New Book Challenges Spending Adequacy Claims

Published April 1, 2009

Schoolhouses, Courthouses, and Statehouses: Solving the Funding-Achievement Puzzle in America’s Public Schools
by Eric A Hanushek and Alfred A. Lindseth
Princeton, NJ: Princeton University Press, 2009
456 pages, hardcover, ISBN 978-0-69113-000-2, $29.95

For the general public, which faces a constant barrage of media stories decrying education underfunding, one thing certainly bears repeating: At least in public education’s current form, there is no correlation between increased spending and performance.

For people who pay close attention to what Americans get for their education dollar, however, this is not new information. That’s why the value of the new book Schoolhouses, Courthouses, and Statehouses: Solving the Funding-Achievement Puzzle in America’s Public Schools depends largely on what you already know. If you already understand money doesn’t buy kids achievement, this book doesn’t have a ton to offer. If you have doubts about that, you should read it.

Big Money, Little Achievement

The immediate focus of the book, penned by economist Erik Hanushek and lawyer Alfred Lindseth, is the impact of lawsuits challenging the “adequacy” of state education funding. The book’s exposure of the clear lack of correlation between spending and outcomes, however, is applicable beyond the legal wrangling over how much states should spend on their kids’ education. It shows why spending matters little, regardless of which branch of government is driving the ducats.

These education funding lawsuits spread like wildfire starting in the 1970s and have resulted in huge, court-ordered spending increases around the country. Perhaps the most infamous of these happened to Kansas City, Missouri, where in 1986 federal judge Russell Clark ordered nearly unbounded funding for the schools. The resulting spendapalooza pushed the district’s per-pupil expenditures to a level three times greater than the state average and bought extravagances ranging from a planetarium to a robotics lab.

What it didn’t purchase was significant academic improvement.

Structural Problem

Huge spending boosts such as those Clark ordered have done little if any good because underfunding is not schools’ primary problem, Hanushek and Lindseth make clear. What’s to blame instead is the very structure of our top-down, bureaucratic, public school system, which protects waste and has the ultimate captive audience.

“First and foremost, schools are public monopolies, and they do not feel the same pressures to perform that firms in the competitive sectors of the economy face every day,” the authors write. “Productivity and effectiveness have little to do with a school’s survival.”

From a legal standpoint, decisions in many adequacy suits have been most problematic because courts ordering state legislatures to spend money—especially when judges dictate how much to spend—violates the separation of powers critical to keeping government in check. Legislatures, which represent the people, make the laws and appropriate funds. The judicial branch is supposed to determine only whether or not what legislatures have done is allowed under the national and state constitutions.

After their discussion of adequacy suits’ legal and educational failures—including an excellent dissection of dubious “costing-out” methods courts have used to prescribe funding levels—the major question Hanushek and Lindseth have to answer is what, exactly, to do about underperforming schools. Here the authors offer something new—”performance-based funding,” essentially a weighted-student-funding/performance-based budgeting hybrid—but their proposed solution is much less powerful than their analysis of the problem.

Big Differences

Performance-based funding, the authors write, would “focus funding and policy decisions on student outcomes, provide incentives and funding to achieve outcome goals, and evaluate whether what is being done is consistent with improving student outcomes.”

In other words, it would mimic what a free market in education would do, rewarding success and punishing failure.

But there are a couple of big differences between performance-based funding and a true education market. First, instead of consumers identifying acceptable outcomes, under performance-based funding state governments would be the arbiters of success, as they are now. Second, though the authors call for private school choice for students in failing public schools, the market would remain heavily biased toward the public sector under their proposed system.

Fatal Flaw

Those problems constitute a fatal flaw: After convincingly demonstrating top-down political control has led to profligate overspending and unacceptable educational outcomes, the authors would essentially maintain the current monopoly. They would incorporate value-added assessments, merit pay, and other marginally useful within-the-system improvements, but widespread consumer choice and competition—the keys to truly powerful, innovative reform—would remain largely on the sidelines.

The primary power of Schoolhouses, Courthouses, and Statehouses is its convincing refutation of the notion that spending more money is the key to American educational success. For readers who already know that, however, the book doesn’t have much to offer.

Neal McCluskey ([email protected]) is associate director of the Cato Institute’s Center for Educational Freedom and author of Feds in the Classroom: How Big Government Corrupts, Cripples, and Compromises American Education.