Tag: Neal McCluskey

Obama Proposes an Education Employee Bailout. How Novel!

Over the weekend, the White House released a “new” report explaining why President Obama thinks the Feds need to spend – er, “invest” – $25 billion on public school staffing. Since July 2009 “the economy lost over 300,000 local education jobs.”

Where have we heard this before?

Of course! We’ve been down this road many times, and the President did get a tidy $10 billion bailout on top of the original “stimulus” – with its roughly $100 billion for education – as a result. Why not try again?

For the same reason he should never have tried: While no one likes to see someone lose a job, the fact of the matter is we’ve seen decades of public-school hiring and spending binges, ultimately without even close to commensurate achievement gains to show for them. Between 1969-70 and Fall 2009 pupil-to-staff ratios dropped from 13.6-to-1 to 7.8-to-1 – a huge staffing increase. Pupil-to-teacher ratios dropped from 22.6-to-1 to 15.4-to-1. Meanwhile, National Assessment of Educational Progress scores for 17-year-olds – our schools “final products” – were almost completely stagnant. And that 300,000 figure? It seems like a lot, but in 2010 there were almost 6.2 million local, public K-12 employees.  That’s a less than 5 percent trimming.

In addition to the dearth of evidence that more hiring will do appreciable good, there are two other big problems. The first is that $25 billion is a lot of money that we simply don’t have. Anyone notice the national debt is about to surpass $16 trillion? And the second: The federal government has no constitutional authority to waste our dough in the name of education.

Frankly, this bailout idea is really stale, and we at Cato’s Center for Educational Freedom are getting a little tired of ripping it to shreds. But as long as people continue to believe that public schools have no money, and that someone else (hint: “the rich”) will pay the bills, we’ll constantly be offered such reality-be-darned proposals.

Edu-poll Results, for What They’re Worth

Polls are tricky things, giving a veneer of scientific certainty to an endeavor subject to all sorts of biases, methodological problems, etc. Worse, while they might tell us what people think, they do almost nothing to inform us about what policies actually make the most sense. With those provisos in mind – and they apply heavily here – what follows are the highlights of the annual Phi Delta Kappa/Gallup poll on public education, released this morning. Phi Delta Kappa, by the way, is the self-described “premier professional association for educators.”

I’m not going to hit all the topics – you can catch every question here – I’m just going to cover the ones likely of most interest to libertarian types. And here they are:

School choice:  Using PDK/Gallup’s long favored voucher question – the most loaded one, which asks whether respondents favor or oppose allowing people to “choose a private school at public expense” – 44 percent favored and 55 percent opposed. For whatever reason – maybe seeing choice greatly expand recently, maybe growing disgust with teachers unions – favorability rose from 34 percent last year. Charter schools were favored by 66 percent of respondents, and “laws that allow parents to petition to remove the leadership and staff of failing schools” – roughly, “parent trigger” laws – were favored by 70 of respondents.  This last one is probably the worst way to deliver “choice,” but it must sound good. And how did the best way to deliver choice – tax credits – do? The pollsters didn’t even ask about them, probably because they would have polled very well.

National Standards: Asked several questions about their thoughts on the likely effect of “common core standards” – but not the Common Core standards – most people thought having some commonality would be beneficial. But there seems to be a huge disconnect between the question and reality: only 2 to 4 percent of respondents answered “don’t know” or refused to respond to the common core questions, but 60 percent of voters polled just a few months ago said they knew nothing about the actual Common Core standards being implemented in almost every state. So people seem to like generic commonality, but know little about the actual standards that were, unfortunately, purposely kept under the radar by their supporters.

Biggest Problem Facing Schools: Surprise, surprise, by far the most cited “biggest problem” people said their public schools were facing was ”lack of financial support.” 35 percent picked that, versus 8 percent fingering “lack of discipline,” the next biggest vote-getter. What this likely tell us is that (1) we are very slowly coming out of a recessionary period and some districts probably are making some cuts, and (2) people have no idea how much is actually spent on education, or how much it has grown over the decades. It also shows that propaganda – when you hear people say “the schools are underfunded” enough you believe it – works.

Grading Public Schools: As always, people gave their local public schools decent grades and public schools overall lousy ones. This year 48 percent of respondents gave their own public schools an A or B (though that means a majority graded them C-or-below), while only 19 percent gave high marks to “public schools nationally.” Basically, people – who often heavily considered schools when they bought their homes – tend to affirm their own choices, but see the overall system as crummy.

And so goes another Phi Delta Kappa/Gallup poll. See you pollsters next year!

Obama Must Not Read Our Stuff

The topic of this weekend’s weekly presidential radio address was education. The message? You guessed it: The federal government needs to “invest” more in education – as do other levels of government – but instead they are making cuts.

At this point I don’t know what more can be said to show how nonexistent is the connection between federal spending and actual education. As we at Cato’s Center for Educational Freedom have pointed out on countless occasions, federal and overall spending on public schooling has skyrocketed for decades as test scores have laid motionless; staffing has ballooned at the same time; Head Start has almost no lasting benefits; and federal higher ed spending largely enables massive price inflation and encourages people to enter college but not finish.

The evidence, frankly, is overwhelming that federal education “investment” is really just flushing precious money down the toilet. Which makes me think that maybe President Obama doesn’t read our stuff. Or maybe he just doesn’t care.

Not Quite Blowing Up the Death Star, but…

For two years the national curriculum blitz has been rolling through states unabated, with “Common Core” standards now fully adopted in all but five states and development of national tests continuing. Of course all of this has been done with heavy federal air support, including making adoption of Common Core crucial for states wanting to access Race to the Top funds, and Washington selecting and funding the national test developers.

Last week, however, national curriculum forces suffered a small but notable setback, with the Utah State Board of Education withdrawing the Beehive State from the Smarter Balanced Assessment Consortium, one of the two consortia developing tests to accompany the Common Core. In terms of its on-the-ground impact, it’s not huge —Utah will still have the Common Core standards—but symbolically it could be big, showing that states can undo decisions they may have made in haste, or in pursuit of federal money or favors. And to be honest, it is more official push back than I expected.

That said, the crucial point will still be when the Elementary and Secondary Education Act—AKA, No Child Left Behind—comes before Congress for reauthorization. That is when it will be decided whether adopting the Common Core will be necessary for states to get huge amounts of annual federal funding, and whether scores on the national tests will determine whether districts, schools, or children get rewarded or punished. If those measures are included—especially the high-stakes testing—then it is game over: we will have an indisputably federal curriculum, and no state will dare resist it. They simply won’t be willing to jeopardize billions of annual dollars.

Until then, national standards opponents can take heart in Utah’s small act of defiance.

You’re Destroying the Whole Tower, Stop Blaming It on the Basement

Yesterday Sen. Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor, and Pensions Committee, released his magnum opus on for-profit colleges, the culmination of two years of excoriating, browbeating, shaming, and generally demagoguing that fast-growing but relatively small sector of American higher education. His report is everything you’d expect from a crusade characterized by an almost complete unwillingness to address the central role of the federal government in creating pervasive rot not just in for-profit higher education, but the entire Ivory Tower.

The for-profit college sector is certainly raking in lots of cash and producing very little for it, with big revenues but very low completion rates. It’s probably not as bad as Harkin would have us believe—I’ve chronicled much of the exaggeration and misrepresentation that has punctuated his attack—but there’s little question that lots of students drag heaps of taxpayer dough into for-profit schools and get little of value for it.

The thing is, that happens across higher education, including the profit-taking.

As I’ve cited ad nauseum, completion rates throughout higher education are abominable. Looking at first-time, full-time students—an imperfect sample, yes, but the best we’ve got—the top completion rate is for bachelor’s students at private not-for-profit schools. But that’s only 65.4 percent completing within six years. The worst is at public two-year institutions—community colleges—which see only 20.4 percent finish their programs within 150 percent of normal time. That’s just one-in-five!

Surprisingly, Harkin’s report mentions the atrocious completion rates at community colleges. But only very briefly, and mainly to assert that “the cost of for-profit programs makes those programs more risky for students and Federal taxpayers.” That proviso is technically correct, but as misleading as much of the behavior for which Harkin condemns for-profit schools. Community colleges are cheaper to students in large part because they get direct taxpayer subsidies, and while those don’t come mainly from Washington they do come from taxpayers, just at the state and local level. In the 2009-10 school year, state and local appropriations to community colleges totaled $5,412 per pupil. Meanwhile, public four-year schools—with six-year graduation rates of just 56 percent—received almost $8,000 per student in federal, state, and local appropriations. And, of course, all “not-for-profit” schools get favored tax status, paying no taxes on most of their revenue and benefiting from tax deductible largess of donors.

But don’t think those schools aren’t profiting. Harkin’s report blows off the possibility that putatively not-for-profit schools make profits simply by stating that “by definition” such schools “do not retain any revenue as profit.” But as Vance Fried illustrated in his 2011 policy analysis, most public and not-for-profit private colleges make thousands of dollars per-undergraduate beyond the cost of educating them. They just use the money to reward the people in the school, or to pay for things that often make the school more bloated, instead of distributing the profits to investors.

Putting the for-profit sector in the context of all of higher education, it’s clear the witch hunt has been on. But there’s also been major scapegoating: by enabling students to pay for school with other people’s money, and with almost no regard for their ability to do college work, it is federal student aid that largely causes the rot in higher ed, quashing both school and student incentives to economize, and student incentives to think critically about consuming higher ed. By demonizing institutions that dare admittedly make profits, politicians like Sen. Harkin shift the blame from where it belongs—themselves—to those who do what the politicians want: ”educate” people regardless of their ability. It’s exactly like housing: the politicians demand that everyone be able to buy a home, condemn anyone who might fail to furnish the uncreditworthy with mortgages, then blame the lenders when things go horribly wrong. They seem to want the votes—their profits—but no blame when things go south.

Sen. Harkin, the fault for what ails not just for-profit higher education, but the entire Ivory Tower, sits largely with you and your colleagues. Please quit shifting blame and do what must be done: phase out student aid and make all schools earn their money.

Note to Education Reporter: GDP Is HUGE, Just like Education Spending

Last week I testified before the Senate Appropriations subcommittee that deals with education. The topic was sequestration, and my case was, frankly, overwhelming, showing that education spending has ballooned for decades while achievement for 17-year-olds – our schools’ “final products” – hasn’t budged.

At least I thought it was overwhelming. But apparently a Huffington Post reporter was underwhelmed by it and wrote the following:

Some lobbyists in the education reform camp note that U.S. education spending has skyrocketed, while test scores have stagnated. Neal McCluskey – an expert witness who serves as associate director for the Cato Institute’s education center – took this line, but a recent report from the nonpartisan Center on Education Policy shows that education spending has actually not grown at all as a share of the gross domestic product.

Aside from the odious implication that I am either a lobbyist or take my cues from them, the big problem with this rebuttal is that it is flat-out wrong. Open the link to the CEP report, go to page 35, and there you will see that the share of GDP taken by elementary and secondary education in fact grew between 1999 and 2009, from 4.4 percent to 4.6 percent.

Perhaps the writer thinks a 0.2 percentage point uptick isn’t big enough to constitute growth. If so, she should really take a look at the Digest of Education Statistics table that furnished the GDP data. It reveals just how big a spending increase that seemingly dinky rise was, a function of GDP starting very large and growing  substantially. Indeed, there was an increase of over $237 billion, or a 57 percent ballooning, with spending rising from $413 billion in 1999 to $650 billion in 2009!

Those are current dollars so we should really adjust for inflation. Doing that moves the 1999 figure to $531 billion, but that still means there was a real increase of $119 billion, or a 22 percent move. That’s no growth by no means.

To her credit, the Huff Po reporter included one piece of context that’s crucial when discussing cuts to federal education spending, context that belies the irresponsible rhetoric of people like Education Secretary Arne Duncan, who said sequestration would “jeopardize our nation’s ability to develop and support an educated, skilled workforce that can compete in the global economy.”

Surely to justify such doomsaying cuts would have to be very large – perhaps 10 or 20 percent – right?

Nope. As Sen. Shelby (R-AL) rightly noted at the hearing – and the Huff Po reported – the 7.8 percent cut to federal education programs likely under sequestration would only translate into about a 0.84 percent cut in total education spending. Why? Because the Feds – though spending far too much on education – still only supply about 10.8 percent of the total. Most funding comes from state and local governments.

When you look honestly at the numbers there really is no question: Sequestration should fully include education.

Federal Irony Alert!

The nation’s biggest subprime student lender–your federal government!—has just called out private “subprime” lenders.

This morning the Consumer Financial Protection Bureau and U.S. Department of Education released a report examining private student loans. It concludes that private lenders were out of control, just like all of Wall Street, before the “Great Recession” hit, a fact largely evidenced by high default rates. It was, the report argues, a part of the overall subprime lending debacle and it hurt innocent students.

“Subprime-style lending went to college and now students are paying the price,” said U.S. Education Secretary Arne Duncan in a release accompanying the report.

What’s the report’s solution to the problem? Push people into federal loans to the maximum extent possible. After all, those loans have low, taxpayer-backed interest rates; generous repayment terms, including speedy forgiveness for anyone going into “public service”; and essentially no requirement that borrowers offer evidence of creditworthiness.

Wait—essentially no evidence of creditworthiness? Isn’t that subprime lending in its very purest form? Indeed it is, which is perhaps why the report offers no comparison of default rates on private and federal loans.

Basically, the report is pushing for even greater subprime lending, only with taxpayers on the hook rather than voluntary investors.

The report tries to further portray the fate of private lending as part of an exclusively Wall Street-driven recession by arguing  that a big drop in private lending between the 2007-08 and 2008-09 academic years was  entirely the result of private lenders suffering from the collapse of credit markets. No doubt that had a significant role, but the report somehow manages to not discuss numerous changes to federal law in the 2007-2010 time frame that pushed private lenders out of the way, including:

  • The College Cost Reduction and Access Act (2007), which set federal subsidized-loan interest rates on their halving path from 6.8 percent to the current 3.4 percent.
  • The Ensuring Continued Access to Student Loans Act (2008), which increased unsubsidized loan maximums, reduced eligiblity criteria for PLUS loans (the only loans requiring some demonstration of creditworthiness), and offered federal money when guaranteed lending participants couldn’t get it through capital markets.
  • The reauthorized Higher Education Act (2008), which increased Pell Grant maximums, authorized forgiveness of up to $10,000 in debt for anyone working in an area of “national need,” and added new regulations for private lending.
  • The Student Aid and Fiscal Responsibility Act (2010), which ended federal guaranteed lending in favor of federal lending directly from the U.S. Treasury

Fully private lending probably was reined in thanks to the recession, which is a good thing, with private lenders taking less risk when it didn’t pay off. But it is no doubt also important that Washington enacted many laws that made it much harder for private lenders to compete. The fact is the Feds can subprime-lend without any major concern about losing big bucks. It’s only taxpayer money, after all, and there’s always more of that! Plus the political dividends are sizable, enabling politicians to heartily and repeatedly congratulate themselves for “making sure everyone can go to college!”

That gets us to the next critical point: In addition to reinforcing the utterly discredited notion that the recession was all the fault of “greedy Wall Street fat cats,” a report focusing on private lending is just a distraction from the 800-pound gorilla in higher education: the federal government. At their peak in 2007-08, private loan originations were less than one-third the size of federal loans, and about one-fifth the size of all federal aid. Today they are slightly more than one-20th the size of federal loans, and about one-30th the size of all federal aid.

In other words, private loans are but bit players in a student-aid show dominated by Washington. It is super-abundant federal aid, not private lending, that signficantly fuels tuition inflation, enables dreadful college completion rates, and fosters a glut of degree holders. Yet it’s those same federal lenders who dare scold private companies and warn us about their subprime failures.

Oh, the irony!