Education Spending

It is very interesting to go to conservative and/or libertarian blogs and encounter the comments on public education. So often you run across the statements about how the cost of education is rising and that they take some quote about rising real cost as absolute proof of their beliefs that politicians and the teachers unions are destroying the education system. As far as they seem to believe this is an argument stopper and that all they have to do is quote the numbers.

The numbers they quote are generally accurate. Education is an interesting industry. Despite all the advances of the computer revolution no one seems to have improved on the age-old system of the teacher sitting on one end of the log and the pupil on the other end. There has been no improvement or growth in productivity in public education. As a matter of fact one of the major metrics defining good education is a lower student-teacher ratio. But a lower teacher-student ratio means the the teachers productivity has fallen.

So we have a basic problem of having to pay teachers competitive salaries that are always rising in todays world while teacher productivity is flat to declining. The economic consequence has to be rising education cost. the best data on this I’ve been able to find is from the National Education Statistics published by the Department of Education. They report that since 1981 that nominal expenditures per student have grown at an annual rate of 5.9%.

Libertarians and/or conservatives seem to find this nearly 6% growth in expenditures per student to be proof that the politicians and teachers unions are destroying the system.

Maybe. But you need to put this number in perspective. If the public schools are doing so badly, how are the private schools doing? It turns out that we have a very good source of data on tuition and fees in private elementary and high schools. It is an individual line item in the CPI.
This shows that since 1981 tuition and fees at private elementary and high schools has been growing at an average annual rate of 7.7%, or about 30% faster than expenditures per pupil at
public elementary and high schools. Over this period the CPI reports that prices for college tuition and fees had almost an identical pattern as private elementary and high schools.

So I always take great pleasure of asking those citing rising education cost as proof of their position what does it mean that prices are rising about 30% faster in the private sector. The responses are always amusing.

About the only responsible and/or intelligence response I’ve seen is that private schools are cheaper than public schools. Again that is a maybe.

According to the Department of Education in the 1999-2000 school year spending per pupil in public schools was $8,033 while the average tuition & fees at private elementary and high schools was $6,770. Since this is only 85% of public spending they are right. But if you look at the details you find:

TUTITION & FEES 1999 ( $) % of PUBLIC
Total …………… $6,779 84.4%
Catholic …………….. 6,780 84.4%
Other religious ……….. 4,260 53.0%
Non-sectarian …………. 12,363 153.9%

So religious schools are cheaper, but tuition and fees at non-sectarian schools were 154% of public expenditures per student. The churches often subsidize their schools by providing the capital cost of the building and finding highly motivated individuals to volunteer and other ways.

As an aside, their was a CATO study in the mid 1990s that pointed out that the data on public spending per student did not include the capital cost of school. The Department of Education recognized this as a valid criticism and corrected their data, so the data I’m citing does include capital cost.

So we really come down to the bottom line that comparing elementary and high school cost between public and private schools is that the private schools do significantly worse than the public schools. I wonder what their equivalent of the teachers unions are?