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“We have to have a culture that
cares about results connected
to cost.”
Mike Johnston
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Budget shortfalls represent an enormous opportunity for education reform if states can ensure that funding focuses on initiatives that deliver measurable results for students.
What’s likely to happen over the next few years with school financing and how will reform weather the storm? What can districts and states do now? That’s how Fordham Institute Vice-President Mike Petrilli framed a discussion that couldn’t have been timelier, with elections less than two weeks away.
Petrilli said that while the economy is in recovery, income tax revenue is not where it used to be. He suggested a possible scenario for 2013:“Schools have almost stopped hiring new teachers. Charters are particularly hard hit. LEAs are decimated because of a lack of funds. Is this likely? What will it mean?”
Budget pressure on the states
"This is highly likely,” answered Hess. “There are four factors that will be pressuring states. First, property tax assessment lags property values. We’ll see a gravitational downward pull on collections through 2014. Homeowners are not going to be keen on the tax increases that could offset declining valuations. Second, healthcare costs will rise for states as health care reform—with its new Medicaid mandates—kicks in. Third, K-12 has been protected the past two years while other agencies have seen steep cuts. Education has actually added positions in the last few years. Consequently, K-12 won’t be first in line for new dollars. Fourth, we have had three generations of increases in spending. We have a profoundly destructive mindset in which all school improvement is ‘this, as well as that.’ People see reform as doing everything and getting more money. We’re not used to actually making choices.”
“We can no longer just do reform with new dollars,” said Hess. “We have to get out of this gluttonous mindset and figure out how to spend existing dollars smarter.” Hess said with the current economy, “Reform is no longer optional. Rethinking pay and delivery is now the only way forward.”
A chance for reform through budget cuts
Colorado State Senator Mike Johnston agreed that major changes are needed. “There is a critical shift coming,” he said. “We have been doing education reform by initiative. There are two risks – first, there will be less room for reform by program. Second, if we don’t get new systems built in time- all reforms will be cut. Reforms have to be in place before the budgetary cliff.”
“We have the chance for education reform through cuts,” Johnston said. “If we are going to cut 20%, we have to keep things that make a difference. The environment forces the ‘what kind of state do we want to have’ conversation.”
Petrilli asked Johnston, “You’re at the state level. What levers do you have?”
Johnston said funding is set by the number of students, along with additional factors. “There is more money for at-risk students, but cost of living is funded 16% more than risk factors, and district size is funded 32% more than risk factors,” he said. “We have to ask, does it really make sense to have so many small districts and subsidize them? We have to think about consolidation.”
Increasing and rewarding productivity
Salary and benefits are the biggest levers, according to Hess. “The key,” he said, “is to make individuals more productive. That’s how we need to think about merit pay. Today, most merit pay proposals reward teachers for doing well, without finding ways to broaden their impact or help them serve more students. In business, most ‘merit pay’ involves serving more clients or taking on new responsibilities. There’s much reason to think that effective teachers could handle more kids. If we want to reward you, we want to reward you for more work in the organization. We have to figure out how to increase productivity.”
“Until recently, at the state level there was no way to identify non-effective teachers, but some states are now in a position to do this,” Hess said. “We should find ways to encourage effective teachers to take more kids. It is not politically feasible to raise class size across the board. However, teachers could be identified as gold star teachers with high Value Added scores and could choose to take on more students. If teachers choose to take more children, it will save the state more money. In order to ease parent concerns, give parents the choice to put their student in a large class with an effective teacher or a smaller class with a non gold star teacher.”
Johnston said the cost savings factor would be a helpful point in promoting that idea. “It is hard to sell a system in which effective teachers are being recognized by taking on more students,” he said.
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“Reform is no longer optional.
Rethinking pay and delivery is
now the only way forward.”
Rick Hess
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Hess replied, “The system has to be optional. It needs to foster a professional dynamic in which teachers want in because they want the recognition and the rewards.”
“Historically, the teaching job was about keeping kids under control,” said Hess. “Today we are asking for something different. If we are trying to solve particular problems, we need to hire people that can solve those problems. Right now we don’t have specific roles for non full-time teachers. We need to rethink the job.”
Smart spending on the state level
Hess pointed to some steps that states can take to facilitate smart spending. “First, look at ESEA regulations around Title 1- many states have interpretations that stymie smart district spending which would seem to comport with federal guidelines,,” he said. “Districts should be able to use dollars in ways that make a difference for students. Secondly, states should take care that statute and regulation don’t get in the way of hiring great people or figuring out how to use them.”
Johnston responded, “The counterweight is that people will only be confident in investing resources if there is accountability in the back end. The fear is quality control.”
When Petrilli asked about the possibility of statewide teacher contracts, Hess responded that they might not make anything better.
One of the attendees observed that district costs are being driven by an increase in the workforce without increased enrollment, and much of the funding is going to non-core classes. Hess agreed. “Thirty-five years ago, nationally, the student-teacher ratio was about 22 to 1. Now it’s down to just over 15 to 1,” he said. “This creates an enormous appetite for teachers. Indeed, more that 10% of every working adult with a college degree is a classroom teacher.”
Is special ed spending creating results?
Johnston said, “We are going to have to have a conversation about whether special-ed teachers should be opted out of growth measures for students. Right now, endless amounts of money are going into that structure and not creating results. I would like to see as much attention given to at-risk students. Special education is equally distributed across population and class, but race is not. It is not as politically feasible to give more resources to at-risk children. Special ed classification has been an excuse for no results.”
“We don’t have an endless amount of money for special education kids,” said Hess. “People have to step up and acknowledge that.”
An audience member asked if districts should we invest in high quality early education because it pays off later.
“High quality is the key,” said Hess. “We can’t invest in Pre-K across the board because it’s only the good programs that are likely to pay off.” Petrilli added that early investment in reading is critical.
An audience member said while there are many ways to save money, dollars for good programs might not actually get back to the districts once they are “saved.”
Petrilli agreed advocates have reason to be cynical. “The feds often fund ineffective programs and cut effective ones,” he said.
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Moderator Mike Petrilli (r) chats
with Sen. Frist at the summit
reception.
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Encouraging efficiency
“This difficult environment provides cover for tough decisions,” Hess said. “Efficiency will free up dollars to do a better job on the things that matter.”
Hess added, “If we are going to see an increase in state aid, we should reserve some dollars for districts that can demonstrate models of efficiency instead of trying to fix the system all at once. We should let superintendents and school boards set examples.”
Johnston said the key to accountability is good metrics, such as comparing the effectiveness of different teacher training programs. “We have to have a culture that cares about results connected to cost,” he said.
Rachel Hicks, the Executive Director of advocacy group Mississippi First, asked, “In Mississippi we have underfunded our funding formula year after year. How do we pay teachers more to get them to Mississippi?”
“We can do things differently,” Hess responded. “Rosetta Stone might be just as or more effective than a traditional language teacher, and is likely to be substantially cheaper.. We need to figure out how to change the system to attract more talent, to make better use of the talent we have, and to use technology and tools to complement that talent.”
Another audience member commented, “Technology is being seen as a silver-bullet. How do we change that mindset?”
Hess responded, “Technology is a tool, like charters are a tool. Used smart, it can be very helpful. But we need to understand the problems and how the tools can help solve those problems. It’s absolutely not a solution in its own right.”
Another attended asked about state level policy changes that are cost neutral.
“Changing last-in, first-out for teachers actually saves money,” said. Johnston. “Licensure costs a great deal for infrastructure. These facts start a conversation about the masters degree pay bump, etc. A lot can be done without a price tag.”
“States could approve new teacher prep programs which tap an existing stream of dollars,” Hess said.
