful students deprived of all knowledge.”

The prose may have been purple, but Trump’s overwrought language should not obscure an important truth – we spend a lot on education in the United States, and it’s not clear we’re getting our money’s worth.

The United States spends close to $700 billion a year on K-12 schooling, or about $12,000 per student. Per pupil, we spend as much on K-12 education as any nation in the world. Places like Newark and New York City spend more than $20,000 a year per pupil. When it comes to college, Washington and state governments spend $160 billion annually. Yet our K-12 results are middle-of-the-pack, at best, and our colleges are beset by runaway price inflation and a surfeit of unhelpful degrees.

Now, most education spending is not provided by Uncle Sam. In K-12, Washington covers about 10 percent of the tab, with the rest picked up by state and local government. In higher education, the lion’s share of costs are covered by states and families. The bottom line: Uncle Sam is a minority shareholder when it comes to education, and reforms should be designed accordingly.

The United States spends close to $700 billion a year on K-12 schooling … Yet our K-12 results are middle-of-the-pack, at best.

Given that, what might a bang-for-the-buck federal reform agenda look like? Here are seven ideas:

Promote transparency. It should be easier for parents, taxpayers, and policymakers to know if they’re getting their money’s worth from schools and colleges.  After all, it’s not enough to know test scores and graduation rates. Gauging performance in any enterprise is a matter of looking at costs as well as results. The 2015 Every Student Succeeds Act promoted this kind of transparency in K-12, reducing federal micromanagement while asking for more basic information on spending. In higher education, Obama-era reporting efforts got entangled in clumsy schemes to shutter for-profit colleges. Washington’s role should be simple: equipping parents, voters, and taxpayers across the land with comparable, reliable data on spending, costs, and simple measures of performance. Making use of existing law, the Department of Education should set expectations for clean, consistent accounting by educational entities that receive federal funds, then slowly back away.

Embrace regulatory reform. The major federal laws governing K-12 and higher education have been with us for half a century. Over time, well-meaning regulations have fueled a staggering proliferation of paper-driven compliance. Rules meant to ensure that federal funds “supplement not supplant” local spending have led to fear-based budgeting, with superintendents afraid to move dollars out of ineffective programs. “Time-and-effort” reporting requires whole bureaucracies dedicated to tracking inputs. Federal rules governing distance education grow more anachronistic by the year. The Secretary of Education should work with practitioners and state and local officials to determine how best to streamline requirements while retaining essential protections.

Support basic research. Big productivity gains are usually the product of breakthroughs in research and technology. In education, the sad truth is that, for all our spending and for all the breathless new initiatives and hyped new technology, there’s little commitment to basic research and development. We devote just $600 million a year to the federal Institute of Education Sciences, less than one percent of federal education spending. Compare that to medicine, where treatments are developed and marketed by pharmaceutical firms – but where the pipeline of life-altering drugs is primed by $31 billion a year in National Institutes of Health funding. Doubling or tripling our investment in researching brain science, cognition, and new technologies can equip educators and entrepreneurs to better develop interventions and tools that deliver exponentially more powerful teaching and learning.

Enable states and communities to provide access to high-quality, lower-cost K-12 options. Today, in the nation’s capital, the DC Public Schools spend upwards of $20,000 per student. Meanwhile, some local private schools eagerly accept students funded only by a $7,500 school voucher. The federal evaluation of the program found that participating students performed as well academically as their peers and were much more likely to pursue postsecondary education. Nationally, the most reliable research suggests that charter schools generally perform as well as or better than traditional district schools, while spending about 80 cents on the dollar. Congress and the Department of Education should relax restrictions on federal funds so that states can more readily use them to support choice programs that allow students to choose high-quality, lower-cost options.

It should be easier for parents, taxpayers, and policymakers to know if they’re getting their money’s worth from schools and colleges.

Give colleges “skin in the game.” Increases in college aid get repeatedly gobbled up by rising college costs. Federal student loan programs give colleges little incentive to control prices or worry about whether graduates are repaying their loans. Congress should give colleges a stake in the success of their students by changing federal law so that the institutions have to repay a portion of any defaulted dollars.  This would give colleges a share of the risk that students and taxpayers now bear on their own.

Support apprenticeship programs and job training. Millions of youth enroll in college, take on loans, and then drop out saddled with debt. For many, a better, cheaper, and more rewarding option may be occupational certificates that prepare students for valued trades. Such training has big benefits in terms of employment and earnings. Washington can do much more to support and highlight these alternatives. For instance, researcher Andrew Kelly has found that the Department of Labor’s successful registered apprenticeship program receives about one-thirtieth the funding of “ineffective college access programs.” Policymakers should invest more heavily in job training, allowing students and taxpayers to reduce wasteful spending and reap higher returns.

Open doors for new, cost-effective college providers. American higher education is configured to address the challenges of the mid-20th century, when books, expertise, and content were in limited supply. Back then, the big challenge was providing students with access to the institutions that provided these. Today, content is readily available. Online delivery, new models, and just-in-time training make it possible to reimagine the postsecondary cost curve. The challenge is to deliver instruction in cheaper, more useful, and more convenient ways. Yet regulations governing accreditation and loan eligibility keep cost-effective new ventures from emerging. Congress should explore measures such as a new accreditation agency for innovative programs or devolving accreditation to state government.

It’s easy for applause-seeking politicians to demonstrate their commitment to opportunity by calling for exciting new educational programs or big new outlays. But in a nation that already spends a great deal, and where high-profile federal education programs have flopped more often than they’ve flourished, there’s a more promising course. And it starts by ensuring that both taxpayers and students are well-served by our schools and colleges.

Frederick M. Hess is director of education policy studies at the American Enterprise Institute and author of the new book Letters to a Young Education Reformer (Harvard Education Press).

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