North Kitsap Schools Aren’t Underfunded

This article appeared in the North Kitsap Herald on June 21, 2008.
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All across the state, public school districts are announcing that they’ll have to make major program cuts next year. Nancy Moffat, executive director of finance and operations for North Kitsap Schools, recently told reporters that the state’s funding formula “is way out of date and it is way inadequate.” Is it? North Kitsap Public Schools spent $15,766 per pupil in the just‐​completed school year.

That number hasn’t been reported in the local media. You probably won’t hear it from the district itself. But if you don’t mind doing a little arithmetic, you can compute it from the district’s F-195 budget form, available on the Web site of the state Office of the Superintendent of Public Instruction.

One of the reasons you never see this number is that it includes capital expenditures – money spent on building construction and upgrades as well as land acquisition. School districts all over the country like to exclude capital expenditures when they talk about how much they spend. But to operate schools you really need buildings, and buildings have to be paid for.

To put NKSD’s spending in perspective, it’s about twice the average published tuition at the King’s West private school (which also has to pay for its buildings). Private, especially church‐​affiliated, schools often have other sources of income besides tuition, but they also offer financial assistance to lower income families and discounts for parents who enroll multiple children. When I studied the real cost of private schooling using survey data for the state of Arizona, I found that it averaged about 25 percent more than total tuition revenue. That would still put total per pupil spending at King’s West at less than two thirds of the NKSD figure.

On the high end of Kitsap private school tuitions is West Sound Academy, an independent college prep school charging an average of $13,530 annually. Even if West Sound has substantial other sources of income besides tuition, its total per pupil spending is not likely that far above the overall average for North Kitsap public schools, even though it offers much smaller average class sizes and serves only the more expensive middle and high school grades. All of this to say, North Kitsap Public School funding cannot reasonably be described as “way inadequate.”

What explains the district’s spending level? Even if we exclude capital spending from consideration, real inflation‐​adjusted spending has risen by more than $2,000 per pupil since 2001. During that period, the district hired 74 more people to teach 292 fewer students. If you choose to hire more people to serve fewer kids, your per pupil costs will rise.

And why do district officials care so much about the source of their revenues – about the fraction that comes from the state versus local taxpayers? What’s the difference? After all, the dollars we pay in sales taxes are worth the same as the dollars we pay in property taxes. The difference is that the district actually has to convince local taxpayers to vote for levies every few years, whereas state payments are automatic. If you ran a business, and you could choose between a guaranteed revenue stream and the need to actually offer a service people would willingly pay for, which would you prefer?

Of course, most private businesses, including private schools, aren’t offered that choice. Each and every day they have to convince their customers that their service is as good or better than the competition’s. If they want to make more money, they have to figure out ways to offer their services more economically, or to improve their quality enough that people will pay more. In fact, dramatic progress has been the norm in virtually every human endeavor for centuries. Except in education. The last major technological development to transform classrooms was the invention of the chalkboard during Thomas Jefferson’s presidency. According to the National Assessment of Educational Progress test, the performance of American 17‐​year‐​olds has been flat since 1970, while public school spending has doubled in real, inflation adjusted dollars.

The reason for that collapse in efficiency is easy to see: education is one of the only fields in which the free enterprise system has been largely excluded for the past 150 years. Until we bring the dynamic forces of consumer choice, competition and economic incentives back into our education system, we shouldn’t expect to see much change besides the constantly rising price tag.