#Amplifychoice 2015: Dr. Ben Scafidi on Economics and School Funding, Economics and School Choice

Dr. Ben Scafidi speaks at #Amplifychoice 2015 on the unusual economics
of School Funding

At the recent #Amplifychoice event held in Atlanta this past weekend, sponsored by the Franklin Center for Government and Public Integrity, several interesting presentations were given by multiple subject matter experts. 

One especially interesting presentation was given by an individual that knows a lot about economics and school choice. 

Dr. Ben Scafidi gave a riveting lecture on the economics of school choice on Friday afternoon.  Dr. Scafidi, whom I had previously had the opportunity to meet and speak with a few years back at a conference in Milwaukee, is a professor of economics at Kennesaw State University. In addition to this, he‘s also a senior fellow with the Friedman Foundation for Educational Choice and also the director of education policy for the Georgia Community Foundation, Inc. 

Dr. Scafidi wrote the bombshell report The School Staffing Surge: Decades of Employment Growth in America’s Public Schools and he co-authored the very influential report from 2013 More than Scores, an Analysis of Why and How Parents Choose Private Schools.  In these reports, Scafidi detailed the troubling phenomenon of ever expanding public educational hiring of non-instructional employees and also the reasons why parents take such an active interest in choosing where their children attend school.  And these reports are amazing documents that every education policy-maker in America should read.

But the subject of discussion at this week’s event was the money behind education and the non-standard economic explanations those in public education try to give when discussing their financial challenges.  “The fact of the matter is that spending on education has risen dramatically in the U.S. since 1970, yet the vast majority of the spending increases have paid for increases in non-instructional and administrative school employees” said Scafidi during his presentation.  

Data courtesy of Dr. Ben Scafidi

He went on to describe the strange phenomenon that occurs when some educational administrators talk budgets.  “They’ll try to convince you on one hand that, even if their enrollments are declining, they cannot take budget decreases because all of their costs are fixed costs” Scafidi said.  “But this is simply not true from an economics perspective—and if it were—how do we explain the appearances of these same administrators at legislative committee hearings clamoring for more and more money to cover the costs of enrollments that rise?”  Scafidi asked rhetorically.  “They wouldn’t need more money if all of their costs were fixed—and this disproves the very arguments they try to make when their enrollments drop” he quipped.

An interesting and unique thing happens in publicly funded education—a practice that occurs nowhere else and in no other occupation in America according to Scafidi.  

In environments of declining enrollments in school districts, according to Scafidi, policy makers still oftentimes fund school systems for students (customers) that are no longer even in such schools.  “You’re paying to serve customers that are no longer there!” Scafidi pointed out, with emphasis, to the wide-eyed room full of attendees. “What other industry has this as their business model?!”

Taking the long view, Scafidi points to some amazing numbers and some startling conclusions.  “Since 1950 public school enrollments have increased nearly 100 %, but staffing has increased at almost four-times this rate-but H.S. graduation rates have remained flat despite all of this spending” he stated.  

According to Scafidi, the increases in educational/academic attainment do not match the massive


 spending increases the public has made, and this begs a question:

 

Are we spending our money in the best most efficient manner in order to foster higher academic outcomes?  This huge question that policy-makers should be asking is simple.  Is this the best way to spend this money, increasing non-instructional staffing? 

To illustrate this point, Dr. Scafidi proceeded to go through a data-rich PowerPoint presentation documenting the opportunity costs that are lost due to spending on huge staff increases in public school districts. (In economics, opportunity costs are the costs assigned to things that could have been purchased with finite resources that are already allocated for a different purpose; for example--the opportunity cost of the $7.50 I spend on a movie is that I could have spent this same $7.50 on a Hamburger, Fries, and a Milkshake at McDonalds.) 

Dr. Ben Scafidi Talks Opportunity Costs with attendees of
#AmplifySchoolChoice Atlanta, Friday April 24, 2015

So the opportunity costs to the American Public School System, according to Scafidi’s presentation, add up to a staggering $26 Billion Yearly!  This recurring annual amount, if school systems held their geometric staffing in check and only hired staff at the same level as student enrollment growth on a percentage basis, is a huge number. 

This massive amount could fund an $8,500.00 raise for every teacher in America, or it could provide 3.3 Million American students an $8,000 scholarship to attend a private school of their choice! 

These are outrageous numbers and they point to a huge and under-reported problem in the American Educational-Industrial complex: 

We can’t control our spending, and therefore we lose the opportunity to spend on things that might be more aligned with our mission which is to educate students to the fullest extent possible, with the finite resources available to do this.

Has America succeeded at this, are we truly doing the best we can with the taxpayer resources we are spending on education? 

Looking at the data in Scafidi’s presentation, a compelling case could be made that as a system we are not making the best spending decisions and that something needs to change.