The future of education, part 5

To sum up the four previous posts looking at the current and future state of the public education system (1, 2, 3, 4):

• There will be a record number of children in the system through 2014, and likely beyond (based on K-8 projections)
• These students will increase in diversity over time, with particular growth among student groups we’ve been least successful in educating
• We’ve set a mandate to educate every child, and put into place accountability systems that deny us the opportunity to hide any shortcomings toward this goal
• We will almost certainly have less money to work with, and at the same time will experience a significant growth in costs

In short – we’ve committed to significantly better results while serving a greater number of students than ever before, and we’ll have fewer resources – perhaps significantly fewer – to do it with.

That’s the data. How will the public education system react to these circumstances?

I think there are five options open to schools and districts:

Cut services. Schools and districts may decide to cut costs by cutting non-core classes (the arts have traditionally been an easy target), resources for other areas (instructional materials, resources for vocational programs), staff (teacher aides, support personnel such as nurses and maintenance staff), employee benefits (particularly in the areas of healthcare and retirement), and the costs of other services (transportation, foodservice, etc.). They may just decide to hunker down rather than pursue the other options listed here.

Improve efficiency. There are undoubtedly efficiencies to be found in large-scale operations like schools and districts. These could range from improving transportation systems to finding more cost-effective instructional programs.

Fake it. Rather than actually improve results among all students, schools can focus on appearances instead, making it look as if things are improving without actually changing true outcomes. This has already happened to an extent: states are reporting much lower dropout rates than are independent researchers, and the cut scores used in reporting on state assessments make it look as if students are performing much better than they actually are.

Fundraise. To make up for a reduction in resources, schools can reach out to their communities for help, soliciting financial support and volunteers. Under this model, nothing changes in terms of the structure and function of the schools: it’s a request for donations to maintain the current state of operations, and nothing more.

Partner. Schools and districts may turn to community partners to help them address the many challenges they face, building collaborative relationships that benefit the schools and their partners. This is more than fundraising: in a fundraising situation, schools remain as sole decision-makers, and community partners simply fund the things the school has decided to do; in partnership models, partners work collaboratively, with equal voices, to identify and meet outcomes. This approach promises far greater returns than a sole focus on fundraising.

Which of these options will schools and districts pursue?

My hope is that we’ll see institutions across the country throw open their doors and welcome community members in as true partners in the learning process. This approach ensures a focus on outcomes that the community wants to see, and is the best opportunity for generating significant levels of support – the support schools need to make up for coming shortfalls.

Other options are possible – it’s certainly hard to move from being a sole decision-maker to working through a collaborative model, and the partnership approach may be resisted for this reason. But the other options (except, perhaps, improving efficiencies) are short-sighted: reducing services or faking it put schools on a bad PR spiral, and putting all your efforts into fundraising without building relationships beyond that will ultimately cause resentment within the community.

If others see the data or likely options differently, please chime in – I’d love to hear different interpretations and predictions.

The future of education, part 4

In an analysis of the state of public education (and more specifically, where it’s headed), we’ve looked at population trends and key movements. What about the financial outlook?

School Finances – Incomes
Property taxes make up a large percentage of the funding for public education at the local and state level. Thanks in large part to the ever-increasing value of homes and property, we’ve seen tremendous growth in per-student revenue over the past 40 years. The chart below (from USDE) shows the growth in constant dollars:

Can this continue? I believe that for several reasons, the answer is no.
The big issue here is that, unlike the federal government, states typically have requirements to balance their budgets, which means that reduced revenues cannot be offset by borrowing and deficit spending. And it is state and local funding that makes up approximately 92% of funding for public education.

The immediate concern, of course, is the subprime mortgage crisis. Home prices are dropping at a record rate; when all is said and done, some experts predict that we’ll see a total peak-to-trough decline of 15% in home value. That will have a direct impact on the revenues that local and state governments have to pay out.

California, for example, has been one of the states hardest hit by the subprime crisis, and the governor has already declared a fiscal emergency to deal with a $14 billion shortfall. And there are 19 other states that expect to go back and patch holes in their 2008 budgets.

But I believe that the subprime issue merely jump-started the financial challenges facing public education.

The much larger issue facing us is the retirement of the baby boomers. According to census data, past and projected data on people of retirement age are as follows:

• In 1980: 25.7 million people ages 65+, or 11.3% of the US population
• In 1990: 31.2 million people ages 65+, or 12.5% of the US population
• In 2000: 35.1 million people ages 65+, or 12.4% of the US population
• In 2010: 40.2 million people ages 65+, or 13.0% of the US population
• In 2020: 54.6 million people ages 65+, or 16.3% of the US population
• In 2030: 71.5 million people ages 65+, or 19.6% of the US population
• In 2040: 80.0 million people ages 65+, or 20.4% of the US population
• In 2050: 86.7 million people ages 65+, or 20.6% of the US population

First, and most obviously, these are people who have been paying income and employment taxes into the system and, by and large, will not be in the future.

And they’ll have a huge impact on state budgets as many start drawing on Medicaid, which is paid for in part by the states. According to Stateline.org:

• States pay for close to half (43%) of Medicaid expenses.
• The 2006 cost of Medicaid was $320 billion for the states and the federal government combined.
• It accounts for 22% of state spending (up from 8% in 1985), and recently surpassed elementary and secondary education as the most expensive item on state ledgers, once federal matching grants are taken into account.
• Medicaid costs are growing at 6% annually – twice the rate of inflation.

Reduced revenues and increased expenses for the states for the foreseeable future…can the picture get worse?

Actually it can. There are indications that older citizens are less likely to support education funding, such as bond issuances. And remember that the elderly vote at much higher rates than those in other age groups, making them particularly powerful on such issues.

School Finances – Expenses
With the image of dramatically reduced state and local funding still fresh in our minds, let’s consider expenses within the school/district structure. How do things look there?

Not so good, unfortunately. Public education is a manpower-intensive enterprise: according to NCES, there were nearly 6 million full-time equivalent positions in the 2003-04 school year. More than 3 million of these were teachers, 685,000 were teacher aides, and the remainder were a mix of administrators and support staff.

Most of these employees, as state employees, receive generous benefit and retirement programs as part of their compensation. The financial implications are clear. First, consider that states have not set enough money aside to cover the retirement benefits of employees (current retirement programs are underfunded by $731 billion). And next, consider the rising cost of health insurance, coupled by the fact that many teachers receive full coverage not only for themselves, but for spouses and children as well. As one administrator said, the rising cost of health insurance “is the single most important issue facing districts nationwide.”

Finally, in terms of school/district spending, remember from a previous post that the percentage of students being placed into special education is growing steadily, then consider that it costs more to educate these students: according to the Center for Special Education Finance, in the 1999-2000 school year that cost was $5,918 per student beyond what was being spent on regular education students. Even assuming that number as a constant, the steadily increasing percentage of students being classified with learning disabilities represents a significant growing cost to schools and districts.

So, to sum up: the likelihood significantly reduced income, combined with rising costs, points to a very real possibility of financial crisis for schools and districts in the very near future.

In the next post: what it all means. Click here for Part 5.

The future of education, part 3

Before moving on to school finance, I wanted to highlight another significant trend in K-12 education, which is the heavy emphasis on equity.

We’ve always talked about the importance of educating every child, but in reality we haven’t really done it. The gap between different student groups has been with us for decades, and has not changed significantly for quite some time. Another indication of our lip service in this area is the difference in dropout rates by race/ethnicity, with recent calculations indicating that 75% of white students graduate high school, but only 50% of African-American and 53% of Hispanic students do so.

Now, thanks to the No Child Left Behind Act, we have not only affirmed our commitment to educating every child, we have put tools into place – namely, the reporting of disaggregated data – so that we can clearly see whether we’re fulfilling that commitment. Previously, most of this information was hidden within schoolwide averages; however, by reporting on the progress of each student group individually, we have no choice but to address the challenges that we face.

We should also note that this applies not only to racial/ethnic groups, but to special education students as well. Outcomes for these students are also reported separately, and with a small number of exceptions, they are required to participate in annual assessments along with the rest of the student body.

Next up: school finance. Click here for Part 4.

The future of education, part 2

In the last post, we covered changes in the student population, including changes in population size, racial mix, and special education percentage. (Short version: the population will continue to grow and become more diverse.)

In this post, we’ll look at another key trend – this one focused on the way in which schools operate – then follow up in future posts with an analysis of school finances and the conclusions we draw relative to community/school partnerships.

We should distinguish between characteristics and trends: characteristics are descriptions of the education system as it currently stands, with no expectation of major changes in the near future. Trends describe elements that are in flux, having changed significantly in the recent past and/or that are expected to create change in the near future.

There are many characteristics that affect public education, such as the relatively recent introduction of the charter school concept close to 20 years ago; however, since growth has slowed dramatically, they do not qualify as a trend stretching into the future. Important, yes; but not a current or future change in the market that will affect the course of business. Same with mainstreaming and other issues that, together, define to the current state of education.

In the context of this market analysis, it also does not make sense to list things that should be changed, but which in reality will not be. We all have our lists, but we all know which have the potential to happen and which do not.


Key Trend: Accountability
In fact, the only major trend in the way that schools and districts operate is the move to accountability. It is real, it is significant, it is still developing, and it is changing the very structure and operations of the education system.

As a specific piece of legislation, there are certainly several points of contention on the elements of the No Child Left Behind Act. We can debate the content and subjects tested, the quality and type of assessment tools, cut scores, lack of comparability among states, and many other things.

But regardless of how one comes down on the current version of NCLB, it is changing the entire conversation on education. The framework of the discussion is moving from a focus on inputs and processes to a concentration on outcomes.

It will be a couple of years before NCLB is reauthorized, and there is no doubt that it will look different than it does now. Growth models are already coming into play as a possible substitute or supplement for AYP, multiple measures are being floated, and there’s debate about the number of grades and subjects being assessed.

Regardless of the specifics of the reauthorization, however, the idea of accountability, and measuring outcomes, seems to be here to stay. Politically, no one can say that they want to remove accountability, and the fact that parents like the idea (here) means that it’s here to stay in one form or another.

However, while accountability is the watchword of the day, shifting from a system based on inputs to one based on outputs is a monumental task, and signs indicate that it’s going to be a slow and contentious process that goes on for the foreseeable future. Consider the National Board for Professional Teaching Standards: the program is incredibly expensive and, despite a laborious process for participants, there’s no evidence that it has an impact on student outcomes (see here). Yet it continues to go strong, and efforts to eliminate it in states that actually look at the data get roundly defeated.

Still, this trend towards accountability and a focus on outcomes will continue into the future – definitely a major factor in the future of the education market no matter how the specifics play out.

The next post addresses another key trend in education - click here for Part 3.

The future of education, part 1

It’s that time of year again – hunkering down to do some strategic planning for the business. But before you can start making plans for what you’ll do as a business, you have to give careful consideration to the conditions of the market in which you work. How is the market changing, and what’s driving that change? What will the market landscape look like as a result in 1, 5, or 10 years? Only when you have answers to questions like these and others can you chart a course for your company.

Rather than keep all this to myself, I thought I’d post my analysis of the education market. Today’s post is on population trends; future posts will address school management and finance, with a final post to explore what all of this means to the area of community/school partnerships.


Population Trends – Growth
According to the National Center for Education Statistics (NCES), “school enrollment is projected to set new records every year from 2006 until at least 2014, the last year for which NCES has projected school enrollment.” (see here) The table below shows historical data and projections:


Of course, some regions of the country will grow faster than others, and in fact NCES predicts a decrease in the Northeast. But the fact remains that we should see slow but continued population growth within this market overall.


Population Trends – Increased Diversity
In the year 2000, whites made up 69.9% of the total US population, with all other groups comprising 30.1%. We are on a track towards an even split by the year 2050, with whites comprising 50.1% of the population, and all other groups making up 49.9% (see here).

According to the Pew Hispanic Center, we have already seen a dramatic population shift within public schools. Richard Fry, Senior Research Associate, notes that “Latinos in 2005-06 accounted for 19.8% of all public school students, up from 12.7% in 1993-94.1 During this same period, the black share of public school enrollment rose slightly -- to 17.2%, from 16.5% -- while the white share fell sharply, to 57.1% from 66.1%.”

Based on fertility rates, demographic changes among school-aged children will continue at a quicker pace than the general population. According to work cited by the American Academy of Pediatrics, by 2020 approximately 40% of school-aged children will be from minority groups, and by 2025 we can expect to see that the child population will comprise 15.8% blacks, 23.6% Hispanics, 1.1% American Indian/Native Alaskans, 6.9% Asian/Pacific Islanders, and 52.6% whites.


Population Trends – Special Education
From the 1976/77 school year to the 2003/04 school year, the percentage of students characterized as having some type of disability rose steadily from 8.3% of the population to 13.7% (see here). There are no available projections related to the growth of this market; however, growth has been steady over the past 30 years, so one can expect this trend to continue.

The next post addresses other trends in the market - click here for Part 2.

EEPC - third keynote speaker!

I'm excited to announce that we've confirmed our third keynote speaker for the Effective Education Partnerships Conference - it's Dr. David Mathews, president of The Kettering Foundation.

Dr. Mathews has written extensively on the issue of public engagement in education (see here for his latest book); prior to joining Kettering, he served as Secretary of Health, Education, and Welfare for the Ford administration and as president of the University of Alabama.

We now have all three of our keynote presenters confirmed - Dr. Mathews, Dr. Rick Hess, and Dr. John Stone!

In other news, breakout session proposals are starting to roll in, and time is running out if you'd like to participate - the deadline in Friday, December 14. Go here for more information.

States' wallets get thinner

According to this article from Stateline.org, the fiscal picture is growing darker for state governments:

A slumping housing market and skimpier sales tax collections will force as many as 20 states to go back and patch holes in their budgets in 2008, the nation’s governors reported Wednesday (Dec. 5).

Most states will muddle through the current economic slowdown, but if the country dips into a recession, then even more than 20 states likely will have to make cuts to their current budgets, Raymond C. Scheppach, executive director of the National Governors Association predicted. "Clearly, it’s a little more gloomy than it was once was," Scheppach said as NGA and the National Association of State Budget Officers released the latest state revenue numbers.

and:

Unlike the federal government, which can run a deficit, states must balance their books. That means if tax revenues come in less than what a state had projected, then a state either has to cut programs or find other sources of revenue. The fiscal year begins July 1 for all but four states (Alabama, Michigan, New York and Texas).

Scott D. Pattison, executive director of the National Association of State Budget Officers, said the report shows that “most states are moving from peak fiscal conditions to a period of much slower spending and revenue growth.”

State spending is budgeted to grow a modest 4.7 percent in fiscal 2008. That’s far below the robust 9.3 percent growth states saw in fiscal 2007 and even lower than the 30-year average of 6.4 percent.

Where do states spend their money? The article says:

Spending on Medicaid, the federal-state venture that provides health insurance to the poor, accounted for nearly 22 percent of all state spending in 2007, followed by K-12 education (21 percent); higher education (10.4 percent), transportation (8.1 percent), corrections (3.4 percent); public assistance (1.8 percent) and all other expenditures (33.4 percent).

So budgets are tightening, and education (K-12 plus higher ed) make up almost a third of state expenditures. I think it's safe to say that large-scale movements in education, including universal Pre-K and reducing class sizes, are looking unlikely; what's more, given that some costs in education are rising dramatically (such as health insurance costs), I would expect that schools and districts are going to feel a real pinch in the coming years.

Spending for K-12 education over the past 10-15 years has skyrocketed. Consider these numbers from the US Department of Education:

By the end of the 2004-05 school year, national K-12 education spending will have increased an estimated 105 percent since 1991-92; 58 percent since 1996-97; and 40 percent since 1998-99. On a per-pupil basis and adjusted for inflation, public school funding increased: 24 percent from 1991-92 through 2001-02 (the last year for which such data are available); 19 percent from 1996-97 through 2001-02; and 10 percent from 1998-99 through 2001-02.

This pace is unsustainable even in boom times, and clearly those times are about to become a memory, due both to short-term conditions (like the subprime lending issue) and long-term trends.

The question is, what's going to happen to K-12 education as a result? How will they accommodate this change in the funding climate? Will they reach out to their communities, find more efficient ways to educate, or simply suffer through?