School Choice or Best Systems_ What Improves Education_ - Margaret C. Wang [44]
The shortcomings of New York City’s public schools were described in the last chapter, and Chicago public schools further illustrate these big-city problems. Only about 54 percent of Chicago public school students actually graduate.34 According to the 2005 Trial Urban District Assessment, administered as part of the National Assessment of Educational Progress,35 only 14 percent of Chicago’s fourth graders and 17 percent of Chicago’s eighth graders are reading at or above proficiency. An astounding 40 percent of fourth graders read below even “basic” levels—scoring so low as to literally be “off the charts.” Only 13 percent of fourth graders have math skills considered at or above proficient levels, and only 11 percent of eighth graders have this skill level.
The enormous size, bureaucracies, and inefficiencies of big-city schools in the United States help explain why teachers constitute approximately half of all school district staff in the United States in contrast to between 60 and 80 percent of school staffing in Europe.36 School districts in Texas devote approximately 59 cents of every dollar spent on education to classroom instruction, California about 54 cents, and Illinois only 46 cents.37 Private schools, as reported in the previous chapter, devote much higher percentages of their budgets to classrooms and less to administration.
State versus Local Funding
Another factor influencing the amount of competition and choice in a school system is how heavily schools rely on state rather than local governments for their funding. Near the bottom of state achievement are California and Hawaii states that rely most heavily on state rather than local taxes. Public schools that can rely on state funding don’t have to compete with schools in other districts for local taxpayers willing to support them. They lose the incentive to operate effectively and efficiently and to be accountable to local parents and business owners.
Unfortunately, states have paid a growing share of K-12 funding in the United States. Because of litigation, they are increasingly compelled to provide equal per pupil funding to local schools. An unintended consequence of this policy is that parents who care the most about providing a quality education for their children tend to send their children to private schools at higher rates than they otherwise would, which gives them less reason to support neighborhood public schools by participating as accountable board members and engaged parents, volunteers, or boosters.
Local funding gives local property owners a rational interest in the quality of public schools, even if they have no children in school, because good schools enhance real estate values. As realtors often stress, homeowners in districts with effective and efficient schools are rewarded with high, rising property values. A literature review by Yinger, Bloom, Borch-Supan, and Ladd found that 27 of 28 studies confirmed this local expenditure “capitalization effect.”38
Caroline Hoxby39 compared the performance of schools in New Hampshire, where the state’s share of school funding was just 7.0 percent in 1996, to that of six comparison states (Massachusetts, California, Hawaii, Connecticut, Indiana, and Washington), where schools rely more heavily on state funding. She found that public support for public schools, measured by per pupil spending, rose more slowly in four of the six control states than it did in New Hampshire from 1980 to 1990. Enrollment in private schools during that period fell 11 percent in New Hampshire—evidence of satisfaction with public schools—but rose in five of the six control states and fell by only 2 percent in the sixth state (Massachusetts).
Hoxby found that New Hampshire beat every control state in change in college graduation rate, beat five states and tied with one on student earnings, and reduced the percentage of students who are unemployed more than five states but less than one. Overall, New Hampshire’s locally funded schools were clearly providing superior service and, in return, enjoyed