Smart Guy (Gates) makes my list of “Dumbest Stuff I’ve Ever Read!”

Bill Gates (clearly a very smart guy) has just topped my list of Dumbest Stuff I’ve Ever Read for the first few months of 2011. He did it with this post in the Huffington Post and with his talk to State Governors (in which he also naively handed out copies of the book Stretching the School Dollar, which is complete junk):

Let’s dissect two bold premises of Gates’ argument about US spending and student outcomes – how we’ve spent ourselves crazy for decades and how we’ve gotten nothing for it – how we spend so much more than other countries, but they kick our butts – his reasons for arguing that now is the time to flip the curve.

Gates opines:

Compared to other countries, America has spent more and achieved less.

To be able to make such a comparison, one would have to be able to accurately and precisely measure education spending levels in the United States relative to education spending levels in other countries, and achievement outcomes of children in the United States compared to otherwise similar children in other countries. We’ve already heard much blog talk about how poverty rates among US children and children in Finland are, well, not really so comparable – Finland having much lower poverty. Clearly, that makes at least some difference.

But let’s focus on the expenditure side of this puzzle for a moment.

We don’t hear enough about how those expenditure figures are, well, not so comparable either.

International education spending comparisons like those presented by the Organization for Economic Cooperation and Development (OECD) and often reported by organizations like McKinsey are, well, bogus…meaningless… uh…not particularly useful. Why? Because they are not comparable. Plain and simple.

Government or public education expenditures in different countries contain different components. A number of my colleagues and I are in the process of better understanding and delineating the components included in public education expenditures across nations. For example, in a country with a national health care system, public education expenditures may not include health care expenses for all employees. That’s not a trivial expense. The same may be true of pension contributions and obligations, where they exist, in other countries. The same is also true for arts and athletic programs in countries where it is more common for those activities to be embedded in community services. But, we’ve yet to fully identify the extent of these differences across nations or how these differences affect the spending comparisons. What we do know is that they do affect the spending comparisons – and likely quite significantly.

So, that in mind, what can we say about how much the US spends with respect to how well our children do, compared to other countries’ spending and outcomes when neither the spending figure nor the children in the system are even remotely comparable? Not much!

Gates opines:

Over the last four decades, the per-student cost of running our K-12 schools has more than doubled, while our student achievement has remained flat, and other countries have raced ahead.

[from a previous post]

We often see pundits arguing that education spending has doubled over a 30 year period, when adjusted for inflation, and we’ve gotten nothing for it. We’ve got modest growth in NAEP scores and huge growth in spending. And those international comparisons… wow!

The assertion is therefore that our public education system is less cost-effective now than it was 30 years ago. But this assumption is based on layers of flawed reasoning, on both sides of the equation.

Here’s a bit of School Finance 101 on this topic:

First, what are the two sides of the equation, or at least the two parts of the fraction? The numerator here is education spending and how we measure it now compared to previously. The major flaw in the usual reasoning is that we are making our comparison of the education dollar now to then by simply adjusting the value of that dollar for the average changes in the prices of goods purchased by a typical consumer (food, fuel, etc.), or the Consumer Price Index.

Unfortunately, the consumer price index is relatively unhelpful (okay, useless) for comparing current education spending to past education spending, unless we are considering how many loaves of bread or gallons of gas can be purchased with the education dollar.

If we wanted to maintain constant quality education over time, the main thing we’d have to do is maintain a constant quality workforce in schools – mainly a teacher workforce, but also administrators, etc. At the very least, if quality lagged behind we’d have to be able to offset the quality losses with additional workers, but the trade-offs are hard to estimate.

The quality of the teacher workforce is influenced much more by the competitiveness of the wages for teachers, compared to other professions, than to changes in the price of a loaf of bread or gallon of gas. If we want to get good teachers, teaching must be perceived as a desirable profession with a competitive wage. That is, to maintain teacher quality we must maintain the competitiveness of teacher wages (which we have not over time) and to improve teacher quality, we must make teacher wages (or working conditions) more competitive. On average, non-teacher wage growth has far outpaced the CPI over time and on average, teacher wages have lagged behind non-teacher wages, even in New Jersey!

Now to the denominator or the outcomes of our education system. First of all, if we allow for a decline in the quality of the key input – teachers – we can expect a decline in the outcomes however we choose to measure them. But, it is also important to understand that if we wish to achieve either higher outcomes, or to achieve a broader array of outcomes, or to achieve higher outcomes in key areas without sacrificing the broader array of outcomes, costs will rise. In really simple terms, the cost of doing more is more, not less. And yes, a substantial body of rigorous peer-reviewed empirical literature supports this contention (a few examples below).

So, as we ask our schools to accomplish more we can expect the costs of those accomplishments to be greater. If we expect our children to compete in a 21st century economy, develop technology skills and still have access to physical education and arts, it will likely cost more, not less, than achieving the skills of 1970. But, we must also make sure we are adequately measuring the full range of outcomes we expect schools to accomplish. If we are expecting schools to produce engaged civic participants, we may or may not see the measured effects in elementary reading and math test scores.

An additional factor that affects the costs of achieving educational outcomes is the student inputs – or who is showing up at the schoolhouse door (or logging in to the virtual school). A substantial body of research (see chapter by Duncombe and Yinger, here) explains how child poverty, limited English proficiency, unplanned mobility and even school racial composition may influence the costs of achieving any given level of student outcomes. Differences in the ways children are sorted across districts and schools create large differences in the costs of achieving comparable outcomes and so too do changes in the overall demography of the student population over time. Escalating poverty, and mobility induced by housing disruptions, increased numbers of children not speaking English proficiently all lead to increases of the cost of achieving even the same level of outcomes achieved in prior years. This is not an excuse. It’s reality. It costs more to achieve the same outcomes with some students than with others.

In short, the “cost” of education rises as a function of at least 3 major factors:

  1. Changes in the incoming student populations over time
  2. Changes in the desired outcomes for those students, including more rigorous core content area goals or increased breadth of outcome goals
  3. Changes in the competitive wage of the desired quality of school personnel

And the interaction of all three of these! For example, changing student populations making teaching more difficult (a working condition), meaning that a higher wage might be required to simply offset this change. Increasing the complexity of outcome goals might require a more skilled teaching workforce, requiring higher wages.

The combination of these forces often leads to an increase in education spending that far outpaces the consumer price index, and it should. Cost rise as we ask more of our schools, as we ask them to produce a citizenry that can compete in the future rather than the past. Costs rise as the student population inputs to our public schooling system change over time. Increased poverty, language barriers and other factors make even the current outcomes more costly to achieve. And costs of maintaining the quality of the teacher workforce change as competitive wages in other occupations and industries change, which they have.

Typically, state school finance systems have not kept up with the true increased costs of maintaining teacher quality, increased outcome demands or changing student demography. Nor have states sufficiently targeted resources to districts facing the highest costs of achieving desired outcomes. See And many states, with significantly changing demography including Arizona, California and Colorado have merely maintained or even cut current spending levels for decades (despite what would be increased costs of even maintaining current outcome levels).

Evaluating education spending solely on the basis of changes in the price of a loaf of bread and/or gallon of gasoline is, well, silly.

Notably, we may identify new “efficiencies” that allow us to produce comparable outcomes, with comparable kids at lower cost. We may find some of those efficiencies through existing variation across schools and districts, or through new experimentation. But it is downright foolish to pretend that those efficiencies are simply out there (even if we can’t see them, or don’t know them) and we can simply squeeze the current system into achieving comparable or better outcomes at lower cost.

Closing thought

So, Mr. Gates… neither of your two main premises rests on solid footing. Not only that, but these arguments are so commonplace and so intellectually flimsy and lazy as to be outright embarrassing.

I know you’ve got other things to think about and likely rely heavily on advisers to help you shape these arguments, much like politicians rely heavily on their staffers. Here’s a tip Mr. Gates. YOU ARE GETTING REALLY BAD, DEEPLY FLAWED ADVICE AND INFORMATION WHEN IT COMES TO SCHOOL FUNDING ARGUMENTS.

There are many, many credible school finance and economics of education scholars out there. Those who you have chosen to rely on in many instances – authors of Stretching the School Dollar and others are not credible scholars of school finance or education policy more generally. I tackle some of the other myths driving the current debate in these two recent posts:

School Funding Equity Smokescreens

School Funding Myths & Stepping Outside the “New Normal”

I don’t pretend by any stretch to be the only credible source, or the best one (or even one of the top 20, 50 or 100). And we in the field certainly don’t all agree on all, or perhaps even most topics. I’d try listing the many exceptional school finance and economics of education scholars here, but I’d likely end up leaving some really important ones out. I’ll gladly inform you directly regarding which scholars may provide the most useful information regarding specific topics and issues.


Related Readings

Baker, B.D., Taylor, L., Vedlitz, A. (2008) Adequacy Estimates and the Implications of Common Standards for the Cost of Instruction. National Research Council.

Duncombe, W., Lukemeyer, A., Yinger, J. (2006) The No Child Left Behind Act: Have Federal Funds been Left Behind?

This second one is a really fun article showing the vast differences in the costs of achieving NCLB proficiency targets in two neighboring states which happen to have very different testing standards. In really simple terms, Missouri has a hard test with low proficiency rates and Kansas and easy test with high proficiency rates. The authors show the cost implications of achieving the lower, versus higher tested achievement standards.


2 thoughts on “Smart Guy (Gates) makes my list of “Dumbest Stuff I’ve Ever Read!”

  1. Bruce, thanks, as always, for explaining in detail the shallowness of some of the thinking about school finance! You provide an excellent resource.

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