Shop At Education Market

My column for the Daily News is online.  It’s called, “Shop At The Education Market.”  It’s particularly relevant considering the actions of the West Bend School Board last night.  Here’s a portion:

In the idealized Lake Wobegon, Wis. School District, the taxpayers of the entire state pay for two-thirds of whatever the district decides to spend through their sales, income and property taxes while the local residents of the district pay for the rest through local property taxes. If the voters of the Lake Wobegon School District elect a board that decides to jack up spending, the voters only bear one-third of the cost of their decisions.

   The result is the same as in the restaurant example above. The market is distorted. After many years of this market being distorted, it’s hard to tell anymore where reality lies anymore.

   Reports began circulating last week that as many as 300,000 teachers may be laid off nationwide due to tight government budgets and Wisconsin is no exception. While this is certainly bad news for hundreds of thousands of teachers and their families, is it a bad thing for the kids and taxpayers?

   Because the market is distorted, it’s difficult to tell. How many years did the school districts jack up spending and staffing levels – especially during good economic times – because the local taxpayers were only paying a fraction of the cost? Also bear in mind that spending increases compound. A 5 percent spending increase for five years is a 27.63 percent spending increase over the base year.

   Here in West Bend, per pupil spending is up 38 percent since the 2000-2001 year. That’s better than in some other districts, but would spending have increased that much had the property taxpayers of the school district borne the full cost of those spending decisions?

   We don’t know. And since we don’t know, we don’t know if staffing levels are currently optimum, overstaffed, or under-staffed in any school district in Wisconsin. All we know is the current staffing level, which was reached after years of making decisions in a distorted market, is almost universally decried as too lean by district administrators and teachers’ unions, and often deemed too fat by others.

   Who is right? That will depend on the district, but we’ll never know the full truth until local taxpayers pay the full cost of the district. If every school district’s taxpayers had to pay for the full cost of their school board’s decisions, then the efficiencies of the district would be better achieved and the priorities of the taxpayers properly reflected.

   Adam Smith’s Invisible Hand is still the best mechanism for achieving the efficiency and excellence at the price the purchaser is willing to pay. It works whenever it’s tried and it should be tried in education.