Magic Bullet: Here's a Long-Term Way to Fix State and Local Budget Deficits

By Andrews, Lewis | The American Enterprise, October-November 2003 | Go to article overview

Magic Bullet: Here's a Long-Term Way to Fix State and Local Budget Deficits


Andrews, Lewis, The American Enterprise


With a significant number of states in serious budget trouble, the Center on Budget and Policy Priorities has estimated state deficits for fiscal year 2004 at up to $85 billion. Town and city governments are also struggling with out-of whack budgets. Many are responding by raising taxes: In 2002, the latest year for which data are available, property taxes rose an average of 10 percent nationally. Even with this added revenue, a recent survey by the National League of Cities found that 75 percent of municipal finance officers believe their own governments will not be able to cover costs this year.

In attempts to cope with these budget problems, one important contributing factor has been ignored: the exploding costs of public education. A comparison of the costs of public schooling versus private schooling suggests how much our current state schooling may needlessly inflate the cost of local government. According to the National Center for Education Statistics, per pupil spending in religious and independent schools averages $4,600, versus $6,857 in public schools. The real difference is actually higher (for reasons I'll explain) but even this conservative $2,257 figure, multiplied by the number of American public school students (47.6 million), implies that there may be more than $100 billion in unnecessary spending for public schools. Reduce that, and the state and local budget deficits evaporate. There would be no budget crisis were public schools operating with the same efficiency as private schools.

Public education's huge role in America's fiscal woes would be easier to accept if there were positive results to show for the spending. But much of the extra funds sloshing through public schools is simply wasted. Only half the people on the District of Columbia public school payroll are teachers. Fully 40 percent of per pupil spending in California goes to bureaucracy. Nationwide, public schools spend more than twice what other industrialized countries spend on administrators.

Per pupil expenditures within public schools have increased 23 percent over the last two decades. Yet standardized test scores of students are lower than they were in 1977. Though government spending on public education is now higher in the U.S. than in any other developed country, American middle and high school students ranked last in mathematics and science in the most recent International Assessment of Education Progress.

Spending more is not helping our children. The only cure for America's education stall, many reformers now say, is to give parents more control over the public funds allocated for the education of their children. That way they can shift their children away from failing schools and into successful ones. Making public schools compete for students leads to overall academic improvement, studies by Harvard professor Paul Peterson and others show.

One point that has been missed up to now, however, is that school choice is more than just an educational innovation. It also has the potential to make education spending much more efficient, and thus to help reduce state and local budget pressures. Competition lowers the number of dollars needed to achieve good academic results.

Helping more parents obtain private education for their children could not only improve U.S. schooling, but also save large amounts of taxpayer money. In some public school districts, annual per pupil costs run five to ten times the cost of a local parochial school. Teachers' unions are well aware of these price advantages, and ferociously oppose any efforts to take advantage of them. As a defensive measure, the American Federation of Teachers has launched a campaign to discredit the financial appeal of school choice. But objective comparisons of public verses private school expenditures are available from the National Center for Education Statistics, and they show that all but a very few elite private schools have expenses far below those of American public schools. …

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