A proposal likely to appear on the November ballot would change
Michigan law to mandate annual in- flationary education expenditures. But the
results of government education spending over the last several decades have
shown little that would lead us to think simply spending more would improve
schools. In large part, this is because schools generally operate without
significant institutional incentives for producing improved results.
Consider this: In what service sector have inputs more than
doubled over three decades, while outputs have remained stagnant? If you
answered, "Public education," go to the head of the class.
In both Michigan and the nation at large, the amount spent per
student in public education has more than doubled since 1970, even after
inflation is factored out. Compare that doubling of expenditure to students’
performance on the federally administered National Assessment of Educational
Progress. The most recent average reading and mathematics scores on that test
are virtually identical to the scores in the early 1970s.
Our educational institutions usually do not create incentives
for instructional improvement by rewarding effective teachers and sanctioning
Student achievement has remained stagnant or slightly worsened
by other measures, too, including achievement gaps, graduation rates, Scholastic
Assessment Test results and international test scores, according to Harvard
Professor Paul E. Peterson and education researcher Herbert J. Walberg.
However, following the logic of the proponents of this spending
mandate, Michigan citizens should disregard the relationship between more money
and unchanged results. Is this reasonable? Simple observations of the market
reveal that firms strive to create value by keeping costs low, while
simultaneously increasing the quality and quantity of the goods or services
demanded by consumers.
The contention that these fundamental principles don’t work in
government schools has long been discussed by education policy scholars such as
Eric Hanushek, who found a decade ago that education sector productivity, or the
ratio of outputs to inputs, "is falling at 3.5 percent per year relative to low
productivity sectors of the economy."
Such a finding appears contrary to common sense, since our
experience tells us that having more money makes individuals’ lives better than
having less money does.
Based on this perception, many people seem to believe that the
worst performing schools are those spending the least per student. But this is
not the case. Take, for example, the 117 Michigan public schools that have
failed to meet federal and state standards under the No Child Left Behind Act
for five or more consecutive years. Calculations based on recently released data
from the Michigan Department of Education show that 89 percent of those
consistently failing schools are in districts that rank in the top quarter of
all districts in terms of per-pupil expenditures for operations.
A primary reason for this disparity between spending and
achievement is the relatively weak incentives for schools to improve, a problem
researched by Hanushek and others.
One vital area of education that lacks meaningful improvement
incentives is instruction, an area of operations that accounts for more than
half of all education spending. Instruction of students, a school’s primary
mission, is an activity that takes place largely in classrooms with teachers.
Teachers’ pay is usually based on a "uniform salary schedule" that gives raises
according to increasing years of employment and the highest educational degree
attained, as noted by a recent Harvard University study of collective
Since the mid-1980s, median teaching experience has hovered at
about 15 years. Moreover, from 1961 to 2001, the percentage of teachers with
master’s degrees increased from about 23 percent to 56 percent. This means that
public education employers are maintaining an "experienced," highly educated
workforce, even though their spending on labor is hardly ever connected to
In other words, our educational institutions usually do not
create incentives for instructional improvement by rewarding effective teachers
and sanctioning ineffective ones, even though the effectiveness of teaching in
the classroom is the most important factor in student achievement. The fact that measures of educational results have been stagnant or even slightly declining over the past several decades ought to alert Michigan citizens that simply hiking school spending – as we’ve already been doing for decades – will do nothing by itself to improve learning for Michigan’s children. In fact,
increased spending distracts us from addressing the lack of incentives for
public schools to fulfill their most vital mission: the quality instruction of
Ryan S. Olson is director of education policy at the Mackinac
Center for Public Policy, a research and educational institute headquartered in