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The Fraser Institute

June 2000 Fraser Forum: How Smart Is "Third Way" Education Policy?

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Patrick Basham

"We cannot win this battle simply by throwing money at it. We must not let taxpayer dollars be wasted on bureaucracy, but, instead, we must invest them directly into the classroom: for students and for teachers." - California Governor Gray Davis, State of the State speech, January 2000

The contemporary American educational policy debate increasingly reflects the realization that successive government-centred programs and "progressive" experiments have failed to address the inefficient culture of this critical public program. Sadly, the US public school system remains both inefficient and unequal. Consequently, both at the grassroots and policymaking levels, concern is starting to focus on who is best served by education policy, not with who runs the system.

This article outlines recent developments in education policy initiated by so-called "Third Way"1 policymakers, as led by President Bill Clinton. On educational issues, Clinton and his New Democrat disciples are frequently on sounder footing than in other public policy areas. Among Third Way adherents, there appears to be a genuine commitment to the expansion of choice and accountability within the public school system. However, there is little appreciation of the necessity of expanding choice beyond public to private school systems. There is, also, a commensurate lack of appreciation of the empirical evidence casting doubt on the widely held view that higher spending on education produces higher levels of achievement.

The public school problem

American public schools are, on average, significantly underperforming. For example, 77 percent of low-income students in urban schools read below a basic level, while 50 percent of students in urban schools fail to graduate on time. Such academic inefficiency is mirrored by commensurate financial inefficiency. For instance, the majority of those employed by the public schools are non-teachers, mainly administrators and bureaucrats.2

Such is the scale of academic failure that, since 1989, on 25 occasions individual state governments have been compelled to take control of the local school districts responsible for failing public schools.3

Of the myriad "solutions" to this educational morass, the most conventional, but most misguided, is greater funding for the public school system.

The empirical evidence clearly demonstrates that money is not the answer to this nationwide problem.4 For example, between 1960 and 1996, real spending per public school student rose from just under $2,000 to just over $6,000 (in 1996 dollars); during the same period, the student-teacher ratio fell from 26 to 17, and teachers' salaries rose from $25,206 to $39,451 (in 1996 dollars).5 However, average SAT scores fell from 950 to 900 during this period.6

Probably the best example of the non-existent relationship between increased public school funding and improved academic performance is the case of the Kansas City School District. In recent years, this Missouri educational authority spent billions of dollars to improve school performance and, consequently, now boasts the highest per-student spending in the nation.

It has also had its accreditation status removed by the Missouri Board of Education after the city's schools failed to meet any of 11 performance standards.7 As the Cato Institute's Paul Ciotti concluded in his seminal study of this experiment in fully funded educational failure, "The lessons of the Kansas City experiment should stand as a warning to those who would use massive funding and gold-plated buildings to…improve education."8

The conclusion that more spending has little to offer in the way of higher academic achievement is further borne out by research papers recently published by the National Bureau of Economic Research.9 These find that intellectually advantaged students are prone to greater achievement regardless of the specific characteristics of their school. For example, those students who underachieve in poorly funded schools also tend to underachieve in well-funded schools.

Third way reforms

At the federal, state, and local levels, this year's crop of incumbent and would-be Third Way policymakers are focusing on educational issues as a way of targeting the elusive independent voter who will decide the outcome of the presidential and many other key electoral races.10

A popular Third Way issue is the (re)introduction of standardized testing. In order to ensure that a high school diploma accurately denotes a graduating student's ability to read, write, and calculate, many major American cities and larger states have introduced pre-graduation testing of high school students. Contrary to the predictions of opponents of testing, the introduction of standardized testing has not led to a higher dropout rate.11 Nationally, the US Department of Education reports that dropout rates are flat. In some cities, such as Chicago, the dropout rate has fallen since testing was introduced three years ago.

The expansion of charter schools (public schools that operate largely free of government regulation and union intervention) continues apace. President Clinton is ebullient in his praise for the nation's 1,700 charter schools: "We now have enough evidence that the charter school movement works… Very often we see charter schools provide an even greater atmosphere of competition that induces kids to work harder and harder to learn."12

American Third Wayers are also prominent in the campaign to end the pernicious practice of "social promotion." In Third Way Governor Davis' state, starting in the fall of this year, the Los Angeles School District will cease automatically promoting students to the next grade regardless of whether they have mastered their current material.

However, although an estimated one-third to one-half of Los Angeles public school students are potentially affected by the end of social promotion (e.g., 60 percent of LA's eighth graders do not know their multiplication tables), only underachieving students in Grades 2 and 8 (i.e., less than two percent of students) will be held back. This reform setback is a result of pressure applied by the extremely powerful teachers' union, which argued that its members were not trained to handle the "emotional decisions" regarding who will pass.13

Vice-President Al Gore, the Democratic Party's presidential candidate, is showcasing his educational policy initiatives as he seeks to inherit the Third Way mantle from Clinton and to employ that image to attract the support of suburban voters, especially in such electorally critical swing states and regions as California and the mid-west, respectively.

To that end, Gore has articulated some fairly sensible, albeit piecemeal, reforms. These include the following: providing state governments with financial incentives to intervene in failing public schools, including the option of closing the schools and reopening them under new management; providing an $8 billion grant program over 10 years to increase teachers' salaries in exchange for higher standards for teacher performance and giving principals the authority both to hire teachers without regard to seniority and to fire poorly performing teachers; and the proposal that continued federal education funding be conditional upon the elimination of social promotion.

Unfortunately, too many of Gore's other proposals begin with a pledge to spend more money on education, rather than providing more structural remedies. This reflects, in large part, his campaign's (and his party's) reliance upon public sector union-based financial and organizational support, especially from the teachers' unions. Consequently, in predictable public choice fashion, Gore wants to provide school districts with billions of dollars to hire new teachers, ostensibly in order to reduce class sizes. Even if one ignores the political calculation involved, it remains distressing that apparently so well read a policymaker as Gore is unaware of the wealth of research debunking the myth that smaller class sizes are integral to academic achievement.14

Most radically, at least in fiscal terms, on May 12th Governor Davis proposed to exempt California public school teachers (from kindergarten through grade 12) from the state's personal income tax. This would result in an average income tax cut of $1,350 for an experienced teacher. Although it is certainly the case that teaching is a more significant influence upon student achievement than is class size, and an effort to attract quality teachers is to be commended, a willingness to further tangle an already complicated tax system is an overriding concern given the paramount need for the American taxpayer (ditto his Canadian counterpart) to be subject to a tax system within which fairness and simplicity are guiding principles.

A more encouraging (albeit half-) step in the correct policy direction is Davis' plan to introduce performance pay for teachers. However, the Governor's compromise with the teachers' unions will see collective merit pay apportioned according to the results of overall school, rather than individual student, performance.

Market-oriented reforms

During this election year, many market-oriented policymakers are outlining educational reforms which rely less heavily upon increased spending than does the Third Way approach and, which, additionally, demonstrate some degree of awareness of the nature of the failure of public education and, therefore, the need for fundamental reform of a failed system.

For example, Texas Governor George W. Bush, the Republican Party's presidential candidate, would grant the individual states more autonomy in spending the $7.7 billion in federal aid, but require that the states conduct annual testing of third to eighth grade students' math and reading skills. Most importantly, Bush would provide federally-funded vouchers to low-income families that would empower their children to attend private schools, if necessary.15

In the US Congress, meanwhile, Senate Republicans have introduced a "Public Schools Choice Initiative," which would allow students in failing schools to transfer to another public school of their choice. This measure follows on the policy heels of 18 state legislatures agreeing to examine proposals to offer tax breaks to help families cover private school tuition fees. There are an additional 21 state legislatures considering the introduction of voucher programs.16

The intellectual debate over how best to help disadvantaged public school students has been further stimulated by the work of Heritage Foundation scholar Samuel Casey Carter. He has identified 21 schools that primarily serve very low-income students who nevertheless perform exceptionally well academically.

The study, entitled No Excuses: Lessons from 21 High-Performing Poverty Schools,17 found that a relentless focus on academic achievement separated these performing schools from their non-performing peers. For example, these 21 schools have principals who are unafraid to ignore unworkable rules, who conduct nation-wide searches for excellent teachers (importantly, these teachers do not necessarily possess the standard teaching credentials), and who do not accept either poverty or class size as an excuse for poor academic performance.

While this year's discussion is unlikely to extend to the issue of for-profit schools, there are now some 250 such schools operating throughout the United States.18 Most prominent are the Edison Schools, founded by Christopher Whittle, which now operate in 20 states and the District of Columbia. In stark contrast to the government-owned and -operated schools, these for-profit schools are projected to spend only 8 percent of their revenues on administrative costs, with 79 percent being spent in the classroom.

Overall, the degree of innovation taking place throughout American education constitutes an experiment in developing a model of public education that incorporates pluralism, risk taking, public accountability, equity, fairness, and a consumerist ethos. Importantly, the reform experience in US cities and states may provide the comparative case study data required to develop such a model for Canadian public education.

Notes

    A more comprehensive analysis of the Third Way movement and its policy characteristics is found in Patrick Basham, The "Third Way": Marketing Mirage or Trojan Horse?, Public Policy Sources No. 33, The Fraser Institute.

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