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National Review Online


The 65-Cent Delusion

March 02, 2006

By Jonathan Butcher, Jay P. Greene

A seductively simple and horribly wrongheaded proposal is sweeping through education-reform circles and catching on with policymakers. The proposal, often called the “65-cent” solution, is to mandate that schools spend at least 65 percent of their money on instructional costs. The idea is to move resources out of administration and into the classroom, where it is assumed that students will automatically benefit from the increased expenditure.

Advocates of this proposal have not stopped to ask for evidence that student achievement is higher at schools spending at least 65 percent of their resources on instruction than at schools that do not. In fact, there is no evidence to support such a claim, though this has not slowed the 65-cent fad. According to First Class Education, the group trumpeting the movement, some 20 states and the District of Columbia are considering 65-cent proposals, and Louisiana, Kansas, and Texas have already adopted similar plans. Nor are supporters bothered that the two states currently spending more than 65 percent of their budgets on instruction, New York and Maine, are hardly paragons of education excellence.

Before jumping on the 65-cent bandwagon, reformers might want to think about whether this wagon is headed for a cliff. There is no reason to think that schools in general are starving instructionally or that all schools have the same instructional and non-instructional needs. Some schools have large numbers of students who benefit from school-lunch programs, special education services, and buses to transport them to school. Other schools have less need for these services. Why should we prohibit all schools from spending more than 35 percent on non-instructional services if that is where their needs are?

Previous reform efforts have rightly pushed to empower schools to make decisions about how they can best allocate their resources while holding them accountable for producing results. Schools should have this freedom to control their own inputs while we demand better outcomes because there is no “right” way to use inputs. Schools are in the best position to make these judgments. The 65-cent solution pushes in the opposite direction, imposing a mandate on how schools use their resources without demanding results.

Meaningful enforcement of a 65-cent solution will also be highly problematic. There are no proper accounting standards in public education, so the classification of spending as instructional or non-instructional is often arbitrary and inconsistently applied. This problem is not resolved even if we were to use the guidelines for classifying expenditures adopted by the National Center for Education Statistics. Those guidelines classify athletic programs, for example, as “instructional” while special-education services are “non-instructional.” Do we really want to force more spending on football programs and less on students with cerebral palsy? Besides, schools categorize their own spending with hardly any auditing or oversight, so complying with a 65-cent mandate could simply be a matter of moving some accounts around.

Schools cooking their books would be preferable to the next easiest way to comply with the 65-cent mandate: go on a teacher-spending binge. Unions would welcome this, of course, as hiring more public-school employees and raising their salaries means more revenue for the union. The 65-cent solution then becomes a giant ruler that reformers hand the teachers unions to beat reformers over the head. Consider why New York and Maine already satisfy the 65-percent mandate. New York has a student-teacher ratio of 13.7, much lower than the national average, and ranks fifth in the nation in teacher salaries. Similarly, Maine has the highest number of teachers, with one teacher for every 12.1 students, which is almost 25 percent more teachers than the national average.

Hiring more teachers and paying them more would be an acceptable reform strategy if evidence suggested this improves student achievement. Research shows, however, that this is not a promising strategy since student outcomes are no better in states with higher pay or more teachers per pupil. Using the 65-percent mandate to raise teacher pay and hire more teachers is like pouring more water into a river. The water level will rise but it won’t change the course of the river.

Rather than be distracted by simplistic solutions, reformers should remain focused on policies that alter the incentives that schools and educators have to help their students succeed while freeing them to make choices about how best to produce that success. It makes no more sense to mandate that schools spend no more than 35 percent on non-instructional expenses than to mandate that CEOs make no more than $1 million. Both ideas have populist appeal while flying in the face of everything economic theory and empirical experience teaches.

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