The Folly of an Education Spending Race

Report Education

The Folly of an Education Spending Race

February 24, 1999 8 min read
Stuart Butler

Federal spending on education is fast becoming a reverse political "third rail." Rather than being an issue that politicians cannot touch--as Social Security was until recently--education spending is the issue that every politician feels compelled to embrace. And the level of spending proposed is now the measure of a lawmaker's commitment to America's children.

President Bill Clinton recently called for a $1.2 billion increase in federal education spending, to $34.7 billion next year. Senate Budget Committee Chairman Pete Domenici (R-NM) has upped the President's bid by calling for a $40 billion increase over five years. Besides siphoning off money that should be used for tax cuts, saving Social Security, or other pressing needs, this race by federal lawmakers to outspend each other ignores the simple fact that the key to improving education is not how much money is spent, but how it is spent. Moreover, the evidence shows that Washington has little idea of how to spend it wisely. Consider:

  1. There is no evidence that simply increasing spending improves education. If there is one lesson that should have been learned about education, it is that money does not cure the problems ailing America's schools. The most comprehensive survey of spending and performance was conducted by Professor Eric Hanushek, chairman of the Economics Department at the University of Rochester. After reviewing close to 400 studies of student achievement, Hanushek found no strong or consistent relationship between student performance and school resources, at least after variations in family inputs are taken into account.1

The latest American Legislative Exchange Council Report Card on American Education underscores this conclusion.2 Typical was New Jersey, which had the highest per-pupil expenditure ($10,241) in the 1996-1997 school year and the second smallest pupil-to-teacher ratio. New Jersey received nearly 50 percent of its public education funding from federal sources, yet its students ranked 39th on the 1998 Scholastic Aptitude Test. Conversely, Minnesota, which ranked 27th in per-pupil spending ($5,826), received the highest ranking in student achievement on the same test.

  1. Serious studies of major federal education programs either do not exist or suggest that the programs are unsuccessful. A remarkable feature of most federal programs for schools is that few have been properly evaluated to see whether they work. The U.S. General Accounting Office (GAO) has pointed out in several reports, for instance, that despite spending roughly $30 billion over 30 years, Head Start has never been subjected to a serious study.3 Yet Congress reauthorized the program last year and boosted spending--although this time it did call for a study based on GAO guidelines.

Congress hopefully will not repeat its "don't ask, just spend" approach again this year when it reauthorizes the Elementary and Secondary Education Act (ESEA). Despite over $118 billion spent on Title I of ESEA since 1965, there is little evidence of any significant positive effect. The first longitudinal study of Title I, released in 1984, revealed that the $40 billion in federal aid spent to help millions of poor children over two decades had done little to boost achievement.4 Although the students' scores initially improved at a slightly faster rate than those of their peers, the improvement disappeared by the time these students reached junior high school. A later longitudinal study of the program found that little had changed, despite an additional $78 billion spent from 1984 through 1997.5

  1. Innovation and improvement come from states and localities, not from Washington. The story of education reform is much like the story of welfare reform: The government bodies and other institutions closest to the people have taken the initiative in deciding how to improve education. The states, for instance, have decided to experiment with charter schools, reintroduce phonics, and empower parents with school choice. The federal government has had to play catch-up. Worse, it has used its resources to encourage states and schools to accept programs that lack serious evaluation and has promoted fashionable but dubious education techniques through its regional education laboratories.6


Given the lackluster experience of federal
education programs, commencing a discussion of federal policy with a bidding contest over spending makes no sense. It also draws attention away from what needs to be done to ensure that current federal spending is conducted more wisely. Rather than earmark even more tax revenues for education programs that fail or have not been held accountable for positive results, Congress should do three things:

  1. Unleash the states to innovate in education. Federal programs hand out money with many strings attached, leading to a focus on how the money is to be spent rather than on results. And although President Clinton now emphasizes "accountability," this appears to mean whether he approves of how the federal dollars are being spent rather than whether states and schools are held accountable for academic
    performance. What Congress should do--in an approach similar to the one it used to achieve welfare reform--is give maximum flexibility to the states in how they use their federal funds but, in exchange, demand proven results as the condition for receiving future funds.

Congress can give immediate meaning to this principle by sharply broadening state access to the federal Ed-Flex program under the Education Flexibility Partnership Demonstration Act of 1994.7 Ed-Flex currently gives some 12 states greater freedom from certain federal
regulations in the use of federal aid as long as program goals are met. Senators William Frist (R-TN) and Ron Wyden (D-OR) have introduced a bill, S. 280, to expand the Ed-Flex program to include all 50 states. With the upcoming re-authorization of the Elementary and Secondary Education Act and Goals 2000, Members should consider allowing all interested states the maximum flexibility to administer most federal funds (in ESEA and other federal programs) on the programs that are best suited to their needs.

As a condition of this greater flexibility, however, states should have to agree to a method of evaluating the success (or otherwise) of their alternative uses of the federal funds. Just as in welfare reform, this flexibility to innovate should be accompanied by a contract between each state and the federal government that specifies methods to evaluate the impact of state reforms on academic achievement.

  1. Require full evaluations of all federal education programs and end failing programs. It is unconscionable that many education programs continue to receive ever-larger budgets without serious evaluation. Just as Congress last year required Head Start to be subjected to a long-overdue evaluation using GAO-approved methodologies, it should apply a similar requirement to all other programs as a condition of continued funding. In addition, programs should be required to meet specific goals for academic improvement. In fact,
    academic achievement should be at the heart of all federally funded education programs.
    If a GAO-approved evaluation shows that a program has failed, that program should be scrapped or drastically reformed.
  1. Give parents the opportunity to invest in their children's education. Despite considerable talk of increasing public investment in education, Washington places huge obstacles in the path of parents who wish to use their own resources to improve their children's
    education. One of the largest obstacles is the double taxation of family savings for secondary or college education. When already-taxed money is put aside to pay for private school costs, tuition for courses to supplement public school, or college costs, the earnings on that money are taxed once again, making it difficult for many families to save enough to make a difference. Although some families can avoid this double taxation through special tax provisions, most cannot. Congress could help families to invest in their children's education through education savings accounts, such as the "A-Plus Accounts" proposed by Senator Paul Coverdell (R-GA) last year.8

Congress also could help parents invest in their children by reducing the barriers they face if they want either to exercise greater control over how funds are spent on their children or to supplement these funds with their own money. For instance, giving eligible parents the right to spend Title I funds at a private or public school of their choice, and to supplement the funds themselves if they wished, would empower them to seek the best possible education for their children.


President Clinton has raised the right issue in education--accountability. Regrettably, however, he seems to think of accountability more as an accountant would ("Is the money being spent in the ways intended?") than as a parent does ("Is the money causing good results for my child?").

Moreover, the President and some congressional leaders seem to think that the solution to the problem of falling academic scores is to spend more on programs, regardless of whether they are failing or have never been evaluated properly. It is time for lawmakers to demand real accountability and not allow themselves to slip into a competition over who can spend the most on education this session.

Stuart M. Butler, Ph.D., is Vice President of Domestic and Economic Policy Studies at The Heritage Foundation.

1. Eric A. Hanushek, "Assessing the Effects of School Resources on Student Performance: An Update," Educational Evaluation and Policy Analysis, University of Rochester, Summer 1997, pp. 141-164.

2. American Legislative Exchange Council, Report Card on American Education 1998 (Washington, D.C.: American Legislative Exchange Council, December 1998).

3. U.S. General Accounting Office, Head Start: Research Provides Little Information on Impact of Current Program, GAO/HEHS-97-59, April 15, 1997. See also Nina H. Shokraii and Patrick F. Fagan, "After 33 Years and $30 Billion, Time to Find Out If Head Start Produces Results," Heritage Foundation Backgrounder No. 1202, July 15, 1998.

4. David Hoff, "Tracking Title I," Education Week, October 22, 1997.

5. Ibid.

6. Maris A. Vinovskis, "Reconsidering Federal Education Research: An Historical and Policy Analysis of the R&D Centers, Regional Laboratories, and the `New' OERI," Preliminary Draft, February 1999. See also Nina H. Shokraii, "Why Congress Should Overhaul the Federal Regional Education Laboratories," Heritage Foundation Backgrounder No. 1200, July 2, 1998.

7. See also Nina Shokraii Rees, "Time to Supersize the Federal Ed-Flex Program," Heritage Foundation Executive Memorandum No. 571, February 10, 1999.

8. Nina H. Shokraii and Rea Hederman, "17 Million Reasons to Like A+ Accounts," Heritage Foundation Executive Memorandum No. 514, March 17, 1998.


Stuart Butler