Sunday, May 08, 2005

Goods, Teaching, and Learning

SwanBlog -- Updated every day in May!

I recently wrote about Governor Pawlenty's proposal to require all Minnesota schools to spend 65 percent of education operating dollars directly in the classroom. In addition to the predictable editorials in the Minneapolis and St. Paul newspapers, some guy named Ward Eames wrote a piece claiming that 62.1% actually is 95%.

. . .

In fact, the average Minnesota school district spends 95 percent of its expenditures on teaching and learning. I know this because about a year ago the Hopkins Legislative Action Committee Business Task Force (formed by parents) decided to translate school district financial data into an easy-to-understand report similar to that used in the private sector. Key to this translation is to re-order school district financial data based upon the private-sector definition of "Cost of Goods Sold" into a category called "Cost of Teaching and Learning."

Cost of Goods Sold (CGS) are the costs directly related to the purchase or production of whatever a company sells. Costs typically include not only direct labor and material costs but associated overhead costs such as plant operation and maintenance, plant management, employee benefits, delivery costs (transportation), insurance and supplies.

In the case of a school district the product is education. The Cost of Teaching and Learning includes all costs directly related to educating the student. This would incorporate not only classroom teachers, but also support staff such as paraprofessionals and secretaries, building principals, benefits, supplies, building operations (custodians and utilities) and building maintenance costs. It would also include curriculum development and staff development expenditures. Without these expenditures the educational process would not exist for the students. Just like in the private sector.

. . .

Eames' reasoning is faulty in many ways. First, public schools have a monopoly. In the private sector, the cost of goods sold is only part of the equation, with the profit margin determining the remaining portion of the purchase price. Then the market decides whether the product is worth buying. Spending on a government monopoly is simply not analogous to the Costs of Goods Sold for a private business.

Second, the accounting gimmick of "Cost of Teaching and Learning" makes no distinction between the Minnesota districts that spend 47% in the classroom and the ones that spend 70% in the classroom. Eames implicitly argues that the more spent on overhead, the better. Outcomes are not mentioned. If Hollywood took this approach, Kevin Costner's Waterworld would be as worthwhile of a project as Star Wars.

Third, Eames and the two newspaper editorials argue for more state money to schools. If you want to spend more on education, generally, you can do that under the 65% plan. But at least you know that the increased spending goes primarily to the classroom.

Finally, Eames rails against what he considers "simplistic solutions." Yet he is telling us not to worry, he's done the math, and almost all of the money is already being spent in the classroom already. If you believe that, I have some sand where you can comfortably bury your head.

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