The 77 Percent Effect

Cynics have argued that the Department of Education's "Race to the Top" (RTT) program has distracted attention from the need to address unsustainable state budgets. Such cynicism has been deemed unfashionable by Obama-administration allies, cash-starved state and local officials keen to stay in the administration's good graces, and editorial writers eager to say nice things about our earnest education secretary, Arne Duncan. The Kumbaya chorus has even been swelled by conservative voices, including those of David Brooks and the Wall Street Journal editorial page.

Much of this pro-RTT enthusiasm has been driven by the fact that the program has (in theory) changed the way the federal government and the states do business. We are shifting from a model driven by aid formulas toward one focused on transformation and performance--or so I've been told. I've been assured that this shift is already affecting the thinking of state governments, as evidenced by their RTT applications.

The administration has not been shy about its claims on this count. It has celebrated its self-proclaimed effort to "take on business as usual" and revolutionize the shape of federal education funding. The president has declared it his aim that "instead of funding the status quo, we only invest in reform."

We are shifting from a model driven by aid formulas toward one focused on transformation and performance--or so I've been told.

As a longtime advocate of using federal education dollars to support state and local reformers and not just subsidize the status quo, I have been eager to verify these happy reports. Have states indeed ditched the usual calculations based on bodies and budgetary health and begun letting reform policies determine their funding requests? After gorging on $100 billion in formula-driven stimulus aid last year--aid that yielded no reform but aimed expressly to subsidize the status quo--did states succeed at crafting reform-centric budgets?

Well, my colleague Daniel Lautzenheiser and I ran some numbers. It turns out we can figure out almost everything we need to know about how much RTT funding a state asked for if we look at only two things, neither of them related to the state's RTT application. The first is state student enrollment, and the second is the size of a state's reported 2010 budget shortfall. Those two figures allow us to predict with 77 percent accuracy how much money a given state requested in its RTT application.

The simple correlation between student enrollment and the size of the RTT request was an eye-popping .83 (a 1.0 would mean the numbers marched in perfect lockstep). This suggests that, whatever the ins and outs of their actual proposed reforms, states' requests were largely a product of headcounts. Even more interesting, the correlation between the 2010 budget shortfall and the (seemingly unrelated) RTT request was a cool .63.

Missouri, looking at a $770 million budget shortfall, happened to request $743 million. Nebraska, trying to make up a $150 million shortfall, put together a proposal that seeks $123 million. Then there are the big states, which, bleeding cash, wildly disregarded the Department of Education's guidelines for budget requests. California, eyeballing a staggering shortfall in the tens of billions, asked for $1 billion. New York, wrestling with a shortfall of more than $15 billion, asked for $831 million.

These results should lead us to question what all the hefty consultant fees and late-night grant-writing really amounted to. Moving forward, the Obama administration's claims about the impact of RTT and the intentions of winning states ought to be met with sensible scrutiny.

Frederick M. Hess is a resident scholar and director of Education Policy Studies at AEI.

Photo Credit: iStockphoto/RonTech2000

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