They Never Learn

Courts and legislators drive up New York school costs, without boosting education quality

THE UNITED STATES NOW SPENDS almost a half-trillion dollars yearly on its public schools. According to the Organization for Economic Cooperation and Development, on a per-pupil basis, we allocate significantly more money to K-12 education than any other industrialized nation. Yet the performance of American students on international achievement tests remains close to the bottom among OECD countries.

Such depressing results should ring alarm bells and force some recognition that what ails American education has little to do with money. Alas, local politicians, education officials and even some business leaders are in denial about the implications of these international comparisons and continue to complain that there's not enough money being spent on the nation's schools.

To make matters worse, lawyers and judges have gotten into the act. In over a dozen "fiscal equity" cases, courts have usurped the legislative function and ordered states to increase spending for allegedly underfunded school districts. The rulings usually have been based on general statements of principle in state constitutions guaranteeing children an adequate education.

Yes, in most cases, the quality of schooling offered to poor kids in our inner cities is less than adequate. But the courts may be the institutions least likely to improve classroom instruction and raise academic achievement -- as most judges have decided just to throw more money at the problem.

Demand for More

This march of judicial folly has reached New York, with trumpets blaring. The current New York City education budget per pupil is higher than the average for every state in the union, as well as for every other urban school district but one -- Washington, D.C.'s.

Nevertheless, a three-judge panel in the remedy phase of the 10-year-old case known as Campaign for Fiscal Equity v. State of New York has ruled that New York City's public schools are entitled to an additional $5.6 billion in operational aid from the state, plus another $9 billion in new capital funds. If the decision is upheld and the state pays up, the city's education budget will reach at least $20 billion within four years, for an average per-pupil expenditure of more than $18,000 annually.

Let's comparison-shop: What would $18,000 pay for in the non-public education sector? Tuition and even some school-related expenses for three students attending the best Catholic high schools in the city, or for six kids to go to a Catholic elementary school. We also know that typical Catholic schools in the city are more orderly, safer, and boast higher graduation rates than comparable public schools with demographically similar student populations.

Unfortunately, there is no assurance that the extra $5.6 billion ordered by the judges to be spent in the public-education system will pay significant dividends in the form of improved academic performance. Indeed, through the entire 10 years that the Campaign for Fiscal Equity case was wending its way through the legal system, from trial court to the state Court of Appeals, not a single piece of hard evidence established a causal relationship between increased spending and higher academic outcomes.

On the other hand, the plaintiffs' argument that more money would improve the city's schools received a real-life test. From 1997 to 2002, without any judicial intervention, the city's education budget skyrocketed, from $8.8 billion to $12.5 billion. The results were underwhelming. Although fourth-grade reading scores did tick up somewhat, overall academic performance remained stagnant. More than half of the children still couldn't read at grade level, and only 20% of the students graduated with a Regents diploma, which requires a passing grade on five content-area tests.

Apparently unimpressed by the extra $3.7 billion a year that already had been spent on the schools during the trial, the judge and then the state's highest court ruled that New York City's schoolchildren had been denied an adequate education because the city was still being shortchanged by the state.

If that's what the esteemed jurists believed, you might think they would have stepped up to the plate and said exactly how much more money the city schools needed in order to meet the constitutional standard of "adequacy." Instead, the high court threw that hot potato back to the legislature and the governor. When those two branches of government couldn't come to an agreement either, the task of coming up with the right dollar amount to achieve "adequacy" was punted back to a panel of three "special masters" appointed by the trial judge.

More Is Not Better

Of course, the very premise behind the court decision is absurd on its face. There is no magical level of funding that any scholar or expert can reasonably predict will transform lousy schools into good schools. Even the high-priced school-finance consultants hired by the plaintiffs said in a report submitted to the special masters that the "costing out" methodology they employed to recommend the billions of dollars in new funding was "not based on an exact science" and that "different assumptions can lead to different results." Indeed, the original amount of extra funds proposed by the consultants was $3.7 billion, but under pressure from Campaign for Fiscal Equity (CFE) proponents, the numbers were massaged to produce a final recommendation that exceeded $5 billion.

It looks as if the $5.6 billion figure picked by the panel was based on guesswork. The manner in which the school numbers were crunched would be regarded as voodoo economics in any other enterprise. But there's no guesswork about the dire economic consequences for New York's taxpayers of trying to come up with another $5.6 billion to throw at the city's unproductive public schools, to say nothing of the likely demands on the state treasury by other cities that will be regarded as not meeting the court's "adequacy" standard.

New York's finances already are in disarray, both at the state and city level. The state faces a $6 billion budget deficit; it has reached its debt limit. The upstate economy is in a virtual depression. The city's projected budget deficit for fiscal 2006 is $2 billion and is expected to be higher the following year. Gotham residents already pay the nation's highest combined state and city (a well as federal) taxes, and the final court settlement will significantly increase that burden.

Reversed Consequences

After 10 years of very costly litigation, here is the bold new deal in education that a group of judges has presented to the citizens of New York. The children of the city will get a gilded school system with upgraded facilities that, based on outlays per pupil, according to OECD figures, will cost two times as much as the U.S. average and will be more than three times greater than the average in the other advanced industrial democracies, such as Germany and France.

Most of the additional money will go to teachers and other adults who work in the city's public school system, while there is little prospect that the children will get a substantially better education. On the other hand, the added tax burden on businesses and working New Yorkers will further depress economic activity, harming many of the families of the children who were supposed to benefit by this case.

One other unintended consequence of the CFE case, largely ignored by most commentators, is that it will put additional financial stress on the city's excellent Catholic-school system. Instead of allowing public education dollars to be used to enroll more city students in these cost-effective schools, the windfall for the public schools could attract an exodus of good teachers from the Catholic-school sector.

Right now, teachers in the public schools make twice as much as their Catholic-school counterparts. With the Campaign for Fiscal Equity money, the pay gap will grow even wider. It would be a tragedy if a case that was supposed to provide better schools for inner-city children accelerated the demise of a school system that actually knows how to educate poor kids.

New Yorkers are likely to look back on this case and conclude that it wasn't much of a bargain after all, although it was done in the name of "fiscal equity." They will rightly find fault with the lawyers and judges, but they should also blame the leading politicians and business leaders who supported this seemingly idealistic litigation for 10 years.

Somehow they forgot that in all enterprises there are economic consequences. In other words, even in education, there is no such thing as a free lunch.