September 2000 Fraser Forum: What Do Our Public Schools Do With All That Money?
In 1996, BC’s Comptroller General complained in his Report on Accountability in the K to 12 Education System that for too many years, the qualityof education in the province was defined in terms of inputs, like the amount of money spent in the year, the number of new classrooms built, or the number of computers per student in each school. He argued that far more attention should be paid to measures of output, such as the degree to which each school’s students acquire essential skills. Strangely, though, the Comptroller General did not suggest that input and output measures should be compared to determine the relative cost-effectiveness of the province’s school districts and individual schools. He seemed prepared to ignore the question of how well each of the province’s 60 school districts make use of the money granted to them by the Ministry of Education.
The efficiency of education providers would be of no great public concern if each student (or his parents) paid for his education. In a free-market system, effective, efficient schools would flourish; ineffective and inefficient ones would languish and disappear. But the K to 12 education system is not a free market. Primary and secondary education in BC are heavily regulated and subsidized by the provincial government. In operating expenses alone, the province annually provides the school districts with on average $5,800 for each of the province’s nearly 600,000 public school students. When capital costs are included, the total bill for BC’s public K to 12 school system exceeds $4 billion. It is quite appropriate, therefore, that taxpayers be able to judge not only the success of schools in meeting their objectives, but also the degree to which they are managed efficiently.
Public understanding of the efficiency of the school system is doubly important
at this time. As provincial budget deficits have been eliminated or reduced,
calls for increases in funding to education and other key social services
have become numerous and strident. In British Columbia, the teacher’s union
(BCTF) would have us believe that public education is drastically under-funded.
In a recent position paper on education funding (Education Funding), the
BCTF detailed how more money should be spent, and obligingly suggested
two sources of additional funds that could be tapped by the Ministry. Not
surprisingly, its first suggestion was to raise taxes—local property taxes
in this case. The union’s second suggested option was that the provincial
government should stop funding independent schools, thereby transferring
some $160,000,000 annually into govern-
ment-run schools. The union did
not explain how such a transfer would result in a net benefit to students
or taxpayers. Anyway, how can we judge the validity of requests for more
money when we have no measure of cost-efficiency with which to judge the
operation of the public education system?
Later in the fall, The Fraser Institute will begin developing cost-efficiency indicators for districts and, to the extent possible, for individual schools in those provinces for which it produces a Report Card. Preliminary analysis of British Columbia regulations and data suggest that this effort is long overdue.
Paying for nothing at all
What should we pay our public schools to do? In Alberta, high schools are paid for courses that students complete. In New York, the state pays the schools when students attend class. In other states, schools are paid bonuses when students perform well on tests. But, in BC, the Ministry of Education pays for enrollment. In many cases, doing this means paying for nothing at all. As part of its funding package, each of the province’s 60 public school districts gets what is called a Common Core Grant for each full-time equivalent (FTE) student enrolled in the district. Last year, for each secondary school student the districts received about $3,277 per FTE student. They get a little more for primary students (grades K to 3) and a little less for early intermediate students (grades 4 through 7). This $3,277 grant may seem quite reasonable when you consider that it funds about 920 hours of instruction. It sounds reasonable, that is, until you realize that even if a student enrolls in less than the normal course load (8 courses, each including about 115 hours of instruction), he or she still counts as an FTE student. If the student enrolls in 7 courses, the school district still receives the full $3,277 grant. In fact, the grant is forthcoming in full even if the student enrolls in only 4 courses. It doesn’t matter whether the student is enrolled full-time or half-time, the district still gets the $3,277 grant. But what about students enrolled in fewer than 4 courses? In such cases, the district does not get a full FTE student grant, but it doesn’t do too badly. Enrollment in three courses attracts $2,890, in two courses, $2,475; and in a single course, $2,060. What does "enrollment" actually mean for funding purposes? It means simply that the student has enrolled in the course or courses before September 30 of the school year. Thus, theoretically, if a school district feels the need for more money, it need only ask its principals to host a free dinner and dance for two hundred prospective school-age students on September 29, and during the evening enroll each one in a single course, any course, and the district’s funding request could be raised by a whopping $412,000. But, you ask, wouldn’t the added enrollment entail more costs? Not necessarily: the district gets its money regardless of whether or not these extra students ever attend a single class.
Using enrollment in courses on a given day as the determinant of funding levels simply makes no sense at all. Should we really be paying schools based on their ability to sell course enrollments? A preliminary study of 1997-98 school year data showed that, if we were to recalculate the funding payable using the Alberta method, that is, on the basis of courses completed, the saving would be approximately $125,000,000. While there is no evidence to suggest that districts are abusing this funding procedure, there is likewise no evidence to suggest that this method of funding in any way encourages school districts to wisely manage the taxpayer funds with which they are entrusted.
Paying for failure
Failure in school is expensive. For each course, a student will normally spend more than 100 hours in the classroom, but if he fails to acquire the skills and knowledge that make up the curriculum, that investment returns little. The teacher’s time and effort are also largely wasted. Likewise, the resources provided by the school show no return. Yet there is no refund to the taxpayer for failure. In fact, it is likely that a failure will result in substantial added cost to the taxpayer. If the student repeats the course (as he can without charge) or if he is unable to progress to the next level of study without extra personal attention, we will pay much more. A key measure of a school’s efficiency is, therefore, the extent to which its students succeed in mastering the curriculum in the normal allotted time. Failure rate data for the uniform grade 12 provincial examinations are published annually. In the school year 1998-99, the failure rates at individual schools ranged from 1 to 49 percent with an overall provincial average of about 13 percent. While there are no centrally available data on failure rates in grades 1 through 10 in BC, if the grade 12 rate were constant across all grades, the total number of student courses failed annually would be approximately 640,000. Each of these failed courses attract at least $410 in Common Core Grant () funding. While the possibility of failure undoubtedly serves as an incentive to students to meet the minimum expectations of the course, the grade 12 data shows that some schools are more successful than others in helping their students meet course requirements. Adoption of successful teaching practices will help less successful schools reduce the cost of failure.
In other jurisdictions, the cost of failure has been realized, and programs to reduce failure rates have been implemented or are planned. In Ontario, the education ministry plans to introduce testing of teachers for competence. In some US states, schools that produce above-standard results are rewarded with extra funding. In California, the state is required to take remedial action, possibly including a complete shutdown of any school that does not perform to standard. In BC, we just keep paying.
Paying for empty seats
Empty seats mean wasted money. We recently requested attendance data from all school districts in the province. Early analysis of these data suggests an average provincial absentee rate in the secondary grades of in excess of 5 percent. In some schools, the rate is much higher. The five-percent estimate yields a total of some 26,800,000 classes missed each year. But does it matter whether or not students attend class? Not surprisingly, research shows a significant connection between good attendance and academic performance. Further, higher levels of absenteeism are associated with an increased likelihood of school leaving prior to graduation, and increased criminal activity (Cowley, 2000).
Student attendance data can also reflect the relative importance to students of specific courses. Study of the student level data provided by several schools shows that absenteeism is greater in some subjects than in others. Data from one school showed that the much touted Career and Personal Planning (CAPP) courses—a recently introduced and highly controversial mandatory life planning and guidance program for students from grades 8 through 12—suffered far higher absentee rates than other courses. Careful analysis of attendance data can help district management improve the efficiency of its operation.
The development of district and school cost-efficiency indicators will quite likely uncover many areas of school operation that are in need of thorough study. Until these indicators are developed, it would be wise to resist any attempts to increase funding to the public schools.
Bibliography
British Columbia Teachers’ Federation (2000). Education Funding—A Brief to the Government of British Columbia. Digital document: bctf.bc.ca/bargain/ EdFunding/2000brief/2000brief.html (August 15).
Cowley, Peter (2000). "What Good is School… if Students Don’t Show Up for Class?" Fraser Forum. January.
Peter Cowley (peterc@fraserinstitute.ca) is Director of School Performance Studies at The Fraser Institute. He is co-author of the Institute’s series of report cards on Canada’s secondary schools.
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