The Fiscal Reality of School Spending

In this installment of Education Watch, Bruce Fuller and Lance T. Izumi discuss what the candidates are saying about their education priorities. Go to Mr. Fuller’s post.

Lance T. Izumi, a senior fellow in California studies and the senior director of education studies at the Pacific Research Institute for Public Policy, is the co-author of the book “Not as Good as You Think: Why the Middle Class Needs School Choice.” (Full biography.)

Out here in California, this was supposed to be the “Year of Education,” at least according to Gov. Arnold Schwarzenegger. But whatever plans the terminator-turned-governor had in mind to reform education ran aground on the rocks of a sputtering economy and sagging tax revenue. A similar situation faces the next president, especially with the taxpayer-financed Wall Street bailout crowding out federal spending in other areas, including education.

Barack Obama, unfortunately, seems oblivious to the fiscal reality he faces. In the Oct. 7 debate, Mr. Obama listed education as one of his top three domestic priority areas. He wants to increase federal spending on education by $19 billion, including expanding the federal government’s role in areas like early childhood education. In the wake of the debate, even mainstream observers in the press commented that such a big-ticket spending agenda ignores the obvious squeeze that the bailout will place on education and other domestic spending.

Although he has tried to fashion himself as the candidate of change, Mr. Obama’s overall approach to education is the usual Democratic formula of spending more money. Look at his Web site, it’s a wish list that will mean significantly increasing funding for education to create all sorts of new programs. Yet, if the revenue is not there, then what agenda is left? Not much. Mr. Obama is not offering a re-thought role for the federal government in education, just gussied up more of the same.

Although John McCain did not address education in the Oct. 7 debate, he has offered an alternative view of the way Washington should finance education. According to his campaign Web site, Mr. McCain believes: “Funding cannot be effectively apportioned in Washington, but it shouldn’t be a state-level official or district bureaucrat either. The money must be controlled by the leader we hold accountable: the school principal with a single criterion to raise student achievement.”

What Mr. McCain is saying is that local school leaders have a better understanding of their students’ needs than far-away bureaucrats in national or state capitals. Of course the devil is always in the details in such proposals, but such a plan has a number of positive attributes.

Creating a more direct pipeline of money to local schools could end up being more effective and efficient, avoiding the need to increase federal education spending in an era of revenue constraints. While Republicans routinely slam the costs of bureaucracy, they aren’t the only ones. Last year a Stanford University study found that school districts in California allocate their resources more effectively when they are given more flexibility as opposed to when their allocations are determined by state lawmakers and bureaucrats. The same study also found that local school superintendents said that increased flexibility over how to spend money was more important than simply raising budgets. Mr. McCain’s proposal addresses these two findings.

The major question mark for Mr. McCain is how he would hold local principals accountable for the student performance that results from their greater flexibility over spending decisions. Does he envision more No Child Left Behind-type sanctions or would he somehow tie accountability to his support for school-choice options like vouchers? The latter would be more effective, since competition and potential loss of clientele focuses the mind, but he needs to spell out specifics, especially in light of the turbulent recent history of accountability at the state and federal levels.

While the fiscal picture facing Washington is grim, the silver lining could be that it forces our leaders to re-evaluate the routine, expensive and often failed activism of the federal government. Certainly that would be a welcome change, especially when it comes to federally dictated education policymaking.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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