Don’t Conflate Education Costs With Education Spending

In public policy there’s an important difference between between cutting costs and cutting spending. Cutting costs potentially allows you to have more of something. For example, in healthcare, if a cost-cutting technological advance allows you to get a procedure with 90% of the effectiveness for 50% of the cost, you could take the money you save, spend it on other health services, and potentially end up with more “health” than before the cost-cutting. An action that cut costs leads money to be spent more efficiently, and you can end up better off because of it.

Cutting spending is different because it reflects a decision to have less of something. If your overall healthcare budget is cut by 15%, you’re going to end up with less “health” than before. So while cutting the costs of a given service could allow you reap more overall benefits, cutting spending will leave you with fewer benefits.

Right now there’s a battle being fought to blur this distinction in both higher and K-12 education policy. For example, proponents of MOOCs view them as a way to cut costs and ultimately get more “learning.” If an MOOC can deliver 80% of the learning that occurs in a conventional class for 50% of the cost, those savings can be spent on other important things (scholarships, tutors, professors, etc.) The result is that students can eventually end up with 110% of the previous quantity of “learning.” On the other hand, opponents of MOOCs feel cornered by growing budget deficits and conservative state legislatures. As a result, they view all cost cutting as a means to cutting spending. In their eyes, even if MOOCs give you 80% of the learning for half the cost, you’re just going to be stuck with 80% of the learning. There’s no reinvestment of saved resources on its way, and that means any efficient cost cutting measure will lead to corresponding cuts in spending , and a corresponding decrease in learning.

There’s a similar debate that takes place in K-12 education. For example, proponents of charter schools that use blending learning might believe the model allows students to learn 90% of the necessary math in 70% of the time (or for 70% of the cost). The saved time could then be used to teach math in small groups, and the result is that students end up learning 110% of the necessary math. Others feel that such a scenario is a pipe dream. Even if the school manages to get 90% of the learning in 70% of the time, the remaining 30% will end up as non-profit or corporate “profits” and/or budget cuts. In the end students are left with 90% of the learning. As with higher education, the argument relies on the assumption that the savings from cutting costs are not spent on more learning. Or as Diane Ravitch lays it out (succinctly, as always):

The holy grail for corporate reformers is cost-cutting that produces profits. Their hope is that if schools replace teachers with technology, the districts save money, and the tech companies strike it rich.

Ravitch speaks for a movement that assumes certain cost savings are a trojan horse for cuts to spending on learning (and by “spending on learning” I mean spending that actually goes toward educational services, not the per-pupil allocations that show up as “spending” in a budget but could go toward “profits.”) The movement tends to oppose charter schools, education technology, and the weakening of teacher credentialing, initiatives that some believe could help cut costs in an efficient way. So the question is, will cutting costs lead to less spending on learning? Should we believe that no reinvestment will take place?

I think the answer is no. While the “cutting costs = cutting spending” argument is fairly compelling when it comes to higher education, there is little evidence to support it in K-12 education. One reason is that K-12 education has real accountability systems, whereas higher education has none. If MOOCs are being used to provide inferior learning opportunities, not only is it difficult to prove, there are no consequences if proof is found. We basically let colleges do whatever they want. Things are different in K-12 education. If a charter school provides an inferior education, it’s likely to get shut down. Perhaps the frequency of such closings is still suboptimal, but they are not the myth some would have you believe. In fact, a national charter school advocacy group has a large-scale initiative to close down more schools! That’s hardly the action of a sector bent on providing inferior learning in order to skim tax dollars. The bottom line is that if you cut spending on educational services, there will likely be consequences. Even truly malevolent actors won’t be able to cover their tracks by enrolling a student body whose special education population is 1.4 percentage points lower than the local district average.

K-12 education also has an extremely powerful constituency of parents and teachers that’s vigilant about fighting abuse. The same can’t be said for higher education, where states have routinely been able to cut spending. Furthermore, there’s not a lot of evidence that the supposed bad actors driving these cuts — chiefly corporate CEOs and conservative state-level politicians — have a desire to pale back spending on K-12 learning.  There’s a knee-jerk reaction to assume that the education policies of state-level politicians will mirror the ravenous cost-cutting appetite of the crazed Congressional GOP, but governors have to be responsible, and they generally understand that education is valuable. Take a look at this chart of state-level changes in education spending over the last five years:



Notice anything? Ok, that’s a trick question. You’re not supposed to notice anything because there’s not much to notice. No patterns jump out with regard to the political ideology of state legislatures or the market share of charter schools. Granted, every state had their own unique circumstances during the recession, but there’s nothing that would lead you to believe an identifiable group is using the idea of cost-cutting to slash spending on learning. Even budget-cutting addict Rick Scott wants more spending! Cynics might say he just wants to funnel more money into his cronies’ pockets, but even if that’s true his proposal is certainly not the type of thing you do if you’re scheming to spend less money on learning.

Yet despite a lack of empirical evidence, much of an entire movement’s argument remains built on the fact that any kind of efficient cost-cutting will lead to less spending on learning. The result is that much of what’s written becomes an exercise in making ad-hominem attacks and playing “Six Degrees of Some Crazy Tea Party Dude.” It may seem farfetched that Rocketship charter schools are only interested in teaching math more efficiently so they can raid education budgets, but if their funder’s funder’s friends are evil, maybe Rocketship really is up to no good.

That’s why every time certain entities are mentioned the name of 10 other loosely affiliated entities (all bad, of course) are mentioned along with them. (My favorite example is this utterly nondescript Diane Ravitch postIt’s literally one sentence of news about a Khan academy grant followed by 8 sentences of ad-hominem attacks against a dead woman.) It’s also why there’s a concerted effort to turn Bill Gates — a man who is unquestionably on Earth’s top 10 list of “People who have alleviated the most human suffering” — into the Koch brothers — seemingly selfish tycoons who have few qualms about harming others (or destroying the environment) in order to promote their own business interests. There are good reasons to disagree with Gates’ policies, but if your argument is built on his nefarious motivations, it may be time to re-examine your priors. (Or to put in another way, you may be derpy.)

But I digress. My point is that it’s bad to equate cutting costs with cutting spending because cutting costs could ultimately lead to more learning while cutting spending will not. But when unsubstantiated assumptions lead you to refuse to acknowledge that cutting costs can be a step toward smarter spending and more learning, you rule out those potential gains. To go back to the healthcare analogy, it’s like refusing to ever purchase a slightly inferior but much cheaper treatment from a certain group of doctors, with the result being that you can never efficiently reallocate spending and reach a higher level of “health.” That’s not to say people shouldn’t scrutinize big spending decisions on technology or charter schools, but when you repeatedly assume that a slew of potentially good things are bad, you’re eventually going to stop good things from happening.

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