Tuesday, February 22, 2011

Wisconsin: An Educational Failure?

CNS is running a news story that skewers the Wisconsin educational system. A few key details:
In the National Assessment of Educational Progress tests administered by the U.S. Department of Education in 2009—the latest year available—only 32 percent of Wisconsin public-school eighth graders earned a “proficient” rating while another 2 percent earned an “advanced” rating. The other 66 percent of Wisconsin public-school eighth graders earned ratings below “proficient,” including 44 percent who earned a rating of “basic” and 22 percent who earned a rating of “below basic.”
Wisconsin public schools increased their per pupil expenditures from $4,956 per pupil in 1998 to 10,791 per pupil in 2008. According to the Bureau of Labor Statistics inflation calculator the $4,956 Wisconsin spent per pupil in 1998 dollars equaled $6,546 in 2008 dollars. That means that from 1998 to 2008, Wisconsin public schools increased their per pupil spending by $4,245 in real terms yet did not add a single point to the reading scores of their eighth graders and still could lift only one-third of their eighth graders to at least a “proficient” level in reading.
Sounds pretty terrifying. Except there are a few problems.

To tackle the matter of finances first. The statistics quoted above compare apples to oranges. The $4956 CNS attributes to 1998 does not cover the total per-pupil spending---only the spending for instruction (and not for support services). The amount spent per pupil on instruction in Wisconsin in 2008 was, according to the Department of Education, $6560, or about exactly what it would be if 1998's numbers were adjusted for inflation. The total expenditures per pupil in 1998 were $9298. According to the inflation calculator, $9298 in 2008 comes out to $12,281. So total expenditures in Wisconsin for education seem to have gone up slower than the rate of inflation.

On to the role of the National Assessment of Educational Progress (NAEP) tests: One of the unfortunate tendencies of many right-leaning approaches to education policy has been the elevation of standardized test scores above all (see No Child Left Behind, etc.). Especially from a classical conservative perspective (though not only from that perspective), it seems problematic at best to reduce educational success to a few test scores. Moreover, one perhaps cannot disregard the notion that certain parties inside and outside the government may have an interest in defining "proficiency" up in order to precipitate a useful "crisis." So I think these scores might be taken with a grain of salt.

But it should be noted that Wisconsin's average eighth-grader NAEP reading score of 266 is above the national average. 34% of students at or above grade level in reading may sound bad, but the highest-scoring state scored only 43% at or above level. That state happens to be the union bastion of Connecticut, which spent over $14,500 per pupil. Massachusetts and New Jersey round out the top three, both having spent significantly per pupil more than Wisconsin.

What does a low-scoring state look like in terms of scores? States like Louisiana ($10,000 per pupil), Mississippi ($7890 per pupil), California ($9706 per pupil), and Nevada ($8180 per pupil) have NAEP proficiency ratings in the low 20s (Mississippi is in the teens). The lowest-scoring jurisdiction in the USA is Washington DC, with only 13% of 8th-graders at or above level. The District spends over $16,000 per pupil.

The case of DC shows that high spending is not enough to ensure academic success, and the case of Idaho (which spends $6900 per pupil for an achievement level about equal to Wisconsin's) shows that higher spending is not necessarily necessary for scores above the national average. Many of the states near the bottom are right-to-work states, but some right-to-work states have higher scores. Meanwhile, many union-strong states dominate the top of the charts, but having a strong union (see California) is not a sufficient recipe for educational success.

Unions in public education may be bad or they may be good. But to single the public schools of Wisconsin out for a unique inefficiency and failure is rather unfair.

There are far more variables involved in the success of our schools than mere funding and union presence. The composition of student populations in a school district, for example, plays a key role in the challenges and opportunities for that school. An inner-city school with a majority of immigrant students faces a very different educational situation than a small middle-class town in Idaho---and that educational situation would not suddenly turn around if a union were abolished. Unfortunately for us, perhaps, educational policy often seems more about struggling with numerous finite particulars than grasping that golden panacea.

Saturday, February 19, 2011

The Day After Tomorrow

The Wisconsin budget battle is really not about today or tomorrow but the day after tomorrow; it is far less about helping the state make up for a projected $137 million budget deficit than it is about changing the role that public unions play.

This budget shortfall was not unexpected. Indeed, Wisconsin's Republican governor, Scott Walker, has pushed for policies that, in the short term at least, have exacerbated the state's deficit. Walker and the Republican-controlled Wisconsin state legislature passed in January $117 million (over the next two and a half years) in tax breaks for businesses and health savings accounts. Part of the budge deficit is really the story of transferring some state subsidies from public employees to private businesses. That transference may be good or it may be bad, but it is a key detail of this battle.

Moreover, it seems as though union leaders are open to accepting Walker's demands that members contribute 5.8% of their incomes towards their public pensions and and at least 12.6% of their incomes towards health-care plans. This increased contribution would be a de facto pay cut for union members (for example, University of Wisconsin union members could see a 8-15% pay cut). Union leaders have suggested that they would be willing to make these concessions. If this battle were just about the upcoming deficit, it would be over.

But it isn't. There's one concession that unions are not willing to make: surrender their collective bargaining power. Walker's proposal would deny most unions the ability to collectively bargain for anything more than salary (and even that would be limited); Walker's proposal excepts from these collective bargaining rules his political allies in the police and firefighters unions. His proposal also puts up additional hurdles for unions to maintain their union status. These measures set the stage for a long-term structural change.

Consider education. The elimination of union collective bargaining could open the door for destroying tenure, limitations on teaching load, pay for extracurricular activities, limits on working hours, and state funding for continuing the education of teachers. The end of collective bargaining could also help undermine public employee pension funds.

Scott Walker has borrowed a page from Barack Obama and Rahm Emanuel and is not letting a crisis go to waste. As with Obama, the most contentious part of Walker's proposals (collective bargaining) serves a far more structural purpose than a short-term one.

(A couple other structural notes: At a time when private sector employment is stagnating and wages shrinking, public workers are not going to be able to defend ever-increasing wages and benefits for themselves. Also, many public unions made the choice to full-throatedly back Democrats, which has limited their leverage over Republicans. With Republicans newly empowered in state legislatures across the country, the hands of public unions are significantly weakened. These unions could be paying a price for their partisanship.)

Tuesday, February 15, 2011

A Fiscal Crisis or an Economic One?

After having backed a $800+ billion tax-cut/stimulus package last December, House Republicans are now looking for ways to trim $100 billion from federal budget. The new wonky cocktail party comment on the battle over Obama's new budget is that non-defense discretionary spending was merely 15% of the 2010 budget. Defense spending came out at about 20% and interest payments on the ballooning national debt were about 5%. The rest of the budget came from "mandatory" programs. Last year's deficit was about 40% of the federal budget, so, even if we were to reduce all discretionary spending to zero, we would still have a considerable deficit. Even reducing defense spending to zero might not erase the deficit.

So "mandatory" spending is the only thing left on the chopping block. The left likes to appeal to this "mandatory" spending as a device for arguing that taxes should be raised; the right likes to appeal to this "mandatory" spending percentage as an excuse for "entitlement reform." Both views may have some substance.

But what is "mandatory" spending? Despite what some media reports or pundits may imply, it's not just Social Security or Medicare. While both are part of "mandatory spending," plenty of other measures are as well. Indeed, if there will be an "entitlement crisis" for Social Security or Medicare, we probably haven't even hit it yet.

Many of these outstanding "mandatory" costs over the past few years can directly be traced to the nation's poor employment picture. Even the Obama administration forecasts the unemployment rate for 2012 to be 8.6%. That would mean nearly four years (at least) with unemployment rate above 8%. We have not seen that continuously high level of unemployment since the end of World War II. With the government safety net bearing more weight than it has in decades, it's no wonder that it is straining.

According to the Heritage Foundation, government spending on unemployment benefits jumped from about 30 billion in 2010 dollars in 2000 to about 194 billion in 2010. And unemployment benefits are only part of the picture. Section 8 housing benefits would grow 7.5% for the next year under the Obama budget proposal, from $26.6 billion to $28.6 billion. Foodstamps spending would grow from $68 billion to $80 billion. Spending for all these measures has been fed by economic stagnation.

This increase in unemployment has also hit tax receipts. Government revenue fell from a high of 2.7 trillion (in 2010 dollars) in 2007 to 2.1 trillion in 2010. If tax receipts reached 2007's levels, we would cut $600 billion from the deficit. A drop in the need for unemployment assistance could easily cut federal spending by at least $150 billion. That's already about half of last year's deficit taken care of without making a single cut to any program. (And those figures do not take into account other areas where unemployment has increased federal spending.)

The fastest, politically easiest way to reduce the deficit would be to restore the health of the labor market (which might be the same thing as saying that the fastest, easiest way to reduce the deficit would be to rub a lamp until a genie come out). This is not to say that there is not a cloud in the fiscal future of Medicare or Social Security, or that there is not waste in federal expenditures, or that making certain budget cuts would be a bad idea, or that taxes should not go up (it's worth noting that we have had nowhere near a balanced budget since the Bush tax cuts passed). This is not even to say that there are no hard choices that face us in dealing with mounting debts. But the focus should be less on trying to shave off a billion here or there and more on getting the nation's economic house in order so that it can get its fiscal house in order.

For the past few years, if not the past decade, the US has been in a period of economic stagnation. If the unemployment rate continues to hover around 9% and tax receipts do not go up through increased taxes, expect either more debt or a radically diminished standard of living or perhaps both. The government has been able to mask some of the effects of this stagnation through increased subsidies to the unemployed. We are borrowing to pay for that mask now. Perhaps the best strategy for the nation's immediate fiscal future would be to make that mask unnecessary.