NOTES from a School Finance Curmudgeon

Posted on December 9, 2008



On my daily commute today I had the pleasure of listening to a talk radio discussion about the option for providing tuition tax credits in New Jersey to be used for sending talented elementary and high school students from poor urban New Jersey school districts to either affluent suburban public schools or to urban catholic schools.

As is standard fare in any heated political debate, many “facts” and “figures” were thrown around by the show host in an effort to support the move toward tuition tax credits.

Here is a quick synopsis of the facts and arguments presented, along with my response:

The host noted that Abbott districts (poor urban districts that won a lawsuit against the state legislature) spend $25,000 per kid per year.

Fact Check: The average current operating expenditure per pupil in Abbott’s in 2007-08 was $15,584 with a range of about $12,000 to $22,000. Current operating expense is the most relevant figure to compare. http://www.state.nj.us/education/guide/2008/abbott.pdf

The host also suggested that Abbotts spend much more on administration than other districts.

Fact Check: Both Abbotts and non-Abbotts spend about $1,000 per pupil on administration with Abbotts slightly outpacing non-Abbotts by less than $100 per pupil. Abbotts spend a smaller share of their budgets on administration (7.5% as opposed to 8.8%), which is probably the most relevant comparison. Using NJDOE comparative spending guide (2007-08) definitions (indicator 9). http://www.state.nj.us/cgi-bin/education/csg/08/csg9.pl

The host also argued that we might save money by sending kids to Catholic schools which “cost” about “$3,500 per kid (as the host opined).” The $3,500 figure comes from nowhere (It is a relatively standard figure tossed around, but I’ve yet to really track any legitimate source for it). Further, if this was even near the tuition price that tuition price would not represent the actual cost of schooling that child, even in the private catholic school – which relies heavily on church subsidy.

Few good analyses exist on the actual total per pupil costs of private schooling. One of my doctoral students a few years back went into 4 private Catholic high schools and detailed out their cost structure finding them to be somewhat lower than area public schools in Kansas City (spending about $6,046 per pupil in 2004). These findings are reported in the school finance textbook I authored (Financing Education Systems, Merrill-Prentice-Hall). Salaries are somewhat lower and class sizes slightly larger (catholic compared to public) leading to a slight reduction in cost. The change in student body composition (relative to poor urban schools) allows them to accomplish this without substantially compromising outcomes.

But… Let’s say Catholic schools in this area actually cost about $10,000 to $12,000 per pupil to run. If we gave $6,000 vouchers to kids to go to Catholic schools we would be asking the Catholic Church to cover $4,000 to $6,000 of their cost. For 10,000 kids we’re now expecting an additional 40 million to 60 million in church sponsored (or additional) philanthropy in addition to corporate philanthropy which generated the voucher amount. As the program scales up, the additional philanthropy required to meet actual cost simply can’t be achieved. To make something like this scalable, you have to willing to pay the full cost, not tuition rate. That might be feasible for Catholic schooling, at roughly break even (a) setting aside additional transportation and program management costs and (b) assuming sufficient supply of catholic schooling.

Regarding actual private school expenditures for private schools that are required to file an IRS form 990. Here’s how the numbers shake out in New Jersey.

Public schools by their District Factor Groups

DFG Total Current Exp. PP (2006-07)
A $14,524
B $12,247
CD $10,481
DE $10,520
FG $11,068
GH $11,894
I $11,826
J $12,179

Private schools by affiliation (IRS 990 2007, for 2006)

Independent Private $21,929
Hebrew/Jewish Day Sch. $17,130
Christian (AACS, ACIS) $5,902

Based on a sample of 45 private day schools, serving over 18,600 children (2006-07). Includes “program expenditures” and “administrative expenditures” as reported on form IRS 990 (www.guidestar.org). By comparison, Charter schools served approximately 13,000 and DFG J districts approximately 50,000.

Sadly, Catholic schools which are the largest group do not report their finances. We do know from regional and national data that the conservative christian schools that are members of AACS and ACIS, at their relatively low expenditure, actually have salaries that are over $5,000 per teacher lower than catholic school teachers at same degree and experience level, and comparable assignment (in the Norheast, in 2003-04 based on the National Center for Education Statistics Schools and Staffing Survey). It stands to reason that Catholic school expenditures are somewhat higher than AACS and ACIS schools. 4 years ago, in Kansas City (a much cheaper labor market), Catholic high schools spent over $6,000 per pupil.

We also know that conservative christian day schools have the academically weakest pool of teachers (high shares from the least competitive colleges and very low shares from the most competitive colleges – typically a much weaker pool than in public schools) and lowest student outcomes (corrected for student characteristics). You get what you pay for – though most who attend these schools are buying religious separation – not academic advancement. Catholic schools have teaching staff quite similar to public schools in terms of qualifications, and adjusted test score outcomes that are about the same (acknowledging that “adjusted” is not what matters to individual children. As much as anything, it’s about getting kids into a setting with different kids).

In addition, private school headmaster salaries outpace both big city superintendents in NJ and the superintendents of the mainly affluent suburban districts where those private schools exist – this despite the fact that these private schools serve total school enrollments of 300 to 1100 students. That’s what the free market for non-church subsidized private schooling supports.

Big City Supts. $196,039
Headmaster Mean $214,309
Host Supt. Mean $184,802

Note: Private school headmaster compensation from Guidestar.org, IRS 990 for 2006. Local Superintendent compensation for district that is geographic home to private school. Supt. Comp based on 2006-07 (1 yr later than Headmaster Comp.). Headmaster and Supt. Comp. include salary and cash-basis benefits (not health-care, retirement contributions, etc.). Big City Supts. Includes Newark, Camden, Jersey City, Paterson and Trenton.

Here’s the distribution of private school enrollment slots in NJ:

Type Enrollment
Catholic Schools 100,562
Other Schools 17,453
Christian Schools 11,939
Independent Schools 9,598
Special Emphasis 5,249
Jewish/Hebrew Schools 4,996
Friends Schools 1,480

Data Source: NCES Private School Universe Survey. Note that there appears to be substantial under-reporting of private independent schools in this survey.

I could go on… But I need to actually get some other number crunching done today.

Cheers!

Posted in: Jersey