What's the Best Use of Stimulus Money?

I need to reframe this question to answer it--because I don't accept the premise that states and districts are in dire straits or that the Department of Education is able to do much with ARRA dollars to promote meaningful reform.

In theory, the money be used for reform rather than to subsidize the status quo. However, I'm profoundly concerned that these dollars will serve to dampen the modest fiscal pressure that can serve as a prerequisite for transformative reform. In good times, leaders in any organization--public or private, for-profit or non-profit--have incentives to push off hard choices and let inertia rule. It is only when circumstances pinch that leaders typically find the stomach to take a necessary axe to budgets, programs, or personnel; and only then that they can plausibly blame such acts on necessity.

In schooling, of course, budgets have historically increased year-in and year-out. This means that hard choices are never made. Indeed, this spring we've seen districts wring their hands about painful cuts even when budgets remain static. Budgets and programs are hardly ever scrutinized in a tough-minded fashion, and what passes for bold management or aggressive cost-cutting is thin gruel indeed. The result is that not only have the ranks of teachers increased relative to the ranks of students by 50% since the early 1970s, but in the past decade--an era marked by the economic chaos of the dot-com bubble and the real estate bubble, and seemingly a sensible time for prudent management--districts added teachers at twice the rate they enrolled new students.

While the economy has deflated along with property values, school districts are still living within budgets built for a bubble economy. The rapid decline in property valuations won't fully filter through to state revenues until 2012 or 2013. Given that property taxes account for about a third of school spending, the tight fiscal situation of most states, massively underfunded public employee pension plans, and the nation's perilous fiscal situation, it's unlikely that substantial new sums will be flooding into K-12 coffers. This suggests the urgent need for belt-tightening and transformation; and the sooner, the better. Unfortunately, the construction of the stimulus bill and the way the Department has proceeded in fulfilling that bill means that, at best, all but a tiny percentage of the spending will prop up overextended state and district budgets and dull the appetite for meaningful change.

Frederick M. Hess is a resident scholar and the director of education policy studies at AEI.

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