Understanding Education Costs versus “Inflation”
We often see pundits arguing that education spending has doubled over a 30 year period, when adjusted for inflation, and we’ve gotten nothing for it. We’ve got modest growth in NAEP scores and huge growth in spending. And those international comparisons… wow!
The assertion is therefore that our public education system is less cost-effective now than it was 30 years ago. But this assumption is based on layers of flawed reasoning, on both sides of the equation.
Here’s a bit of School Finance 101 on this topic:
First, what are the two sides of the equation, or at least the two parts of the fraction? The numerator here is education spending and how we measure it now compared to previously. The major flaw in the usual reasoning is
Thinking through cost-benefit analysis and layoff policies
If you’re running a school district or a private school and you are deciding on what to keep in your budget and what to discard, you are making trade-offs. You are making trade-offs as to whether you want to spend money on X or on Y, or perhaps a more complicated mix of many options. How you come to your decision depends on a number of factors:
- The cost – the total costs of the various ingredients that go into providing X and providing Y. That is, how many people, at what salary and benefits, how much space at what overhead cost (per time used) and how much stuff (materials, supplies and equipment) and at what market prices?
- The benefits – the potential dollar return to doing X versus doing Y. For example, how much dollar savings might be generated in operating cost savings from reorganizing our staffing and use of space, if we spend up front (capital expenses) to reorganize and consolidate our elementary schools where they have become significantly imbalanced over time?