The high cost of public schools

Larry Willmore

I live in White Plains, a small community that is capital of
Westchester County, just north of New York City. Last week I
received by mail an 8-page brochure from the White Plains
Board of Education outlining a proposed 6.9% increase in
spending (to $127 million) to be financed by an 8.7%
increase in property taxes (to $105 million, amounting to
$4,898 for the average home). Residents are urged to support
this in a budget vote on May 21st. I am not eligible to
vote, but I am interested in local politics, especially when
they touch on issues of public finance.

The Board's brochure contains a large chart that proudly
illustrates per-pupil expenditures on education since 1989
have increased by only 35.5%, less than the 38.8% increase
in the consumer price level. In large type, there is a
rhetorical question "Why hasn't the district just reduced
spending even more to lower per-pupil expenditures?" This is
followed by an answer: "Slashing programs or services would
make our district less attractive to the thousands of
families who use our schools." In other words, residents
want quality schools, and quality schools cost money. Sounds
reasonable.

What, precisely, is the expenditure per student of the White
Plains Public Schools? This information would provide us
with a standard to judge whether current expenditure is too
high or too low, but it is nowhere to be found in the
brochure. Only on the last page is there a statistic, hidden
in a list of other statistics, on the approximate number of
students enrolled in public schools: 6,800. This figure
includes all levels, from pre-kinder (age 4) through high
school (grade 12). Dividing total expenditure by the number
of students, expenditure per student comes to something in
excess of $18,500 for the 2002-2003 school year. If White
Plains financed its public schools by tuition fees rather
than property taxes, this is the average tuition that the
parents of each student would be charged. (Presumably fees
would be lower for pre-kinder and primary school, so high
school tuition would have to be correspondingly higher.)

After making this calculation, my immediate reaction was,
Wow! This rivals the tuition charged by elite private
schools in New York City. White Plains public schools are
widely regarded as mediocre, though the Board of Education
disputes this. If it costs this much to produce mediocre
results, what must districts with excellent schools, such as
Scarsdale or Chappaqua, spend per student?

My second reaction was: Where is the outrage? Why is there
no taxpayer revolt against such poor value for money?

One explanation for such taxpayer docility might be that,
despite high per-student expenditures on schools, property
taxes in White Plains remain relatively low. There are two
reasons for this. First, many residents of White Plains are
elderly, and do not have school-age children. Second, many
of the high-income residents with children of school age pay
tuition at private schools rather than consume the 'free'
schooling that White Plains offers. Few neighbours in my
affluent community (The Highlands) use public schools. Most
send their children to one of the two nearby private
schools. (One school is Catholic and the other Jewish.) A
bus also transports children each morning to the privately
run German School, located in another part of White Plains.
I haven't done the research, but I doubt that that tuition
at any of these private schools amounts to anything like
$18,000 a year, or even $12,000 a year.

Why should less affluent parents be forced to send their
children to schools at a cost (to taxpayers) greater than
the cost of tuition at private schools in the city? Why not
issue a voucher to each public school student, redeemable at
any approved school, public or private, for actual tuition
or $18,500, whichever is less? This would save tax money,
and everyone will be better off. Students who switch to a
private school gain, for they could have continued in public
school. Taxpayers gain, because those who opt for private
schools require less financial support than those who
continue in public school.

Of course, if the large number of children currently in
private schools are also given vouchers, total public
expenditure on education could well increase. This
possibility can be avoided by making the vouchers means
tested, i.e. available only to those whose income falls
below a certain level. To insure that no one loses from such
a change in policy, it would be necessary to offer the
option of tuition-free public schools to everyone, even the
affluent. In other words, those above the means-tested
income level would have access to public school without
paying tuition, but would have to pay full tuition in a
private school. It is easy to design a system that offers
realistic choice to everyone, but saves taxpayer money.
Everyone gains from lower taxes, students who choose to
switch to private schools gain, and nobody loses!  (Well,
almost nobody. Administrators and teachers in the public
system will lose their jobs if they are unable to compete
with private schools. This privileged group, like any
monopoly, will oppose competition in the supply of
schooling. One person's excess cost is another person's
income!)

Substantial gains with almost no losses are so rare an
outcome in economics, that it boggles the mind that in White
Plains, and in communities and nations around the world,
these reforms are not taking place. Instead, governments
everywhere continue to link public finance of schooling to
public ownership of schools. Governments with otherwise
impeccable capitalist credentials, who are willing even to
privatise jails, insist on owning the means of production
when it comes to provision of taxpayer-financed schooling.

Why is it so difficult to move to a system where schools can
be privately run, but publicly financed? What is missing in
my analysis? Is it possible that small groups of educators
are holding taxpayers hostage? I find it hard to believe
that, in a democracy, the consumer/taxpayer is so
uninformed, so weak or so gullible, but this might provide a
rationale for observed policies as well as for the dearth of
information on comparative costs of private and public
schooling.

All help and suggestions will be much appreciated; I am
searching for a solution to this puzzle. If you have any
comments or ideas, please reply to willmore@un.org.

12 May 2002

Reference: About Our White Plains Public Schools. Special
Budget Issue. May 2002.

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