Nova workboard

a blog from young economists at Nova SBE

Inefficiency in American Schools

From the OECD members, and overall developed countries, the USA often comes on the lower tail of the efficiency rank. Relatively to the amount of public spending and the counterfactual, the United States lies at the bottom of the chart on health system efficiency (Joumard, 2010), and there is no reason for the country to lag behind in terms of energy efficiency. But even so, one would expect that a country that produces the bulk of Nobel laureates would top the ranks on educational attainment and efficiency – as it turns out, it does not.

For the past 30 years, total US expenditure per student has more than doubled and remains a growing figure. Looking at spending alone, one may praise the US policies for shifting emphasis towards education, but the truth is public schools are not getting their dollars’ worth: spending grows, but the average test scores do not follow. And while average cost per student in public schools is similar to that of private institutions, the latter are more efficient and get their students their money’s worth – all this controlling for students’ background and income.

So, where do public schools fail? Efficiency issues stem from budget planning. The top-down administration of school funds gives priority to government bureaucracies, and schools plan their spending poorly. The education efficiency index makes it clear that one of the tools to improve the efficiency scores is teachers’ salaries: indeed, spending on teachers accounts for 54% of public school budgets (source: Department of Education) which leaves some astounding room for improvement. Moreover, the spending is mainly driven by tenure rather than teaching skills, so schools may be financing résumés rather than competence.

The prevalent issue is a ‘mismatch between stated priorities and actual spending’, as stated by Marguerite Roza’s in ‘Educational Economics: Where Do School Funds Go?’. Roza finds a significant discrepancy between the education goals and the actual allocation of funds. Low-income and lagging students, whom the funds are supposed to be assisting, receive less spending than their high-income counterparts, or those attend AP and gifted classes. The same happens for extracurricular activities, which have a higher spending per pupil due to the small attendance numbers and the ease to allocate teachers to teach those classes.

It comes as no surprise that school attainment does not explicitly express the allocated funds. The marginal gains of gifted students are important, but they may be small in terms of school average when compared to those of the students lagging behind. Helping overachievers maintain their grades while letting worse students’ scores slip drags down the school average. The same goes for neglecting core classes such as math and science while fully assisting the school’s football of gymnastics team: in a country where sports are the rule and children need a distraction from the excessive workload it is difficult to throw P.E. classes aside, but this cannot be done at the cost of core school subjects.

The solutions go through increasing transparency – the budgetary misallocations are probably not perceived by the institutions – and shifting some of the burden of the decision-making process to the schools. But beyond bureaucratic procedures, it is vital to shift the American school paradigm that focuses on standardized test scores and fund-driven schooling indicators, towards more learning and student-centered policies that emphasize personal development and human capital formation.

Carla #636

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Author: studentnovasbe

Master student in Nova Sbe

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