Where Has the Money Gone?
One of the most common complaints of public school critics is that it’s useless to “throw money at the schools.” More money won’t help, they assert. It’s just pouring good money after bad.
On the surface, their argument is appealing. In 1990, the U.S. spent $5,521 per pupil on public schools, more than double the $2,611 (in 1990 dollars) spent 25 years earlier.
But, as usual, there is more to the story than a few simple statistics. In fact, spending more hasn’t failed. It hasn’t been tried. The truth is that little new money has been invested in regular educational improvements since 1965. How has the money been used?
Special Education. Nearly 30% of new education money has gone for “special education” of children with disabilities.* Since 1975, federal law has required public schools to provide “a free appropriate education” to each child, no matter how seriously handicapped. By 1990, nearly 12% of all schoolchildren were in special education. Schools must design an “individualized education program” for each child with a learning, emotional, or physical disability.
Publicly financed medical diagnoses, special transportation arrangements, personalized instruction, tiny class sizes, specially trained teachers, and the purchase of special equipment may be required to place a child in the “least restrictive environment.” Parents dissatisfied with an individualized program are entitled to a hearing. The Supreme Court has ruled that cost cannot be an excuse for failing to design an appropriate program. If a handicap is too severe for a public setting, schools must pay the child’s private tuition. Education of the handicapped is worthwhile, but it is dishonest to suggest that special education funds should produce academic gains for regular students and, when they do not, claim proof that money spent on public schools is wasted.
Nutrition Programs. School breakfast and lunch programs have absorbed nearly 10% of increased costs. In 1965, nutrition programs were mostly self-supporting, selling milk and ice cream being their main function. Today 35% of all students get free or reduced-price meals, costing over $6 billion a year. Providing meals to needy children should also improve academic achievement, since nutrition is necessary for learning. However, such an expectation assumes that children are better nourished as a result. If, on the other hand, school food subsidies only offset deterioration in children’s health since 1965, expecting academic gains from this program would be unrealistic.
Fourteen percent of Americans lived in poverty in 1992, the highest rate since 1964. Growth of overall poverty masks more drastic growth in child poverty. In 1990, nearly 25% of American children under age six were poor, an increase from 18% in 1979. With a probable deterioration in the nutritional condition of children when they come to school, it is questionable whether educational improvement can be expected from today’s breakfast and lunch programs. Nor is it appropriate to suggest that maintenance of such expenditures would, from an educational point of view, be throwing good money after bad.
Smaller Classes. Nearly one-third of new school money has gone for smaller classes. Pupil-teacher ratios have declined by about 30% since 1965 and average class size is now about 24, requiring more teachers and extra classrooms. It seems reasonable that this investment should produce academic gains. Yet while reducing class size to 24 creates better teacher working conditions and may be needed for discipline, it’s not enough to improve academic outcomes as much as we would like. Unless class sizes get small enough (around 15) so that the method of teaching can change to individualized attention, smaller classes have no measurable academic effect.
Salary Increases. Teacher salaries have grown 21% — less than 1% a year — from an average of $27,221 in 1965 (1990 dollars) to $32,977 in 1990. This increase is responsible for another 8% of increased education costs. This added expenditure should result in improved student achievement if higher salaries attract more highly qualified graduates to teaching. But if other professional salaries grew more, higher teacher pay would not enable school districts to maintain teacher quality in the face of greater competition from other professions.
Since 1975, starting teacher pay increases have lagged behind pay increases of other beginning professionals with bachelors’ degrees. Starting teacher salaries have grown by 149% since 1975, less than the rate of inflation. For beginning engineers, the increase was 153%; for marketing reps, 169%; for business administration grads, 171%; for mathematicians and statisticians, 163%; for economists and finance personnel, 161%; for liberal arts graduates, 183%. Teachers did better than chemists (144%) and accountants (130%).
Teacher salaries increased faster from 1965 to 1975 than after. But over 25 years the overall increase in real teacher pay at best maintained schools’ ability to attract candidates. If anything, the increase has been inadequate to maintain teaching’s competitive standing, since more professions have welcomed women since 1975. Highly qualified female college graduates are no longer captives of the teaching profession, so the same relative teachers’ pay now attracts less qualified teachers than before. All told, we can’t expect teachers’ pay gains since 1965 to produce higher student achievement; for this result, we would need bigger pay boosts to attract higher quality college graduates to teaching.
Transportation. Transportation has consumed 5% of increased costs. In 1965, 40% of public school students were bused at an average cost of $214 (1990 dollars). By 1989, 59% were bused, and the cost jumped to $390.
Fewer Dropouts. About 3% of new spending stems from keeping more students in school. The oft-repeated worry that more students are dropping out has no factual basis.
Since a student dropping out of one school may move to a new community and enroll there, the most accurate measurement of dropouts is not schools’ own records but census information on young adults who have completed 12 years of school.
In 1970, 75% of youths between ages 25 and 29 had completed high school. By 1990, 86% had done so. Minority dropout rates have steadily declined — in 1940, only 12% of 25-to-29-year-old Blacks had completed high school. In 1950, the Black completion rate rose to 24%; in 1960, to 39%; in 1970, to 58%; in 1980, to 77%. The rate continued to rise in the 1980s, to 83% in 1990.
Hispanic dropout rates are less accessible because the 1980 decennial census was the first with separate data on Hispanics, and because many so-called Hispanic dropouts (young adults who have not completed high school) are immigrants, some of whom came to the U.S. too old to enroll in school. They shouldn’t be considered “dropouts” — many never “dropped in.” In 1990, only 58% of Hispanic 25-to-29-year-olds had completed high school. But for Hispanics in their forties (who were in their twenties in 1970), the rate was less — 52%. And for those in their sixties (in their twenties in 1950), the rate was only 38%.
Thus, it seems, Hispanic dropout rates are declining as well.
If the typical dropout completes 10.5 years of school, then the higher completion rate has increased per pupil costs by 1.3% since 1965. This added spending does not improve graduates’ average academic achievement. While preventing dropouts is important, lower dropout rates will also reduce average scores on tests such as the SAT. So, paradoxically, expenditures for more schooling can seem to reduce academic achievement while contributing to an improved education level for society.
In sum, special education, smaller classes, school lunches, better teacher pay, more buses, and fewer dropouts account for over 80% of new education money since 1965. That these produced few academic gains is no surprise.
* Note: This and the following data regarding the composition of school spending growth were estimates made by the author, based on an examination of one typical school district and other generally available national data. A more precise study of the subject, in which some of these estimates may be revised based on study of a full national sample, will be published by the Economic Policy Institute in the fall of 1995. Notwithstanding the forthcoming revision of these numbers, the author stands by the chief point of this excerpt: schools don’t have nearly as much “new” money for regular education as critics claim, and we can’t expect regular academic achievement gains to result from spending on worthwhile but nonetheless non-academic school projects.