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Businessweek Archives

True Or False: More Money Buys Better Schools

Social Issues


In 1968, Demetrio P. Rodriguez sued the state of Texas over its miserly spending in his poor San Antonio school district. Back then, he hoped that by the time his third-grade son reached sixth grade, his district's spending level would equal that of richer ones. Now, his grandchildren attend the school his kids did, and conditions are no better: Often, trailers serve as classrooms, and the ceilings leak. Says Rodriguez: "My grandchildren deserve better."

But his great-grandchildren may face the same fate. In June, a judge preliminarily approved the Texas legislature's latest school-financing plan. In an unprecedented fourth try at satisfying a court order to equalize education funding, lawmakers crafted a plan forcing well-off districts to share their wealth. But a final pact could prove elusive: Lawyers for the poor districts plan to challenge the plan on the grounds that it still doesn't do enough to close the gap.

HEATING UP. Texas' funding woes reflect a national debate that promises to grow ever more heated. Some 30 states are fighting suits over spending disparities due to variations in local property taxes--or else have had their laws invalidated (chart). But the battle is moving to a higher plane: Instead of clamoring for equal funds, parents and students are also demanding that the money be better spent. Already, courts in Alabama and Massachusetts have ruled that their school systems violate the state's constitution because they failed to provide kids with an "adequate education." This issue is also being fought out in Connecticut and Louisiana.

The Clinton Administration's education-reform plan will intensify the dispute by creating opportunity-to-learn standards and urging states to meet them. The controversial rules would give students the basic tools for learning: competent teachers, current textbooks, and clean classrooms. The Administration insists it won't specify rigid rules for class size or spending per pupil, but critics say the standards will trigger suits by parents who feel short-changed.

The question at the heart of the education debate: Is money critical to improving performance, or are other factors more crucial? "Money does matter," says Craig Foster, executive director of the Equity Center, a group of 300 poor Texas school districts that are challenging the state's financing law. "The only people who say it doesn't matter are those who already have it."

But money alone is no panacea (page 63). A decade after A Nation at Risk, the federal report warning that schools are failing America's children, the performance of U.S. students remains mediocre: American students still underperform those of other industrial countries, despite one of the highest levels of educational spending. Many of the states that spend the most per pupil have the lowest test scores, says a recent Heritage Foundation study.

One problem is that public-school bureaucracies absorb money long before it reaches the classroom. Yet pouring even more funds into an inefficient system won't guarantee better results. Consider a five-year experiment completed in June by the Annie E. Casey Foundation. It committed about $40 million to four cities with a high proportion of disadvantaged youths. With the windfall, the cities--Dayton, Little Rock, Pittsburgh, and Savannah, Ga.--aimed to raise test scores and fix other inner-city problems. But aside from a slight lowering in dropout rates, which tracked a nationwide decline, the experiment "didn't produce significant changes in the institutions or student outcomes," says Gary Wehlage, associate director of the Center on Organization & Restructuring of Schools, who studied the program.

A key reason: Most of the schools' practices stayed the same. While some schools added after-school programs, for example, they didn't change the regular curriculum. Says Wehlage: "Money spent foolishly doesn't make any difference."

Houston's Hollibrook Accelerated Elementary School shows that schools can do more with less. Some 85% of the students are from non-English-speaking homes. And the cash-strapped school spends far less than Texas' annual average per pupil of $3,939.

Despite such obstacles, Hollibrook students have made significant gains. Five years ago, its fifth-graders' mean scores for reading, math, and social studies were, by national norms, only at the level of the eighth month of third grade. Today, students are performing at grade level. Based on the work of Stanford University economist Henry M. Levin, the improvements also followed innovations introduced by a new principal, Suzanne Still. Instead of spending more, she reallocated the resources she already had. For example, teachers now move with students from one grade to another, which eliminates days wasted adjusting to new instructors each September. The program, now being used in some 500 schools in 35 states, also requires extensive parental and community involvement.

TOUGH GOALS. Other experts agree that such influences as teacher ability and parental support are key factors affecting student performance. Costly efforts, such as smaller classes, have not yielded consistent educational gains, says economist Eric A. Hanushek of the University of Rochester, who has studied the link between spending and achievement.

In the face of such evidence, taxpayers and business groups are calling for a total restructuring of the nation's schools, along with funding reforms. But sweeping changes in Kentucky show how tough such a goal can be. In 1990, Kentucky lawmakers mandated such radical measures as school-based management and merit pay for teachers and ordered the state to fund them. The state has complied--until now. With Kentucky facing a budget shortfall of up to $300 million, the education department expects a 2% cut in its $2.2 billion budget. That could slow reform this year, and further cuts could threaten future efforts. As the debate over how to improve education rages on, it's clear that money cannot be divorced from finding a better way to educate our kids.Stephanie Anderson Forest in Dallas, with bureau reports

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