Dumbest “School Finance” Tweet Ever?

Critics say only public systems can focus 100% on the children, but vast majority of K-12 $$ goes to employees not kids bit.ly/SLrNUn

— AEI Education(@AEIeducation) December 18, 2012



  1. I believe the point they were trying to make (following the thread and the link) was that in public schools teachers get paid… and in for profit models, the business makes profit… if they can… after providing sufficient quality of service to attract consumers… therefore, what’s the difference? Either way the money isn’t going to the kids.

    But… even shining that best light on this quote assumes that it’s reasonable to equate the dollar spent on direct instructional/educational services and the dollar retained as profit as being comparably disconnected from the child? In both cases, the majority of expenditures would likely go to personnel involved in the direct provision of services (or perhaps slightly more indirect in online models?).

    1. Oh, I thought they were pointing out that they pay (with Public monies) for advertising their schools instead of paying their teachers a fair wage.

  2. Seems from my days in private industry and teaching economics and finance that in any business, labor costs are normally 70-75% of the cost of doing business. Next is usually rent of various sorts. Silly AEI.

  3. I’m reminded of a dialog I once had with a friend who was in the auto industry. He observed that the American auto industry might be better off today had the auto workers gone on strike in the 1970s to protest the crappy cars they were being asked to build, instead of always battling over compensation, benefits, and work rules.

    With this strategy, the UAW won an ever-increasing percentage of an ever-shrinking pie, and the US auto industry almost didn’t survive the war.

    I serve on the Board of Education for my community, have a business degree, am a retired executive, and have a pretty good understanding of how school governance and school economics works – at least in our state.

    When one examines the contract between our teachers union and the school board, one finds nothing in that contract about how well the kids are being served. I take that back – there is a paragraph which states that teachers agree that class size is NOT a matter of negotiation. Presumably that clause is there because the teachers at some point in the past traded class size limits, which might have benefited the kids – at least that’s a common claim – for some other economic benefit for themselves.

    So why is that when teachers threaten to go on strike, the issue is always some matter of comp/benefits? Why don’t they threaten to strike over the curriculum they’re being asked to teach, the methods they’re required to use, or the many other new burdens placed on them by their administrators?

    Without question, teachers’ unions use their substantial political power, funded by union dues, to influence lawmakers. But even on that stage, their primary agenda is about comp/benefits and labor rights. Why isn’t it about matters that directly benefit the kids?

    Americans are being awakened to the economic drivers in our public schools because an increasing fraction of their income is being drawn away by school taxes, and they’re discovering that 80-90% of the money goes to the comp/benefits of the teachers. That’s not a bad thing. One could argue that a highly efficient school district, that is one with very low administrative and operational overhead, almost all of the money would be spent on teacher comp/benefits.

    The issue is the rate in which these comp/benefits costs – and hence taxes – have been increasing, set against a background where most Americans are barely recovering from a very nasty recession, and some are still suffering. The longer that teachers, and public sector workers in general, remain tone deaf to this, the more damage will be done to their relationship with the voters.

    1. First, I should note that it’s not necessarily the case that “an increasing fraction of their income is being drawn away by school taxes”


      In many states, direct spending on public education as a percent of income has declined. In many of the same states, total state and local taxes as a percent of income have been relatively flat in recent years – and state and local taxes make up the bulk of K-12 education spending. So, I’m not sure that it’s a matter of the public sector workers being deaf to a legitimate concern as it is the media and politicians very effectively conveying a false message regarding public expenditure – one that even reasonably informed people have totally bought into.

      Yes, there are related issues of growing unfunded pension liabilities, due as much if not more so to really crappy legislative & gubernatorial financial planning, playing political football, and kicking the can down the road to the maximum extent allowable.

      Indeed, the public does need to better understand the link between their taxes, their spending and its relationship to the quality of services provided – which is certainly murkier than choosing product A vs. B of the shelves at Walmart vs. Target.

      Regarding your other point about negotiating strategy… I concur that it can be more politically palatable to negotiate over things that teachers can view as “working conditions” but can be pitched publicly as “best for the kids” (like class size). In many states, these issues have been taken off the table – not by teachers & their unions but by collective bargaining rules/laws. Increasingly, state legislatures are working to limit the scope of what can be bargained… limiting that scope to the extent possible around wages alone.

      Finally, the Chicago Teachers’ strike was primarily about the proposed teacher evaluation system – not wages – and I believe that there was some solid public support that the proposed evaluation system would create a pretty crummy learning environment for kids.

    2. Dr. Baker has already made the point, but I need to emphasize it: in many states (including mine – Maine), what some would consider teachers’ “working conditions” (class size, curriculum, teaching methods, school day structure, professional development , teacher evaluations and more) are not negotiable. In Maine, this comes under the “educational policy” restrictions of the public employees’ collective bargaining law 26 MRSA 962, et seq., specifically 26 MRSA 965(1)(c) and significant case law.

      If somehow one of those topics did make it into a collective bargaining agreement and it were to be the basis of a grievance, the arbitrator (and maybe court system) would be very likely to throw it out as not enforceable because it’s not negotiable.

      As a former teachers’ union representative in Maine, I can say that many of my arbitrations following a 1997 Maine Supreme Court case (http://www.maine.gov/mlrb/decisions/ppc/1997ME219.htm) were bifurcated into: (1) is the matter one of “educational policy”?, and only then (2) is it grievable?

      Following that same case, it was typical for school boards/committees’ legal counsel to scour collective bargaining agreements during successor negotiations for anything remotely resembling educational policy language and propose massive deletions based on their broad interpretation of the statutes.

      1. My concern is that this stuff must be on the table as we move toward test-based evaluation models. These matters of “education policy” are critical in making less unfair, the test-based evaluations. Teachers should/must be able, for example to negotiate a “random, balanced student assignment” clause, “class size” parameters, random assignment or rotated assignment of classroom space and random/rotated assignment of when during the day they will teach specific course sections and when their sections will be tested. Otherwise, due process violations when VAM or SGP estimates are used in de-tenuring or dismissal decisions are pretty much a given. Without controls over the parameters above, the estimates are inherently unfair – and we can’t even figure out to whom they are most unfair.

  4. The average compensation for the teachers in our school district has increased at a compound annual growth rate of 5.1% for the past decade – a 56% increase in all. Benefits costs have increased even more steeply. Meanwhile, the per-capita income in our community increased by 1.5%. This is based on data taken from official school reports and the US Census. Since more than 100% of the marginal funding in our funding comes from local property taxes (ie state funding has been going down), then indeed an increasing fraction of the voters’ income is being drawn away for school taxes.

    What teacher can and cannot bargain for is determined by the laws of the state, Ohio in my case. Our Governor and General Assy recently tried to restrict what the teachers could bargain for, and they had their hats handed to them in a statewide referendum.

    All I’m asking is that the teachers accept that, just as their fortunes rise as the tide comes in (when they won their contracts with 5% annual comp growth), they need to be accepting of the pain that occurs when the tide goes out – which is what has happened to our economy in the past 5 years.

    In particular, they need to have some empathy for the all the Boomers who are hitting retirement age having no pension and little left of their retirement savings. It doesn’t matter whether or not the teachers can win the argument that a healthy pension was part of the deal for meager incomes at the beginning of their careers. The political reality is that, among retirees, the retired teachers are pretty well off and the rest of us are hurting. Those ever-increasing property tax bills are getting pretty painful. It makes it tough to vote for the next levy.

    1. I assure you that there are additional layers to the math you point out above, including changes to total numbers of staff, and public school enrollment as a share of local population. Further, in most regions/labor markets – especially urban/suburban labormarkets a) teacher wages remain significantly below (on an hourly basis) non-teacher wages at same age & education level and b) teacher wages have grown more slowly than non-teacher wages at same age and education level… and c) the average benefits differential is not even close to enough to make up the difference. Here’s one paper that looks at weekly wage variation: http://www.epi.org/publication/the_teaching_penalty_an_update_through_2010/ (and related analyses for NJ, taking a slightly different approach: https://schoolfinance101.wordpress.com/2010/01/27/new-jersey-teacher-salaries-spiraling-out-of-control/ & https://schoolfinance101.wordpress.com/2010/03/17/just-the-facts-nj-taxes-teacher-salaries-and-spending-fluff/).

      In rural and small town areas, teacher pay is more comparable to non-teacher pay, and in some cases marginally higher at same degree level and age. But growth rates have remained similar. Here’s a useful piece on variation across the state of Washington, which imposes a single statewide salary schedule: http://www.leg.wa.gov/JointCommittees/BEF/Documents/Mtg11-10_11-08/WAWagesDraftRpt.pdf

      So, yes, there probably are places where public employee compensation is leading to a larger share of local income being paid in taxes, but I assure you that this is not some standard, national trend as many have been led to believe. Benefits costs have increase. Wages for individuals have lagged. Numbers of staff have increased (per pupil). Yet still, because of a number of other moving parts in this system, the share of personal income spent on schools has in many states declined… quite substantially, and in only a few has grown to any degree. https://schoolfinance101.files.wordpress.com/2010/12/slide31.jpg

      All education spending as a share of GDP is relatively constant (oscillates but ends back where it was in the mid-1970s). http://nces.ed.gov/programs/digest/d10/tables/dt10_028.asp

      Unfortunately, I would argue that this bleak political reality for schools & all public services for that matter (that it’s never politically palatable to raise taxes) is driven by economic myth of overtaxation & bloated public employee compensation.

Comments are closed.