Financing entrepreneurial education: Part II

Patrick Gibbons

Economists have long understood that prices carry important information. How much you are willing to pay for a certain good or service reflects how much you value that good or service. Similarly, where sellers place their offering price for what they offer in the marketplace carries implicit information about the costs of the elements going into that product or service and the value that the producer places on his own time and energy.

Efforts to replace this capitalist system almost always fail. Lenin's disastrous experiment with a "moneyless economy" produced widespread food, fuel and transport crises in 1920-21, compelling the Soviet Union's "New Economic Policy," a retreat toward a more capitalist "mixed economy." Lenin, however, still centralized control over what he called "the commanding heights" of the economy, nationalizing heavy industry and retaining authority to direct what should be made, how much should be made and who got what was made. The system was still not sustainable. In about 70 years, it collapsed.

Unfortunately, American public schools today are still run in a largely similar fashion — bureaucrats control the commanding heights of public education finance. The bulk of decisions on staffing and budgeting are made at the central office rather than by local principals, teachers and parents. And public education's focus stays on funding programs and staffing positions for adults rather than educating students and improving results.

Most public schools in Nevada, and abroad, are staffed according to complicated formulae that use "Full-Time Equivalents" (FTE), rather than dollars. Schools are assigned FTEs based on student count and requirements for a minimum number of teachers per student. School staff members — including school principals, secretaries, nurses, librarians and guidance counselors — are also rationed to schools in this manner. Custodians are rationed based on the square footage of the school.

When schools are mechanically allocated staff FTE's by the district office, local need or the effectiveness of the position often turns out to be irrelevant. In Clark County, for example, high schools with 500 or more students will receive an assistant principal. With 1,300 students, they will receive two assistant principals, with 1,800, three, and with an enrollment of 2,900, four.

Elementary schools are assigned teachers based on the number of students in each grade — one licensed classroom staff member for every 16 students in grades one and two, one for every 19 students in grade three and one for every 30 students in grades four and five. Middle and high schools receive one licensed teacher for every 32 students.

The Clark County School District also rations school supplies from the central office. Approval for a needed resource to be allocated requires the authorization of up to six different central-office administrators.

In one instance, a district principal sought permission to acquire new computers that had large 22-inch monitors. District regulations, however, prohibited monitors larger than 19 inches. Yet the systems with 22-inch monitors were on sale for less than systems with the 19-inch monitors. Because of the inflexible regulations, the purchase request was initially denied.

In another case, CCSD paid $1.4 million above the lowest bid to remodel a school and an extra $170,000 for landscaping at another school. The central office also rejected a printing job that FedEx Kinkos would have done for $1,800, requiring the school instead to purchase the same service from the central office for $4,000. Although the school district is not required by law to accept the lowest bid, these practices add up and leave fewer dollars for the classroom.

When a central office directs the use of scarce resources, no one knows the real value of the resources being provided. What would benefit a school most — an assistant principal, a new English teacher or new computers for every classroom? Only the local school, intimately aware of the needs of its students, is in the best position to answer that question.

Decentralized schools with incentivized staff will produce the best, most effective use of always scarce resources. This means Nevada must adopt genuine school empowerment.

In contrast to traditional public schools, empowerment schools control their budgets. They purchase not only staff but also office, classroom, medical, custodial and athletic supplies, along with textbooks, library books, printing and binding, field trips, computers and even professional development.

Because responsibility and important elements of ownership now rest with the teachers and principals — because they are empowered — they have real incentives to make wise use of the always necessarily limited budget resources.

Patrick R. Gibbons is an education policy analyst at the Nevada Policy Research Institute.

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